The rules on severance pay in detail
The amount of statutory severance payable in the Czech Republic depends on two factors, namely:
- grounds for termination of employment; and
- the amount of the employee’s ‘average monthly earnings.’
Grounds for termination
If the employment is terminated on organisational grounds (for the closure or relocation of the employer or for redundancy for organisational reasons), the employee is entitled to severance pay of:
- one month’s average earnings where the employment lasted less than a year;
- twice the average monthly earnings where the employment lasted between one and two years;
- three times the average monthly earnings where the employment lasted for over two years;
- one of the above amounts (depending on the duration of employment) plus three times the average monthly earnings if a so-called ‘long term working hours account’ applies.
If the employment is terminated on health grounds when the employee is no longer able to perform the work because of an accident at work, occupational disease or threat of such a disease, or if the maximum permissible workplace exposure limits have been exceeded, the employee is entitled to severance pay of 12 times his or her average monthly earnings.
The above applies to both unilateral terminations and termination agreements.
Average earnings are determined based on the gross salary provided for hours actually worked by the employee in the previous quarter.
Author: Randl Partners
Date: December 2018