An amendment to the Employment Act came into force at the beginning of this year. It brings a number of much-discussed changes, but we would like to mention two in particular that we believe may have potential overlaps with many due diligence issues.

Illegal work no longer has to be continuous.

The Employment Act now explicitly states that the duration of work is irrelevant to the assessment of whether it is illegal work. Considering that, in practice, proving the criterion of consistency could have been complicated for labour inspectors, it cannot be ruled out that the change will lead to more cases in which illegal work will be proven.

Not only a fine but also a ban on the company'sactivities.

The fundamental change is that for allowing illegal work to be carried out (but also for disguised employment and facilitating it), in addition to a fine, labour inspectorates will be able to impose a ban on the company's activities for up to two years. The imposition of this sanction would inevitably entail not only a loss of revenue for the company but also a significant reputational risk.

Given these changes, investors are likely to be more cautious if due diligence identifies, for example, the risk of false self-employment.

Authors: Klára Šmídová, Nathalie Hofmanová