JŠK Legal Flash
Supreme Court confirmed protection of employees against discrimination even in the event of termination during probationary period
In accordance with the Labour Code, an employer may terminate an employee during the probationary period for any reason or without stating a reason. In its recent decisions, the Supreme Court has confirmed that if an employer terminates an employee during the probationary period without giving a reason, this does not in itself preclude discriminatory termination. If the reason for the termination lies, for example, in the employee's pregnancy or in the employee's loss of medical capacity, this constitutes inadmissible discrimination, which results in both the invalidity of the termination and the possibility for the employee to seek protection against discrimination (i.e. among other things, reasonable satisfaction). It makes no difference if the reason for the termination was not explicitly stated in the written termination notice or if another reason inconsistent with the facts was stated in such notice.
(Decision of the Supreme Court of 16 March 2021 file 21 Cdo 2410/2020 and Decision of the Supreme Court of 8 April 2021 file 21 Cdo 504/2021)
Statutory rules on inadequate consideration do not apply to transactions with shares in joint-stock companies
In one of the recent decisions, the Czech Supreme Court came to a surprising conclusion that the statutory rules on inadequate consideration do not apply to transactions with shares in joint-stock companies regardless of whether these shares have been admitted to trading on the (European) regulated market or not. Thus, the court’s decision substantially deviated from a widely accepted opinion that the exemption from the inadequate consideration rules only applies to stock trading on the regulated market. The court based its argument on a technical interpretation of the Czech Capital Market Act’s definition of transferable securities and, therefore, the court’s conclusion cannot be directly applied to transactions with shares in limited liability companies because these shares are not typically issued as securities.
(27 Cdo 451/2019)
Reorganization plan’s impacts on third party security in rem
In Unicredit Bank v. Olšanská investiční, the Supreme Court rejected an expansive reading of Section 356(3) of the Insolvency Act adopted by the lower courts and held that the provision alone will not protect a third-party in rem security right against release occurring as the result of the adoption of a reorganization plan approved in respect of the primary borrower and restructuring the secured obligations. This will be the case even where, as in the insolvency matter before the court, the reorganization plan itself purports to exempt the third party security interest from its impacts. However, the Supreme Court did not deal with the whole question at hand, having remanded the case to the lower courts with instructions that the particular restructuring measures contained in the reorganization plan must be reviewed and an analysis conducted as to whether the security interest would not survive under general provisions of the Civil Code, in particular Section 1907 which provides, under certain circumstances, for the survival of third-party security interests upon a novation of the secured obligation. The case should be read as a reminded of the perils of financing structures in which the security provider is not also an obligor in respect of the primary debt. And as a warning for lenders who have accepted such third party security and are negotiating the reorganization of the underlying debt.
(Supreme Court decision no. 29 Cdo 567/2019 of 29 April 2021 in UniCredit Bank v. Olšanská investiční)