On 12 April 2013, Slovenia’s new Employment Relationship Act (Zakon o delovnih razmerjih; “ERA-1“) and the Act on the Amendments to the Labour Market Regulation Act (Zakon o spremembah in dopolnitvah Zakona o urejanju trga dela;“ZUTD-A“) entered into force, introducing labour market reforms as a result of long-lasting negotiations among the country’s social partners. The reforms aim to establish (maintain) adequate protection of workers and their employment relationships by simultaneously implementing more effective and flexible means of adapting to current market conditions (thus reducing labour market segmentation and increasing the flexibility of employment relationships).
Some of the most significant changes pertain to the following areas:
Amendments to the regime of management and middle-management
Managing employees as the sole founders of an undertaking may now be granted the status of employees – they may have social security taxes levied on them like other employees and are insured on the same basis. Middle management (leading employees) is defined as a new category under ERA-1.
Temporary agency work
Agency work shall be costlier and more restrictive. The number of workers employed through an agency (de iure employer) and actually working at the user (de facto employer) may as of 12 April 2014 not exceed 25% of the user’s overall headcount (exceptions apply).
Economically dependent persons
The concept of an economically dependent person (EDP) has been established: a self-employed person performing work independently, against remuneration (at least 80% of income deriving from a single entity), personally, long-term under a civil contract, and without employing other workers. The EDP is granted employment-related protection (against proving his/her economical dependence) as to the minimum notice periods, protection against unlawful terminations, comparable salaries, assertion of damage claims, etc.
The conclusion of fixed-term contracts has become more restrictive: the 2-year fixed-term contract is limited to work on the same working post / for the same nature of work, which is as a fact being performed by an individual worker. The limitation can no longer be circumvented by employing another worker for actually the same work, which another worker has been performing for the 2-year period. Severance payments should be paid out after the lapse of the fixed-term period (a few exceptions apply), but not for fixed-term contracts that were concluded prior to 12 April 2013. Higher unemployment contributions have been introduced for fixed-term contracts (up to the fivefold amount), whereas no contributions shall be paid for the first two years upon conclusion of an indefinite term contract.
Simplified procedures for terminations
The new labour market reforms remove the obligation to examine whether the worker can be re-employed at another working post, re- or pre-qualified; pre-notifications for terminations due to business reasons have been retrenched; notifying the employee may in certain cases be done by e-mail; serving of terminations may be done by registered post, etc.
Shorter notice periods and lower severance payments
Terminations due to business/incapacity reasons now entail shorter notice periods: (i) 15 days (for employments up to 1 year), (ii) 30 days (for employments between 1 – 2 years), (iii) 30 days + 2 days (but not exceeding 60 days) for each additional year of employment after 2 years of employment; (iv) 60 days (for employments between 17 – 25 years); (v) 80 days (for employments over 25 years, unless stipulated otherwise under the branch collective agreement, but not less than 60 days). Terminations due to culpability reasons entail a notice period of 15 days. Also, severance payments have been slightly reduced.
During a trial period, now either the employer or the worker may terminate the employment contract with a 7-day notice period; severance payments may apply.
Annual leave shall be calculated in proportion to the length of the worker’s employment at the employer, i.e. 1/12 for each month of employment (the right of attaining the full annual leave after 6 months of continuous employment at the employer has been struck off). Unused leave may be used until 31 December of the next calendar year, if it could not have been used due to sick, pregnancy or maternity leave.
Role of trade unions and works councils
The works councils may now actively cooperate in employment-related procedures (terminations, adoptions of internal acts, etc.) on the worker’s request or as a replacement to the trade unions (if they should not exist on the company level / if employees are not their members).
Obligation to carry out other work and temporary lay-offs
The employer may (in writing) instruct the worker to perform other adequate work (ustrezno delo), which exceeds the scope of the worker’s activities (if necessary for the preservation of the employment relationship or the uninterrupted working process), or suitable work (primerno delo), which is applicable for smaller employers. Temporarily dismissals (lay-offs) are possible up to a total of six months per calendar year.
Increased liability of employers when transferring workers
The transferor (25% stakeholder of the transferee) transferring workers to the transferee shall be jointly liable for all claims of the transferred workers in cases of bankruptcy/compulsory liquidation of the transferee within two years after the transfer. If the transferor is not a predominant stakeholder, the liability shall be of subsidiary nature.
The payroll of the worker is now considered a credible document, based on which the worker may directly enforce payments in front of courts (ie. initiate judicial enforcement proceedings).
An employer may, under certain conditions, make use of tax reliefs (reduction of the tax basis up to 45% of the paid salary – gross I), if the employer hires for an indefinite period an individual (i) under the age of 26 or (ii) over the age of 55 who has been registered as unemployed for at least 6 months prior to the employment.
Slovenian employment legislation remains predominantly worker-friendly and is still aimed at safeguarding employment relationships and workers’ rights. Minor steps have nonetheless been made towards loosening the restrictive framework encumbering employers. Administrative impediments and costs of employing a worker for an indefinite period have been reduced, whereby the employing under fixed-term contracts will from now on represent a financial disincentive.