News

Quarantine

A mandatory 14-day quarantine for employees, who returned from abroad starting from March 13th 2020, 7:00 a.m. (before March 13th 2020 there was a quarantine for employees, who returned from People's Republic of China, the Republic of Korea, the Islamic Republic of Iran and the Italian Republic on or after March 10^th 2020). The procedure is similar to normal sick leave. The documentation in connection with demonstration of the inability to work shall be delivered to the employer by the Social Insurance Agency on the basis of a request of a general practitioner of the concerned employee.

Nursing a (sick) family member

In case of absence of an employee for the reason of provision of care for a child younger that ten years of age due to the interruption of educational process the same procedure shall apply as in a case of ordinary nursing a sick family member. The employee is obliged to inform the employer without delay about the aforementioned. In case of employees with children older that ten years of age it is necessary for a paediatrician to formally order the necessity of personal and full day care for the child.

Holiday

The employer may order an employee to take a holiday leave. The employee should be informed about such order reasonably in advance. At this time, if the employer is limited in the allocation of work to the employee through home office, the employer is entitled to order an employee to take a holiday leave.

If the employer is interested in ordering a holiday leave for a limited time to employees collectively, it is obliged to notify the employees of such ordered holiday leave at least 14 days in advance. Collective holiday leave cannot be ordered for more than two weeks.

Home office

If the type of work of the concerned employee allows for the possibility of working from home, the employee and the employee may agree, that the employee will work from home for an agreed period (home office).

Obstacle on the part of the employer

The employer is under Section 5 of Act No. 124/2006 Coll., on safety and health protection at work obliged to apply the general principles of prevention in implementation of measures necessary to ensure safety and protection of health at work. In the light of the abovementioned, the employer may, on the basis of its sole discretion, arrive to a conclusion (especially if it is not possible to agree on home office or to order a holiday leave), that in order to ensure protection and health of the employees, it is necessary to order the employees to leave the workplace. This will be then considered as an obstacle on the part of the employer and the employee is entitled to wage compensation equal to his average earning during its duration.

Special arrangement for obstacles on part of the employer

Where representatives of employees are present (trade union, works council, employee trustee) in a company, the employer may conclude a written agreement with such representatives of the employees, the subject of which is (i) definition of serious operational reasons, for which the employer cannot allocate work to employees; and (ii) the amount of wage compensation, to which the employee is entitled during the duration of such obstacle (in any case at least 60 percent of the average earnings of the employee). This agreement may be concluded only with the representatives of employees and cannot be replaced by a decision of the employer. If the employer has established a working time account by means of a collective agreement with representatives of the employees, the employer may, for serious operational reasons, not observe the weekly working time schedule, valid at least one week in advance.

Closure of certain establishments

Via measure of the Public Health Authority of the Slovak Republic a duty to close all retail and services establishments (with the exception of specific establishments, such as pharmacies drugstores etc.) has been introduced. If, as a result of this measure, the employer is unable to allocate work to employees (for example employees performing personal customer service – sellers, dealers, operators etc.), it is possible to address this situation temporarily through an agreement on change of working conditions, whereby the employer and employee agree on performance of work different from that, which is stipulated in the employment contract or agree on different working hours. Such agreement must be executed in written form, otherwise it is invalid. If the employer could not allocate work to the employee, it would be considered as an obstacle on the part of the employer and the employee would be entitled to wage compensation equal to his average earnings.

Agreement on shorter working hours and shared jobs

In case of decrease in workloads resulting from the crisis and the impact of government measures, the employers may utilize the following institutes in order to preserve job positions:

• an agreement with employee on shorter working hours;
• an agreement on the placement of an employee to a shared (part-time) job position in case of an agreement on shorter working hours.

Allocation of other work

The employer may, in order to preserve job positions and at his own discretion, allocate an employee to a different kind of work or place of work than agreed in the employment contract, if the terms of employment or other internal regulation of the employer indicate, that present situation may be considered an emergency situation that can be averted by relocation of employees. For the sake of legal certainty, it is recommended to include a definition of an emergency situation in the internal company regulations.

Unpaid leave

If the application of the aforementioned is not possible, another option is to agree with the employee on taking a time off work without wage compensation.

Arbitrary absence of employee from work

In view of the unpredictability of the current situation, the possibility that an employee refuses to appear at the place of work of his own volition cannot be excluded. In such case, if the life or health of the employee in the workplace is not endangered, such conduct of the employee may be considered as a breach of work discipline. However, the employer is obliged to provide the workplace with sufficient protective equipment, otherwise existence of a health risk could be argued by the employee.

The list above cannot cover all eventualities which may arise, including the occurrence of other obstacles barring performance of work (e.g. the employee cannot come to work because of border closure, inoperative traffic etc.). In spite of the crisis situation, all issues of labour law must always be dealt with in accordance with legal regulations, thus avoiding the risk of negative consequences for the employer.

We are at your disposal to address all of the above and other situations arising from the coronavirus crisis and COVID-19 disease in labour-law relations.

We are available to answer any questions.

BBH advokátska kancelária, s.r.o.

This memorandum may not be relied upon or used by any party without the prior written consent of BBH, advokátní kancelář, s.r.o., regardless of whether the use is of private nature, or for civil, administrative, criminal or other court purposes.

Substantial change of circumstances

The negative consequences of coronavirus and related measures may manifest on the side of either of the contracting parties. Slovak legal regulation on law of obligations is strictly based on the pacta sunt servanda principle (agreements must be kept) and with a few exceptions (e.g. Section 518 of the Slovak Commercial Code – contract on deposit of an item or Section 292 (5) of the Slovak Commercial Code – contract on future contract) does not recognize a general legal provision (so called “hardship clause”) which would, in the event of a substantial change of circumstances, allow the affected party to unilaterally amend any agreed upon contractual arrangement.

A Party which is despite of substantial change of circumstances objectively able to fulfil its obligation has in principle no other choice, but to comply with its obligation, unless, as a result of the substantial change of circumstances under which the contract was concluded, the initial purpose of the contract, which was explicitly stated in such contract (see below), has been frustrated. In this context, it is possible to apply institutes such as good manners or fair business relations, as exercise of any rights and obligations cannot be in conflict with good manners or fair business relations and no one shall abuse his/her rights against the interests of others, neither shall unfairly enrich himself/herself  at the expense of others. The notions of good manners and fair business relations are not specifically defined in Slovak legislation, and therefore provide a relatively wide scope of application as well as a wide range for application of judicial discretion.

If, as a result of the coronavirus, a party is in default with the performance of its contractual obligation and it is not a case of impossibility of performance nor the contract provides for exclusion of default in case of non-performance in case of force majeure, as set out below, the other party has the right to withdraw from the contract. If the contract does not provide terms for such withdrawal, the other party may, in accordance with the applicable law, withdraw from the contract after granting the party in default an additional reasonable time period for performance of its contractual obligation (in case of an immaterial breach of contract) or without undue delay (in case of a material breach of contract).

Force majeure / compensation for damages

If a contract contains an arrangement according to which one or both contracting parties do not get into default with performance of the contract in case a force majeure event occurs, and this term in the contract also includes the occurrence of the coronavirus pandemic or the governmental measures related to it, then the affected contracting party does not get into default (breach of contract) and the other party has no right of withdrawal neither right to compensation of damage or to a contractual penalty.

If a contract does not contain a force majeure clause, then a higher power in the contract relations shall be still relevant, as, according to Section 374 of the Slovak Commercial Code, such force majeure event is a circumstance excluding liability for damages. In this case, however, in spite of the above, the party is in breach of a contract and must therefore take into account all the other consequences associated with it, such as the possibility of withdrawal from the contract by the other party or the obligation to pay an agreed contractual penalty.

Frustration of the purpose of the contract

Coronavirus-related governmental measures, which prohibit a range of activities, could also potentially frustrate the purpose of the contract as a result of a substantial change in circumstances under which the contract was concluded. If, as a result of the coronavirus and related measures, the essential purpose of the contract has been frustrated (provided that this purpose has been specifically stated in the contract), the party affected by the frustration of the contract pursuant to Section 356 of the Slovak Commercial Code may withdraw from the contract. A party that has withdrawn from the contract in this manner shall be liable to compensate damages incurred by the other party due to such withdrawal. Change in the (value of) assets of either party and change in the economic or market situation shall not be considered as a change of circumstances.

Impossibility of performance

Governmental measures related to coronavirus may, within the meaning of Section 575 of the Slovak Civil Code in conjunction with Section 352 of the Slovak Commercial Code cause also the termination of a contractual obligation due to the impossibility of its fulfilment. However, this is possible only provided that such obligation cannot be fulfilled even under more difficult conditions, with higher costs, with the aid of another person or after an additional agreed upon time period. The obliged party shall, without undue delay after becoming aware of the circumstance which makes performance of an obligation impossible, notify the other party of the situation. If a consideration (renumeration) for the failed (impossible) performance has been already provided, it must be reimbursed. Given that in the case of coronavirus, the contracting party has not caused the impossibility of performance, it will not be obliged to compensate the other party for damages incurred by it, unless the damages have been caused by the late notification of the impossibility to perform.

Last, but not least, we would like to point out that the existence of coronavirus and the measures against its spread are no longer an unforeseeable circumstance and therefore, when entering into new commercial contracts, we advise to take them into account and incorporate them adequately into drafts of contractual documents.

It is always the case when dealing with contracts that the contracting parties may agree on a number of issues differently from the written legislation so it is always necessary to analyse the specific contract directly and not to just follow the general rules resulting from the abovementioned applicable legislation.

We are available to answer any questions.

BBH advokátska kancelária, s.r.o.

This memorandum may not be relied upon or used by any party without the prior written consent of BBH, advokátní kancelář, s.r.o., regardless of whether the use is of private nature, or for civil, administrative, criminal or other court purposes.

„We are very glad that our long-time colleague and generally recognized expert in the area of capital markets, financial law and regulation, Zdeněk Husták, expanded number of Partners in our law firm. Zdeněk is highly demanded by clients as an authority in the field of regulation, which is currently the most dynamic field of law and legal practice in general. Also, the fact that Zdeněk has now become a Partner further accentuate continuous growth of our firm.“ says Vladimír Uhde, Managing Partner.

Zdeněk Husták has over 20 years of professional expertise capital and financial markets, financial regulation, banking and finance and insurance law. He has advised number of clients on broad scope of issues ranging from new products and services, financial market transactions, corporate governance and compliance to licensing and sanction proceedings.

Zdeněk has served a number of years as a member of advisory bodies to the European Securities and Market Authority (ESMA) and the European Insurance and Occupational Pension Authority (EIOPA), furthermore Zdeněk was a member of the presidium of the Czech Securities Commission and an advisor to the Czech Ministry of Finance. Zdeněk presided the working group of the EU Council for the Rating Agencies Regulation and the Alternative Investment Fund Managers Directive (AIFMD) as well as was in charge of drafting the pension reform legislation in the Czech Republic. Currently, he is a member of the Appellate committee of the Czech National Bank and the chairman of the Ethical board of the Czech Capital Markets Association. Zdeněk is an author of number legal publications and lectures on financial and capital markets law at several Czech universities.

Zdeněk graduated at the Law Faculty of Masaryk University in Brno where he also received Ph.D. degree. Further, he received master degree in finance from the Faculty of Economics and Administration in Brno. He speaks Czech, English, German and Russian.

Partner Tomáš Sedláček commented on the transaction: “This transaction is one-of-a-kind in the area of IT and has significantly stood out from the rest in the market. We are truly honoured to have advised a group of talented innovators on this important sale of their company to the American giant and we wish them successful collaboration with the Facebook team.”

The BBH team assisting Beat Games owners in this achievement was led by Partner Tomáš Sedláček, Associate Kristýna Domokošová, Junior Associate Martin Procházka with the support of other BBH lawyers.

External links:

https://www.cnbc.com/2019/11/26/facebook-buys-beat-saber-vr-game-maker-beat-games.html

https://www.bnnbloomberg.ca/facebook-acquires-studio-behind-popular-vr-game-beat-saber-1.1353917

https://www.oculus.com/blog/welcoming-beat-games-to-facebook/

https://www.cnet.com/news/facebooks-oculus-acquires-beat-games/

https://www.polygon.com/2019/11/26/20984478/facebook-acquires-beat-saber-beat-games-vr-modding

Due to organisational reasons, please confirm your participation in the seminar by email to kkusa@bbh.cz until 18 October 2019. The capacity is limited.

In case of any questions, please do not hesitate to contact Kateřina Kusá, kkusa@bbh.cz, tel.: +420 234 091 355.

Please see the following link for more information:

https://www.iflr1000.com/Jurisdiction/Czech-Republic/Rankings/184#rankings

Prague-based Regulatory and Banking & Finance BBH Partner Tomáš Sedláček said: “We are proud to have advised a member of this leading European fund distribution group throughout the authorization process to bring it to a successful completion. We assisted our client in the course of rigorous prerequisite reviews and demanding compliance checks and demonstrated our abilities in achieving compliance with the highest level regulatory standards under MiFID II.”

The BBH regulatory team assisting Moventum in this achievement was led by Partner Tomáš Sedláček with Zdeněk Husták, Head of Regulation & Compliance, Jan Kadrnožka and Martin Procházka and the support of other BBH lawyers.

We thank all of our clients for their trust and proudly acknowledge the extraordinary work of our whole team, thanks to whom we belong among the top law firms in the region. We greatly appreciate the recognition!

Please see the following link for more information:

https://chambers.com/profile/organisation/1427?publicationTypeId=7&practiceAreaId=467&locationId=69&subsectionTypeId=1

„We are very excited that we assisted the sellers in this complex transaction which lasted over a year throughout which we had to give effect to all sorts of corporate and regulatory changes. The work only underlines our prime experience, practice and knowhow in the niche area of pharma business and related legal matters,” says partner Tomáš Sedláček referring to BBH’s other pharma, medical and health industry clients.