Unpaid leave - a risk for employers?
However, as it now turns out, this practice can be very risky, so I recommend that all employers read the example below carefully.
Author of the article: ARROWS ( Mgr. Jakub Oliva, LL.M., MSc., office@arws.cz, +420 245 007 740)
This article was written in 2022. If you are looking for up-to-date information on this topic, please feel free to contact us at office@arws.cz or by phone at +420 245 007 740. We will be happy to advise you.
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Unpaid leave is used by every company from time to time. However, fewer companies have written agreements about taking time off. Unpaid leave agreements typically involve dealing with deductions - particularly paying health insurance, but almost no employers include the actual reason for taking unpaid leave in the agreement anymore.
As it happens in the law, judicial decision-making practice can, at the snap of a finger, relegate relatively well-functioning and safe employment law institutions to the category of unreasonable risk. A typical example of this is unpaid leave, which the Supreme Court recently commented on in its judgment in Case No. 21 Cdo 496/2022.
The facts of the case
The case described above occurred during the so-called covid period, when the employer had almost no work for its employee (the driver). In order not to have to terminate the employment relationship, they agreed (verbally) to grant unpaid leave (i.e. without pay), when the driver could and did work for another employer in the meantime. However, the employee subsequently brought a court case, claiming that the employer had transferred its business risk to him in this way and that the oral agreement on unpaid leave was therefore invalid and that the company should pay him back wages.
The court's legal conclusions
The case went all the way to the Supreme Court, which (rather surprisingly) concluded that in this case the agreement on unpaid leave could not have been concluded at all, because there were obstacles on the part of the company (the company could not assign work to the employee due to the pandemic) and the employee should have been entitled to wage compensation under the Labour Code.
For those interested, I quote below the key passages:
"Although the Labour Code does not expressly provide for the possibility for an employer to grant an employee (at his request) leave of absence, if an employee is prevented from working by a (personal) obstacle other than those to which the law links the employer's obligation to excuse the employee's absence from work or to grant leave of absence, the employer may, in accordance with the application of the principle "what is not prohibited is permitted", grant leave of absence (without or with wage or salary compensation) to the employee on the basis of an agreement with the employee [. ..].
The situation is different, however, if the employee cannot perform the work due to obstacles to work on the part of the employer (Art. 207 et seq. of the Labour Code) and if the employee is entitled to compensation for wages or salary for that reason.
Pursuant to the provisions of Section 4a(4) of the Labour Code, the employee may not be required to work or to perform his/her duties. 4 of the Labour Code, if an employee waives a right granted by this Act, a collective agreement or an internal regulation, this shall not be taken into account. In the light of the above, it must be concluded that an arrangement whereby an employee waives the employer's obligation to provide him with wage or salary compensation for a period during which the employee is prevented from carrying out his work due to an obstacle to work on the employer's side and for which he is entitled to wage or salary compensation for that reason is disregarded.
What to take away from the case
In view of these conclusions of the Supreme Court, all employers can be clearly advised that, if they wish to take unpaid leave, they should always conclude an agreement in writing and explicitly include in it the reasons for which the agreement is concluded, where obstacles to work on the part of the company cannot be such a reason, see above. As with any other legal document, it may be advisable to have the unpaid leave agreement prepared by the company's lawyer or an external lawyer. Our employment law specialists will be happy to help you with this.