About Advantages and Disadvantages of Salary Statement

A salary statement as such is a unilateral legal act of the employer. The employee does not have to agree with its change at all. These two methods of determining the amount of salary are often being confused in practice because the employee usually signs also a salary statement.[1]

While the employee´s signature of an amendment to an Employment Contract is a necessary condition without which the amendment of an Employment Contract is not effective, signature on a salary statement always declares only that the employee was properly acquainted with a new salary statement, not the fact the employee agrees with that.

When determining the amount of salary based on a salary statement the Labour Code requires only that the employer informs the employee of such new salary statement, latest on a day when the change of salary becomes effective (Section 113 (4) of the Labour Code). If the employee is not acquainted with a salary statement on this decisive day, no increase or decrease can be applied. 

In everyday practice of most employees it is possible to encounter cases when the employee refuses to take over a new salary statement because he/she thinks he will prevent from decrease (or increase) of salary by such avoidance behaviour. 

The above described acting may seem to be problematic for the employer but the situation has a very simple solution. The employee whom a salary statement is delivered at a workplace, in compliance with Section 334 (1) of the Labour Code, will be asked to take over a new salary statement. In case the employee refuses the takeover, it will apply he/she thwarted delivery of a document and such a document will be considered ipso jure as delivered (the employee does not have to be instructed about this consequence in contrast to delivery by mail).

In necessary, the employer must be ready to prove the delivery of a document to the employee, eventually the fact the employee refused to accept the document (usually in case of a litigation or audit by the Labour Inspection).[2]

In case the employee refuses to confirm the takeover by his/her signature, it is recommended to obtain signatures of at least two attending witnesses confirming the fact the affected employee refused to take over a document. It is possible to prevent in this manner from many complications in the future when negotiating with courts or inspection authorities of the Labour Inspection.

How employers complicate their lives for nothing 

As indicated above, the unquestionably biggest advantage of a salary statement is that the employer can treat the amount of salary freely without the employee´s consent and adjust it at the employer´s own discretion and needs (while following a ban of discrimination in the salary field, in compliance with Section 110 of the Labour Code).

However, there are many cases in practice when the wording of an Employment Contract states that: “Salary is determined based on a salary statement forming an integral part of an Employment Contract”. The phrase “integral part” causes that a salary statement ceases to be a unilateral legal act of the employer and becomes an agreement which amendment requires a bilateral consent. 

In such case the employer exposes itself to various risks of e.g. losing a possible litigation concerning additional salary payment to the employee because a court will probably pronounce that salary decrease specified in a salary statement was ineffective as the employee did not agree with that.  

The above-mentioned conclusions, though not held by the Supreme Court in practice yet, result from an investigation report of JUDr. Pavel Varvařovský, Ombudsman, as of 25 June 2012, file No. 6167/2011/VOP/EHŠ, and are accepted by the expert public without any reservations.  

Conclusion

The purpose of this article was mainly to draw the employers´ attention to the attractiveness of a salary statement and also warn of injudicious formulations which occur often in practice and complicate the employers the usage of an otherwise trouble-free institute which a salary statement is, for sure. 

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[1] Supreme Court judgement as of 28 June 2005, file No. 21 Cdo 2449/2004.
[2] Bělina, M., Drápal, L. a kol.: Zákoník práce. Komentář. 2^nd edition. Praha: C. H. Beck, 2015, p. 1365.