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Changes in the retirement pension system - Amendment
to Act No. 155/1995 Coll., the Retirement Pension
Act
In the Czech Republic, the retirement pension system is based on
social security contributions paid by the economically active part
of the population and redistributed among senior citizens as the
retirement pension. Due to the ageing population, this system has
become increasingly under-funded over the last decade. Despite
long-term discussions about fundamental system changes, only minor
adjustments to increase the income of the "pension fund"
have been made so far. These adjustments involved increasing the
contributions, and decreasing the expenses by tightening the
criteria to qualify for the retirement pension payment. With effect
from 1 January 2010, the following further changes have been
made:
the period of active participation in the social security
system necessary in order to qualify for the retirement pension
payment (the "qualifying period") will progressively
increase from 25 to 35 years over the next ten years;
after 31 December 2009, a period of study will not be counted
in the qualifying period;
the age of retirement will increase to 65 for men (depending on
their year of birth), and to 64 for women (depending on the number
of children they have raised);
administrative barriers for retired people to become employed
have been removed; and
there are changes to disability benefits payments, as the
criteria to be considered 'disabled' has been amended.
Changes in sick pay - Amendment to Act No. 187/2006
Coll., the Health Insurance Act
In the Czech Republic, mandatory health insurance is
paid by all employees (and by employers for their employees as
well). From this fund, salary compensation is paid to those who are
ill for longer than 14 days (until then, the compensation is paid
by the employer). Previously, the amount of compensation varied
between 60-72% of the average earnings, depending on the length of
the illness. The longer the illness, the higher the compensation.
As of 1 January 2010 this varied rate has changed and has been
replaced by a flat rate of 60%.
Reported case law
Supreme Court decision No. 21 Cdo 2972/2008,
issued on 22 October 2009, on redundancies
The Supreme Court held that the dismissal of an employee for
redundancy reasons was lawful when only some of the employee's
work tasks ceased to be necessary and the rest were merely split
amongst the other employees.
Supreme Court decision No. 21 Cdo 3881/2008, issued on 4 December
2009, on continuous acts of misconduct
Where there is a continuing act of misconduct in the workplace,
the statutory period for terminating the employment agreement
starts running after the last breaching act occurs.
The content of this article is intended to provide a general
guide to the subject matter. Specialist advice should be sought
about your specific circumstances.
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