Prague - Nowhere in the EU is laying off staff so complicated as in the Czech Republic and neighboring Slovakia, says a report by Deloitte auditory company.

The report makes a comparison of the labor regulations on laying off in 18 EU member states. "Specifying precise conditions on which an employee can be fired is not typical even among the ex-Eastern Bloc countries," says Petr Suchý from Deloitte. "In fact, as restricted conditions as seen in Czech or Slovakian labor law are unique in the EU," Suchý added.

Labor market deformed due to rigid law

"In many cases, this rigidity can deform the labor market," warns Suchý, echoing what some experts have been saying for a long time. In all 18 states discussed in the report, employers must give a reason for laying off staff. However, in the older EU states, this condition is formulated in a rather general fashion.

"Czech approach to the necessity of stating a reason for laying off is possibly comparable only to other European rarity - in Netherlands, before an employee can be fired, an appropriate state office has to give a green light," says the report.

Heritage of communism

"Unfortunately, when Czech labor law was being completely re-codified recently by the Czech parliament, Czech lawmakers failed to use this opportunity to create a labor code that would suit the needs of a modern European state," said Suchý. That's why Czech (and Slovak) labor law still contains many articles that originated with the labor code adapted in communist Czechoslovakia in 1965.

However, in terms of the length of the layoff period, the Czech republic is not among the most benevolent countries. "For example, the layoff period in Austria, Denmark, Norway or Sweden may be as much as six months, depending on the length of the employment that is to be terminated," says the report. However, in some other European states, the layoff period exists only as a compensation in the cases when an employee is dismissed with no reason being stated.

Scandinavian "flexicurity" a solution?

The National Economic Council (NERV), a special advisory board established one year ago by the government of Mirek Topolánek (Civic Democrats, ODS), says that changes in Czech labor law are "absolutely crucial".

NERV proposes a so-called "flexicurity" model used in the Scandinavian countries. According to the NERV, the Czech Republic would benefit the most from a more flexible labor market and better targeted social welfare.

"It is a long-term problem," agrees Klára Valentová, an employment law specialist from Ambruz & Dark law firm. According to her, all efforts on labor market reforms have failed to make a real difference. "The last effort on reaching a higher flexibility was that prepared by Topolánek's government. His reform would shorten the layoff period to one month, with a possibility to extend the trial period to six months, or to replace the layoff period with financial compensation," says Valentová. "Jan Fisher's caretaker government has not debated it yet, and given the forthcoming elections the future of the reform is uncertain," she added.