How to dismiss senior managers in the private sector

Authors of the article: Mgr. Jakub Oliva, LL.M., MSc., Mgr. Bc. Kryštof Pažourek, ARROWS advokátní kancelář (office@arws.cz, +420 245 007 740)

The dismissal of senior managers is often associated with the public sector in particular, where senior managers' employment is often by appointment. However, even in the private sector, where the employment relationship is based on a contract of employment, the removal of a manager is not prohibited. In what case and in what way can such a dismissal be made in order to comply with the legal requirements?

When a private sector manager can be dismissed

The dismissal of a senior employee in the private sector is only possible provided that a so-called dismissal clause has been concluded between the employer and the senior employee. This is a contractual arrangement which entitles the employer to remove the manager from his/her post, while at the same time allowing the manager to resign. Without such a clause, dismissal is not normally permissible in the business world.

The revocability clause can only be negotiated with senior staff as provided by law. The range of positions defined below cannot be extended by contract in any way. In particular, the following posts:

• in the direct management competence of the statutory body,
• under the direct management authority of the employer as a natural person,
• under the direct management authority of a senior member of staff who reports directly to the statutory body, or
• under the direct managerial authority of a senior member of staff directly subordinate to the employer, if that senior member of staff has other senior members of staff under him/he. 

A revocability clause can be negotiated not only in the employment contract but also in a separate agreement with the employee. Although the law does not require it to be in writing, for reasons of legal certainty and need for evidence, it is recommended that the agreement be in writing. The clause may also contain additional provisions such as grounds for dismissal, consequences of dismissal, severance pay or other conditions. However, a clause cannot be negotiated that would prevent the senior staff member from resigning.

How to proceed during and after the appeal

Only the statutory body of the legal entity may dismiss a senior employee, or by the employer itself, if it is a natural person. Dismissal of a senior employee must be made in writing, and the document so executed must be served on the employee. The effective date of the dismissal shall be the date on which the document is delivered to the employee, unless a later date is specified in the document.

The Labour Code does not require that reasons be given for the dismissal or resignation of a managerial post, unless a specific legal provision so provides or this has been agreed between the employe and the employee. However, even in the absence of an obligation to state reasons, the dismissal must not be made in a discriminatory manner, as it could be found invalid.

Removal of a senior member of staff from his/her post shall result in termination of employment in a management position. However, this does not end the employment relationship. The Labour Code requires the employer to, to offer the employee another suitable job assignment appropriate to his state of health and qualifications. If the employer does not have such a position or the employee refuses it, a situation of obstruction of work on the part of the employer arises, which may lead to dismissal on the grounds of redundancy. In such a case, severance pay shall be due only if the employment relationship is terminated following the removal of a managerial post in connection with the abolition of that post as a result of an organisational change. 

Conclusion

Dismissing a senior employee in the private sector is a step that requires careful preparation and compliance with legal procedures. A properly negotiated dismissal clause and ensuring a transparent process that excludes discriminatory grounds are key. Employers should also bear in mind their obligations following recall, in particular to offer another suitable job. Ambiguities or mistakes in this process can lead to unnecessary litigation, which can be time-consuming and costly.