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Legal newsletter October 2020

New regulation of monistic joint stock company

According to the currently valid legal regulation the monistic joint-stock company has (in addition to the General Meeting) a statutory director to which the regulation of the board of directors applies, and the management board headed by a chairman to which the regulation of the supervisory board applies. The amendment abolishes the statutory director function and retains only the management board without any special regulation for its chairman. Currently as well as under the amendment the management board has three members both but if the company articles of association specify so one-member management board is possible.

Its members will be elected by the general meeting for a three-year term, unless this right is associated with a specific share. The member of the management board function terminates by the election of a new member. If the function is terminated otherwise the election of a new member should be made within two months. The prohibition of competition applicable to board of directors and the rules on conflicts of interest applicable to supervisory body member will apply to members of the management board.

The management board will be responsible for business management and supervision of the company's activities. It thus combines the powers of the board of directors and the supervisory board in the hands of one body. Unlike the board of directors, however, it will not be possible to divide the powers among individual members of the management board. It will also not be possible to entrust these powers to other persons. In addition to the above, the management board will also be responsible for keeping the accounts and submit the regular, extraordinary, consolidated and interim financial statements (where applicable) to the general meeting for approval.

Thanks to the statutory director position abolition and redefining the powers of the management board, the monistic system will be much more attractive form of a joint-stock company, as it will be significantly simpler more flexible and therefore less financially demanding. Other advantage is also better understandability of the new system for foreign business partners.


Equal pay for employees between regions

The decision of the Supreme Court file no. 21 Cdo 3955/2018 relates to the dispute between the Czech Post and its employee. The employee worked as a driver in Prague for a tariff wage of CZK 21,260 plus a performance wage part of CZK 2,130. When he moved house and started working in the same job for the Czech Post in Olomouc his salary was lowered to CZK 18,018 in tariff wage and CZK 1,810 in its performance part. The employee therefore demanded the payment of the difference before a court since Czech Post’s unequal pay between regions was in his opinion in conflict with the basic principles of the Czech Labour Code.

The Supreme Court has recognized that socio-economic conditions differ in different regions, affecting both housing, goods and service prices, as well as the labour market conditions, where in some regions employers have to offer better working conditions including wages. However, it states that “from the point of view of the principle of equal treatment according to the Labour Code socio-economic conditions and corresponding costs of living in the location where the employee works for the employer based on his contract are not significant for the assessment of whether in the case at hand the work is of the same nature or equal value.” The decision relies on the fact that the law provides for possible pay inequalities only because of difficult working conditions defined by the law as e.g. working at night, overtime, or working on holidays. The list therefore includes only internal working conditions. For the purposes of unequal pay the law does not take into account any other aspects, including socio-economic ones. The court thus sided a very formalistic interpretation of the law, which in practice disadvantages especially employers operating in several regions.

This decision may pull down an avalanche of labour lawsuits by employees of nationwide employers aiming at obtaining a remuneration equal with their colleagues at the same position, especially in Prague, which is typically is a region characterized by higher pay than other regions. Although the question now is whether only employees of state-owned enterprises such as Česká pošta or also employees of private companies could be successful with such a lawsuit, at this moment employers can only be advised to provide higher remuneration for employees in regions with higher living costs not as a part of their wages, but rather as a separate employee benefit (e.g. in the form of a regular housing allowance). Alternatively, positions in regions with lower wages should be defined in a different manner in terms of work content.


Staffing - bullying in the workplace a little different

Although the supervisor is seemingly in a position from which it should not be a problem to prevent bullying from his subordinates, the reality is often different since subordinate employees under robust protection of the Labour Code. Thus, even a superior employee can get into an unenviable situation, where he will be forced to use legal means of protection against bullying behaviour of his subordinates.

It is important to determine whether bullying behaviour is also discriminatory in order to determine the appropriate means of protection. This would be an undesirable act or omission of treating the employee less favourably compared to other employees in a comparable situation, on the basis of one of the reasons prohibited by law. In such a case, the legal protection is stronger and the superior has the opportunity to use specific legal means of protection against discrimination. It should be borne in mind that not every bullying behaviour is at the same time discriminatory.

Legislation does not know or regulate the term "bullying". In such situations, legal means of protection must be sought under more general provisions of legislation including in particular the right to protection of dignity and the right to satisfactory working conditions under the Labour Code. In the case the motive for bullying or harassment is one of the legally defined as discriminatory, the Anti-Discrimination Act No. 198/2009 Coll. applies.

If staffing by subordinates cannot be solved otherwise, the first step is to contact the employer with a complaint. The employer is obliged to create favourable working conditions, and it is therefore in his interest to resolve the situation that has arisen in order to prevent liability for non-compliance with this obligation. In extreme cases it is also possible to contact the labour inspectorate or file a court claim for order to refrain from bullying, or for the compensation of damages or reasonable satisfaction.

If the motive for bullying by subordinates is one of the legally defined as discriminatory, the injured party benefit from the use of reversed burden of proof. However, in other cases proving bullying is difficult.

It should be noted that legal solutions to bullying in general are usually not simple or very successful in practice. A negative perception of leadership skills and general suitability for leadership positions may be of concern if the victim of bullying is a supervisor.