Originally published February 2010

Changes in the retirement pension system - Amendment to Act No. 155/1995 Coll., the Retirement Pension Act

In the Czech Republic, the retirement pension system is based on social security contributions paid by the economically active part of the population and redistributed among senior citizens as the retirement pension. Due to the ageing population, this system has become increasingly under-funded over the last decade. Despite long-term discussions about fundamental system changes, only minor adjustments to increase the income of the "pension fund" have been made so far. These adjustments involved increasing the contributions, and decreasing the expenses by tightening the criteria to qualify for the retirement pension payment. With effect from 1 January 2010, the following further changes have been made:

  • the period of active participation in the social security system necessary in order to qualify for the retirement pension payment (the "qualifying period") will progressively increase from 25 to 35 years over the next ten years;
  • after 31 December 2009, a period of study will not be counted in the qualifying period;
  • the age of retirement will increase to 65 for men (depending on their year of birth), and to 64 for women (depending on the number of children they have raised);
  • administrative barriers for retired people to become employed have been removed; and
  • there are changes to disability benefits payments, as the criteria to be considered 'disabled' has been amended.

Changes in sick pay - Amendment to Act No. 187/2006 Coll., the Health Insurance Act

In the Czech Republic, mandatory health insurance is paid by all employees (and by employers for their employees as well). From this fund, salary compensation is paid to those who are ill for longer than 14 days (until then, the compensation is paid by the employer). Previously, the amount of compensation varied between 60-72% of the average earnings, depending on the length of the illness. The longer the illness, the higher the compensation. As of 1 January 2010 this varied rate has changed and has been replaced by a flat rate of 60%.

Reported case law

Supreme Court decision No. 21 Cdo 2972/2008, issued on 22 October 2009, on redundancies

The Supreme Court held that the dismissal of an employee for redundancy reasons was lawful when only some of the employee's work tasks ceased to be necessary and the rest were merely split amongst the other employees.

Supreme Court decision No. 21 Cdo 3881/2008, issued on 4 December 2009, on continuous acts of misconduct

Where there is a continuing act of misconduct in the workplace, the statutory period for terminating the employment agreement starts running after the last breaching act occurs.

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