Settlement of disputes from the agreement on the provision of a contribution from the targeted Antivirus Programme

The application for a contribution under the targeted programme for the protection of employment Antivirus also includes a draft agreement concluded between the Labor Office of the Czech Republic and the applicant. Each applicant must send this signed agreement together with the duly completed application to the Labor Office. What is the legal regime of this agreement and how to defend yourself in case of violation?

The agreement is concluded in accordance with the conditions of the targeted Antivirus Programme approved by the Government of the Czech Republic by Resolution No. 353/2020 of 31 March 2020 pursuant to Section 120 of Act No. 435/2004 Coll., On Employment, as amended (hereinafter as “Employment Act”and the“Agreement”)

Targeted programmes dealing with the employment are part of an active employment policy, and a contract for the provision of contributions is concluded under it pursuant to Section 119 of the Employment Act.

In view of administrative law, in our opinion, this is a subordinating public contract in the sense of § 161 of the Administrative Procedure Code. There is the Labor Office acting as a public administration entity as a first party, and as a second party, the applicant who is the employer to whom the Labor Office provides a financial contribution for partial reimbursement of wage compensation costs due to employees under the Labor Code in connection with the spread of COVID-19 caused by new coronavirus SARS-CoV-2. This should, as a result, help employers overcome the economic problems caused by the coronavirus crisis, prevent mass redundancies and thus be a tool for employment protection.

How to defend yourself if the Labor Office violates the agreement?

Following the launch of the Antivirus Programme, the Ministry of Labor and Social Affairs additionally excluded some groups of persons from the group of persons entitled to apply for a grant with its interpretative opinions, or reduced the costs that can be covered by programme contributions. The Labor Office thus completely or partially rejects some applications due to these reasons.

E.g. Antivirus Programme contributions are not automatically paid due to the conflicts of interest to cover the costs of an employee who is also a member of the employer's statutory bodies, contrary to the case law that the conclusions on conflicts of interest cannot be automatically applied in every case where the statutory body concluded an employment contract for both parties. On the contrary, each specific case must be assessed individually, taking into account the nature of the work performed by the employee.

We believe that in some cases this procedure may be contrary to law, as the parties to a public contract are bound by this contract (agreement) and in accordance with Section 159 (4) of the Code of Administrative Procedure, a public contract is always assessed according to its actual content. It is therefore not possible for one of the parties to the contract to change the terms of the agreement unilaterally.

Administrative justice

How can I defend myself if the Labor Office has rejected my application? Disputes arising from the law of the public contracts are decided in dispute proceedings pursuant to Section 141 of the Code of Administrative Procedure by an administrative body superior to an administrative body that is a party to a public contract (using Section 169 (1) (d)). In this case, the superior body will be the Ministry of Labor and Social Affairs (hereinafter as a "MLSA"). An appeal cannot be lodged against the decision of the MLSA.

An adversarial procedure can be likened to the civil proceedings to some extent. As in civil proceedings, these proceedings are initiated on a motion addressed to the competent administrative authority (in this case the MLSA), which must specify what is the subject of the dispute and contain the petit, i.e. what the claimant is seeking in the dispute. Furthermore, the administrative body bases its decision-making primarily on the evidence proposed to it by the parties to the proceedings. Apart from the decision on the merits (rejection or grant of the petition), the dispute may be settled by a settlement concluded between the petitioner and the respondent (Labor Office), which is subject to the approval of the MLSA.

Given that the decision of the Ministry of Labor and Social Affairs is a final decision against which no appeals can be filed, the applicant has the right to sue the MLSA within the administrative court in proceedings on an action against a decision of an administrative body pursuant to Section 65 et seq Code of Administrative Justice.

The defendant in this proceeding will be the MLSA. The action may be brought within two months of the decision being notified (delivered) to the applicant. The action does not have suspensory effect, but the court may grant suspensory effect at the request of the plaintiff. If the action is well-founded, the court will annul the contested decision and return the case to the MLSA for further proceedings. In further proceedings, the MLSA is then bound by the legal opinion of the court contained in the annulling judgment.

Civil justice

However, the procedure described above is unlikely to apply to disputes under Article IX of the Agreement (hereinafter as a "Settlement"). By this Settlement, the employer waives the right for compensation for damages against the Czech Republic caused by crisis measures taken in connection with the occurrence of coronavirus under the Crisis Act, arising from the employer's legal obligation to reimburse employees. The employer is entitled to a contribution according to the agreement.

It is not true that the competent administrative body according to Section 169 of the Code of Administrative Procedure is automatically competent to decide all disputes on public contracts. A public contract may also contain elements of private law, where the courts within the civil court have jurisdiction to decide disputes from that part of the contract which contains private law elements. JUDr. David Hejč, Ph.D., doc. JUDr. Petr Havlan then states in their article Substantive jurisdiction to decide disputes arising from public law contracts - practical issues of the dualism of law:

"However, within the framework of the arrangements contained in the public contract, it is necessary to distinguish those that form certain private law parts only inserted into a public contract. Such arrangements are not anticipated by the law governing the relevant public law contract and are separable from the public law contract, resp. materially and legally independent to the public contract. This is the case of concluding a private contract (i.e. not fulfilling the conceptual features of a public contract mentioned in the previous part of the text) in a public contract, which must be seen as if two contracts had been concluded, even if both were part of one document in writing."

We believe that the settlement contained in the agreement can be considered as a private law provision, which was inserted into a public contract, factually and legally independent against the agreement, and to solve disputes arising from this provision will be the competent civil courts.

Conclusion

If you feel that your rights arising from the agreement have been violated by the Labor Office, you have the opportunity to defend yourself in the form of administrative proceedings, respectively in the civil proceedings if the dispute concerns Article IX. agreement. The administrative proceedings are initiated by submitting a proposal to the Ministry of Labor and Social Affairs. If the MLSA rejects your proposal, there is also the possibility of defense in the administrative judiciary. Given that there is no experience so far with disputes arising from agreements concluded under the targeted Antivirus Programme, it will be interesting to see how the competent authorities will react.

Authors: Jiří Mačát a Aneta Koubková

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