Employee loyalty has its rules

The duty of loyalty toward one’s employer is a fundamental principle of labor law, and a key obligation of employees in connection with their work performance.

The Czech Labor Code gives no explicit definition of employees’ duty of loyalty toward the employer. Even so, the topic is widely discussed in recent times, and finds its reflection in the decision-making practice of the courts in the field of labor law.

In a broader sense, the duty of loyalty is an expression of the general principle whereby employees must properly discharge their work duty. In a narrower sense of the word, the duty finds its expression in particular in Sec. 301 (d) of the Labor Code according to which employees must not act in conflict with the legitimate interests of the employer. Case law has inferred that the decisive criterion for determining whether an employee acts in accordance with this provision of the Labor Code is not whether their actions are in line or at odds with the legal regulations or other rules applicable to the work which they perform – but whether their actions objectively served to protect the employer’s property or were aimed against it, which is to say: whether they did or did not act in conflict with the employer’s legitimate interests. These legitimate interests of the employer, then, form the central theme of the duty of loyalty, no matter whether the employee may have acted in formal compliance with the law. The employer’s legitimate interests may be deemed to comprise, in particular, the successful operation of its business, compliance with the law, representation of the company toward others, and the protection of health and property on the level of the employer.

Other expressions of the employee’s duty of loyalty, as inferred by the courts, include in particular the duty to secrecy, the duty to exercise moderation in criticizing the employer, the duty to protect the good reputation of the employer, the duty to show a measure of respect toward the employer, the duty to maintain trust between the employer and the employee, the duty to avoid any conflict of interest, and the duty to maintain proper relations with one’s colleagues.

The employee’s duty of loyalty toward the employer lasts throughout the existence of the employment relationship and in some cases even beyond, e.g. if a non-compete clause was concluded. The obligation to remain loyal vis-a-vis the employer is not strictly limited to the employee’s working hours. Employees may be obliged to observe the legal provisions which apply to the work which they perform (such as the obligation to protect the employer’s assets and to refrain from acting in conflict with the employer’s legitimate interests) also outside their working hours, in their free time (e.g. when being active on social networks).

Having said all that, the employee’s duty of loyalty is not an absolute duty. As follows from the case law of the Constitutional Court, an employee may e.g. act at odds with the legitimate interests of the employer, even though they are not in conflict with the law, if there exists a higher public good (such as the protection of the environment, or public health, etc.). Similarly, „whistleblowing „, i.e., notifying law enforcement of the fact that a criminal offense has been, or is being, committed of which the employee has gained credible knowledge, cannot be considered an action in conflict with the employer’s legitimate interests, if failure to alert the authorities would itself qualify as a felony (of concealment of a crime).

Needless to say, any potential breach of an employee’s duty of loyalty will have to be assessed with a view to the specific circumstances of each individual case. According to the decision-making practice of the courts, actions which represent a breach of the duty of loyalty may give cause for dismissal of the employee from employment within the terms of Sec. 52 (g) of the Labor Code or, in the case of a particularly gross breach of duty, summary dismissal by the employer.

Labor Code (Act No. 262/2006 Coll.); case law of the Czech Supreme Court and the Czech Constitutional Court

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