The judicial branch decide what's legal and what is not in most modern democratic country by interpreting laws written by the legislature. However, in parliamentary systems, like UK or Canada, the government mostly control the legislature and impose its agenda. I'm unsure about Czech republic but clear power separation like the US is uncommon.
You are correct, Czechia is a parliamentary democracy. Usually, the government is formed by the parties that together have a legislative majority in the lesser chamber.
I should clarify that this is not a law, rather a "government decision" (a la "executive order") on how to act on it's law. Forgive me, I'm not well versed in legal English, and the systems are quite different.