Legally Safe Staffing Changes: Avoid HR Disputes and Business Risks

JUDr. Jakub Dohnal, Ph.D., LL.M.
JUDr. Jakub Dohnal, Ph.D., LL.M.
2.4.2026 | ARROWS law firm

Staffing changes, reorganizations, conflicts with management, or the departure of key employees are among the most common crises in business. A seemingly simple decision—reassignment, a pay cut, termination of employment—can end in a fine, a court dispute lasting months, or a corporate disaster that could have been easily avoided. Attorneys from ARROWS, a Prague-based law firm, will show you how to handle such situations safely and in full legal compliance, so that staffing changes strengthen your company rather than weaken it.

The illustrative image shows a specialist consulting on staffing changes.

Key takeaways:

  • Employment law has pitfalls: an apparently simple task (reassignment, termination, merging roles) may contain legal traps which, without expert oversight, lead to the Labour Inspectorate, court proceedings, or fines.
  • Investing in legal certainty pays off: proper procedure and a documented process for HR changes reduce disputes, protect the company from unfounded claims, and help maintain good relationships with people.
  • The right time for legal support is today, not in the courtroom: the attorneys at ARROWS can help you prepare changes so they never escalate into a conflict.
  • Disputes with management can often be prevented: clear contracts, clear procedures, and timely legal review mean fewer disputes and less stress for business owners.

When HR matters stop being “just an HR issue”

HR management usually appears to be part of internal administration. The HR manager or the owner is in charge, the paperwork gets signed, and “the matter is resolved”. In practice, it does not work that way.

As soon as even the slightest tension arises—whether it involves termination, a pay cut, reassignment to another role, or a disputed departure—it stops being merely an internal matter. The employee may contact the State Labour Inspection Office, report a breach of a collective agreement to the trade union, or file a lawsuit with the court. At that point, what matters is no longer “how we see it”, but how the law sees it under Czech legislation—and how effectively the employee can use the situation.

It is precisely in these moments that it becomes clear whether HR steps were prepared carefully and in a legally sound way. Small mistakes—such as missing written justification, failure to observe the notice period, a discriminatory element, or a breach of procedure—then translate into high costs, reputational damage, and management time being tied up.

The attorneys at ARROWS know this from practice. They help entrepreneurs and HR teams in the Czech Republic handle HR situations so they do not spiral out of control.

What are the most common legal risks in HR practice

Termination and ending of employment

Termination is the most sensitive situation. Formally, it looks simple: you deliver a written notice of termination stating the reason, you observe the notice period (typically at least 2 months), and after the period expires, the employment ends.

In practice, it is more complicated. Under the Labour Code, employees are entitled to protection: they cannot be dismissed without an adequate reason, and even where a reason exists, it must meet strict conditions. There are no “general” reasons—Czech law recognises specific grounds such as repeated breach of work duties, unsatisfactory work performance (provided the employee has previously been warned in writing), or organisational changes.

Practical risk: An employee can challenge the termination in court. If the court finds that the reason was not properly documented, the employee was not given an opportunity to explain the situation, or the procedure was not followed, the court will invalidate the termination. The employee returns to work with a claim for wage or salary compensation for the period of invalid termination of employment. In practice, this can mean months of litigation and additional costs.

What is often forgotten in practice: For unsatisfactory work performance to be a valid reason for termination, it must be preceded by a written warning to the employee and a period to remedy the shortcomings. Without this, the termination is considered unlawful. Likewise, you need documented specific examples of failures, not just a general statement.

The attorneys at ARROWS prepare termination procedures so they are legally robust under Czech law.

Reassignment and changes to working conditions

Reassigning an employee to another role or changing the amount of pay may seem like a matter between employer and employee. It is not. This is where the legal principles of contractual freedom and employee protection come into play: one of the employee’s rights is the agreed content of the employment relationship. If you want to change the role or salary, you cannot simply order it—you must reach an agreement with the employee.

If you cannot reach an agreement, you may give notice for organisational reasons if the original role is being abolished or changed, and offer work under new conditions. However, that means at least two months of discussions (the standard notice period), and in the meantime the employee may continue working under the original contract or find another job.

Practical risk: When a business owner takes matters into their own hands and reduces pay or reassigns an employee without agreement, the employee may contact the State Labour Inspection Office and allege a breach of working conditions. The authority will then investigate, and if it finds that the legally required procedure was not followed, it may impose on the employer a fine of up to CZK 2 million. In addition, the employee is entitled to compensation for the pay difference.

How the law views it: The Labour Code requires changes to conditions to be agreed in writing, or for the content of the employment relationship to be amended by a new agreement signed by both parties. A unilateral change is not legally effective.

The attorneys at ARROWS can structure reassignments and changes so they are legally compliant and difficult to challenge before a court or authority in the Czech Republic.

Reorganisation and merging roles

Reorganisation is a topic that should be handled with legal input. If a company wants to streamline its structure and, for example, merge two roles into one, this is a material change to working conditions or even the abolition of a role. This means the business owner cannot simply order people to work differently—they must inform them, allow them to comment, and, if they disagree, offer a solution (e.g., another role within the company or termination for organisational reasons with severance pay).

In such cases, the Labour Code requires the employer to proceed with reasonable caution: inform employees in a timely manner, take their comments into account, and offer an appropriate solution.

Practical risk: If a company takes restructuring into its own hands without legal support, it risks a court later finding the process invalid. In that case, employees may demand either reinstatement to the original terms of their employment or compensation for harm suffered. In addition, this can create tension within the team, potentially lead to the departure of key people, and damage the company’s reputation as an employer.

ARROWS, a Prague-based law firm, can help you prepare the reorganisation from a legal perspective so that it is clear and fair for all parties.

Most common questions on legal certainty in HR matters

1. Do I always have to give an employee an opportunity to defend themselves against termination?
The law does not expressly require it, but in practice we strongly recommend it. If you want the termination to withstand potential court review, you should allow the employee to explain their side of the story. This usually means an in-person meeting or a written statement. This in itself significantly reduces the risk that a court will side with the employee regarding the procedure.

2. What documents do I need to make a termination meeting legally safe?
You should have minutes of the meeting (who was present, what was discussed, what evidence was presented). Ideally, the meeting is conducted by two people (e.g., the owner and an HR specialist) and the employee receives a copy of the record. For you, this serves as evidence that you acted diligently and that the employee knew why termination was being discussed.

3. Can I reduce an employee’s salary if the business is failing?
Not without their consent. Salary is part of the terms of employment and you cannot reduce it unilaterally. That would be a breach of the law. You must reach an agreement with the employee and document the change in writing. If they did not agree, then—where there are objective organisational reasons—you would have to abolish their position and terminate employment for organisational reasons with severance pay, and then potentially offer them other work under the new terms.
ARROWS, a Prague-based law firm, can assist you with these discussions so that they lead to a solution that is legally correct and at the same time acceptable for the company.

Disputes with leadership and management – when it’s time for a lawyer

Disputes involving leadership (directors, managers, company owners) are among the most complex HR matters. These are people with higher pay, often under a different type of contract (not only an employment relationship), sometimes with an ownership stake or specific obligations (a non-compete agreement, confidentiality regarding trade secrets).

When a senior employee decides to leave or enters into conflict with their employer, it may mean:

  • information leakage,
  • breach of a contractual non-compete clause,
  • a dispute over the amount of severance pay,
  • a dispute over the forfeiture of shares or equity interests,
  • the manager’s claims for premiums, bonuses, or other receivables.

Practical risk: Without legal oversight, a situation may arise where a senior employee leaves with valuable information, sets up a competing business, and starts taking clients. Or they may file a lawsuit against their former employer claiming they were denied agreed bonuses. In both cases, the business owner ends up in court and uncertain about the outcome.

How the law views it: Czech law protects trade secrets. If the company has a basis in the employment contract or another agreement to bind the employee to confidentiality and compliance with a non-compete clause (including agreed financial compensation), it can defend itself against such a threat. However, only if this is clearly agreed and the employee has consented to it.

ARROWS, a Prague-based law firm, can help you put the right contractual framework in place for working with leadership—i.e., contracts that genuinely protect the business owner.

Ensuring legal certainty – what to do immediately, today

Review of existing employment contracts and internal policies

If you have employees and employment contracts from earlier times, it is time to have them reviewed by an attorney. They often contain incomplete, illogical, or legally problematic wording. This then becomes apparent precisely at the moment you need them. ARROWS, a Prague-based law firm, will take such contracts, identify the gaps, and propose solutions that protect the company.

Preparing a procedure for HR changes

If you know changes are coming (termination, reassignment, reorganisation), you should have an attorney prepare the process for you: how to communicate with the employee, what documents to obtain, how to conduct the meeting, and what pitfalls to avoid.

Documentation and communication

Every important meeting should be documented. It does not have to be lengthy minutes—a note with the date, participants, and a brief summary is sufficient. This will help you greatly later if the matter ends up before the State Labour Inspection Office or in court.

Dealing with the State Labour Inspection Office or trade unions

If you want to dismiss an employee or carry out a larger reorganisation and you know there will be resistance, we recommend engaging with the State Labour Inspection Office or trade unions before you lose control of the situation. ARROWS, a Prague-based law firm, can represent you in such negotiations—ensuring that all procedures are followed and that your position is as clean as possible.

Table of risks and solutions

Potential issues

How ARROWS helps (office@arws.cz)

Termination challenged by the employee: The court finds that the reason was not sufficiently documented. The employee returns to work with a claim for wages for the period of absence.

ARROWS’ Prague-based attorneys will help you prepare the termination properly: document the reason, conduct the correct meeting with the employee, and ensure that all procedures are followed. If needed, they will represent you in court proceedings concerning the invalidity of the termination.

Breach of the terms of employment: You reduce an employee’s salary or reassign them without agreement. The employee reports a breach of working conditions to the State Labour Inspection Office. This is followed by a fine of up to CZK 2 million.

ARROWS’ attorneys will propose how to communicate and agree the changes properly with the employee in writing. If you have already implemented the change without agreement, they will help you remedy the situation and handle negotiations with the State Labour Inspection Office.

Disputes with management and departures of key people: A manager leaves, takes trade secrets, or breaches a non-compete clause. The business owner faces uncertainty and the risk of losing clients.

ARROWS’ attorneys will prepare a contractual framework for managers with the relevant clauses (non-compete clause, confidentiality regarding trade secrets). In the event of a breach, we will represent you in court proceedings or in negotiations with the employee.

Reorganisation without legal oversight: Merging roles, closing a department, or changing the structure without proper communication with employees. Employees feel threatened, misunderstandings and conflicts arise, or even mass departures.

ARROWS’ attorneys will help you prepare the reorganisation from a legal perspective: they will ensure proper communication to employees, make sure procedures are followed, and propose solutions for employees who do not want the new terms.

Missing documentation and records: When an inspection by the State Labour Inspection Office or court proceedings occur, you do not have records of meetings, reasons, and evidence. Your position is weak.

ARROWS’ attorneys will help you with retroactive documentation where possible and with your court defence. At the same time, we will teach you how to document properly going forward.

Final summary

Employment and HR law is among the most frequently underestimated areas of business law. Many business owners think these are matters that “take care of themselves” — that it is enough to give an employee notice and that’s it. In practice, it does not work that way.

Every step in HR has legal consequences. If it is carried out without sufficient legal oversight, it can backfire on the company: an increase in litigation, fines from authorities, loss of key employees, reputational damage. Conversely, if HR changes are prepared correctly and communicated carefully, they become a tool through which the company grows and improves.

The lawyers at ARROWS advokátní kanceláře see it from both sides: they assist business owners in their interests and also their employees in enforcing their rights. This gives us deep insight into how HR matters are actually handled and where disputes most often arise.

If you are planning HR changes or dealing with a current dispute with an employee or management, do not hesitate. The lawyers at ARROWS advokátní kanceláře will help you with preparation, documentation, communication, and legal defence. A safe solution to HR matters starts with getting in touch: email us at office@arws.cz.

Most common questions on employment law and HR changes

1. Do I have to explicitly state the reason in a notice of termination?
    Yes. The Labour Code requires that a notice of termination includes the reason. Without a reason, or with an unclear reason, the termination may be considered invalid. The reason should be specific (e.g., “you repeatedly breach your manager’s instructions, and despite being warned on date X, you continue to do so”), not general. If you are unsure, ask the lawyers at ARROWS advokátní kanceláře — preparing the correct wording of the reason is one of their key services.

2. How long should I wait before I can dismiss an employee after giving them a written warning for poor performance?
The law requires that the employee be given a reasonable period to improve. What is “reasonable”? This may ultimately be assessed by the court. Typically, it means at least 1–2 months, depending on the nature of the work. If you want to be on the safe side, do not send a warning and a notice of termination in the same month — you risk the court saying you did not give the employee a chance. ARROWS’ attorneys will help you set the correct timeline.

3. Can I dismiss an employee without severance pay?
  That depends on the reason and on any agreement. If the reason lies on the employee’s side (breach of work duties), severance pay is not mandatory. If the reason lies on the employer’s side (e.g., an organisational change), severance pay is mandatory under the law. The amount of severance pay depends on the length of the employee’s employment with the employer. If you want to align legal obligations with practical considerations, contact the lawyers at ARROWS advokátní kanceláře.

4. Which employees are protected and cannot be given notice of termination?
Special protection against termination applies, for example, to pregnant employees, employees on maternity leave, employees on parental leave, employees on temporary sick leave, employees called up for military training or service, and other groups during the protected period defined by the Labour Code. Stricter rules apply to these groups — termination is made more difficult or entirely impossible.
If you are in such a situation, timely legal assessment is especially important to avoid a discrimination claim. ARROWS’ attorneys can navigate these situations without difficulty.

5. What is the difference between termination by notice and ending employment by mutual agreement?
Termination by notice is a unilateral decision by the employer or the employee and must be justified. Ending employment by agreement is a bilateral consent — both parties agree that the employment will end. An agreement is usually faster and carries a lower risk of dispute, but you must genuinely reach an agreement with the employee, and it is advisable to agree on any severance pay or other obligations as well. The lawyers at ARROWS advokátní kanceláře will consider both options and recommend which is better in the given situation.

6. What happens if an employee files a lawsuit for breach of employment rights? What should I expect?
Typically, this means court proceedings before a district court, which take several months, sometimes longer. If the court upholds the employee’s claims, you may be ordered to reinstate the employee, pay compensation for wages or salary for the period of invalid termination of employment, pay court fees and the other party’s costs, etc.
We recommend contacting a lawyer as soon as the employee files a lawsuit — the earlier you submit a response and prepare your defence, the stronger your position. ARROWS’ attorneys represent clients in employment-law litigation and know how to identify weak points in the employee’s allegations.

Notice: The information contained in this article is of a general informational nature only and is intended to provide basic guidance on the topic based on the legal status as of 2026. Although we take the utmost care to ensure accuracy, legal regulations and their interpretation evolve over time. We are ARROWS advokátní kancelář, an entity registered with the Czech Bar Association (our supervisory authority), and for maximum client protection we maintain professional liability insurance with a limit of CZK 400,000,000. To verify the current wording of the regulations and their application to your specific situation, it is necessary to contact ARROWS advokátní kancelář directly (office@arws.cz). We accept no liability for any damages arising from the independent use of the information in this article without prior individual legal consultation.

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