A delay by a business partner often means more than simply postponing the completion date of a project. In the meantime, the company continues to incur costs – employees are ready to work, machinery remains idle, and the project cannot commence. Can the injured party also claim compensation for the wages of employees who had to wait? This question was addressed by the Czech Supreme Court in its judgment, Case No. 23 Cdo 418/2026. 23 Cdo 418/2026.
Wages May Constitute Recoverable Damage – But Not in Every Case
The Supreme Court confirmed an important principle: wages incurred without purpose may constitute actual recoverable damage. However, it does not automatically follow that every wage paid during the other contracting party's delay is recoverable. The injured party must prove all statutory requirements for liability for damages, in particular the existence of damage and the causal link between the breach of contract and the costs incurred.
The judgment contains two important conclusions. First, the parties do not need to have expressly agreed on an obligation to reserve employees for a specific project. Such a contractual obligation is not a prerequisite for a claim for damages. Second, merely asserting that wages were paid is not sufficient. It will be necessary to demonstrate that the employees genuinely could not have been assigned to other work and that the costs arose specifically as a consequence of the other party's breach of contract. Companies should therefore consider, already when concluding significant contracts, how they would prove the existence of damage in the event of a dispute. In practice, records of employee utilisation, capacity planning and project documentation may prove decisive.In the case at hand, the contractor argued that employees had been specifically assigned to the project and were unable to perform their work because of the customer's delay. However, the courts found that these employees had not in fact been "reserved" exclusively for that project. They could perform other work and, in fact, did perform other tasks. Consequently, no causal link was established between the customer's delay and the wages paid.
The judgment serves as a reminder that claims for damages are assessed not only on the basis of whether costs were incurred, but also on whether those costs were genuinely caused by the other party's breach of its contractual obligations.
