Employment Litigation from the Employer's Perspective

Why are labor law disputes so dangerous for companies?

Statistics and our long-standing practice show that most disputes are concentrated in three main areas: termination of employment, wage claims, and compensation for damages, typically in connection with work-related injuries.

At ARROWS, we specialize in this area and help companies resolve these situations daily. Our philosophy is that the best dispute is one that never begins. Our Prague-based legal team provides preventive audits and legal consultations that protect companies from future disputes. Want to have your risks assessed? Contact us at consultation@arws.cz.

Deep Dive #1: Invalid Termination of Employment – An Employer's Nightmare

The biggest threat for most employers are disputes over the invalidity of a notice of termination or immediate dismissal. The financial consequences here can be devastating even for an established company.

What are the financial consequences of an invalid notice of termination?

It's not a one-time fine. If a court declares the termination invalid and the employee has stated in writing that they insist on continued employment, you must pay them wage compensation for the entire duration of the dispute.

Court proceedings can drag on for several years. This wage compensation can easily reach millions of crowns, which you must pay in addition to the court costs and legal fees for both parties.

What is "putative" versus "invalid" termination?

Not every mistake has the same meaning. As a manager or HR professional, you must distinguish between two fundamental concepts:

1. Putative act: This is a situation where the legal act (e.g., a notice of termination) never came into existence because it lacks basic requirements, typically written form (you gave notice verbally). From a legal perspective, it is "as if" it never happened, and the employment relationship continues.

2. Invalid act: The act exists (e.g., the notice is in writing), but it suffers from a legal defect. It lacks a statutory reason, you violated a protective period (e.g., sickness), or you delivered it incorrectly.

This act is considered valid until a court authoritatively rules on its invalidity.

Key Risk: The 2-Month Preclusive Period

An employee who wants to challenge the validity of a termination must file a lawsuit with the court within a period of two months from the day their employment was supposed to end.

Here we encounter the technical term "preclusive period." Unlike a statute of limitations, where the court considers an objection, with preclusion (forfeiture of a right), the court takes it into account automatically. If the employee misses this two-month deadline, the court will dismiss the lawsuit, even if your termination was one hundred percent contrary to the law. It is a race against time that requires an immediate legal strategy on both sides.

Are you facing a lawsuit for invalid termination? The lawyers at ARROWS are ready to represent you immediately and review all procedural and substantive aspects. For an immediate solution, write to us at consultation@arws.cz.

Where do employers most often make mistakes? Procedural errors that lose disputes

Many employers focus on the reason for termination but forget that the court first examines the process. This is precisely where fatal errors occur.

Why is delivery so crucial?

You can have a perfectly justified termination for a gross breach of duties, but if you deliver it incorrectly, the court will not even consider the reason and you will automatically lose the dispute.

The Czech Labour Code sets out very strict and hierarchical rules for the delivery of key documents (notice of termination, immediate dismissal, but also a wage assessment). The priority is always personal delivery to the employee at the workplace. Only if this is not possible does delivery by post, data box, or email come into consideration, with each of these methods having its own specific and strict rules.

What is "fiction of delivery" and what are its rules?

If you send a notice of termination by post (as a last resort), you must follow a strict procedure. If the employee does not collect the shipment within the 10-day collection period, the document is considered delivered on the last day of this period (the so-called "fiction of delivery").

But beware: you must be able to prove in court that you sent the shipment to the correct address where the employee resides and that they were properly informed of the consequences of not collecting it.

The ARROWS team will prepare internal delivery guidelines for you and provide expert training for your HR department to help you avoid these fatal mistakes. Order a training session at consultation@arws.cz.

Other costly disputes: Wages, work injuries, and discrimination

Although terminations are the most common, financial risks also lurk in other areas of a company's daily operations.

Disputes over wage claims: Are you sure you are paying everything correctly?

This is not just about situations where you owe basic wages. Disputes are very common over the correct payment of overtime, supplements for night or weekend work, travel expense reimbursements, or the validity of a non-compete clause and the amount of severance pay. If a company becomes insolvent, employees can claim their outstanding wage claims from the Labour Office or register them in insolvency proceedings.

ARROWS conducts reviews of internal wage regulations, bonus schemes, and management contracts to prevent future disputes over remuneration. Do not hesitate to contact our office – consultation@arws.cz.

Work injuries: Your liability is almost absolute

An employer is liable for damages in the event of a work injury, even if they have complied with all health and safety regulations. It is only possible to be absolved of this liability (so-called liberation) in very exceptional cases (e.g., the employee's intoxication).

You have three key obligations: record-keeping (maintaining an injury log), reporting (reporting injuries to the insurance company, SÚIP, and other authorities), and compensation (paying for pain and suffering, impairment of social functioning, etc.). Errors in recording and reporting can result in a fine from the State Labour Inspection Office (SÚIP) of up to CZK 400,000, in addition to compensation claims from the employee.

Disputes over discrimination and unequal treatment

The Czech Labour Code strictly prohibits any discrimination, for example, on the grounds of gender, age, race, religion, or sexual orientation.

Be aware, it doesn't have to be just direct discrimination ("this is a man's job"). Much more insidious is indirect discrimination: you set a seemingly neutral rule (e.g., "language courses are only for full-time employees"), which ultimately disadvantages a protected group (in this case, predominantly mothers working part-time).

How does a court dispute proceed? The key role of the burden of proof

Many managers enter the courtroom convinced that "the law is on their side." In labor law disputes, however, it is more complicated.

Why do you have to prove your innocence?

In a standard civil dispute, the plaintiff (the one who sues) must prove their claims. In labor law, however, it is very often the other way around. The employee is considered by law to be the weaker party in the relationship. For this reason, in most key disputes, the law shifts the burden of proof to the employer.

Therefore, in court, the employee does not have to prove that your termination was unjustified. You must prove to the court that it was justified. You must present clear, specific, and timely evidence (warning letters, testimonies, records) that the employee actually breached their duties.

What does this mean for your business practice?

You must have a perfect administrative system. Dealing with problematic employees requires a precise procedure: written warnings (reprimand letters), clear evidence of the breach, all properly delivered and filed. Without this documentation, the chance of success in court is minimal.

How does ARROWS prepare clients for court proceedings?

Our lawyers focus not only on legal paragraphs but primarily on collecting and preparing evidence that will stand up in court. We represent clients in all phases of the proceedings, from the preparatory hearing to a possible appeal or extraordinary remedies, such as an appeal to the Supreme Court.

Our lawyers are ready to represent you and prepare a defense strategy based on strong evidence. Contact us at consultation@arws.cz.

Procedural and Substantive Risks in Disputes

Labor disputes with an international element: The new reality of global teams

Do you have employees working remotely from abroad or do you send workers on projects within the EU (so-called posting of workers)? Then you face a whole new level of legal risks.

Which law applies and which court has jurisdiction?

Many companies mistakenly believe that if they have a clause in their employment contract stating "This relationship is governed by Czech law," they have won. European regulations (like Rome I for the choice of law and Brussels Ibis for the jurisdiction of courts) protect the employee as the weaker party.

An employee can often sue you in the country where they usually perform their work, regardless of your company's headquarters. The local court may then also apply local protective mandatory rules (e.g., local minimum wage or rules for termination), regardless of what you have agreed upon in the contract.

Why is ARROWS International your partner?

Thanks to our ARROWS International network, built over ten years, we handle labor law cases with an international element on a daily basis. We ensure that your international employment contracts comply not only with Czech law but also stand up in the context of European regulations and local laws in the countries where your people operate.

Do you need to prepare an international employment contract or are you dealing with a dispute with an employee abroad? Connect with us at consultation@arws.cz and leverage our international network.

The best dispute is one that never starts: Prevention from the ARROWS perspective

Most of the disputes we handle in court could have been prevented with one step: precise and up-to-date documentation. The investment in prevention is a fraction of the costs you will pay for a single lost court case.

What can ARROWS do for you in terms of prevention?

• Preparation and review of employment contracts: We will ensure that your contracts (including agreements to complete a job/perform work - DPP/DPČ) have a correctly defined type and place of work, clear wage agreements, and valid non-compete clauses.

• Creation of internal regulations: We will prepare robust work regulations and internal policies for you (e.g., for health and safety, home office, use of AI, or document delivery) that will give you legal certainty.

• Expert training: We will train your managers and HR department on how to correctly handle disciplinary issues, how to conduct job interviews in compliance with the law, and how to properly deliver documents. Successful graduates will receive a certificate.

Why entrust your labor law matters to ARROWS?

We understand the law, but above all, we understand business. Our lawyers don't just think in terms of legal paragraphs, but in solutions that save your company time and money.

Our experience speaks for itself: We have been providing long-term legal services to more than 150 joint-stock companies, 250 limited liability companies, and 51 municipalities and regions. We pride ourselves on speed and high quality. We know that labor law can't wait. And what's more – we actively seek business opportunities for our clients and are happy to connect them with each other. We would also be glad to hear your business ideas.

Conclusion: Don't handle labor disputes on your own

Labor law disputes are complex, financially costly, and procedurally demanding. The burden of proof is almost always on you, and a small administrative error can lead to fatal financial consequences.

Whether you are facing an urgent lawsuit or want to finally set up a prevention system that really works, the team of labor law experts at ARROWS is at your disposal. Connect with us today at consultation@arws.cz and schedule a consultation that will protect your business.