Freedom of contract versus equal treatment in the light of recent case law

The Supreme Court by judgment of 18 May 2020, File no. 21 Cdo 68 / 2020-200 ruled that in the event of termination of employment within the limits set by law, the action of employer who chose to terminate the relationship with the employee by notice of termination rather than by mutual agreement, and thus exercised contractual freedom, which is a central principle of private law, cannot be considered as inequal treatment or discrimination against employees.

Case description

In the said decision, the Supreme Court dealt with the situation where the employer terminated the employment relationship with the employee by notice of termination for redundancy (Section 52 (c) of the Labour Code), even though the employee requested termination of employment by agreement for the same reason. According to the collective agreement, in the event of termination of employment by agreement, the employee would be entitled to severance pay in the amount of 5.5 times the average monthly earnings, as opposed to 3 times guaranteed by law if the employment is ended by notice of termination. It is worth mentioning that the collective agreement did not impose an obligation on the employer to terminate the employment relationship by agreement.

The employee (plaintiff) considered the rejection of his request for termination of employment by agreement, resp. the payment of lower severance pay than guaranteed by the collective agreement, as unequal treatment of employees by the employer, consisting of payment of different severance pay to employees upon termination of employment, depending only on the form of termination of employment. The employee thus demanded to pay the difference in severance pay.

The employee further argued that the employer was "bound by the collective agreement" at least to the extent that it was his duty to act equally in this respect to the employees with whom the employment was terminated in the close time period for similar reasons".

The employer argued that no unequal treatment occurred and that he chose the notice of termination because severance pay is a tool that helps employees to overcome often difficult social situations when they would otherwise have to do without income. Therefore, the employer opts to terminate the employment by agreement, and thus with the right to higher severance pay, in the case of employees who work hierarchically in lower positions than the plaintiff and whose income is several times lower. The employer then concluded that in the case of the plaintiff, given the amount of his income, the loss of employment would not be such a significant social intervention.

Conclusions of the Supreme Court

In the reasoning of the said judgment, the Supreme Court first points to the fact that the law allows the termination of employment only in the ways explicitly stated in the provisions of Section 48 of the Labour Code. However, if, within the limits of the law, there is a choice in the participants' conduct regarding the termination of employment, the use of the possibility of this choice cannot be considered as inequality or discrimination. In other words, if it is possible to terminate the employment in several ways, the choice of one of them cannot be questioned.

The Supreme Court further states that "despite the emphasis on equality in law, it must not be forgotten that the main value protected by private law is (contractual) freedom". Therefore, the employer cannot be denied the legal right to choose which method of termination of employment with the employee he chooses and to restrict his contractual freedom based on the principle of equal treatment.

The Supreme Court therefore concluded that the fact that the amount of severance pay provided to employees with whom employment is terminated due to redundancy differs depending on the method of termination of employment and the amount of income of individual employees does not constitute unequal or discriminatory conduct by the employer.

Author's note

Although the Supreme Court has ruled that the mere choice of an employer on how to terminate an employment relationship does not in itself constitute unequal or discriminatory conduct, this does not mean that the employer cannot in such context discriminate at all. Please note that it is always necessary to proceed within the limits of the law. If the criterion for choosing the method of termination of the employment relationship is the employee's income, no unequal or discriminatory conduct occurs. However, in other cases where the choice would be made, for example, based on the employee's ethnic origin or age, it could be considered as discriminatory conduct of the employer.

Author: Aneta Koubková

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