Law Legal News [September 2023]: Where is the place of work?
What is the relationship between the place of work agreed in the employment contract and the workplace? Is it possible to extend the term of office of statutory body members? These are just some of the questions addressed by the Supreme Court in its recent judgments. You can read about all the case law news in the latest Legal News.
- In its decision No. 21 Cdo 2355/2022, the Supreme Court addressed the question of whether an employer using the reason for termination under Section 52(a) of the Labour Code, i.e. the dissolution of the employer or a part thereof, is limited (restricted) by the simultaneous occurrence of the reason for termination under Section 52(d) of the Labour Code, i.e. the impossibility of assigning work to an employee due to an occupational disease or an accident at work. The Supreme Court confirmed that the employer may terminate the employment relationship with the employee concerned by giving notice for any of the above reasons, or may define the reason for termination in such a way that it corresponds to the facts of both of these reasons. In the present case, the plaintiff’s medical inability to work cannot change the conclusion that one of the organisational reasons for termination is met, because in addition to the plaintiff’s medical inability to work, the defendant cannot (objectively) assign the plaintiff to the agreed work due to the dissolution of the employer following the court’s bankruptcy decision and the closure of the employer’s business.
- In its earlier decision, Case No. 27 Cdo 1190/2022, the Supreme Court dealt with the question of whether the reasonableness of an action for which a guardian is to be appointed can be assessed in proceedings for the appointment of a material guardian on the grounds of a conflict of interest of a member of the statutory body with the interests of a legal entity. The examination of whether a legal entity needs to appoint a guardian (ad litem) to manage its affairs or defend its rights (Section 486(1) of the Commercial Code) does not, in principle, involve a preliminary determination of whether the legal entity will be successful in managing its own affairs or exercising its rights. This would unduly anticipate future developments that may occur in the administration of the legal entity’s affairs or the exercise of its rights. On the other hand, if a guardian (ad litem) is to be appointed for the sole purpose of exercising or defending a right arbitrarily or apparently without success, the guardian cannot be appointed because the legal requirements are not (cannot be) met. The Supreme Court thus stated that the court’s action in this matter cannot be reduced to a purely formal (separate) assessment of whether the individual requirements for the appointment of a guardian (ad litem) are met. Thus, already in the proceedings for the appointment of a guardian (ad litem), there must be room for the court to decide not to appoint a guardian (ad litem) for a legal person if it is prima facie obvious that the appointment of a guardian (ad litem) cannot serve its purpose in a given specific situation.
- We also summarise the decision of the Constitutional Court in case no. Pl. ÚS 24/23 on the interpretation of the term “individual part of a municipality” in the Real Estate Tax Act. The Constitutional Tribunal concluded that a part of a municipality is not only a contiguous part of the municipality’s territory, but also a specific designated real estate. In this context, the municipality is entitled to levy higher taxes only on certain properties. This is in accordance with the constitutional principle of self-government and subsidiarity of political power (Article 8 of the Constitution), as it is the local authorities that can effectively ensure that the level of taxation of real estate corresponds to the negative externalities associated with it in a particular location. Therefore, the possibility of individualising the level of real estate taxes to a certain extent serves the purpose of taking into account the unequal burden on common space and shared infrastructure in municipalities. Thus, the Constitutional Court concludes that the Municipality issued the relevant generally binding decree within the limits of its autonomous competence and did not abuse its competence, as it pursued a legitimate aim and used reasonable means to achieve it. At the same time, the legislation adopted cannot be considered discriminatory or contrary to the principle of equal treatment, as it is justified by objective and rational reasons. The Constitutional Court did not consider the contested parts of the General Binding Decree to be unreasonable and therefore found no grounds for its annulment.
- In its decision no. 27 Cdo 1915/2022, the Supreme Court dealt with the issue of the extension of the term of office of the members of the statutory body, which, in the case of an amendment to the articles of association at a general meeting, generally takes effect at the time the resolution is adopted and, in the case of a sole shareholder, at the time the resolution is served on the joint-stock company. In addition, the Supreme Court notes that in this case too, the condition for the extension of the term of office is the consent of the relevant member of the statutory body, which may be implied.
- In another judgment (29I Cdo 114/2023), the Supreme Court dealt with the issue of a challenge in insolvency proceedings to an electronic payment order against a debtor (the bankrupt) under a consumer credit agreement. Although the electronic payment order had entered into force (the debtor had not objected), the insolvency proceedings revealed that the debtor’s creditworthiness had not been properly assessed when the consumer credit agreement was concluded. However, according to the Supreme Court, such a circumstance constitutes a ground for rejecting such a claim under Section 199(2) of the Insolvency Act. This is a matter of “facts not raised by the debtor in the proceedings” and not a different legal assessment of the matter (which is not a ground for rejection).
- The nature of the legal relationship between the statutory body (or the person performing the activities of the statutory body) and the company, and its effect on the limitation period, was addressed by the Supreme Court in its recent decision, Case No. 27 Cdo 2401/2022. With regard to the previous case law of the Supreme Court and the Constitutional Court, the Supreme Court stated that a member of the statutory body of a company and the company itself may deviate from the rule according to which their relationship is governed by the provisions of the mandate contract, even by agreeing on the application of the Labour Code regime to their relationship. However, since the exercise of the function of a member of the statutory body is not dependent work within the meaning of the Labour Code, such an agreement does not transform the relationship between the member of the statutory body and the company into an employment relationship. It remains a commercial relationship governed by the Commercial Code and the provisions of the Labour Code, the application of which is not precluded by mandatory legal norms regulating (in particular) the position of a member of the statutory body of a company and his or her relationship with the company. Therefore, if there was a relationship between the statutory body and the company consisting in the performance of activities falling within the competence of the statutory body, it was a commercial relationship and not an employment relationship, even after the statutory body’s removal from office. The commercial nature of such a relationship is determined by the nature of the activity and not by the duration of the term of office of the statutory body of the company. The commercial nature of such a relationship is determined by the nature of the activity, not by the duration of the term of office of the statutory body of the company. The commercial nature of the relationship also affects the assessment of the limitation period (under the law in force at the time).
- In its recent ruling, Case No. 21 Cdo 1501/2023, the Supreme Court addresses the relationship between the place of work agreed in the employment contract and the employee’s workplace as the place where the work is actually performed. The place of work can be defined very narrowly (e.g. a specific workplace) or more broadly. The Labour Code assumes that the place of work is a municipality or an organisational unit, but does not exclude that it may be a different place. Thus, the place of work may be agreed as a specific workplace, but also as the employer’s registered office, a municipality, a region, the territory of the Czech Republic, etc. In this context, the Supreme Court has consistently held that a workplace, as the place where an employee performs his or her work duties under the employer’s instructions, can only be located where it can be subsumed under the concept of workplace as defined in the employment contract. In other words, the workplace cannot be located outside the area defined by the agreement on the place of work. Therefore, an employee does not commit a breach of an obligation arising from the legislation applicable to the work he or she performs by failing to perform work or by failing to report to a place of work (even if it is the employer’s registered office) other than the place of work agreed in the employment contract when requested to do so.
