Legal

Amendments to Employment Contracts Act enter into force on 1 August

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The European Union directive on transparent and predictable working conditions has been transposed into national law. The corresponding amendments come into force on 1 August 2022, but it would be a good idea for employers to start preparing for this date already.

Probationary period

A new section was added to the Employment Contracts Act that consolidates all the provisions pertaining to probationary period. A new feature is an exception enabled by the directive: the probationary period does not include time where the employee was prevented from performing duties of employment by temporary incapacity for work or use of holiday or leave. Nor are other reasons excluded if they hinder the employer from evaluating the employee’s suitability for performing the task in question. The probationary period will be extended correspondingly – if the employee was on sick leave for five days, five days are added to the probationary period. Employers must keep in mind that if a temporary employment contract is extended or a consecutive employment contract is entered into concerning the same kind of work, there is no new probationary period.

Prohibition on adverse treatment

The amendment transposes the directive principle that an employee must not be treated adversely solely because they invoke their rights, draw attention to violations of their rights, or support another employee in defending their rights (including a trustee or working environment representative). For example, if the employee demands the pay provided for by law for overtime work, the employer may not respond to the request by terminating the employment contract.

Employees are not compared to other comparable persons or groups of persons for the purposes of ascertaining adverse treatment; rather, the employee’s situation is compared to their own previous situation. It is not important that a certain protected characteristic exist (such as gender, age, beliefs etc.); rather, every employee is also guaranteed protection even in the absence of a specific common characteristic. These two circumstances distinguish the prohibition on adverse treatment from the previously existing prohibition against discrimination based on gender and ethnic affiliation.

Employer’s notification obligation

As a significant change, there are new entries on the list of data and information that the employer must transmit to the employee in the written document of the employment contract prior to starting work. The written document of the employment contract is a paper on which the parties have written down significant circumstances of the employment relationship. Internal procedures established by the employer, rules on payment of bonuses and other such documents are not included in this category. That means employers will have to make changes to their employment contract templates. Pursuant to subsection 5 (1) of the Employment Contracts Act, the employer must additionally transmit the following information to the employee:

1. Taxes and payments

The Employment Contracts Act currently in force requires that the information on taxes (e.g., income tax, social tax) and premiums (e.g., unemployment insurance premium, compulsory funded pension payment) be disclosed to employees. Now employers will have to also submit data about which institutions the taxes and premiums are paid to and what protection employees enjoy in regard to payment of taxes and premiums.

2. Information on training

The employee must be notified about training offered by the employer. To satisfy the notification obligation, it is not sufficient to include a provision in the contract stating that the “employer shall offer training”. Yet the employer will not be required to provide detailed information on the training course (e.g. the date, duration of training). It is not necessary to include information on the employee’s participation in formal education for which the employee has gone on study leave, nor other training for which the employer is not paying. If the employer does not offer training, there is likewise no duty to submit information on the training.

3. Holiday and leave

The employer must notify the employee of holiday and leave paid by the employer and the duration of such leave, including the conditions on which the employee is entitled to leave and the procedures for remuneration.

4. Cancellation of employment contract

Earlier, the employer had to notify the employee of the terms of advance notice for termination of the employment contract but now a reference to formal requirements and obligation to provide reasoning for the termination must be included.

5. Performing overtime work and procedure for compensation

The employer must submit information on performance of overtime work and procedure for compensating such work. The notification obligation must include information on the fact that the overtime work is performed upon agreement and overtime work is remunerated by default with time off work or, upon agreement between the parties, monetarily.

6. Probationary period

The current Employment Contracts Act stipulates a four-month probationary period and requires written notification of probationary period only if the parties to the employment relationship agree on a probationary period shorter than four months. The amendments to the Employment Contracts Act provide for a new obligation to notify the employee of the duration of the probationary period.

The above data must be conveyed in the written document of the employment contract. The new act does not require amendment of contracts with existing employees. However, employers do have to provide the corresponding information within two weeks upon receiving a request from an existing employee and the employer has the right to demand confirmation that the data have been forwarded. If the employer does not provide the information, it is considered a material breach of employment contract. Of course, the employer may at its own initiative notify employees of the new information even if the employees do not ask for it. It is important for the employer to bear in mind that the information on the forwarding and receipt of the data must be retained both during the term of validity of the employment contract and for 10 years after expiry of the contract.

The employer’s notification obligation during the employment relationship

The current act required the employer to notify temporary agency workers only of the fact that the duties of employment are to be performed as agency work. From now on, temporary agency workers must be notified of the name of the user company as soon as it is known. This is a continuing obligation.

From now on, employers who use cumulated working time must also notify employees of conditions for changes to the work schedule. Depending on agreement between the parties or the company’s organization of work, such information may cover the cases in which the work schedule may be changed, how the change takes place and what the terms for making the changes are and whether the work schedule changes may be agreed upon by employees as well. The notification regarding a change in the work schedule may also include other information relevant to the relationship between the parties.

Under the current law, if the employee is sent abroad and works longer than four consecutive weeks in a country whose law is not applied to their employment contract, the employer shall notify the employee before their departure regarding the time to be spent working in that country, the denomination of currency in which they will be paid, benefits related to their sojourn in the country and conditions for returning from the country. According to the new wording, now the employee must be notified if they work longer than four consecutive weeks in a country other than the one in which they usually work. Thus, employment contract law will no longer play a role in determining when the notification obligation arises. The notification obligation data now also includes the country in which the employee will begin work.

Other amendments to the Employment Contracts Act

The directive provides for the employee’s right to seek suitable working conditions and to receive from the employer a reasoned written response to a request within two weeks. Above all suitable working conditions means agreeing on full-time or open-ended employment instead of part-time employment and formalizing a temporary employment contract as a full-time or open-ended contract, but it can also denote other working conditions arising from the employment relationship. The draft legislation does not restrict the employee’s rights to submit more than one request for suitable working conditions but limit the employer’s obligation to respond. If the employee has submitted more than one request over four months, the employer is obliged to respond to only one of them. If the request is denied, the employer’s reasoning must make plain why it is not possible to grant the request due to the organization of work. When returning from child-related leave or from sick leave, the employee has the right to use improved working conditions, including demanding a pay rise to which they would have been entitled during their absence.

The employer may not prohibit employees from taking up employment with other employers outside of working time. The employee must not be subjected to adverse treatment due to parallel employment, such as preventing the employee from attending training while working for the other employer. Parallel work may only be restricted due to a non-compete clause that meets the requirements of the Employment Contracts Act.

In addition, a significant amendment will affect accountants. Holiday pay will be paid to the employee on the last but one calendar workday before the start of the holiday, unless agreed otherwise by the employer and employee.

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