Authors: Josef Hlavička, Petr Kadlec, František Korbel
The Czech cabinet has declared a state of emergency throughout the entire territory for 30 days in connection with the health threats due to the proven occurrence of coronavirus disease (COVID-19) pursuant to Constitutional Act No. 110/1998 Sb., effective as of 2:00 pm, 12 March 2020.
In connection with the declared state of emergency, the cabinet is the key crisis management authority pursuant to Act No. 240/2000 Sb. During the period of emergency, the cabinet is authorised to issue emergency measures for the necessary period of time and to the extent necessary to limit fundamental rights such as the right to the integrity of persons and home inviolability, the right to assemble, ownership right, usufruct (to order the provision of material resources, to suffer the use of real estate), the right to do business, the right to strike and the freedom of movement and residence. Furthermore, the cabinet may restrict the right to possess and carry arms, restrict financial operations and restrict the entry of other nationals to the Czech Republic. The cabinet is also authorised to impose work duties and assistance and to order construction work. The cabinet can also order preferential supplies to selected groups of inhabitants, and order the notification of a temporary change in residence for more than 3 days. The persons affected are entitled to compensation as a result of the restriction of the ownership right or usufruct, the provision of material resources, the performance of work duty or assistance. The state is also obliged to compensate the damage caused to the persons concerned in connection with the emergency measures.
The decisions on emergency measures are published in the media and promulgated in the Collection of Laws https://aplikace.mvcr.cz/sbirka-zakonu/. They become effective on the date specified in the decision.
The Central Crisis Staff is the cabinet’s crisis management body. Its staffing and activities are governed by the Statute of the Central Crisis Staff approved by the cabinet.
Ministries and other central administrative authorities ensure their readiness to address emergency situations within their competence. The Ministry of the Interior isthe coordinating body. The Minister of the Interior addresses crisis management conflicts, if any. The Ministry of the Interior addresses emergency situations related to internal security and public order (implementation of the ban on entry into the Czech Republic, the ban on assembly, etc.) with the assistance of the Police of the Czech Republic and fire brigades. The government is also authorised to deploy soldiers in active service to assist in enforcing emergency measures.
Under these circumstances, the Ministry of Health naturally has the key role (it ensures the procurement and distribution of medicines, makes decisions on the extent of urgent inpatient care), and the Crisis Act also explicitly grants powers to the Ministry of Transport, and in connection with the energy infrastructure also to the Ministry of Industry and Trade and the Czech National Bank. To make sure territorial self-governing units are ready to address emergency situations, regional and municipal authorities (including governors and mayors) are also vested with necessary powers laid down by the law. Regional authorities and municipalities with extended powers set up crisis task forces as their working bodies, thus exercising the delegated powers of public administration.
The state of emergency is an exceptional situation where lives, health or property and internal order and security are at risk. Decisions issued during a state of emergency are not (with some exceptions) subject to the Administrative Procedure Rules (no appeal may be lodged against them). Any breach of emergency measures is an offense punishable by high fines in administrative proceedings. Given the nature of some emergency measures, however, criminal consequences are not ruled out either.
Pursuant to the cabinet regulation, coronavirus disease (COVID-19) has been included in the list of contagious human diseases, the spread of which can be classified as a crime – the crime of spreading a contagious human disease can also be committed by negligence. In general, the commission of any crime during an emergency is an aggravating circumstance.
Should you have any other questions regarding the above topic, do not hesitate to contact our legal team.
Authors: David Krch, Josef Žaloudek, Martin Bureš
Dear clients and business partners,
We would like to inform you that in connection with the spread of coronavirus COVID-19, the Government of the Czech Republic has prepared and approved a Liberation Tax Package. The Government has adopted a significant relaxation of sanctions that could result from non-compliance with time-limits and other requirements under the law.
Therefore, we recommend you to store all evidence proving coronavirus connections (for example documents and orders on mandatory quarantines or medical reports of key personnel, etc.)
To summarize “standard” mechanisms – taxpayers have the possibility to apply for:
Any application should be granted if a coronavirus connection is proved. The charges should be waived for the applications that involve administrative charges.
In addition to the information on the Liberation Tax Package, we summarize the possible tax implications of home office work that many employers have now negotiated with their employees. Specifically, this involves providing compensation for the costs incurred by the employee when working from home.
Of course, the situation is developing, and further measures can be expected, we will keep you informed. Do not hesitate to contact us with any questions. Our experts will look at your specific situation and together we will find a solution.
Dear
Clients and Business Friends,
Let us express our support and sympathies to you and your families during this
difficult time when a large part of the world is afflicted by the COVID-19
virus outbreak and governments are adopting severe measures with
considerable healthcare, social, legal as well as economic impacts on the
entire society.
The health of our clients and colleagues is our top priority, along with our
ability to ensure the continuity of the best possible legal and tax services
for you. We have taken an ultimately responsible approach to the work of
our offices in order to protect the health and well-being of our clients and
colleagues alike. We nonetheless also fully realise that your business cannot
come to a halt, and that our countries and economies need your activity. Our
aim in turn is to ensure maximum legal and tax support for you. We are taking,
to the maximum extent possible, a flexible and dynamic approach to this
extraordinarily complex, evolving situation. The robust technology we use
allows us to fully switch to remote work without physical presence in our
offices, while our more than 220 legal professionals and tax advisers are
prepared to provide full support and service to our clients during this
challenging time.
Dedicated COVID-19 task force
HAVEL & PARTNERS has established a dedicated task force to coordinate
the management of any and all legal, tax and economic issues relating to the
consequences of the COVID-19 situation. This dedicated task force is sharing
best practices with colleagues to promptly attend to our clients’ needs.
Apart from standard communication with our law firm’s partners and senior
associates, with whom you have liaised so far, you can also contact members of
the task force directly. The dedicated task force comprises the following
senior partners covering in particular the practice areas indicated below:
Czech Republic
Slovakia
Special discount for clients and business partners afflicted by COVID-19
Due to the serious nature of the situation and the anticipated economic and other losses that many organisations will suffer in connection with the coronavirus pandemic, we are offering a discounted blended hourly rate of EUR 100 / CZK 2,600 for legal services to all our clients and business partners effective as of today, i.e. 16 March 2020, until the end of April 2020. The discounted hourly rate applies to all legal entities as well as individuals from all jurisdictions if they request the discount prior to the commencement of the service and the current situation is placing a serious economic burden on them. This is without prejudice to our services rendered under the current PRO BONO scheme.
PRO BONO scheme: doubling the extent of legal services provided free of charge, and increased financial support
Effective from 16 March until further notice, we are increasing the volume of our PRO BONO services from 3% to 6% of our total annual service volume, i.e. 18 thousand hours per year, or 1,500 hours per month. In addition, we will double our financial assistance – contribution from our firm’s projected profits. If the transition to remote provision of service permits, we would like to further increase this scope. Within our PRO BONO scheme, free-of-charge legal services related to the COVID-19 outbreak are now an absolute priority. The PRO BONO scheme related to COVID-19 is the responsibility of the partners indicated below:
Czech Republic
Slovakia
HAVEL & PARTNERS as a strategic partner for crisis situations
We trust that HAVEL & PARTNERS, being the largest independent law firm in central Europe, is fully equipped to handle crisis situations. We are capable of managing such situations with our clients comprehensively, well beyond the frame of purely legal and tax issues, including legislative and commercial aspects, practically and consistently. It has always been the case at HAVEL & PARTNERS that we ourselves must be able to carry out what we are advising our clients to do. We verified this during the latest global economic crisis of 2008–2012, when we helped many of our clients to overcome the difficult time while our law firm made it through that challenging time as successfully as our clients did. We firmly believe that thanks to our strategic thinking, dynamics, individualised approach, and extensive know-how, we will be able to help you as well.
Above all, we wish you and your loved ones good health and optimism.
On behalf of the whole team,
Jaroslav Havel, Managing Partner
Authors: Jan Koval, Štěpán Štarha, Zuzana Hargašová
Due to the declaration of an emergency situation in the territory of the Slovak Republic, the Public Health Authority of the Slovak Republic has issued several measures concerning the prohibition of organizing and arranging mass sports, cultural, social or other events, restrictions on Slovak border-crossing points, mass transportation, and prohibiting the operation of various facilities such as swimming pools, cinemas, ski resorts, etc., and only pharmacies, grocery stores, restaurants, fast food stalls, drugstores, and newsstands are allowed in shopping centres over the weekend. The measures will have a significant impact on employment. How specifically? [1]
In our opinion, the employers concerned can be divided into two groups:
Employers where employees’ representatives are active have the possibility to conclude a written agreement with employees’ representatives defining the serious operational reasons due to which the employer will not be able to assign work. In such a case, the employer can then apply the agreement and refer to obstacles on the part of the employer, where the employee is entitled to wage compensation of at least 60% of his/her average earnings (or as agreed with employees’ representatives, however at least 60%).
However, such an agreement with employees’ representatives cannot be replaced by a unilateral decision of the employer (for example, as is the case in the Czech Republic).
Serious operational reasons may include, for example, a situation in which in one shift more than half of the employees do not commence the shift for a variety of reasons (e.g. leave to take care of a sick relative, sick leave, mandated quarantine, etc.) and the rest of the shift due to the small number of employees will not be able to operate various equipment, the employer will thus not be able to assign work to the employees present and may apply the agreement with the employees’ representatives. Similarly, a situation in which the closure of operations is ordered directly by the State may be considered a serious operational reason.
Employers where employees’
representatives are not active cannot assign work due to other obstacles on the part of the
employer, but they have the right to send their employees home, providing them
with wage compensation equal to 100% of their average earnings.
[1] Z dôvodu časovej tiesne tento text nie je komplexným ani detailne odôvodneným posúdením právnej úpravy prekážok v práci. Zamerali sme sa výlučne na praktické dopady situácie pre zamestnávateľov a zamestnancov.
Authors: Štěpán Štarha, Ondřej Majer, Ján Kapec
Coronavirus is now the biggest topic affecting our entire society. It concerns not only all areas of our lives, but also all areas of law. In previous newsletters, we have already informed you about the impact on industrial relations and advised you on how to proceed in relationships with employees. Now, we would like to help you understand the legal impact on your supplier-customer contractual relationships. Below are brief answers to four basic questions that clients have been asking us in the recent days and hours. Also, remember that coronavirus is no longer an unforeseeable fact and it is advisable to include it when concluding contracts. At the same time, as is always the case with contracts, the parties can negotiate a number of matters differently from the law in the contract, so it is always necessary in each case to look directly at a specific contract and not follow only general recommendations.
Can coronavirus be a reason for reducing or increasing the agreed price?
The consequences of coronavirus, or measures associated with it, can be manifested both on the sides of suppliers and customers. For example, the supplier will have to change the shipping method of its products, thereby increasing its costs. The advertiser for a sporting event that is held without audience participation will not achieve the expected purpose of the agreed advertising performance. Does the party affected by the negative consequences of coronavirus have to bear the consequences by itself, or may it request a reduction or increase in the price agreed in the contract?
Slovak legislation does not recognise a statutory provision that would allow the affected party, in the event of a substantial change in circumstances, to unilaterally change the terms of the contract, including a reduction or increase in the agreed price, as the new Czech Civil Code allows subject to meeting certain conditions (a so-called “hardship clause”). In general, it can therefore be stated that the affected party cannot unilaterally increase or reduce the agreed price without fulfilling other conditions.
On the other hand, the exercise of rights and obligations must not be contrary to good morals, or contrary to the principles of fair trade, and no one may abuse his or her rights against the interests of others, and no one may enrich himself/herself to the detriment of others. The terms ‘good morals’ and ‘fair trade’ are not defined by law, as a result of which they provide a relatively broad scope of application, as well as broad judicial discretion. When alleging good morals / fair trade, it is necessary to consider whether and to what extent any of the parties to the legal relationship alleging conflict with good morals / fair trade has exerted a sufficient degree of diligence and foresight when entering into a particular legal relationship.
It is apparent from the relevant case law that the application of the corrective “good morals” or “fair trade” must not, in a particular case, undermine the principle of legal certainty (security) of civil relations, and must not unduly undermine the subjective rights of the parties under the rule of law.
Therefore, if the consequences of coronavirus, or the measures associated with it, caused objective inequality between individual parties with regard to their position at the conclusion of the contract, based on which one of the parties, in order to protect its position, requested a change in the agreed price, the argumentation of the above institutes of good morals / fair trade could be taken into consideration. However, as Slovak legislation, unlike the legislation of neighbouring countries, does not provide for a hardship clause, or any other statutory provision allowing a unilateral amendment to contractual terms, including a reduction or increase in the agreed price, according to our information, the application of good morals / fair trade in connection with a change in the agreed price has not been established in Slovak case law.
Can coronavirus be a reason to justify failure to fulfil contractual obligations?
Coronavirus, or the measures associated with it, may justify the failure to fulfil obligations under contracts if they constitute so-called force majeure. Claims and procedures will vary depending on whether or not your contract contains a force majeure clause, and at the same time, how precisely this clause is formulated in the contract, to which unfortunately parties do not often pay much attention when concluding contracts.
The contract may contain a clause under which one or both parties shall not be in delay with the performance of the contract if the event of force majeure occurs. It is a term that normally refers to situations of war, disasters, flood and, last but not least, epidemics. The term force majeure is then precisely defined in the contract and the contract also provides for the consequences of force majeure and how the parties are to proceed in the event of force majeure (e.g. it stipulates the obligation to notify or to take certain measures so that the fulfilment can take place, even under difficult conditions). It is therefore necessary in each individual case to assess, on the basis of a contractual definition of force majeure, whether the occurrence of a coronavirus pandemic or coronavirus, for example in conjunction with governmental measures or generally only governmental measures, fulfil the definition contained in the contract. However, the fulfilment of the definition of force majeure alone is not sufficient. It is necessary that the obstacle in the form of coronavirus, or related governmental measures, is the cause of failure to perform in a proper and timely manner. For example, a car parts manufacturer cannot justify a delay in supply with reference to coronavirus, unless the government orders the closure of plants or a substantial part of its employees are quarantined or ill. The affected party is not in delay, i.e. it does not breach the contract, if:
If the affected party does not breach the contract as a result of fulfilling the above conditions, the other party is not entitled to withdraw from the contract (unless agreed in the contract) or claim damages or a contractual penalty.
Even if the contract does not contain a clause that excludes delays in the event of force majeure, force majeure is relevant in the contractual relationship. The Commercial Code provides for force majeure (using the term “a circumstance excluding liability”), unless the contract stipulates otherwise, in its Section 374. This provision implies that if a party has been prevented from fulfilling an obligation by an unforeseeable, unavoidable and insurmountable obstacle that has occurred irrespective of the party’s will, such a party is not obliged to compensate for damage. Obviously, an obstacle in the form of coronavirus has occurred independently of the obliged party’s will, since the obliged party could not have objectively influenced the occurrence of coronavirus and the related governmental measures. The condition of unforeseeability will have to be assessed in the light of the time of conclusion of the contract, i.e. whether at that time the spread of coronavirus and its consequences were reasonably foreseeable. Also, the unavoidability and insurmountability of an obstacle in the form of coronavirus should be assessed on a case-by-case basis. If, however, the barrier in the form of coronavirus occurred only at a time when the obliged party was in delay with its performance, or the contract contained its own definition of an obstacle that coronavirus or the measures associated with it did not fulfil, or the contract imposed an obligation to overcome such a type of obstacle, the party affected by the obstacle would not be released of the obligation to compensate for the damage. It should be emphasised that although the party affected by the obstacle is not liable for the damage, by its failure to perform it breaches the contract (unless it is impossible to perform – see below) and must therefore take into account all the consequences associated with it, such as the possibility of contract withdrawal by the other party (see below) or the obligation to pay a contractual penalty. This is in contrast to cases where due attention has been paid to the preparation of the contract and the contract thus contains an appropriately formulated force majeure clause that also addresses the effects on the withdrawal or a contractual penalty.
Can coronavirus be a reason for extinguishing contractual obligations?
Governmental measures that prohibit a wide range of activities may cause an obligation under the contract to extinguish due to the impossibility of its performance (so-called additional impossibility of performance). However, this is only provided that the performance cannot be provided even under more difficult conditions, at higher costs, with the help of another person, or after the agreed period of time. The same would be true if the obliged party was aware when concluding the contract that the creditor would not have an economic interest in late performance, unless the other party, without undue delay after becoming aware of the impossibility of a part of the performance, would notify the obliged party that it insists on the remainder of the performance. If, for example, a cultural event is prohibited in taking place of which, at a later date, the other party is not interested to the knowledge of the obliged party at the time the contract is concluded, and the other party does not even insist on an alternative date, there occurs the event of impossibility of performance and a contractual obligation extinguishes. However, the impossibility of performance would not be the case if the entrepreneur on his or her own initiative, for preventive reasons, decided, for example, to interrupt production in his or her plant. The obliged party is obliged to notify the other party without undue delay after becoming aware of a fact that makes the performance impossible. If consideration has already been paid for the performance that has not been provided, it must be refunded. Since in the case of coronavirus, the party has not caused the impossibility of performance, it will not be obliged to compensate the other party for the damage caused thereby, unless the damage is caused to the other party by being informed late about the impossibility of performance.
Another possibility that can in this context be taken into account in relation to the termination of a contract is a situation where, as a result of a substantial change in the circumstances in which the contract was concluded, the essential purpose of the contract which was expressly stated therein is frustrated. In such a case, under Section 356 of the Commercial Code, the party concerned may withdraw from the contract due to the frustration of the purpose of the contract. Therefore, if the essential purpose of the contract has been frustrated as a result of coronavirus and related measures (provided that it has been expressly stated in the contract), the obliged party may withdraw from the contract for this reason. The party that has withdrawn from the contract in this way is obliged to compensate the other party for the damage it has suffered, which should be borne in mind when terminating the contract due to the frustration of its purpose. However, the applicability of the provision in question will always have to be assessed on a case-by-case basis, in particular with regard to the question whether coronavirus, taking into account all the individual circumstances of the particular case, constitutes a substantial change in circumstances or whether the essential purpose of the contract has been frustrated.
If a party is in delay in performing its obligation under the contract as a result of coronavirus and this is not the case of impossibility of performance or the contract does not exclude delay due to force majeure, the other party has the right to withdraw from the contract under the terms agreed in the contract. If the contract does not provide for withdrawal, the other party may withdraw from the contract after providing an additional reasonable period for performance in the case of a minor breach of the contract, or without undue delay in the case of a material breach of the contract.
Does coronavirus affect international transport and the import and export of goods to/from the Slovak Republic?
According to current information, which is changing by the moment, the transport restrictions introduced do not apply to imports and supplies, i.e. do not apply to international transport by trucks, trains and vessels. However, in view of the introduction of border controls and the closure of smaller border crossing points, it cannot be ruled out that the measures taken will have some effect on the speed and fluency of transport and, for example, on the delay in the supply of goods with the consequences described above.
In this context, we would also like to draw your attention to the measures under which truck drivers must wear respirators when loading and unloading goods, to minimize direct contact with workers of foreign shipper/recipient of goods and be equipped with rubber gloves and hand disinfectant. We believe that we have helped you to obtain at least a basic overview of the impact of the current measures on your contractual relations, and we firmly believe that this impact will be minimized. We will keep you informed about any news that might be of interest to you and could help you in the current situation.
Authors: Robert Nešpůrek, Štěpán Štarha
Coronavirus is now the biggest topic that stirs our entire society. It concerns not only all areas of our lives, but also all areas of law. In previous newsletters, we have already informed you about the impact on labour relations and advised you on how to proceed in relationships with employees. Now, we would like to help you understand the legal impact on your supplier-customer contractual relationships. Below are brief answers to four basic questions that clients have been addressing to us in recent days and hours. Also, remember that coronavirus is no longer an unforeseeable fact and it is advisable to include it when concluding contracts. At the same time, as is always the case with contracts, the parties can negotiate a number of matters differently from the law in the contract, so it is always necessary in each case to look directly at a specific contract and not follow only general recommendations.
Can coronavirus be a reason for reducing or increasing the agreed price?
Consequences of coronavirus, or measures associated with it, can be manifested both on the sides of suppliers and customers. For example, the supplier will have to change the shipping method of its products, thereby increasing its costs. The advertiser for a sporting event that is held without audience participation will not achieve the expected purpose of the agreed advertising performance. Does the party affected by the negative consequences of coronavirus have to bear the consequences by itself, or may it request a reduction or increase in the price agreed in the contract?
In general, the affected party cannot proceed to unilaterally increase or reduce the agreed price without fulfilling other conditions. However, the situation is different if
In such a case, the party affected by the disproportionate performance under the contract may request the other party that the contract negotiations be resumed. It must do so within 2 months of the date on which it became aware of the change in circumstances leading to a particularly gross disproportion in the performance. If the parties do not agree on an amendment to the contract within a reasonable time, either of them may refer to the court. The court may at its own discretion amend or even cancel the contract. However, as long as negotiations or court proceedings to amend the contract are pending, the affected party must perform as originally agreed in the contract.
Unfortunately, the described procedure under Section 1765 or, as the case may be, under Section 2620 of the Civil Code is not available to the party that has assumed the risk of a change in circumstances in the contract. In other words, if the parties have agreed in the contract that said provisions of the Civil Code shall not apply and none or any of the parties shall have the right to renegotiate the terms of the contract in the event of a change in circumstances. Therefore, if you are considering applying this procedure, you should check out first whether your contract contains such an arrangement. We know from our practice that the provisions of the Civil Code were very often excluded in contracts.
Can coronavirus be a reason to justify failure to fulfil contractual obligations?
Coronavirus, or the measures associated with it, may justify the failure to fulfil obligations under contracts if they constitute so-called force majeure. Claims and procedures will vary depending on whether or not your contract contains a force majeure clause, and at the same time, how precisely this clause is formulated in the contract, to which unfortunately the parties do not often pay much attention when concluding contracts.
The contract may contain a clause under which one or both parties shall not be in delay with the performance of the contract if the event of force majeure occurs. It is a term that normally refers to situations of war, disasters, flood and, last but not least, epidemics. The term force majeure is then precisely defined in the contract and the contract also provides for the consequences of force majeure and how the parties are to proceed in the event of force majeure (e.g. it stipulates the obligation to notify or to take certain measures so that the fulfilment can take place, even under difficult conditions). It is therefore necessary in each individual case to assess, on the basis of a contractual definition of force majeure, whether the occurrence of a coronavirus pandemic or coronavirus, for example in conjunction with governmental measures or generally only governmental measures, fulfil the definition contained in the contract. However, the fulfilment of the definition of force majeure alone is not sufficient. It is necessary that the obstacle in the form of coronavirus, or related governmental measures, is the cause of failure to perform in a proper and timely manner. For example, a car parts manufacturer cannot justify a delay in supply with reference to coronavirus, unless the government orders the closure of plants or a substantial part of its employees are quarantined or ill. The affected party is not in delay, i.e. it does not breach the contract, if:
If the affected party does not breach the contract as a result of fulfilling the above conditions, the other party is not entitled to withdraw from the contract (unless agreed in the contract) or claim damages or a contractual penalty.
Even if the contract does not contain a clause which excludes delays in the event of force majeure, force majeure is relevant in the contractual relationship. The Civil Code provides for force majeure, unless the contract stipulates otherwise, in its Section 2913(2). This provision implies that if a party has been prevented, whether temporarily or permanently, from fulfilling an obligation by an exceptional unforeseeable and insurmountable obstacle that has occurred irrespective of the party’s will, such a party is not obliged to compensate for damage. Coronavirus with its international dimension is certainly an exceptional obstacle. The condition of unforeseeability will have to be assessed in the light of the time of conclusion of the contract, i.e. whether at that time the spread of coronavirus and its consequences were reasonably foreseeable. Also, the insurmountability of a barrier in the form of coronavirus should be assessed on a case-by-case basis. If, however, the barrier in the form of coronavirus occurred only at a time when the obliged party was in delay with its performance, or the contract contained its own definition of a barrier that coronavirus or the measures associated with it did not fulfil, or the contract imposed an obligation to overcome such a type of obstacle, the party affected by the obstacle would not be released of the obligation to compensate for the damage. It should be emphasised that although the party affected by the obstacle is not liable for the damage, by its failure to perform it breaches the contract (unless it is impossible to perform – see below) and must therefore take into account all the consequences associated with it, such as the possibility of contract withdrawal by the other party (see below) or the obligation to pay a contractual penalty. This is in contrast to the cases where due attention has been paid to the preparation of the contract and the contract thus contains an appropriately formulated force majeure clause that also addresses the effects on withdrawal or contractual penalty.
Can coronavirus be a reason for extinguishing contractual obligations?
Governmental measures that prohibit a wide range of activities may cause an obligation under the contract to extinguish due to the impossibility of its performance (so-called additional impossibility of performance). However, this is only provided that the performance cannot be provided even under more difficult conditions, at higher costs, with the help of another person, or after a specified period of time. The same would be true if the parties were aware when concluding the contract that the creditor would not have an economic interest in late performance. If, for example, a cultural event is prohibited and cannot be held even on an alternative date, there occurs the event of impossibility of performance and a contractual obligation extinguishes. However, the impossibility of performance would not be the case if the entrepreneur on his own initiative, for preventive reasons, decided, for example, to interrupt production in his plant. The other party must be informed of the impossibility of performance without undue delay. If consideration has already been paid for the performance that has not been provided, it must be refunded. Since in the case of coronavirus, the party has not caused the impossibility of performance, it will not be obliged to compensate the other party for the damage caused thereby, unless the damage is caused to the other party by late informing about the impossibility of performance.
If the party has failed to fulfil its obligation due to coronavirus in a due and timely manner and this is not the case of impossibility of performance or the contract does not exclude delay due to force majeure, the other party has the right to withdraw from the contract under the terms of the contract. If the contract does not provide for withdrawal, the other party may withdraw from the contract after providing an additional reasonable period for performance in the case of a minor breach of the contract, or without undue delay in the case of a material breach of the contract.
Does coronavirus affect international transport and the import and export of goods to/from the Czech Republic?
According to current information, which is changing at any moment, measures to restrict cross-border movement do not apply to international transport by trucks, trains and vessels. However, it cannot be ruled out that the measures taken will have some effect on the speed and fluency of transport and, for example, on the delay in the supply of goods with the consequences described above.
For example, in Slovakia, which has adopted/notified the appropriate measures already on Thursday, truck drivers must wear respirators when loading and unloading goods, to minimize direct contact with workers of foreign shipper/recipient of goods and be equipped with rubber gloves and hand disinfection.
In addition, there are, of course, also earlier measures in place, prohibiting (with a few exceptions) the export of respirators and disinfectants from the Czech Republic abroad. We believe that we have helped you to obtain at least a basic overview of the impact of the current measures on your contractual relations, and we firmly believe that this impact will be minimized. We will keep you informed about any news that might be of interest to you and could help you in the current situation.
Authors: Jan Koval, Veronika Plešková
The Czech government declared a state of emergency on Thursday. In this context, a crisis measure has been issued with a view to limiting concentrations of large numbers of people, and a crisis measure relating to restrictions on transportation. Both these measures will significantly affect employment. How specifically?1
The affected employers can be divided into two groups:
We are of the view that secondarily affected employers will have recourse to the partial unemployment clause under Section 209 of the Labour Code, stipulating that when an employer is unable to assign employees to work due to temporary limitation in the sales of that employer’s goods or reduction in the demand for that employer’s services, such situation constitutes what is referred to as “another obstacle on the employer’s part”. Based on a written agreement with the trade union organisation the employer may agree that compensation for salaries to employees will be temporarily reduced for the duration of partial unemployment; however, the compensation must amount to at least 60% of average earnings. In workplaces with no active trade union organisation the employer may apply equivalent rules by means of an internal bylaw.
This, however, is the last piece of good news for employers. Indeed, the regime of partial unemployment is unavailable to primarily affected employers.
We have noticed views that the simplified procedure applicable to obstacles for work under Section 207 of the Labour Code should be applied:
Although we do wish on behalf of all employers that this legal qualification applied as it allows reducing the compensation for salary to a reasonable amount without the involvement of the trade unions and thus to overcome the most sensitive period of large financial losses, we are of the opinion that it does not have any legal support in the Labour Code.
This is due to the fact that the government decision regarding the adopted measures is neither an unexpected technical obstacle constituting an idle time, nor a sudden effect of natural elements. In simple words, the Labour Code does not provide for the state of emergency in which our country currently is. Hence, the only applicable obstacle remains an obstacle for work on the part of the employer, with the employees’ entitlement to compensation for salary in the amount of 100% of average earnings.
All the adverse impacts have thus been put upon the shoulders of employers. Although, humanly, we do quite understand the undertaken measures, we nonetheless believe that this situation necessitates debate on a legislative change such that the Labour Code will provide for, at least, states of emergency and employers will be able to better overcome the resulting difficulties.
Employers might find consolation in a legislative draft currently under preparation by the Ministry of Labour and Social Affairs which, if adopted, should to some extent compensate them for their financial losses.
(1) Due to lack of time, this text should not be read as a comprehensive or thoroughly substantiated assessment of the statutory provisions applicable to obstacles for work. We have only focused on the impacts of the current situation on employers and employees.
Authors: Jan Koval, Štěpán Štarha, Zuzana Hargašová
Due to an increasing number of questions and growing concerns, we would like to remind you of the possibilities that the Labour Code offers to employers under these situations, and to recommend measures that might be reasonable to take.
In particular, we recommend monitoring the www pages of the Public Health Authority (here), the Ministry of Health (here), and also the Ministry of Foreign Affairs (here) carefully, where you can find the latest information. It would be appropriate to inform your employees about this too, and to emphasise that you are watching the situation carefully, and you are ready to respond immediately by taking appropriate measures should the situation get worse. In addition, of course, we recommend staying calm and keeping a matter-of-fact approach to the situation, not supporting the spread of fear.
Prevention first
COVID-19 and/or coronavirus is a viral disease so the infection could be prevented by typical measures, such as:
The employer must enforce general prevention principles in taking measures required for ensuring the safety and protection of health at work. The general prevention principles include the exclusion of danger and risks resulting therefrom, such as the assessment of risks that cannot be excluded. The employer is thus obliged to assess the risk carefully and, based on the results, to take and perform the necessary measures to ensure the protection of health of its employees. Such measures include cancellation of business trips, cancellation of teambuilding events and any social events, ordering medical examination, and closing the whole workplace or any part thereof.
In this connection, it is also appropriate to limit temporarily all scheduled business trips to foreign countries, withdraw employees who have been sent abroad on a long-term basis, especially to areas that appear as high-risk. If your company is often visited by clients or business partners from foreign countries, consider limiting such contacts, at least for a temporary period of time.
What about travellers?
Italy, especially its northern regions, is currently one of the sources of the infection. Do you have the right to ask your employees to cancel a scheduled and approved leave or to report any visit to that region?
The employer is entitled to cancel scheduled and approved leave and/or change the time of taking such a leave, or to withdraw the employee from the leave, however, the employer must cover the costs incurred by the employee in this respect. Before taking such a radical step, we recommend discussing the leave with the employee and possibly agreeing on solving the situation after their return (see one of the possibilities below). As for the employee´s holiday destination, you, as the employer, are not entitled to inquire that, although the employee may, but does not have to, inform you. In the present situation, it seems appropriate to ask employees to inform the employer if they are about to visit Italy or any other high-risk destinations.
According to the measure taken by the Public Health Authority of the Slovak Republic, all persons having temporary or permanent residence in the Slovak Republic, living in the Slovak Republic for more than 90 days, or working in the Slovak Republic, who have returned from China, Korea, Iran or Italy to the Slovak Republic since 10 March 2020, are obliged to inform a doctor by phone or by e-mail immediately after their return.
Does the employer have to be proactive?
The employer is not entitled (or obliged) to “screen” where their employees spend their holidays, and the employee may, but does not have to, inform the employer. However, due to the seriousness of the situation, and in terms of prevention, we recommend that you:
Quarantine
Quarantine may be ordered only by a medical practitioner, the employee being entitled to receive sickness benefit as in the case of temporary incapacity for work. This may not be decided by the employer. The employee is not entitled to receive sick pay for that period of time.
In case of ordered quarantine, the employer must excuse the absence of the employee during quarantine within the meaning of Section 141(1) of the Labour Code. The employee is obliged to prove the quarantine order to the employer in a reliable way. The competent facility must confirm the proof of the existence of an obstacle to work and its duration for the employee; otherwise the employer might assess the employee´s absence as unexcused absence and/or draw other legal consequences therefrom.
The conditions and extent of financial assistance to the employee during quarantine are regulated by Act No. 461/2003 Z. z., the Social Insurance Act, as follows:
From the eleventh day, if the absence of income is expected, the employee is entitled to receive sickness benefit paid by the Social Insurance Agency amounting to 55% of the daily assessment basis.
What if the employee wants to work but the employer does not agree?
Closed schools and kindergartens – what about parents?
The employer must excuse the absence of the employee taking care of children under ten years of age that cannot be at school or in a kindergarten because they have been closed, or if a personwho normally takes care of the child has become ill or has been ordered into quarantine. The nursing benefit amounts to 55% of the daily assessment basis or probable daily assessment basis.
We believe the information above will help you manage the current situation.
In case of any other questions, our labour-law team is ready to help you!
Authors: Jan Koval, Veronika Plešková
The situation around the Coronavirus outbreak in Europe has worsened since out last issue of Employment Flash newsletter. In response, the Ministry of Health of the Czech Republic issued two emergency measures in the last few days which will affect you as employers.
What do they deal with?
Does the employer have to act actively?
The employer is not entitled (or obliged) to check where the employees spent their holidays. However, considering the seriousness of the situation, and as a part of the prevention, we recommend:
How do the measures of the Ministry of Health affect employers?
We will keep monitoring the situation and in case of any significant changes we will inform you in good time. Our labour team will be happy to answer any other questions.
Our labour team will be happy to answer any other questions.
—
1 I.e. citizens of other countries with permanent or temporary residence in the Czech Republic (more than 90 days), or persons only employed in our territory (applies particularly to border areas).
2 If they do not have one, they can fulfil their obligation at any medical practitioner for adults/children and youth.
3 Persons who have been provably infected with SARS-CoV-2, or persons who came into contact with these persons.
4 The reason is the need to keep a record of the number of persons potentially infected with Coronavirus.
Authors: Jan Koval, Ema Drštičková, Veronika Plešková
Given the growing questions and growing concern in society, we would like to bring up the possibilities offered by the Labour Code to employers in such situations and recommend measures that may be appropriate to take.
We would also like to draw your attention to the steps which may contribute to peace in your company.
Certainly, we do not want to undermine this disease (it is not for lawyers to judge) and we recommend to monitor carefully the web pages of the National Institute of Public Health (here), the Ministry of Health (here), and the Ministry of Foreign Affairs of the Czech Republic (here) where you can find all current information. It would be highly advisable to inform your employees about this and stress that you are closely monitoring the situation and in case of deterioration you are ready to respond immediately by taking appropriate measures. However, we recommend, first of all, maintaining a calm and factual approach to the situation and not to support the spread of fear, as is currently happening in certain sections of the media.
Prevention above all
Coronavirus is a viral disease so classical prevention measures may be applied such as:
It is also appropriate to temporarily limit business trips abroad and, where appropriate, to withdraw employees who have been posted abroad, in particular to areas that appear to be risky. If your company is often visited by clients or business partners from abroad, consider limiting such contacts, at least temporarily. Again, we recommend
that you approach the situation rationally and avoid exaggerated reactions that could, in extreme cases, disrupt your business relationships.
What to do with Italian holidaymakers?
Italy, especially its northern regions which are very popular for skiing and where some of your employees may have been heading, is at the moment one of the sources of outbreaks. Do you have the right to ask employees to cancel their planned and approved holiday or to report a visit to such a region?
The Labour Code does not take such situations into account. With regard to the cancellation of the already planned and approved holiday, the employer is entitled to cancel or change the timing or to withdraw the employee from holiday leave, however, it must cover the costs incurred by the employee in this respect. So, before taking this vigorous step, we recommend that you talk to your employee about their holiday and, if necessary, agree on how the situation will be resolved when they return (see one of the options below).
As for the holiday destination of an employee, you are not entitled to ask as an employer, and the employee may or may not to tell you. In the current situation, however, it seems appropriate to ask employees to notify the employer if they plan to visit the north of Italy or other high-risk destinations.
So, what to do if you find out that one of your employees has returned from or will return from a high-risk destination?
The word ‘quarantine’ is also widely used in relation to coronavirus. Quarantine, as it is known in the Labour Code, can only be ordered by a doctor, and employees are then entitled to sickness benefits as in the case of temporary incapacity to work. It cannot therefore be the employer’s decision.
We believe that the above will help you manage the current situation and will not affect the success of your company in 2020. If you have any further questions, our Employment Law Team is happy to assist you!
HAVEL & PARTNERS and three of the firm’s lawyers have been included in the reputable international research directory World Trademark Review 1000 for the second time in a row. This chart monitors major IP law firms and individual practitioners in more than 80 countries worldwide. The firm’s partners Robert Nešpůrek and Ivan Rámeš and senior associate Tereza Hrabáková are again cited by the publication among the best IP advisory experts.
Ivan Rámeš, the firm’s IP practice group head and one of the awarded practitioners said in this connection: “We are glad that also in 2020 our law firm and its lawyers remain in the most prestigious group of IP experts. This, in our opinion, confirms the high quality of our consistent work in the field of IP and trademarks. This achievement walks hand in hand with the continuous expansion of our team, which would not be possible without satisfied clients and a growing number of interesting matters we deal with not only in the Czech Republic but also internationally. We are happy about the ever-increasing amount of IP work, which is not only thanks to our clients but also because of consistently built cooperation with international law firms.”
HAVEL & PARTNERS’ IP practice group consists of seventeen experienced lawyers making it the largest expert advisory team in this field on the Czech and Slovak markets. Its clients include local companies expanding abroad, major global corporations, entrepreneurs fighting against counterfeiting and also promising technological start-ups dealing with issues of legal protection for innovative ideas. The firm provides its clients with comprehensive services offering protection of IP rights, copyright advice, portfolio management for industrial rights or advice on unfair competition, domain disputes and e-commerce.
None of these achievements would be possible without close cooperation with the firm’s experts in other related practice areas such as competition, corporate, consumer and marketing law and tax advice. This comprehensive and multidisciplinary approach allows HAVEL & PARTNERS to provide their clients with everything needed for effective IP protection from simple tasks such as registration of industrial rights and enforcement to strategic IP advice, including representation in administrative and judicial proceedings.
HAVEL & PARTNERS, the largest independent law firm in Central Europe, has again defended its title of the most sought-after employer among law firms in the TOP Zaměstnavatelé (TOP Employers) survey. Organised annually by the Association of Students and Graduates, the survey ranks employers nominated by university students, i.e. their potential employees, in several categories. A total of 11,491 students submitted their responses for the survey, assessing companies in terms of the work environment, professional training offered, corporate social responsibility and prospects of future high earnings. HAVEL & PARTNERS was also ranked as the best law firm for the fourth time in a row in the special category “Lawyer”, which used to be dominated by international companies.
“It is our exceptional pleasure that we remain the law firm of first choice for students at faculties of law. Once they start working at our firm, we try to offer them extensive options for professional development, access to in-house know-how and promotion. Let me thank all the students for their participation in the survey and I look forward to our future cooperation,” said managing partner Jaroslav Havel in response to the award the law firm had just received.
Even though winning the TOP Employers 2020 survey is a non-legal award, it clearly stands for the firm’s strong brand and its leading position on the legal market. HAVEL & PARTNERS is the largest, most successful and most comprehensive Czech law firm as demonstrated by its compelling long-term results in the prestigious Law Firm of the Year awards. With 220 lawyers and tax advisors, the firm not only provides comprehensive legal advisory but has also extended its portfolio of tax services. It employs about ninety students in six offices in the Czech and Slovak Republics.
Commenting on this year’s results, Josef Hlavička, the partner responsible for human resource management, said: “I strongly believe our significant competitive edge is that we enable our students to be in regular contact and work closely together with experienced senior lawyers and top experts focusing on individual legal practice and business areas. The students do not have to wait long to work for the most important and most demanding clients. Other reasons why students prefer working at our law firm in the long run certainly include the brand’s stability, its firm position on the market, continuous economic growth and, last but not least, prospects of gradual and swift career growth.”
