Czech Republic

The rules on severance pay in detail

If the employment relationship is terminated with notice or by agreement on the grounds of organisational changes or because of the employee’s incapacity to work due to a work-related injury or industrial illness, the employee is entitled to a severance payment.

In the case of organisational changes, the amount of the severance payment will depend on length of service, as follows:

  • one month’s average earnings if the relationship has lasted less than one year;
  • two months’ average earnings if the relationship has lasted at least one year but less than two years;
  • three months’ average earnings if the relationship has lasted at least two years.

Average earnings are determined based on the gross salary provided for hours actually worked by the employee in the previous quarter.

If the employment relationship is terminated due to the employee’s incapacity to work because of a work-related injury or industrial illness, the employee is entitled to 12 months’ average earnings.

The statutory severance payments are a minimum, and the employer may provide more. This is quite common in the Czech Republic, either in the form of a general redundancy pay scheme or more often, by concluding a termination agreement.

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Author: Randl Partners

Date: December 2019