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Changes in the Czech business environment

The business environment in the Czech Republic has recently been subject to various changes. Changes stem from the natural development of the environment or from the current situation after the crisis.

Managing Director or General Manager? Geschaeffstfuehrer or Director?

The top job of a company (managing the company) is typically done by a statutory organ or by an employed person. We can call them the Managing Director (Geschaeffstfuehrer / Jednatel/legal representative) or, in the case of the employed person, the General Manager (Director / ředitel). Needless to say, each company has its legal representative. The point is that under Czech law one cannot hold the two positions . A Managing Director cannot be employed as director at the same time. This, nonetheless, is very often what occurs. It did not matter so much until recently when the high court established a critical precedent in determining that when a person is a Managing Director/Geschaeffstfuehrer and also employed as a director, his or her employment contract will not be considered valid. This means that the state does not have to pay sickness benefit!

This potentially exposes both the situation of top managers holding two posts and that of the companies (in the area of pension insurance or tax deductibility of various expenses, e.g. salary, among others). The situation should be ignored no longer as it is becoming rather expensive.

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