Czech Republic to Extend Sick Leave Pay

As of July 1, 2019, the Czech Republic will abolish the rule that the first three days of incapacity to work due to sickness are unpaid. Once the new rule is in effect, employers will be obligated to provide salary compensation to their employees during this initial time period. The change is expected to increase the rate of employee absences due to sickness and costs for a number of companies.

Employers are currently obliged to pay salary compensation to employees for days 4 to 14 of sick leave. The state takes over the obligation from the 15^th day and provides sickness pay until the 380^th day of sickness.

The rule that the first three days of sick leave were not compensated was established in 2008 with the aim of reducing the rate that employees failed to come in to work due to sickness. The three-day “waiting period” achieved its goal: The number of days that employees took temporary sick leave fell from 2,223,914 in 2008 to 1,526,014 one year later and has been more or less stable ever since.  However, critics claimed that the measure forced people to go to work while sick or utilize paid vacation days to stay at home.

After years of debate, opponents of the waiting period have succeeded in abolishing it after a vote in the Chamber of Deputies confirmed the change (and overruled the Senate’s earlier veto on the issue). The amount of compensation—60 percent of the employee’s average earnings—will stay the same under the new rule.

To reimburse employers for ensuing losses, the state will also decrease employers’ mandatory health insurance payments by 0.2 percent.

The new rule will take effect on July 1, 2019.

Comment

Statistics showed a dramatic decline in employees’ sick leave rates after the introduction of the three-day waiting period in 2008. Employers now expect a reversal of that trend. According to a study by the Czech Chamber of Commerce, the decrease in health insurance payments for employers will not fully cover the increased salary compensation costs. In addition, with unemployment rates at record lows, employers are likely to experience difficulties and incur indirect costs when finding replacement workers for those on sick leave.

Written by Jan Gerych of Wolf Theiss and Roger James of Ogletree Deakins

© 2019 Wolf Theiss and Ogletree, Deakins, Nash, Smoak and Stewart, P.C.