Disguised employment mediation

Labour inspection authorities most often encounter violations of disguised employment mediation by entities that are not legal employment agencies. Such entities merely create the impression of a normally functioning employment agency, while not having the relevant licences. However, there are also cases where disguised employment mediation is committed by entities that conceal their activities with commercial contracts and have the relevant permits.  

The aim of such conduct may be, in particular, to avoid compliance with the legal conditions for mediation, in particular comparable wage and working conditions for assigned employees. 

Inspections focused on disguised employment mediation often also reveal the facilitation and performance of illegal work, both by Czech and EU citizens and, in particular, by foreigners. In the case of foreign nationals, these are cases of work performed in violation of the issued work permit or employee card, in particular in violation of the place of work or type of work for which the permit was issued, as at the time of processing such a permit, disguised employment agencies do not know the actual place of work of such a foreign national. 

In 2021, an amendment to the Employment Act was also adopted, which extended the definition of the offence of disguised mediation to include not only the provider but also the entity that enables the performance of disguised mediation. In the event of an offence of performing or enabling disguised mediation, a legal entity or natural person engaged in business activities faces a fine of between CZK 50,000 and CZK 10,000,000. In view of the social significance of the offence, the amount of the fine was set at the same level as for illegal employment. 

Individual cases very often end up before the Supreme Administrative Court (SAC). One of the latest NSS judgments in this area concerned foreign employees who performed manual labour with forklifts at a retail chain's workplace, including picking goods from storage, assembling pallets, transporting and transferring pallets, sorting waste and sorting returned goods. These activities were provided on the basis of a contract for work together with a sublease agreement. In essence, the retail chain supplemented its own daily labour shortages. During the course of the activities provided, there was no transfer of specific and separately identifiable results for which the contractor would be responsible. According to the regional court, even the fact that the plaintiff equipped its employees with work tools could not reverse the finding of labour leasing. 

In the conclusion of its judgment, the Supreme Administrative Court clearly noted that a typical feature of an offence consisting in concealed employment mediation is the perpetrators' attempt to conceal the true state of affairs through various contractual arrangements. It is therefore the rule that certain facts are set up in such a way as to suggest that the relationship may be based on a contract for work, or that some of these circumstances may not at first glance fully correspond to the hiring of labour. However, in such cases, the actual nature of the employees' activities in the overall context of the matter is decisive. The actual nature of the activities of the contractor's employees, if the work is organised and managed by the customer and if the contractor's employees actually supplement the customer's operations and perform repetitive activities that are commonly interchangeable and are also normally performed by the customer's own employees, cannot constitute work. 

The Supreme Administrative Court also stated that the activities of the complainant's employees for the retail chain cannot be understood as outsourcing either. The findings of fact show that the removal and storage of goods is an activity that is significant for the business of the retail chain, without which the retail chain would not be able to carry out its main activity.   

The cassation complaint was thus dismissed and the fine of CZK 165,000 for the work of four foreign employees was upheld.