Kurzarbeit – a remedy for when there’s a crisis?

Šárka GregorováPartner, Schaffer & Partner

Czech businesses now have a new way of being able to avoid having to make redundancies during a difficult period. That is the intention, at least, of a new amendment to the Employment Act. It has been recently approved by Parliament and will be coming into effect in the near future.

Previously when there has been a difficult economic situation how have businesses responded? One common way of getting round this problem is “underemployment”. This means that employees are assigned less work than they are used to. During the period that they are not working the employer pays its employees 60 % of their original wage.

The new amendment, however, introduces the concept of “kurzarbeit” (German for “short time work”). This is a kind of “improved” mechanism where, in the event of a crisis, the government can decide to provide a subsidy to businesses if they are unable to offer sufficient full-time work for their employees. This will be of particular benefit when there is a bad economic situation. If there is a deficit of work, employees will have the right to 70 % of their usual wage. In this case the employer will pay 50 % and the other 20 % will come from the state subsidy. So, compared to usual “underemployment”, employees will be better off as they will get 10 % more of their original salary. But this system will also be better for employers as, instead of having to pay 60 % of their employees’ original salary they will only pay 50 %.

However, this subsidy will be restricted with regard to its amount as the government will not provide more than 12.5 % of the average Czech salary. It will also be restricted with regard to time. It can only be provided for half a year and this period can only be prolonged once, at the most.

In order for employers to be able to receive a kurzarbeit subsidy, they will need to apply to the Employment Office and prove that no other solutions exist (for example, forcing all employees to take vacation at the same time). The application will subsequently be passed on to the government. The problem with this is that at the same time employers will have to promise in writing that, while the subsidy is provided, they will not make employees redundant for organisational reasons, i.e. due to a lack of work. They will no longer be able to apply for a contribution over the next three years if they breach this promise.

Any employers that are interested in receiving this subsidy should most definitely not underestimate keeping proper records of their personnel issues. When applying for a subsidy they should also consider their tactics in dealing with the Employment Office.

Natalija Bilan from Ukraine has been crowned this year’s Miss Deaf World in Prague

The title of Miss Deaf World 2015 for the most beautiful deaf girl in the world was won by Natalija Bilan from Ukraine in Saturday’s final in Prague. In the men’s category Camilo Viloria Arrieta from Colombia was crowned Mister Deaf World 2015.

Of the Czechs competing Tomáš Brož from Jihlava was the most successful and won the title of Mister Deaf Europe in Top Hotel Praha. Sashes and prizes were handed out by Aleš Eppinger, a partner at Schaffer & Partner.

This year saw the fifteenth final with a total of 65 finalists taking part. Girls appeared in evening gowns and swimsuits but the free disciplines dominated. The men appeared before the audience in their national costumes, as well as in swimming trunks.

Unified Corporate Income Tax Base

The European Commission proposes a new bill concerning Corporate Income Tax, which is designed to ensure more stable profits, improvement of the unified market for businesses and prevention of tax evasion. One of the most important features is reimposition of common consolidated tax base, which represents a more complex solution of the Corporate Income Tax reform. Also, effective taxation is to be guaranteed so that companies would pay due tax share in countries in which they make their profits. Furthermore, the European Commission aims to promote business transparency; so as to achieve such a goal, an EU-wide list of third countries and territories, which have been blacklisted by EU members, has been issued.

Creditors beware! The amendment to the Civil Procedure Code and the Enforcement Code strengthens the protection of the spouse of a liable party to the detriment of the entitled party

The amendment in question comes into force on 1 July 2015. An important innovation in enforcement proceedings is the obligation that proving executors have to determine whether in the List of Instruments of Matrimonial Property Regime there is a contract on the matrimonial property regime or a decision to cancel the joint marital property, to renew it or to narrow its existing, scope, etc. It is now also established that the spouse of the liable party is also a participant in the proceedings. This measure is a response to the situation that arose during the effectiveness of the existing regulation where the spouse of the liable party often did not even know that enforcement proceedings had been initiated against the other spouse. Another significant change is the establishment of a maximum amount in the enforcement of a decision by which the bank account of the liable party’s spouse can be sanctioned. So under the new legislation half of the balance that the spouse that is not in debt had in his/her account at the time the writ of execution was delivered to the bank will remain protected (but a minimum amount equal to double the subsistence minimum). The spouse of the liable party must be advised about this. It can be expected that these measures will have a negative impact on the level of satisfaction of creditors’ claims.


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