Law Legal News [April 2024]: Is unexcused absence a reason for dismissal?
Misconduct of an officer of a local authority, breach of an employee's duties in the case of unexcused absence, the obligation of the general meeting to provide an explanation to the owners, or a declaratory legal action in connection with share ownership determination. You will find these employment and corporate law topics and more in the latest Legal News.
- In judgment No. 21 Cdo 346/2023, the Supreme Court deals with the breach of an employee’s duties consisting of unexcused absence that led to immediate termination of employment. The Supreme Court confirmed its previous settled decision-making practice according to which unexcused absence from work of five or more days usually constitutes a breach of duty in a particularly serious manner and justifies the termination of the employment relationship by immediate dismissal. However, even here, the conduct of the employee cannot be assessed without taking into account other circumstances, which may have an impact on the overall assessment of the case. In the case in question, where the employee was a bus driver, the Supreme Court stated that in order to assess the intensity of the breach of duty, it was also necessary to take into account the distribution of the employee’s working hours on the days in question and the discrepancy between the employee’s agreed place of work (Hradec Králové Region) and the place where he was ordered to work on the days he missed without excuse (outside the Hradec Králové Region).
- In its most recent judgment, Case No. 21 Cdo 3701/2023, the Supreme Court has addressed the question of whether the failure of a local authority official to observe the rules of good conduct constitutes a failure to meet the requirements for the proper performance of work or a breach of duty and what grounds for termination of employment may be used by the employer in such a case. The grounds under Section 52(f) and (g) of the Labour Code constitute separate grounds for termination of employment, the fulfilment of which requires the fulfilment of different prerequisites. Observance of the rules of decency in official conduct is one of the basic duties of a local authority official as laid down in the Act on Officials. On the contrary, it is neither a legal prerequisite for the performance of the job nor (in this particular case) a requirement for the proper performance of the job. Thus, only termination of the employment relationship under point (g), i.e. for the breach of an obligation arising from a legal provision relating to the work performed by the employee, is relevant. In assessing the validity of a termination on this ground (as opposed to a termination for failure to meet the prerequisites/requirements), it is therefore necessary to examine, inter alia, the culpability (where the law requires at least negligence) and the intensity of the conduct of the employee concerned.
- In its most recent judgment, Case No. 22 Cdo 1879/2022, the Supreme Court addressed the issue of the effects of the pre-emption right. It dealt in particular with the interrelationship between paragraph 1 and paragraph 2 of Section 2144 of the Civil Code. Paragraph 1 of the relevant provision gives the pre-emptor the so-called right of retract, i.e. the right to demand against the successor of the obligor under the pre-emption right, who acquired the item by purchase or in a manner equal to the pre-emption right agreement, to transfer the item to them for an appropriate consideration. The right of retract shall arise for the pre-emptor if the original owner has breached the obligation under the pre-emption right to offer the transferred item to the pre-emptor for purchase. The paragraph deals with a different situation where a third party acquires the right of ownership by another means, in which the original owner is not bound by the obligation to make an offer to the pre-emptor. The Supreme Court stated that in such a case, the pre-emption party does not have a right of retract against the successor. It imposes an obligation on the successor to offer to purchase the property, but only when legal facts giving rise to the possibility of exercising the pre-emption right arise. The transfer of ownership of the land in question through a transformation by way of a demerger by spin-off or merger of the company constitutes a so-called other way of acquiring ownership (presumed in paragraph 2). In that situation, the defendant became obliged to offer the plaintiff, as pre-emption purchaser, to purchase the property on the terms to which their predecessor was bound. However, the plaintiff does not have a right of retract against the defendant under Section 2144(1) of the Civil Code, i.e. they cannot require the defendant to transfer the property in question to them.
- As part of its latest verdicts, the Supreme Court has brought two interesting corporate judgements. The first of them (No. 27 Cdo 1535/2023) deals with the obligation of the General Meeting to provide the owners with an explanation on certain issues and the related right of the owners to rectification, if such explanation was not provided to them. The claim for an explanation can be set up within a month from the date of the General Meeting where the provision of an explanation was refused, or from the date of refusal or failure to provide information within the statutory deadline. This is a preclusive deadline, which can never start before the date of the General Meeting where the issue for which an explanation is required was discussed. This applies even if the provision of an explanation was refused by the Board of Directors before that General Meeting.
- The other judgement (Case No. 27 Cdo 2163/2023) concerned a review of the Related Party Report by an expert as part of the legal procedure. As for the Related Party Report, its basic purpose is the provision of information on whether the controlled entity suffered any detriment in relation to its membership in the group, or how such detriment was compensated, what advantages and disadvantages arise from the membership of the controlled entity in the group, whether advantages or disadvantages prevail, and what risks arise for the controlled entity. These data are important namely so as to provide an informed assessment of a possible success or failure when setting up claims pursuant to Section 71 and Section 72 of the Act on Business Corporations – namely the controlled entity’s claim for the settlement of the detriment. The Related Party Report needs to be sufficiently explicit to be able to fulfil such purpose. If the Related Party Report is reviewed by an expert appointed by court as part of the legal proceedings and the expert comes to a conclusion that the Related Party Report under review is insufficient in terms of content or extent, a mere statement of this fact will not suffice. The report prepared by the expert appointed for review of the Related Party Report needs to contain enough detail (specific and explicit) for its addressees to be able to make an informed assessment regarding a possible success or failure when setting up claims pursuant to Section 71 and Section 72 of the Business Corporations Act.
- In its latest judgement, Case No. 27 Cdo 2129/2023, the Supreme Court is concerned with the question whether the company whose share is concerned has to participate in the proceedings for the determination of the ownership title to the share, so that a compelling legal interest in filing a determination lawsuit exists. With regard to its current case practice, the Supreme Court stated that even in proceedings regarding the determination of an owner in a limited liability company, there is no reason to make the plaintiff always (implicitly) direct the lawsuit also against the company whose owner they may become. The fact that the company does not participate in the proceedings does not result in insufficient compelling legal interest of the plaintiff in the required determination. In this respect, the Supreme Court did not accept the argument of the Court of Appeal explaining the company’s necessary participation in the proceedings regarding the record in the Register of Companies and the record in the List of Owners.
