HW Legal
Unpaid wages? Find out when you can terminate your employment with immediate effect and claim compensation. A practical legal guide under Czech employment law.
Has your employer delayed paying your wages? Do they owe you money and you are wondering how to protect your rights? In this article, we explain what remedies Czech employment law provides, how immediate termination of employment works, and when you may be entitled to compensation.
Unpaid wages – what does it mean for an employee?
If your employer fails to pay your wages (or any part of them, including wage compensation) within 15 days after the due date, you may terminate your employment with immediate effect under Section 56(1)(b) of the Czech Labour Code.
The key requirement is that the wages, part of the wages, or wage compensation remain unpaid for at least 15 days after becoming due.
By terminating employment with immediate effect, the employment relationship ends on the date the notice is delivered to the employer.
Wage due date vs. regular payday
It is important to distinguish between the due date of wages and the regular payday.
Under Czech law, wages become due on the last day of the calendar month following the month in which the employee became entitled to them.
For example, wages earned in June become due on 31 July.
An exception may apply where the employment contract specifically provides for an earlier due date, although this is relatively uncommon.
Employment contracts more frequently specify a regular payday, typically on a particular day of the following month (often the 15th or 20th day of the month). In our example, the regular payday could be 15 July or 20 July.
However, the regular payday does not determine the legal due date of the wages.
Example of calculating the relevant deadline
An employee may terminate employment with immediate effect once 15 days have passed from the due date of the particular wage payment.
Using the example above, if the employer fails to pay wages for June, those wages become due on 31 July. The employee may therefore terminate employment with immediate effect from 16 August onwards.
What compensation is an employee entitled to when terminating employment with immediate effect?
If your employer has not paid your wages within 15 days after the due date, you are entitled to compensation equal to your average earnings for a period corresponding to the notice period.
This compensation functions similarly to severance pay.
If your contractual notice period is two months (although it may be shorter in some cases), you are entitled to compensation equal to two times your average monthly earnings.
In addition, you remain entitled to claim any outstanding wages for work already performed.
Unpaid wages during the probationary period
During the probationary period, both the employee and the employer may generally terminate employment for any reason or for no reason at all.
In such cases, the employee is not entitled to severance pay or compensation.
However, a different situation may arise where the employer fails to pay wages during the probationary period.
For example, if wages remain unpaid for at least 15 days after the due date (such as June wages remaining unpaid after 15 August), the employee may terminate employment with immediate effect under Section 56(1)(b) of the Labour Code.
In that situation, it does not matter whether the probationary period is still ongoing.
Termination during a probationary period and immediate termination for unpaid wages are two separate legal mechanisms.
If an employee in a probationary period chooses immediate termination because of unpaid wages, they may become entitled to the additional compensation described above.
Frequently asked questions (FAQ)
What should I do if my employer does not pay my wages?
First, determine when the wages became due. Under Czech law, wages become due no later than the end of the month following the month in which they were earned. The regular payday is not decisive for this purpose.
If payment is not made, it is advisable to send the employer a written demand for payment.
If the wages remain unpaid for more than 15 days after the due date, you may terminate employment with immediate effect.
What is the difference between notice and immediate termination?
Notice of termination: After notice is given, a notice period applies (typically two months). During that period, the employee continues working and receives wages. If the employee resigns, they are generally not entitled to severance pay or compensation.
Immediate termination: Employment ends immediately. The employee is no longer required to attend work and is entitled to compensation corresponding to the length of the notice period.
Does the right to immediate termination also apply during a probationary period?
Yes. An employee may terminate employment with immediate effect during a probationary period if the employer fails to pay wages within 15 days after the due date.
What if the employer pays the wages late but before I terminate employment?
If the wages are paid late but before the employee delivers a notice of immediate termination, employment can no longer be terminated on this ground.
In that situation, the employee remains free to resign through the ordinary notice procedure.
Am I entitled to severance pay if I terminate employment because of unpaid wages?
No. Immediate termination for unpaid wages does not create an entitlement to severance pay.
However, the employee remains entitled to both the outstanding wages and compensation equal to average earnings for the period corresponding to the notice period.
What sanctions may an employer face for failing to pay wages?
In addition to being required to pay the outstanding wages, compensation, and potentially statutory default interest, the employer may also face penalties imposed by the Labour Inspectorate.
Employees may file a complaint with the Czech Labour Inspection Authority, which has the power to investigate the matter.
Need legal assistance with an employment law matter?
If you are dealing with unpaid wages or need advice on how to terminate your employment correctly, do not hesitate to contact our law firm.
We can help protect your rights and ensure that you receive everything you are legally entitled to.