In accordance with the provisions of Section 77(1) of Act No. 128/2000 Coll., on Municipalities, the municipality shall provide a severance allowance to a non-elected member of the municipal council who holds the office of mayor or vice-mayor and to a vacant member of the municipal council whose the mandate has expired a member of the municipal council if they were entitled to remuneration at the date of termination of their mandate.
The municipality shall also provide a severance allowance in accordance with the provisions of Section 77(2) of the Municipalities Act to a non-elected member of the municipal council who holds the office of mayor or vice-mayor and to a vacant member of the municipal council who has been during the term of office Retrieved from or have resignedif they were entitled to remuneration at the date of removal or resignation.
As mentioned above, the entitlement to a severance payment applies to the non-elected mayor and vice-mayor of the municipality and all vacant members of the municipal council (i.e. as vacant mayors, vice-mayors, councillors, chairs or members of committees, commissions, etc.).
The specific conditions of entitlement are set out in Section 77(3) to (7) of the Municipal Act.
The severance payment is set at the amount of the remuneration due to the municipal councillor for the month on the date of the termination of the mandate of the municipal councillor or on the date of his/her dismissal or resignation, plus the multiple of that amount and the number of complete consecutive years of office completed, up to a maximum of 3 completed years of office (Section 78(1) of the Municipal Act).
The severance pay is paid in a single lump sum at the next pay date (Section 78 of the Municipal Act). A fundamental condition for the payment of severance pay is the submission of an affidavit by a member of the municipal council that he or she has not been convicted of a deliberate criminal offence or a negligent criminal offence committed in connection with the performance of his or her duties as a member of the municipal council, his or her prosecution for such an offence has been suspended or a decision has been made to approve a settlement and to discontinue the prosecution.
Health insurance is not deducted from the severance payment (see Section 3(2)(b) of the Act on Public Health Insurance Contributions). The same applies to social insurance (see Section 5(2)(b) of the Act on Social Security Contributions and State Employment Policy Contributions). In contrast, severance pay is subject to taxation.
For the purposes of calculating the amount of deductions from wages, a lump sum severance payment is treated as an advance partial payment of income replacing remuneration for work in the following months, i.e. as a "wage" paid exceptionally in advance for a longer period (see Sections 286 and 299(4) of the Code of Civil Procedure).
For more information on severance pay, please refer to the Methodological Recommendation on the Activities of Local Government Units of the Department of Public Administration, Supervision and Control of the Ministry of the Interior of the Czech Republic "Remuneration and Other Related Entitlements and Cash Benefits for Members of the Municipal Council" No. 5.5 - see this link.
The severance pay is usually entered in this payroll and HR program using the user pay code 865, or other - it is important that it is set to system code 485.
