In Slovenia, employment relationships are regulated by a special act – the Employment Relationships Act (ERA). It first entered into force in 2003 and fundamentally changed the regulation on employment relationships between employers with a registered office or residence in Slovenia and their employees. In 2013 a new Employment Relationships Act was passed with necessary changes that were in the works for years. The Act is aligned with European law and incorporates international conventions and the directives of the European Parliament and the Council. It also applies to the employment relationships of employees of state bodies, local communities and institutions, other organisations and private persons carrying out a public service, although individual rules may be regulated differently by special laws.
A significant autonomous source of law to which the ERA refers is collective agreements. These are regulated by the Collective Agreements Act (regulating the parties, content, procedure for concluding a collective agreement, its form, validity and termination, the amicable settlement of collective labour disputes and the registration and publication of collective agreements). Collective agreements are usually concluded for a specific activity or occupation, but may also be concluded by individual employers. Certain rights are defined in the ERA, but their scope is determined by collective agreements. Collective agreements are particularly important when determining the starting salaries in individual tariff classes, since trade unions and employers are engaged in constant dialogue on this issue.
A special court for labour and social disputes has jurisdiction over the resolution of labour disputes – both disputes concerning status and other matters. An appeal against the judgments of the court of first instance may be filed with the Higher Labour and Social Court. In certain cases stipulated by law, it is possible to file an extraordinary appeal against a finally settled labour dispute with the Supreme Court of Slovenia.
The implementation of the ERA, implementing regulations, collective agreements and general acts of the employer regulating employment relationships is supervised by the Labour Inspectorate of Slovenia according to the regulations governing inspection supervision.
The government’s measures on the labour market are aimed at ensuring the implementation of services in the field of employment, active employment policy measures and the functioning of the unemployment insurance system and are regulated by the Labour Market Regulation Act. The most important body tasked with implementing the measures under this Act is the Employment Service of Slovenia, which reports to the Ministry of Labour regarding its performance and use of funds.
II YEAR IN REVIEW
Since the end of 2013, the unemployment rate has been getting lower. The registered unemployment rate in September 2016 was 10.3 per cent. Along with the economic growth, the rate of employment has increased in the majority of branches of the private sector. If economic growth continues, a decrease of the unemployment rate is expected in the following two years. The number of first-time job seekers is also getting lower, because of a smaller generation of young people who have finished education.
Unemployment among elderly people has increased in the past few years, and as a result, the Intervention Measures for the Labour Market Act entered into force in 2016. In accordance with this Act, an employer that employs a person older than 55 years who was, prior to concluding the employment relationship, registered as an unemployed person for at least six months, will be exempt from paying contributions to mandatory social insurance schemes.
Additionally, there are several programmes performed by the Employment Service of Slovenia that aim to reduce the unemployment rate.
III SIGNIFICANT CASES
Owing to the recession, since 2011 labour courts have been dealing with a higher number of ordinary terminations of employment contracts for business reasons. In the last year the number of such cases has drastically declined. Reasons for this lie in the fact that employees now fully comprehend the situation their employers are in, they have grown accustomed to the economic situation in Slovenia and see its effects everywhere and that they can no longer afford to pay the court and legal fees necessary to process or even file legal actions. The case law remains relatively unchanged; as a rule courts are not competent to supervise the business and organisational decisions of an employer, and as regards the existence of substantiated business reasons they can only judge, based on the statements of parties, whether the reason is fictitious and constitutes a breach of the prohibition of discrimination within the meaning of Article 6 of the ERA.
The Supreme Court of the Republic of Slovenia issued two decisions regarding ordinary cancellation of employment contract because of unsuccessful completion of the probationary period, under reference No. VIII Ips 43/2016 and No. VIII Ips 119/2016. These emphasise that the purpose of the probationary period is for the employer to establish whether an employee fulfils his or her expectations and is successful at working at the specific workplace. In principle, the employer cannot reach such a decision in only a few days; however, in certain cases, and in accordance with the above stated decisions, it is possible that such a decision can be established on the first day of work. For example, if an employee lacks sufficient knowledge of a foreign language and this is necessary to perform a certain job, or if an employee has fear of heights and the job post is elevated, the employer does not have to wait for the probationary period to pass, and can ordinarily cancel the employment contract during the beginning of the probation period.
The termination of an employment contract on the basis of a judicial decision remains a standard practice of the courts in Slovenia. If such a decision is proposed by one of the parties in dispute and there are circumstances and interest of both parties that make the continuation of the employment relationship, whose termination has been deemed unlawful, no longer possible, the court may decide that the employment relationship has been terminated, but no later than the time of the decision of the court of first instance. According to recent case law, some changes in the decisions of the courts came into effect. When determining the cut-off date and the amount for damages awarded to the employee, the courts now take into account many circumstances or facts. One such is the decision of the Supreme Court of the Republic of Slovenia, reference No. VIII Ips 98/2012, declaring that ‘no longer than until the decision of the court of first instance’ actually means no later than when the employee concludes a new employment contract with another employer. Also, if a former employee becomes self-employed after the termination of the employment contract and prior to decision of the court of the first instance, that fact is also taken into consideration when determining the cut-off date (Supreme Court of the Republic of Slovenia decision under reference No. VIII Ips 72/2015). Nevertheless, the Supreme Court of the Republic of Slovenia decided that if the employee becomes employed after the cancellation of the employment contract and before the decision of the court of first instance, but only for a short period of time or only part-time, such employment does not mean that the employment relationship is automatically terminated on the date the new employment contract is concluded (Supreme Court of the Republic of Slovenia decision under reference No. VIII Ips 28/2015 and No. VIII Ips 220/2014). Some questions still exist over whether the employee is entitled to the difference in salary but this will surely be answered in the foreseeable future by new case law.
In addition, a significant decision was issued by the Supreme Court of the Republic of Slovenia under reference No. VIII Ips 102/2015 regarding the termination of an employment contract of workers that are soon to be retired. In accordance with the ERA an employer may not, for business reasons, cancel the employment contract of a worker who has reached the age of 58 or a worker who has only up to five years left to fulfil the pension qualifying period without the worker’s written consent until the worker fulfils the conditions for acquiring the right to old-age retirement. So far, the court has not considered it possible to lower a workers’s age limit for gaining the right to old-age pension (due to caring for a child, national service, etc.). Now, in accordance with the above-stated court decision, the employer must consider such circumstances, since conditions for gaining the right to old-age retirement are different for each individual depending on personal circumstances and decisions (in 2016 this practice remains unchanged).
IV Basics of ENTERING AN EMPLOYMENT RELATIONSHIP
i Employment relationship
The ERA provides that an employment relationship is entered into based on an employment contract, which must be made in writing. An employment contract is deemed to have been validly concluded when it is signed by both the employee and the employer. The employer must submit a written draft of the employment contract to the employee at least three days before the envisaged signing of the contract and a written employment contract upon its conclusion. Even though the ERA prescribes that an employment contract must be concluded in writing, the Act itself and the established case law indicate that a relationship between an employee and an employer that has all the elements of an employment relationship and is actually implemented as such is deemed to exist, even if the employment contract is not executed in writing. In such a case, the employee has the right to request that the employer submits an employment contract at any time during the term of the employment relationship and may exercise judicial protection. In the case of a dispute about the existence of the employment relationship, it is presumed by law that an employment relationship exists if all the elements of an employment relationship exist.
Under the ERA, an employment contract must contain the following elements:
- a details of the contracting parties, including their residence or registered office;
- b the date of commencement of the work;
- c the title of the position or type of work, including a brief description of the work the employee must perform pursuant to the employment contract and for which there is the requirement of a corresponding level of education and other conditions for carrying out the work;
- d the place where the work is to be carried out – if the exact place is not stated, it shall be presumed that the employee is to carry out the work at the employer’s registered office;
- e the duration of the employment contract, the reason for concluding a fixed-term employment contract and the manner of taking annual leave, if the latter is agreed on;
- f a stipulation stating whether the employment contract is for part-time or full-time work;
- g a stipulation of the daily or weekly working time;
- h a stipulation of the amount of the basic salary in euros that the employee shall receive as remuneration for carrying out work in accordance with the employment contract and on any other remuneration;
- i a stipulation of other components of the employee’s salary, payment period, payment date and manner of payment of the salary;
- j a stipulation of the annual leave or the manner of determining the annual leave;
- k length of the notice periods; and
- l collective agreements that are binding on the employer or the employer’s general acts that specify the employee’s working conditions.
In addition to other mandatory elements, an employment contract may stipulate other rights and obligations in cases laid down by the ERA. What is important is that, regarding the issues referred to in (g), (i), (j) and (k), the parties may refer to the applicable laws, collective agreements or the employer’s general acts.
If an employment contract does not contain all the elements prescribed by the law, this does not make it invalid since, in such a case, only the provisions of the employment contract that are contrary to the law do not apply.
An employment contract is normally concluded for an indefinite period of time, but may also be concluded for a fixed term in the cases listed in the ERA. If a fixed-term employment contract is concluded contrary to the law or collective agreement, or if an employee continues to work even after the period for which they had concluded the employment contract has expired, it is deemed that the employee concluded an employment contract for an indefinite period of time. The Act also stipulates that the employer may not conclude several successive fixed-term employment contracts for the same work, the total continuous duration of which would exceed two years. The sanction for violating this provision is the transformation from a fixed-term employment contract into an employment contract for an indefinite period of time.
If both parties are willing, they can always agree to amend the employment contract or a specific provision thereof. An amendment to the employment contract or the conclusion of a new employment contract can be proposed by either the employee or the employer. An employment contract may be amended by an annex thereto. If the amendment concerns a change of job position, the place where the work is to be carried out, the duration of the employment contract or the weekly working hours, the employee and the employer must conclude a new employment contract. An amendment to the employment contract is not possible if either of the parties disagree with it.
The ERA contemplates the ‘economically dependent person’, meaning a self-employed person who does not employ employees and who – stemming from a civil relationship with the employer – performs work for the latter in person, in return for remuneration and for a longer period of time. He or she also has to get at least 80 per cent of his yearly income from the same client. These persons have the right to a limited protection under the provisions of the ERA.
ii Probationary periods
Under the ERA, the employee and the employer may agree on a probationary period in the employment contract, which may not last for more than six months and may be extended in the case of a temporary absence from work. During the probationary period, the employer monitors the employee’s performance and, upon its expiry, decides whether the employee has successfully passed the probationary period or not. If, at the end of the probationary period, the employer makes no decision or determines that the employee has successfully passed the probationary period, the employee will continue working under the employment contract, but if, at the end of the probationary period, the employer establishes that the employee did not successfully pass his or her probations, they may ordinarily terminate the employment contract (which means that the employee is issued an ordinary termination of the employment contract and the employment relationship terminates after seven days).
Under the ERA the employer can terminate the employment contract during the probationary period, if he determines that the employee’s work is lacking.
During the probationary period, the employee may terminate the employment contract with a seven-day notice period without explanation.
iii Establishing a presence
The act governing employment relationships only applies to employment relationships between employers with a registered office or residence in Slovenia and their employees or between foreign employers (without a registered office or residence in Slovenia) and their employees if the employment contract was concluded on the territory of Slovenia. In the case of employees posted to Slovenia by a foreign employer on the basis of an employment contract pursuant to foreign law, the ERA is applied in accordance with the provisions regulating the position of employees posted to work in Slovenia. This means that the posted employees perform work in Slovenia under the conditions laid down in the regulations on the work and employment of foreign citizens. A foreign employer is obligated to ensure that an employee posted to Slovenia enjoys the rights according to the regulations of Slovenia and under the provisions of the collective agreement for the respective branch of industry that regulates working time, breaks and rest periods, night work, minimum annual leave, salary, health and safety at work, the special protection of employees and equal treatment, if these are more favourable for the employee.
The ERA allows for the possibility that employers may, through special persons (employers who carry out the activity of providing workers to another user), hire employees who actually perform work for them but are not employed by them. A foreign employer may actually provide services in Slovenia through their contractual partners as well, provided that they have concluded an appropriate contract with these partners for work and that they hold the relevant authorisations prescribed by the legislation of Slovenia. Under the Companies Act, a foreign employer may establish a branch in Slovenia, through which they perform their activity. Such a branch and its employees are subject to the same rules as Slovenian employers. If an employment relationship exists, the employer must account and pay taxes and contributions from the employee’s salary to the appropriate state sub-accounts.
V RESTRICTIVE COVENANTS
Under the ERA, employees must refrain from all actions during the employment relationship that, in view of the nature of the work that they carry out for the employer, are detrimental or could potentially be detrimental to the employer’s business interests in material or moral terms. Under the ERA, employees must also protect the business secrets of the employer and may not represent a source of competition to the employer during the employment relationship without the employer’s written consent.
If the employer believes that the employee is gaining technical or business knowledge and business connections while carrying out work or in relation to work, it may include a special non-compete clause in the employment contract, prohibiting the employee from pursuing a competing activity for a period that may not be longer than two years after the termination of the employment contract. A non-compete clause is only valid if it is stipulated in writing, if the employer provides monthly compensation to the employee for respecting the non-compete clause equalling at least one-third of the average monthly salary of the employee in the past three months before the termination of the employment contract and if the employment contract is terminated due to extraordinary termination by the employer either by way of mutual agreement between the parties, ordinary termination by the employee or termination with cause.
A non-compete clause has to prescribe reasonable limitation periods for the prohibited competition, may not exclude the possibility of appropriate employment for the employee and must not be contrary to the principle of the equality of reciprocal duties.
In Slovenia, an employee’s salary is composed of a basic salary (one of the mandatory elements of an employment contract), individual performance-related pay, bonuses and company performance-related pay, if so agreed in the employment contract or collective agreement. The amount of salary is agreed by the parties upon signing the employment contract and during the employment. The amount of the basic salary is entered in the employment contract; benefits are usually specified in the respective branch collective agreement or the collective agreement at the level of the employer, whereas performance-related pay is determined on the basis of adopted criteria and conditions. The criteria and conditions may be specified in the general act of the employer or the collective agreement. The tariff section of the branch collective agreements includes the classification of job positions into tariff classes for which the minimum wage amounts are determined for a specific activity. The salaries determined in the employment contract may not be lower than the minimum wage prescribed in the collective agreement for the relevant tariff class. The minimum wage in Slovenia is prescribed by law. In 2016, the amount of minimum wage is €790.73 gross per month. If the parties to the branch collective agreement agree to increase the minimum wage by tariff class, and these are the basis on which the wages are calculated, the employees’ salaries also increase.
i Working time
The ERA defines working time as the effective working time and break time, as well as the time of justified absences from work in accordance with the law and the collective agreement or a general act. Full-time work may not exceed 40 hours a week according to the ERA. The law or a collective agreement may stipulate a working time shorter than 40 hours a week, though full-time work may not be less than 36 hours a week.
The working hours of employees performing night work are limited. If the work is organised in shifts, the employer is obligated to ensure the periodical rotation of shifts. An employee in a certain shift may not work at night for more than one week. Within a period of four months, the working time of a night worker may not exceed eight hours a day on average, while the working time of a night worker occupying a position that – according to the risk assessment – involves a higher risk of injuries or damage to health, may not exceed eight hours a day. Night workers should be given longer annual leave, an appropriate meal during work and professional guidance in the working or production process. An employer may not assign an employee to night work if the employee does not have transport to and from work.
The employer does not have full discretion when assigning night work, as some employee categories cannot be assigned night work or may only be assigned night work in exceptional cases stipulated by the law. Such employee categories include employees under the age of 18, employees during pregnancy and the breastfeeding period, employees who are parents of a child under the age of seven or a child who is severely ill or severely physically or mentally disabled and live alone with the child, and older employees (aged 55 and over). The prohibition of night work does not apply to all cases and categories alike, since the ERA does permit night work for these employee categories, specifying the cases where night work is possible subject to the written consent of the employee.
The ERA stipulates that work exceeding full working hours – overtime work – is only permitted in special cases specified in the Act. These cases involve an exceptionally increased workload, provided the continuation of work and the production process is required in order to prevent material damage or a risk to the life and health of people or provided this is necessary in order to ensure the safety of people and property and the safety of traffic, as well as in other exceptional, urgent and unforeseen cases provided for by the law or by the branch collective agreement. Overtime has to be ordered in advance in writing, but if this is not possible, it may be ordered orally; however, in such a case, a written order must be handed to the employee subsequently. Just as in the case of night work, there are categories of employees that may not be ordered overtime work. These include employees younger than 18, older employees and employees during pregnancy, childcare and parenthood.
Overtime work may not exceed eight hours a week, 20 hours a month and 170 hours a year. If an employee consents, overtime work may exceed this limitation, but must not exceed 230 hours a year. Overtime work is considered work under special conditions and an employee is entitled by law to special overtime pay. The amount of overtime pay is determined in the branch collective agreement. Overtime pay is usually 130–150 per cent of an employee’s regular hourly rate of pay.
VII FOREIGN WORKERS
The new Employment, Self-employment and Work of Aliens Act entered into force on 15 July 2015. The Act redefines the employment of foreign nationals and introduces a single permit for work and residence. A single permit enables people from third countries to enter, reside and work in Slovenia. A single permit for residence and work is issued by the Administrative Unit offices, with the consent of the Employment Service of Slovenia. The first single permit can be issued for a maximum period of one year and can be extended.
Some categories of foreign nationals such as priests, foreign media reporters, business visitors and professional athletes do not require the single permit for residence and work, and can be employed, self-employed or perform work if their residence is in accordance with regulations governing the residence of foreign nationals.
Citizens of Member States of the European Union, as well as citizens of Norway, Liechtenstein, Iceland and the Swiss Confederation have the right to free access to the labour market. This means that they can be employed, self-employed or perform work without the consent of the Employment Service of Slovenia. However, the process still differs for Croatian citizens as Slovenia has extended the two-year transitional period (first set from 1 July 2013 until 30 June 2015) for the employment and work of Croatian citizens in Slovenia. A special Act regarding the free movement of citizens of the Republic of Croatia and their family members has extended the transitional period after 1 July 2015 for another three years.
Foreign nationals residing in the Republic of Slovenia on the basis of a permit for temporary residence for family reunification with a Slovene citizen also have the right to free access to the Slovenian labour market.
Upon the conclusion of an employment relationship with a foreign worker (which must be in accordance with the law governing labour relationships and potential collective agreements binding to the employer), an employer is obligated to register a foreign national in social insurance schemes. Foreign nationals who are employed in Slovenia have equal rights and obligations, arising from the work relationship, to those of Slovenian citizens. If a foreign national is employed on the basis of a single permit, he or she has all of the rights and obligations in accordance with national law related to wages, working time, breaks, rest periods and safety at work, among other rights.
Taking into account the situation and anticipated trends of the labour market, the government may, in accordance with its migration policy and by decree, annually determine the quota of work permits through which it restricts the number of foreign nationals on the labour market.
VIII GLOBAL POLICIES
The ERA only defines the employee’s obligations in general terms. An employee must carry out work with due diligence, they must consider the work and business organisation and comply with the requirements and instructions of the employer in the fulfilment of contractual and other obligations arising from the employment relationship; they must respect and implement the regulations on health and safety at work; inform the employer of any relevant circumstances that affect or might affect the fulfilment of their obligations; they must refrain from all actions that – in view of the nature of the work carried out by the employee for the employer – are detrimental to the interests of the employer in material or moral terms; they must protect business secrets and must not represent a source of competition to their employer. Since the ERA only defines an employee’s obligations in general terms, an employer must in practice prescribe the procedures and methods of work and expected conduct of employees – by way of instructions, general acts, ethical codes and the like – allowing them to determine whether an employee has breached their obligations or not in each specific case. The ERA expressly stipulates that employees must be informed of the provisions with which they should be familiar to fulfil their contractual and other obligations, which indicates that an employer who is unable to apply the general provisions on obligations must specify the employees’ obligations by way of instructions, general acts and other regulations.
Before adopting general acts that specify the obligations with which employees should be familiar to fulfil contractual and other obligations, the employer must submit them to any relevant trade unions, otherwise, the employer must submit them to the workers’ council or the workers’ representative, which may provide an opinion thereon. Before adopting a general act, the employer must discuss this opinion and present its position about it. If no trade union or workers’ council is organised at the employer and no workers’ representative has been elected, the employer must directly inform all the employees about the obligations they should be familiar with in order to fulfil their obligations. In the case of issues that are regulated in collective agreements according to the ERA, the workers’ council or the worker representative enjoys the same rights in such a procedure as a trade union. The general acts should be physically accessible to all employees at the designated location (usually employees may inspect them in the human resources department or the legal department). If all employees have the option of using a computer, the general acts may be available on the employer’s intranet. The ERA does not lay down that employees should agree with the general act, but they should definitely be informed of its content by publication in an established way.
The Act specifically refers to the prohibition of sexual and other harassment in the workplace, as well as discrimination and retaliation. Even though the Act defines the notion of discrimination in the workplace and the content of sexual and other harassment and mobbing in the workplace in great detail, it also explicitly obligates the employer to provide a working environment where none of the employees are subjected to sexual and other harassment or bullying from the employer, a superior or co-workers, and that the employer must, to this end, take appropriate steps to protect employees.
Under the Public Use of the Slovenian Language Act, the official language in Slovenia is Slovenian. Employers (legal or natural persons) performing their activity in the territory of Slovenia must do business with customers in this territory in the Slovenian language. However, when their business involves foreign customers, they may use a foreign language in addition to Slovenian. All the general acts of all the employers performing registered activity in the territory of Slovenia must be in the Slovenian language. Internal operations must also be conducted in Slovenian when they refer to the regulation of the rights and duties arising from an employment relationship, the issuing of instructions, the provision of information to employees and to occupational safety. A foreign language may be used alongside Slovenian if an employment relationship is concluded with a foreign citizen who performs seasonal work. Employers may not request job applicants to submit job applications only in a foreign language.
Since the rights and duties arising from the employment relationship are an element of the employment contract, this must also be drawn up in Slovenian. In practice, foreign employers use a foreign language in addition to Slovenian. The validity of an employment contract or general act of an employer does not depend on whether the contract or general act is only compiled in a foreign language, since the relevant text can be officially translated in any case, but such an omission does constitute an offence, for which a fine is imposed.
If the contracts and general acts of the employer are drawn up in Slovenian and a foreign language, the Slovenian version applies in the case of a dispute.
X EMPLOYEE REPRESENTATION
Employees of companies, public utility companies, banks and insurance companies, regardless of the form of ownership, can organise a workers’ council or elect a workers’ representative and thus take part in the management of the company. A special Act regulates the establishment, composition, term of office and the election of a workers’ council, the method and election of its members, the termination of membership in a workers’ council, the protection of the right to vote, employee participation in the bodies of the company, employee participation in the management of the company and the resolution of mutual disputes. It is crucial for the workers’ council or the workers’ representative to be elected so that the employees to execute their right to participate in the management according to law. If these representatives are not elected, these rights can be executed only individually.
Employees of a company are entitled to elect a workers’ council if the company employs more than 20 employees who have the active right to vote (the active right to vote is enjoyed by all employees who have been employed by the company for six uninterrupted months, while managers, procurators and family members of management staff do not have the active right to vote). If a company has fewer than 20 employees with the active right to vote, the employees participate in management through a worker representative. In larger companies, the size of the workers’ council would be as follows:
- a up to 50 employees – three members;
- b between 50 and 100 employees – five members;
- c between 100 and 200 employees – seven members;
- d between 200 and 400 employees – nine members;
- e between 400 and 600 employees – 11 members;
- f between 600 and 1,000 employees – 13 members; and
- g in a company with more than 1,000 employees, the number of workers’ council members increases by two per every 1,000 employees.
The term of office of the workers’ council members is four years with the possibility of re-election. If a company already has a workers’ council, a resolution is adopted to schedule an election for the workers’ council. If not, such a resolution is adopted by a council of all employees, which may be convened on the initiative of three employees or of the representative trade unions in the company. Depending on the size of the company, the function of a workers’ council member may be professionalised, in which case the cost of the salary of those members is borne by the employer. The establishment of a workers’ council or the election of a workers’ representative is a legally defined right of employees that an employer cannot deny.
Employee participation in company management is exercised by directly informing employees, by allowing them to make proposals and give opinions or by informing them through a workers’ representative or a workers’ council, through which they make proposals and give opinions, require joint consultation with the employer, make joint decisions on specific issues and even require a stay on specific decisions made by the employer until a final decision is adopted by the competent body. A workers’ council is to be informed about issues pertaining to the economic position of the company, the development targets of the company, the state of production and sales, the economic position of the branch as a whole, changes of activity, changes in the organisation of production, technological changes and the annual accounts and annual report. Before adopting decisions regarding status, human resources and decisions related to health and safety at work, the employer is obligated to hold a joint consultation with the workers’ council and strive to seek agreement with the council. The employer is obligated to obtain the consent of the workers’ council for decisions about the bases for determining the use of annual leave and other instances of absence from work; the criteria for the assessment of work performance; the criteria for remuneration for innovative activity in the company; the employee promotion criteria; and in cases where its status changes, the disposal of the company or its significant part; changes in the company’s activity, organisational changes, technological changes or a decline in economic activity that results in an increase or decrease of employee numbers. If the workers’ council denies to consent, the denial has no effect on the regularity and legality of the decision of the employer. If, however, the employer adopts a decision without informing the workers’ council about the issues referring to the changes of the company’s activity, organisational changes, technological changes or a decline in economic activity, or if it adopts a decision regarding these issues without conducting the prescribed procedure, the workers’ council may adopt a resolution to stay the execution of the employer’s decision and at the same time initiate a procedure for the resolution of a mutual dispute. This action may also be taken by the workers’ council if the employer does not comply with the legal deadlines set for the individual stages of the joint consultation procedure or if it fails to request a joint consultation on status and human resources issues. In both cases, the employer may not implement its decision until a final decision is adopted by a competent body (i.e., arbitration composed of an equal number of members appointed by the workers’ council and the employer, and a neutral chair whose appointment is agreed on by both parties). The employer may have a permanent arbitration in place; if not, the minister in charge of labour compiles a list of arbitrators based on the proposals of the representative trade unions and associations of employers.
The rights of the workers’ council and the exercise thereof are specified in more detail in a written agreement between the workers’ council and the employer. By way of such an agreement, participation rights may be extended beyond the scope provided for by the law. The workers’ council meets during working hours, if the work process allows it. If a meeting is held outside working hours because the needs of the work process so dictate, that time is considered work time for the members of the workers’ council. The employer is obligated to ensure that members of the workers’ council are entitled to five paid hours a month for participation in workers’ council meetings. Moreover, they must cover the expenses arising from the work performed within the scope of the workers’ council – as a minimum, the costs of the premises needed for meetings, the reception of customers and the remuneration of professional members of the workers’ council, the costs of material assets used by the workers’ council and the costs of administrative staff working for the workers’ council.
Employee participation in the company’s bodies is implemented in a two-tier management system through worker representatives in the company’s supervisory board or supervisory committee and possibly through a representative of the employees who sits on the management board of a company (worker director). In a single-tier management system, employees participate in management through representatives sitting on the board of directors or a committee of the board of directors and possibly through a worker representative among the executive directors of the company. The number of workers’ representatives on the supervisory board is determined in the company’s articles of association and must be a minimum of one-third and a maximum of half of the seats on the supervisory board. The number of workers’ representatives on the management board is also specified in the company’s articles of association and must not be less than one. A company with a two-tier management system employing more than 500 employees has a worker director who is nominated to the management board by the workers’ council, while in a company with a single-tier management system with more than 500 employees, the workers’ council nominates a worker representative sitting on the board of directors to the position of executive director.
If a trade union is organised within the employer’s organisation, the latter is obligated to provide conditions for the expedient and efficient performance of trade union activities, as well as access to the data necessary for such activities. The trade union must inform the employer about the election of a trade union chairperson and trade union representatives or shop stewards. The trade union and the employer determine in the collective agreement or special agreement how many and which trade union representatives or shop stewards will enjoy special protection.
Representatives of employees – namely members of the workers’ council, worker representatives, members of the supervisory board representing employees and appointed or elected trade union representatives or shop stewards – constitute a special protected category of employees and their employment contract may not be terminated by the employer during their term of office and for a period of one year after its expiry. The employment contract of an appointed or elected trade union representative or shop steward, who acts in line with the law, the collective agreement and the employment contract, may not be terminated without the consent of the body they are a member of or without the consent of the trade union, except in the case of termination for business reasons when the trade union representative or shop steward rejects an appropriate offered employment position or in the case of termination due to the employer’s winding-up procedure.
XI DATA PROTECTION
i Requirements for registration
Within the Slovenian legal system, personal data protection is regulated by the Personal Data Protection Act. The ERA and the Labour and Social Security Registers Act apply to the personal data of employees along with the Personal Data Protection Act. Because it is deemed that employment relationships entail a marked inequality of power among the parties, the legislation in this area disallows the complete autonomy of parties and the possibility of a personal consent of an employee to the collection and processing of their personal data is only permissible exceptionally. An employer or employee who is specifically authorised by the employer for such purpose may only collect, process, use and provide to third parties the personal data of an employee or job applicant if this is provided by the law and necessary in order to exercise the rights and obligations arising from the employment relationship. Once the legal basis no longer exists, the employer must immediately delete and stop using the employees’ personal data. Article 13 of the Labour and Social Security Registers Act stipulates the contents of the records of employees, while other data may only be collected if it is necessary in order to exercise the rights and obligations arising from or related to the employment relationship. The personal data of employees may only be accessed by persons specifically authorised by the employer, while the latter is obligated to provide adequate technical protection of collected personal data under the provisions of the Personal Data Protection Act.
The employer must inform the Information Commissioner of Slovenia about the existence of all records of personal data they are processing. Employers (administrators) with fewer than 50 employees are not obligated to provide entry in the personal data collection register, though this exception does not apply to certain activities and professions.
ii Cross-border data transfer
Should an employer wish to transfer legally obtained personal data to an EU Member State or to a country that has been found to ensure an adequate level of protection for personal data, they need not acquire an authorisation to do so. However, before transferring data to a third country, they must obtain a decision from a national supervisory body stating that the country in question ensures an adequate level of protection of personal data, except in cases specified in Article 70 of the Personal Data Protection Act.
iii Sensitive data
The Employment Relationship Act stipulates that, when concluding an employment contract, the employer may not demand that the applicant provides information on family or marital status, pregnancy, family planning or other information, unless it is directly related to the employment relationship.
An employer may only process sensitive data if that is necessary due to exercising the obligations and special rights bestowed on them by the law, which also specifies appropriate safeguards for individuals’ rights. Such data must be subject to stricter protection. Pursuant to Article 14 of the Personal Data Protection Act, such data must be specially marked and protected by the employer to prevent unauthorised persons from accessing them.
iv Background checks
The assessment of whether the personal data on job applicants and employees is verified should be made on a case-by-case basis, taking into account the principle of proportionality. Depending on the employment conditions, an employer may in some cases justly require an employee to submit a certificate of no conviction, a certificate of medical suitability and similar. If an employee does not comply, they bear the potential consequences. If this and similar data is not necessary to exercise the rights and obligations arising from an employment relationship, an employer may not request them from an employee. In no case may an employer require an employee to provide information on their family or marital status, pregnancy, family planning or other information unless it is directly related to the employment relationship.
XII DISCONTINUING EMPLOYMENT
The methods of terminating an employment contract in Slovenia are explicitly defined in the ERA and are as follows:
- a upon the expiration of the period for which the employment contract was concluded;
- b upon the death of the employee or employer, where the latter is a natural person;
- c by agreement;
- d by ordinary or extraordinary termination;
- e by a court judgment;
- f by law in the cases stipulated by this Act; or
- g in any other case stipulated by the law.
The employment contract must be terminated in writing, regardless of whether it is terminated by the employee or the employer. If an employment contract is terminated by the employee, the latter need not provide an explanation. However, if it is terminated by the employer, the cause of termination must be explained in all cases and the employee must be cautioned about legal protection and their rights arising from unemployment insurance. An employment contract may only be terminated entirely. The employer must serve the termination notice on the employee in person. On the day notice is served, the notice periods and the period for claiming judicial protection commence. As a rule, the termination notice is served by the employer at its premises to the employee in person or at the employee’s address indicated in the employment contract by a registered letter with advice of delivery, or by publication on the bulletin board.
An employer may ordinarily and extraordinarily terminate an employment contract with cause, it may ordinarily terminate it due to an occupational disability, for business reasons or due to the employee’s incapacity to perform work under the terms and conditions laid down in the employment contract due to disability in accordance with the regulations governing pension and disability insurance and the regulations governing the vocational rehabilitation and employment of disabled persons. Ordinary termination with cause and extraordinary termination of the employment contract by the employer must be based on a reason, since an employer may not terminate an employment contract without a substantiated reason. The ordinary termination of an employment contract due to an occupational disability does not constitute a fault cause on the part of the employee, but nevertheless the employer must provide a substantiated reason for termination in this case as well. The voluntary payment of severance does not give an employer the right to terminate an employee’s employment contract without reason. In practice, however, if the offered severance pay is accepted by the employee, the employment contract is considered terminated by agreement.
Prior to ordinary termination of an employment contract with cause, the employer is obligated, within 60 days following the identification of the violation and no later than six months from the occurrence of the violation, to remind the worker in writing of the question of the fulfilment of obligations and the possibility of cancellation of his or her employment contract if the worker repeats the violation of the contractual and other obligations deriving from the employment relationship within one year (unless otherwise stipulated by a branch collective agreement but for no longer than two years) of the receipt of the written warning.
In the case of the ordinary termination of an employment contract with cause, and the extraordinary termination and ordinary termination due to an occupational disability, an employer is obligated to first inform the employee in writing about the reasons for termination, provide an explanation and allow the employees to defend themselves within a reasonable period, which shall not be fewer than three working days.
If so required by the employee, the employer must inform the trade union of which the employee is a member in writing about the intended ordinary or extraordinary termination of the employment contract upon the initiation of the termination procedure. If no trade union exists within the employer’s organisation, the role of the workers’ council or the workers’ representative is identical to the role of a trade union. The trade union, works council or worker representative may give its opinion within six days. The trade union, works council or worker representative may deliver a negative opinion if it considers that there are no substantiated reasons or that the procedure was not implemented in accordance with the ERA. It must explain its opinion in writing. Irrespective of an unfavourable opinion of the trade union, works council or worker representative, the employer may cancel the employment contract with the worker. The role of the trade union differs in case of termination of the employment contract of a worker’s representative, since they are protected by the ERA from having their employment contract terminated by the employer. In such case the trade union may oppose the ordinary termination due to an occupational disability or cause or the extraordinary termination of the employment contract, as a result of which the employee may request a stay of termination of the employment contract. In such a case the termination of the employment contract shall not be effective until the expiration of the term for arbitration or judicial protection. If the employee proposes a temporary injunction to stay the termination of the employment contract in a lawsuit contesting the termination of the employment contract, the stay may be prolonged until the court hands down a decision about the proposal for the issue of a temporary injunction (the deadlines in which a court must render a decision in such a case are extremely short, as is the appeal procedure).
If the employment contract is terminated with cause, an employee is not entitled to severance pay. However, in the case of an ordinary termination of the employment contract with cause or due to an occupational disability, an employee is entitled to a notice period, which is 15 days in the event of an ordinary termination of the employment contract with cause, while in the case of an ordinary termination of the employment contract due to an occupational disability, the notice period is stipulated in the ERA and differs depending on the length of service with the employer. The extraordinary termination of an employment contract – regardless of whether it is terminated by the employer or the employee – is without notice.
In the case of an ordinary termination with cause and the extraordinary termination of the employment contract, the employer has no financial obligations towards the employee and after termination the employee has no preferential right to re-employment with the employer. This is not the case in the ordinary termination of an employment contract due to an occupational disability. As this termination does not constitute a termination with cause, the employer is obligated to pay severance to the employee, which is calculated based on the average monthly salary of the employee in the three months preceding the termination and the number of years in service with the employer. The severance pay may not exceed 10 times the average monthly salary of the employee, unless provided otherwise in the branch collective agreement.
If an employment contract is terminated extraordinarily by the employee (which is only possible in the cases listed in the ERA), the employee must inform the employer and the labour inspector about the employer’s breach of obligations in writing prior to termination. An employee is entitled to request salary compensation from the employer for the period of notice and severance pay as though the employment contract was terminated by the employer.
The ERA protects some employee categories from having their employment contracts terminated by the employer. These categories include workers’ representatives, pregnant employees and recent mothers for up to one year after birth if they breastfeed the child, and parents on parental leave with full absence from work and for one month afterwards. The employment contract of employees during pregnancy and the breastfeeding period and employees on parental leave with full absence from work may be terminated if the employer obtains the consent of the Labour Inspector, provided that the employment contract termination is extraordinary or due to the initiation of a winding-up procedure of the employer.
An employer may only terminate the employment contract if there is a substantiated reason preventing further work under the terms and conditions of the employment contract. An employer may terminate an employment contract for business reasons when the need for specific work under the terms and conditions of the employment contract has ceased for economic, organisational, technological, structural and similar reasons.
The deadlines and procedures that the employer has to comply with in the case of termination for business reasons depend on the total number of employees employed by the employer and the number of redundancies. If an employer who employs more than 20 and fewer than 100 employees is making at least 10 employees redundant, if an employer who employs at least 100 and less than 300 employees is making at least 10 per cent of employees redundant and if an employer who employs 300 or more employees is making at least 30 employees redundant, they are obligated to terminate the employment contracts following a special procedure, they must prepare a dismissal programme for the redundant employees and notify the trade union and the Employment Service of Slovenia about the reasons for the redundancies, about the number and the projected categories of the redundant employees. The trade union plays an important role in the preparation of the dismissal programme for redundant employees, since the employer must first consult with the trade union about all the material circumstances of termination and agree with it on the proposed criteria for determining the redundant employees, possible ways of avoiding and limiting the number of terminations and about the possible measures to prevent and mitigate harmful consequences.
The employer may not terminate the employment contract of workers’ representatives and employees who are soon to be retired (employees aged 58 or over and employees who will meet the requirements for retirement after five years of pensionable service) for business reasons unless it submits new and appropriate employment contracts to them to sign or if an older employee, while receiving unemployment benefit from the Employment Service of Slovenia, fails to fulfil the minimum conditions for an old-age pension, nor may the employer terminate the employment contract of an employee for business reasons during the period of pregnancy and breastfeeding up to the child’s first year or the employment contracts of employees on parental leave and the disabled. In case of the ordinary termination of an employment contract for business reasons and due to an occupational disability, the employer can consider the possibility of offering the employee another appropriate work position (such work being work that requires the same level and type of education as the work performed in the redundant position, to be performed in the working hours agreed in the previous employment contract and at a location that is not more than three hours’ travel in both directions by public transport from the employee’s residence).
If the employer wishes to ordinarily terminate the employment contract of a disabled employee due to business reasons or disability (the difference is that in the former case, the employer no longer needs the work performed by the employee under the employment contract, while in the latter case the employer has no work that could be performed by an employee who has work-related disabilities recognised by a special decision), the Act prescribes that before termination, the employer must obtain an opinion from a special committee composed of the representatives of the institutions administering disability insurance (i.e., the Pension and Disability Insurance Institute of Slovenia, the Employment Service of Slovenia and the Labour Inspectorate of Slovenia, as well as representatives of the employers and trade unions).
If an employee’s employment contract is terminated for business reasons or disability, they are entitled to special severance pay (the conditions and amount are the same as for termination for an occupational disability) and their employment relationship ceases when the notice period expires, which is the same as in the case of termination due to an occupational disability.
Bankruptcy, court liquidation, compulsory settlement and other forms of employer winding up also constitute reasons for the termination of employment contracts. In this case, the notice period is shorter, namely 15 to 30 days, and the employees whose employment contracts are terminated are entitled to severance pay, which is equal to that for an employment contract termination for business reasons or due to an occupational disability.
XIII THE TRANSFER OF BUSINESS
The ERA stipulates that if an employer changes due to the legal transfer of a company or a part of it, a merger or a division, that change does not constitute a change of employment relationship and employees retain all the rights and obligations arising from the employment relationship with the original employer. The Act specifically lays down that the new employer must provide the employees with the rights and obligations from the collective agreement that was binding on the original employer for a period of no less than one additional year, unless the collective agreement expires before that period, has lapsed or a new one is concluded during that period.
According to case law, the new employer need not conclude new employment contracts with employees in the above cases, although the Act provides the employees with the option of declining employment with the new employer. In such a case, the employment relationship is terminated by the original employer as an extraordinary termination. Employees whose employer changes as described above and whose rights under the employment contract deteriorate for objective reasons, may terminate their employment contracts but are granted the same rights as though the employment contract was terminated by the employer for business reasons.
According to the ERA, a change of employer does not constitute legitimate grounds for the termination of an employment contract for business reasons.
Slovenia is currently in the process of considering a new Class Action Act. If passed, the act would introduce collective lawsuits and collective settlements for the first time. The primary purpose of the proposed Act is to allow money claims and claims for compensation to be made collectively. Under the proposals, employees would have easier excess to courts, the burden of caseload on certain courts could be more evenly spread and backlogs reduced. Under the proposed Act, it would be possible to bring a collective lawsuit in certain labour disputes. Employers will still try to stay competitive by using the stipulations of the ERA and the branch collective agreements that allow for a more flexible employment and labour system to be implemented. Trade unions still have a lot of power in Slovenia and they are using – or abusing – that power to block every attempt made by the government and employers to make companies and the country as a whole more competitive in the international business environment.
1 Vesna Šafar and Martin Šafar are founding and managing partners at Law Firm Šafar & Partners, Ltd.