Recently, a decision of the Supreme Court case no. 21 Cdo 2061/2021 caused a considerable stir among the professional public. In this decision the Supreme Court addressed a question of whether (some) contracts can be validly concluded remotely in employment relationships. In particular, it considered the situation where the documents were not delivered to the parties in accordance with the Labour Code; but only by a simple e-mail. Is the alarm caused legitimate?
In the case under review, the employee was dismissed for organizational reasons. The employee objected to the termination, but it remained in force (it was not revoked by the Employer). In the meantime, negotiations took place regarding severance pay to the employee's satisfaction, which resulted in a 'settlement agreement' in which the employer agreed to pay severance pay by a certain date. The employer failed to do so, and the employee brought an action to recover the agreed amount. The main issue addressed by the Courts was whether the settlement agreement was validly executed and existed at all. The employer argued that the settlement agreement never came into existence because the agreement in question was not delivered to the employee in person or by alternative means in accordance with sections 334 to 336 of the Labour Code.
Although it is not entirely clear from the Supreme Court's judgment what the content of the settlement agreement was, it can be understood from the circumstances of the case that this legal action was taken in connection with the issue of termination of employment and was thus a document related to the creation, alteration or termination of the employment relationship. The Supreme Court stated that the Labour Code does not contain a complex legal regulation of assessment of the validity of such agreements and thus the Civil Code regulation shall apply.
According to the opinion expressed by the Supreme Court, the special regulation of delivery of documents in employment relationships does not precede the requirements for the execution of an agreement as set out by the Civil Code.
Even though the violation of the rules for the delivery of documents contained in the provisions of Sections 334 to 336 of the Labour Code results in the absence of such a legal act (contained in the document), it does not mean that the agreement could not arise (occur) in a different, legally foreseen way. The rules of the Civil Code thereby also apply to the procedure for concluding agreements within employment relationships.
The Supreme Court concluded that a scanned version of signed settlement agreement sent by the employer as an attachment to an e-mail, which the employee subsequently accepted in the same manner constitutes valid means of execution of the agreement. However, it is clear from the reasoning of the decision that the same approach should only apply to bi-(multi)-lateral legal actions in the context of employment relations.
One may consider that the Supreme Court has (finally) opened the door to the smooth conclusion of employment agreements via simple electronical means, as long as they are bilateral legal negotiations and the rules of contract procedure under the Civil Code are followed. This conclusion could then undoubtedly be applied to other bilateral legal transactions such as termination agreements.
On the other hand, the Supreme Court did not address the issue of unilateral legal actions, such as termination of employment, where the employer usually most frequently faces issues with delivery, and therefore it can be assumed that in these cases it will still be necessary to comply with the delivery procedure in accordance with the provisions of Sections 334 to 337 of the Labour Code.
Despite the fact that this decision is definitely a welcome sign and a certain entry into the 21st century of labour law in the Czech Republic, we believe that in particular in relation to agreements on termination of employment it would still be more certain to conclude these "the old-fashioned way" in order to avoid unnecessary disputes, at least until there are more similar decisions from the Supreme Court and this practice becomes consistent.