Flooding that affects your business premises can be a trying situation for employees and employers. Do you know how the consequences of flooding are regulated in the Labour Code? And what to do when your accounting records are damaged or destroyed by water? Here are our tips and recommendations.
Dealing with the consequences of a flood? We will advise you on your statutory entitlement
1. Salary compensation for remedying flood damage
If you are repairing damage from flooding that has occurred to your own property, it may interfere with an employee’s work performance (an obstacle to work):
- The employer may grant you leave without salary compensation or may also grant you salary or wage compensation.
- You can also agree with the employer to work overtime to make up for the missed working hours.
If you are helping to remove the damage from flooding that has occurred to a third party’s property in the interest of the general public:
- It is an obstacle to work on the employee’s part under Section 202 of the Labour Code, and it is an excused absence with no salary compensation.
- The duration of the obstacles must be substantiated to the employer.
- Help should be provided in an organised rather than spontaneous manner.
2. Salary compensation for damage to work premises
Your employer has been affected by flooding and has to suspend operations:
- It is essential that your employer try to transfer you to another job provided that the circumstances so allow. The employer may do so even without your consent and for the minimum necessary period of time
- If you are not transferred to another job by the employer, it is an obstacle to work on the part of the employer, and you are entitled to salary compensation of at least 60% of your average earnings
- If the employer is not affected by floods but cannot continue with operations due to a suspended supply of materials, energy or water, it is an obstacle to work and you are entitled to salary compensation of at least 80% of your average earnings.
3. Employer in financial difficulties as a result of floods
If your employer fails to pay you your wages as a consequence of floods, you can rely on Act No. 118/2000 Sb., on Employee Protection in Cases of Employer Insolvency, as amended. Alternatively, you might want to contact the employment agency having local jurisdiction for the employer’s registered office for advice on further action.
4. Property damaged by floods? Are you entitled to any allowances?
Under law, immediate emergency assistance may be provided, depending on the property owner and earnings – either yours or those of jointly assessed persons.
- Assistance may be provided up to fifteen times an individual’s minimum subsistence level, i.e. up to CZK 51,150.
- In addition, you can be granted emergency assistance up to the amount of a specific expense, providing that the sum of such assistance does not exceed ten times the minimum subsistence level of an individual in a calendar year, i.e. currently up to CZK 34,100.
- Applications for assistance should be filed with the employment agency having local jurisdiction for the individual’s permanent residence.
- The application forms can be downloaded from the Ministry of Social Affairs’ website at http://portal.mpsv.cz/forms (Formuláře pro pomoc v hmotné nouzi – ‘Žádost o pomoc z důvodu postižení mimořádnou událostí’ or ‘Žádost o mimořádnou okamžitou pomoc’, available in Czech only).
Accounting records lost in the floods?
What to do immediately after the flood
If you discover that your accounting records have been lost or damaged as a result of flooding (either in hard copy or electronic form), you must act as soon as possible and notify the destruction/damage of the accounting records to your tax administrator. We recommend that the notification provide a true account of all facts and reasons substantiating that there was no chance of protecting the accounting records, technical devices and data storage devices against damage, as required by the Accounting Act.
Following the notification, the tax authority will, as a general rule, check the facts on the spot and prepare a report on an on-site investigation or an official record and provide you with its copy.
Insufficient funds to pay taxes?
There is another problem that need not be directly related to damaged accounting materials but is frequently encountered due to high expenses relating to the adjustment of property damage. This problem is a lack of money to pay due taxes or advances. Missing documents can also make the timely filing of, for example, monthly or quarterly VAT returns difficult.
In order to avoid statutory penalties (fines and default interest), you can apply for an extension of the deadline for filing tax returns or for a deferral of the deadline for an income tax payment or for payment in instalments.
However, if the payment of the due tax is deferred or split into instalments, you should be aware that the deferred amount will accrue interest for this period, calculated as the repo rate increased by seven percentage points, i.e. currently 7.05%.
Considering the deadlines for filing tax returns, persons affected by flooding may request that their tax administrator extend the period for filing tax returns and release them from the obligation to make tax advances or to calculate the tax advances in another manner.
According to the press release from the Financial Directorate General, individuals and legal entities affected by flooding will be exempt from administrative charges related to tax proceedings.
Under statutory authorisation, the tax authority may also waive, in full or in part, inheritance tax, gift tax and real estate tax in connection with dealing with the consequences of natural disasters and other emergency situations on the grounds of mitigating legislative severity.
Certain statutory instruments are also available to municipalities that may exempt, in full or in part, real property affected by a natural disaster from real estate tax within its area of jurisdiction by means of a generally binding decree, even for the previous tax period but not exceeding five years.
If you have any questions regarding these issues, please do not hesitate to contact us. More details can also be found in the press release from the Financial Directorate General of 5 June 2013 (‘Informace daňovým subjektům k řešení důsledků povodní z pohledu daní’, in Czech only) and obtained from your tax administrator.