Amendment to the law tightens conditions for employment agencies

The advantages of agency employment are used by many large companies. Sometimes even at the expense of the assigned employees, who have an unequal position in practice compared to the tribal employees. The approved amendment to the law changes the conditions. Read what the new rules are.

At the end of April 2023, the government approved an amendment to Act No. 435/2004 Coll. on employment and related regulations, which mainly affects employment agencies. Most of the changes are to be effective from the beginning of 2024.

Better protection for agency workers

According to the legislators, agency employment is supposed to be temporary, but in practice many companies overuse it. The amendment therefore introduces measures to encourage employers to take workers directly under their wing after a certain period of time.

Thus, agency workers will now not be able to work for a company for more than 3 years (within a 5-year period). If the company wants to continue working with them after this period, it should offer them the status of core employees.

The change brings more certainty

The position of agency workers is often very precarious. Often they have a fixed-term contract, which is for a "temporary assignment period". Because of this wording, some of them could still lose their jobs overnight. The new legislation prohibits this. Every agency worker must now have a fixed-term contract stating the exact date on which their employment ends.

Assigned employees are also in a worse situation when an employment agency goes bankrupt. Now their unpaid wages are paid by the insurance company from the agency's compulsory insurance only after a long wait. At the same time, tribal employees had better conditions guaranteed by the Employee Protection Act. The amendment abolishes this ineffective insurance and levels the playing field for both groups of employees in this situation.

Stricter conditions for permit holders

In order to reduce cases where an employment agency fails to meet its financial obligations, the amendment introduces additional conditions for obtaining an employment agency permit.

The employment agency must now prove that it is debt-free - the state must not register any arrears with the agency, not only before applying for the permit, but also throughout the duration of the permit. For the application to have a chance of success, the agency must not have a previous "scratch" in the form of a fine for an offence that would be grounds for revoking the permit. At the same time, the State is looking back at least 3 years.

There will also be new situations where the General Directorate of the Labour Office can revoke a permit.

The new legislation also raises the amount of the bond for granting a permit to CZK 1 million to ensure that the state has sufficient reserves to cover any outstanding liabilities of the agency.

The changes will also affect the concept of illegal employment

The amendment to the Employment Act also defines illegal work in more detail. Until now, some companies have employed workers "under the table" beyond the scope of their employment contracts or agreements (typically DPP, i.e. agreements for the performance of work). During an inspection, the employer then claimed that the work was not illegal because the employee did not work for them on a regular basis. And it was difficult to prove that the time frame was exceeded.

The amendment makes such tricks impossible. In general, illegal work is defined as an activity that has the characteristics of dependent work , regardless of its duration.