Nejvyšší soud České republiky; 2024-08-29; 21 Cdo 2270/2023
Decision by national courts in the field of European Union law — ECLI:CZ:NS:2024:21.CDO.2270.2023.1
Date: 2024-08-29
Subject matter: Judicial cooperation in civil matters
Origin: Czechia

82024CZ0829(51)_ENG_SUMJURE
JURE summary
JURE summary
This case, decided by the Nejvyšší soud (hereinafter ‘the Supreme Court’), concerns the calculation of severance pay and compensation for loss of earnings in the case of a fictitious employment contract.
A Polish individual (hereinafter ‘the plaintiff’) brought an action before the Okresní soud v Karviné (hereinafter ‘the Court of First Instance’) for payment of severance pay and compensation for loss of earnings from a company domiciled in the Czech Republic (hereinafter ‘the defendant’). The plaintiff worked for the defendant as a miner, but his employment contract was terminated after he contracted an occupational disease. He claimed that the defendant had failed to appropriately calculate the payments to which he was entitled.
The Court of First Instance found that the plaintiff was paid three times less than other employees because the remaining payment to top up his salary had been made by another company domiciled in Poland. However, the defendant calculated the payments claimed only based on the salary provided directly by the defendant itself. In an interlocutory decision, the Court of First Instance held the action to be founded and left the calculation of the payments due by the defendant to the final decision on the merits.
The Krajský soud v Ostravě (hereinafter ‘the Court of Appeal’) confirmed the first instance conclusion.
Upon the defendant’s cassation appeal, the Supreme Court modified the Court of Appeal’s decision because the lower courts had unnecessarily considered matters that were undisputed between the parties and had not focused on the merits of the case, i.e. what facts were relevant for determining the amount of the claim.
Consequently, the Court of First Instance granted the application. It held that the payments had to be calculated considering all sums paid to the plaintiff for the work carried out, including the payment made by the Polish company. As the plaintiff was a Polish national, the court based its jurisdiction on Article 21(1)(f) of the Brussels I Regulation (recast) (1) since the employment contract was concluded under Czech law and the work was carried out in the Czech Republic. The Court of Appeal upheld the decision.
The defendant filed a new cassation appeal to the Supreme Court, who reiterated the facts of the case. The plaintiff had two partial employment contracts – one with the defendant (for work in the Czech mine) and one with the Polish company (for work in the Polish mine). Although he only worked in the Czech Republic and never worked in Poland, he was paid under both contracts. The Supreme Court upheld the lower court’s conclusions that the contract with the Polish company was purely formal and served the purpose of reducing payroll taxes. Such contract is considered null and void under both Czech and Polish law. The true nature of the payments made by the Polish company must be understood as part of the salary for the work performed by the plaintiff for the defendant. Therefore, these payments must also be considered when calculating the severance payment and the compensation for loss of earnings.
Therefore, the Supreme Court dismissed the appeal in cassation and upheld the decision of the Court of Appeal.
(1) Regulation (EU) No 1215/2012 of the European Parliament and of the Council of 12 December 2012 on jurisdiction and the recognition and enforcement of judgments in civil and commercial matters (recast).