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Board-level Representation

Employees have a third of the seats on the supervisory board of state-owned companies and, following a change in the law in 2017, once again in privately owned companies, although now only in larger ones.

In state-owned companies, irrespective of size, one third of the supervisory board are employees of the company, elected by the workforce. The electoral regulations are established by the management in agreement with trade unions, if any. (The role of the supervisory board is to oversee the management board, which runs the business on a day-to-day basis.)

 

Until January 2014, employees in privately owned public limited companies (a.s.) had the right to elect one third of the members of the supervisory board, provided there were at least 50 employees. However, the Business Corporations Act (90/2012), adopted in March 2012, removed this right, affecting some 2,800 companies.[1] And for a period employee representation on supervisory boards of privately owned companies was only possible on a voluntary basis.

 

However, on 14 January 2017 §448 of the Business Corporations Act was amended to reinstate obligatory employee representation on supervisory boards, although only for companies with more than 500 employees, rather than the previous 50. Employee representatives continue to make up a third of the total, with the remaining two-thirds elected by the general meeting. It remains possible for smaller companies to have employee representation or for the proportion of employee representatives to be higher than a third (although not more than a half). However, this depends on a voluntary decision by the company.

 

The employee representatives are elected by the company’s employees but the legislation does not specify how they should be nominated or elected. Although the law is clear that only company employees can vote in the election of their representatives, there is nothing to stop the individuals chosen coming from outside the company, for example external trade union officials. While the legislation clearly applies to Czech companies with both a supervisory and management board (the standard form), it is uncertain whether and how it applies to the growing number of Czech companies with a single-tier (monistic) governance system, which have no supervisory board.

 

Employee members of the supervisory board have the same period of office as members representing the shareholders. This is set in the company’s own statutes, but where no period of office is set, it is assumed to be three years.

 

Companies had two years to adopt their structures to accommodate the 2017 amendments, so in many companies the changes have only recently started to take effect. There were been discussions at the end of 2018 on changing the rules again, in part to resolves some ambiguities, but potentially also to reduce the number of employee representatives and reduce their influence. However, the outcome remains unclear (mid 2019).

[1]  Zaměstnanci přijdou o právo koukat šéfům pod prsty (Employees lose the right to keep an eye on the bosses) Novinky.cz , September 2013

http://www.novinky.cz/ekonomika/318657-zamestnanci-prijdou-o-pravo-koukat-sefum-pod-prsty.html  (Accessed 30.07.2014)

L. Fulton (2021) National Industrial Relations, an update (2019-2021). Labour Research Department and ETUI (online publication). Online publication available at http://www.worker-participation.eu/National-Industrial-Relations.