The coalition promises higher severance pay for faster dismissals

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“We support greater flexibility as a principle, but on behalf of the Pirates, we fundamentally disagree with the proposal for layoffs without giving a reason,” Deputy Speaker of the Chamber Olga Richterová told Novinka.

Nevertheless, she accepted this possibility, even as an extreme case. “At the same time, it would have to be compensated with a significantly higher severance pay, for example at the level of three times the normal severance pay,” emphasized Richterová. For a large part of the employees, this would be six to nine monthly salaries.

The coalition partners agree to a higher severance pay. How it should look, but they don’t want to forward while the debate is going on.

It should be easier for companies to fire people

“We cannot have a dismissal without giving a reason without severance pay,” declared Finance Minister Zbyněk Stanjura (ODS). According to him, it can be beneficial for both parties.

Now the severance pay is between one and three average monthly salaries. But it is also a widespread practice that companies offer workers severance pay in the amount of five months’ salary, sometimes including the payment of insurance premiums for the entire five months, if they immediately proceed to terminate the contract by agreement from the beginning of the new month.

Even in Denmark it is not completely without giving reasons for the hour. Greater flexibility in the labor market is offset by better unemployment insurance

Dominik Stroukal, NERV economist

The Ministry of Labor led by Marian Jurečka (KDU-ČSL) could present the draft amendment as early as this month, with the aim of it entering into force from next year.

The coalition agrees on the need for change. “Modernization of the Labor Code is necessary, especially now, at a time of long-term low unemployment. If we want to speed up economic growth, it will not be possible without the flexibility of the labor market,” said the head of the House of Representatives and TOP 09, Markéta Pekarová Adamová, to Novinkám.

According to her, easier dismissals will also make it easier to recruit new employees. “These are often neglected, for example because of the employer’s concern about complications with his possible dismissal. “Whether it’s young women, parents of small children, or older people in pre-retirement age,” she added.

People’s deputy Michael Kohajda sees it similarly. According to him, sufficient protection of employees must also be taken into account so that they do not end up in difficult situations due to job loss.

“If these people end up without a job, they will unnecessarily burden the benefit system, which is not advantageous for the state either,” stated Kohajda.

Danish pattern

It is necessary to stimulate the labor market, according to business unions, which have been putting pressure on the government since last fall, and according to the government’s National Economic Council, which has now come up with a set of proposals.

Following the Danish model, the Council wants to strengthen the principle of flexicurity, which is a combination of a flexible labor market (flexibility) and social security (security). The point is that, for some compensation for workers, the protection policy will be reduced, which protects them from dismissal, but can also paralyze the labor market.

It is an extreme matter that would have to be compensated by a significantly higher severance pay, for example at the level of three times the normal severance pay

Olga Richterova

However, unions warn that companies can start getting rid of any inconvenient person in this way, for example mothers with an often sick child or older employees with higher wages, who are already expensive for the company, and the subsequent wave of layoffs will only burden the benefit system as a result.

“The media mostly only took the flexibility from our proposal, and not the security. But both are important. Even in Denmark, it is not entirely without giving reasons for the hour, but the main thing is that greater flexibility in the labor market is compensated by better unemployment insurance. It can pay off for the state,” objected council member Dominik Stroukal.

Pirates agree with the model. “Flexicurity means greater flexibility in hiring and firing, but also, and this is essential, greater social protection for employees – for example, in the form of higher income support in the event of termination of employment,” Richterová emphasized.

Possible stress for people

According to the commercial director of the personnel agency Advantage Consulting, Gabriela Hansliková, increased flexibility in hiring and firing could move the labor market. “Greater flexibility can support innovation and the competitiveness of companies by enabling them to respond more quickly to changes in the market and to optimize their personnel composition,” she said.

However, at the same time, according to her, the potential negative consequences of changes must also be taken into account.

“For example, there may be an increase in employee insecurity about the stability of their job, which could lead to higher stress and lower work motivation,” she warned.

The opposition is skeptical of the government’s plans. According to Alena Schillerová, head of the ANO deputies, dismissals without reason will not solve the problems of the labor market, and the SPD is against any dilution of the labor law protection of employees.

Termination without reason? The unions will strongly oppose NERV’s proposal

NERV: People are often unforgivable

The National Economic Council of the Government claims that problem employees or employees without performance, as long as they do not grossly violate work discipline, are practically unfireable in the Czech Republic

“Difficult layoffs, for example even in response to external shocks, bind employees in less productive firms and thus also hinder the development of more productive firms that are interested in recruiting new employees,” the advisers wrote to the government.

For some companies and industries, this can be a hindrance, responded Gabriela Hansliková from the personnel agency Advantage Consulting.

“Employee non-dismissal can limit the ability of companies to respond to changes in the market, restructuring or the need to adapt the personnel composition. “Somewhere, it can also lead to insufficient performance or inappropriate behavior of employees, which affects the company’s operation,” she said.

The article is in Czech

Tags: coalition promises higher severance pay faster dismissals

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