The Employment Law Review: Slovenia
Freedom of work is ensured under Article 49 of the Constitution of the Republic of Slovenia, and is a freedom and right bestowed on all individuals. Work may be performed on various legal bases, of which the most common is the employment contract. It is concluded between employer and employee and is basis of the employment relationship, ensuring adequate legal protection. Work may also be performed under a civil law contract, but not when the conditions for conclusion of an employment law contract are met. The umbrella act regulating employment relationships in Slovenia is the Employment Relationships Act (ERA-1).2 In addition to regulating the most important mutual rights and obligations between the two parties, the purpose of ERA-1 is the effective inclusion of the employee in the working process of the employer, ensuring freedom of work, the employee's personal dignity and the prevention (or reduction) of unemployment. ERA-1 is applicable both for employers with their operations or address in Slovenia, and their workforce, as well as for foreign employers and employees, provided the employment contracts was concluded in the territory of Slovenia. ERA-1 applies to employers in both the private and public sectors.
The first Employment Relationships Act was adopted in 2003 and has been amended both in accordance with European and international legal order, and a result of various factors affecting employment relationships, such as globalisation, new technology and developments on the labour market for foreigners. More recent changes were introduced under the improved ERA-1 in 2013. Other industy-specific acts have been passed during this century, such as the Health and Safety at Work Act,3 Pension and Disability Insurance Act (PDIA-2),4 Labour Market Regulation Act,5 Labour and Social Security Registers Act,6 Personal Data Protection Act (PDPA-1).7 Certain standards in related fields have changed significantly in recent years.
While ERA-1 ensures employees a minimum level of rights, in every sector or at the employer level, further rights might be granted under collective agreements, employers' internal rules or employment contracts.
Individual or collective disputes are resolved under the specialist Labour and Social Court. The competencies, organisation and rules of procedure are set under the Labour and Social Courts Act. There are four courts of first instance, the Higher Labour and Social Court and the Supreme Court (the latter two are located in Ljubljana). The main objective in any employment dispute is to resolve the matter expeditiously, therefore once a case relating to the existence or termination of an employment relationship has been initiated, it will be prioritised. When the law or collective agreement prescribes that there is a mandatory preliminary procedure for achieving an amicable resolution of an employment dispute, a lawsuit is only permitted if that procedure has been followed, provided there has not already been a settlement.
The key organisation for supervising the proper execution of laws, collective agreements and other acts is the Labour Inspectorate, which acts both on its own initiative and on the basis of external reports. The Inspectorate often emphasises the level of effectiveness of certain employment law provisions. Annual reports by the Inspectorate draw attention to challenges in the field of labour and employment law. This inspires domestic lawmakers to reflect on necessary changes. The Institute of Employment also has an important role, being responsible for helping unemployed workers to return to the labour market and informs workers of their rights when they become unemployed.
Year in review
Despite an economic slowdown, the current level of unemployment is 4.8 per cent.8 The number of people who are active in the labour market is rising, with almost 95 per cent of active working people9 in an employment relationship based on an employment contract, 4 per cent students and 1 per cent of people performing work on another basis (e.g., under a work contract). A work contract is a contract of civil law, whereby the contractor undertakes to carry out a specific job and the client agrees to pay him or her for it. An employee may not perform work under a work contract (or any other contract under civil law) if elements of an employment relationship exist.
A burning issue in Slovenia is non-standard forms of work (self-employment, fixed-term and part-time employment contracts, and student work). These work arrangments do not follow the standard work model and, owing to their flexibility and higher financial benefit, are attractive to both employers and certain categories of employees, in particular the younger generations. These are more often part of modern and progressive work structures. Lawmakers are aware that non-traditional forms of work may cause economic insecurity and contribute to individual poverty, therefore the employer's tax burden in practice is being increased. Slovenia is slowly adapting to more flexible systems of work but is still a long way from emulating EU pioneers in the area of progressive work arrangements.
Most violations of workers' rights observed by inspectors pertain to incorrect payments for performed work (half of all violations). Of these, the most common are untimely payment for work and failure to pay for annual leave. There is also a high number of violations relating to mandated work breaks and rest periods, and inappropriate required management of records.
Given the Labour Inspectorate's lack of personnel, particularly in human resources, and the high number of reports made, its ability to provide effective supervision reports is hindered. The Inspectorate has suggested that employers tend to prevent adequate oversight by inspectors, for which they should be sanctioned (but are not).
A growing trend is the use of agency workers. The Labour Inspectorate reported in 2019 that employers that are not registered as agencies are also often failing to follow correct procedures in respect of employing agency workers. This situation is a cause of concern.
Slovenia is also concerned with prosecuting employers for criminal offences that occur during the employment relationship. Both the theory and practice behind these prosecutions are being developed. Although quite a number of criminal complaints arise, few cases result in convictions.
In 2018, the High Court took a step away from existing court practice with its decision that a worker was entitled to her wages regardless of the fact that she did not inform her employer of her absence or of the reasons for her absence. In its decision, the Supreme Court disagreed with the High Court's 2019 decision, stressing that the obligation to pay wages is not an automatic consequence of the existence of an employment relationship between the parties, but rather represents a counter right in lieu of the performed work. Only in exceptional instances, when the law so provides, may a worker be entitled to payment during the periods when he or she is not working.
The rise of non-traditional forms of work has been reflected in recent case law. Courts have frequently engaged in solving the question of whether an employment relationship exists or not. The Supreme Court has emphasised that, when the court is establishing the existence of an employment relationship, the will of the employer is irrelevant, as it is clear that the employer may be motivated to deny the establishment of an employment relationship by concluding a civil law contract.
A fixed-term employment contract is very attractive to employers because it provides flexibility, but may be concluded only in limited cases. The Supreme Court has emphasised that in the event of a dispute on the lawfulness of a concluded fixed-term contract, the employer must prove the existence of the exact reason that was given as the basis for the fixed-term contract, and not of any other reason (even if it were a lawful basis for conclusion).
Since April 2018, workers have brought claims under the Collective Actions Act (CAA)10 in the hope of ending unlawful actions and attaining damages awards. Shortly thereafter enactment of the CAA, the first claim was raised at the Labour Court, concerning a violation of the right to breaks during working hours. The Court rejected the case, since the claims were not all based on the same, similar or related circumstances. Given that the legislation is rather new and not firmly established in practice, there is still some reluctance to raise employment claims under the CAA.
Basics of entering into an employment relationship
i Employment relationship
Under Article 11 of ERA-1, the employment relationship shall be deemed concluded with the signing of the employment contract. The contract must be concluded in written form. From this point, the worker assumes the rights and obligations codified in relevant legislation, and is registered within the social security system. Under the Prevention of Undeclared Work and Employment Act, employers are prohibited from allowing an individual to work without having executed an employment contract. The contract also provides safeguards and assistance to employees, and ensures they are aware of their rights. A worker who is performing work without an employment contract may at any time request that the employer provides him or her with a valid employment contract. A worker may also file a complaint with the competent supervisory authority against the employer or file a lawsuit at court, on the basis of illegal employment and the failure to issue an appropriate employment contract.
The key elements of a valid employment relationship are integration into an organised work process, performing the job in person and continuously, subordination (i.e., working according to the instructions, and under the supervision of the employer) and remuneration. In this context, work may not be performed on the basis of a civil law contract, except as provided for by law. In the event of a dispute about the existence of an employment relationship between a worker and an employer, the court will assess whether the aforementioned elements are present. If neither the employer nor the individual who has been working illegally prove the duration of the employment, it shall be deemed that the worker was employed illegally for a period of three months and the employer is obliged to provide a written contract within three days of the supervisory authority determining that there has been illegal employment.
An employer must provide an employee with a written proposal of the employment contract at least three days prior to commencement of employment. Once it has been negotiated and prior to commencement of work, the employee must countersign the employment contract. For any specific points on the conclusions, validity, termination or other matters concerning the employment contract that are not explicitly regulated under ERA-1, the rules of the Civil Code11 will apply. If the parties did not conclude the employment contract in writing, or if not all the components of the employment contract are expressed in writing, the existence and validity of the employment contract is not affected.
The usual procedure under Slovenian legislation is for employment contracts to be for an indefinite term, provided the required conditions exist for the contract to be concluded and adopted. The ERA-1 also encourages the use of indefinite term contracts by allowing employers not to pay social security contributions due for unemployment during the first two years of such a contract with an insured person (as referred to in the first, second, third and fourth paragraphs of Article 14 of PDIA-2) who has not reached the age of 26, and mothers who are caring for a child under the age of three. The employer is eligible for this benefit only if it is the employee's first employment for an indefinite period and provided that the employee remains employed for at least two years.
Fixed-term employment contracts may be concluded as an exception, subject to certain restrictions. Nevertheless, Article 54 of ERA-1 provides for numerous instances under which an employer may conclude a fixed-term employment contract with a worker:
- the performance of work that, by its nature, lasts only a limited amount of time;
- substitution of a temporarily absent worker;
- a temporary increase in workload;
- employment of a foreigner or stateless person, who has a single permit or a seasonal work permit;
- employment of a manager or a procurator;
- employment of an executive worker, as described in the first paragraph of Article 74 of ERA-1;
- performing seasonal work;
- employment for the purpose of preparation, training or education for work;
- employment during a period of adjustment on the basis of a final decision and a certificate from the competent authority, issued during the process of recognition of qualifications under a special law;12
- performing public works;
- preparation or execution of work that is organised as part of a project;
- work as required at the time of the introduction of new programmes, new technology or other technological improvements to the work process or for the training of workers;
- during a handover period;
- elected and appointed officials, or their employees, who are bound by the terms of an office of an authority, or an official in a local community, political party, trade union, chambers, association or its unions; and
- other cases as provided by the law or collective agreement at branch level, as defined by the Standard Classification of Activities.13
Employers may not conclude a fixed-term employment contract for the same work with the same worker for a continuous term of more than two years. In practice, it is common for employers to circumvent this rule by repeatedly employing workers for short periods (e.g., six months) until the two years have been reached. Employers will also reclassify a job after the two years, to obscure the fact that the work being performed is the same. If a worker continues doing the same work after the fixed term lapses, it shall be deemed that the worker has concluded an unlimited term employment contract (and thus a 'transformation' of the employment contract has occurred). Severance payments should be payable after the lapse of the fixed-term period, with some exceptions.
An employment contract must always include the following information about the contracting parties:
- the place of residence of the worker and the registered office of the employer;
- the date of commencement of work;
- the job title or the type of work, with a short description of the tasks the worker is obliged to perform;
- the place of work;
- the period for which the employment contract is concluded;
- the reason for the conclusion of a fixed-term employment contract;
- provisions on the manner of taking an annual leave;
- if a fixed-term employment contract is concluded, a statement as to whether it is a full-time or part-time employment contract;
- working time arrangements;
- a provision of the basic salary and other components of the salary;
- provision for annual leave;
- lengths of requisite notice periods;
- reference to any collective agreements that bind the employer; and
- other rights and obligations, as provided by ERA-1.
Either party to an employment contract may propose a change, at any time; however, both parties must agree to the changes. The employment contract is amended by signing an annex to the contract or by concluding a new employment contract; in certain instances, the latter is mandatory.
ii Probationary periods
As part of the employment contract, the employer and the worker may agree on a probationary period, which may last no longer than six months. If the employer determines during the probationary period that the worker did not perform sufficiently and therefore did not complete the probationary period successfully, the employer may lawfully terminate the worker's employment contract, subject to giving seven days' notice. The employer may also terminate the contract during the probationary period if it is determined, based on the work performed, that the probationary period will not be successful, subject to the employer providing valid and substantiated reasons for the termination. During a probationary period, an employer may, in principle, terminate a worker's employment contract if other reasons exist (such as breach of a contractual obligation or other employment obligation).
iii Establishing a presence
Pursuant to general rules of European law and Slovenian commercial and company law, the pursuit of economic activity in the territory of Slovenia may require the establishment of a subsidiary or a branch office. Under Article 57 of the Treaty on the Functioning of the European Union (TFEU), it is possible for a person to temporarily pursue its business in the Member State without having to establish a subsidiary or a branch office. The Court of the European Union held in the Gebhard case that a temporary exercise of business is to be established case by case based on the duration, frequency, regularity and continuity of the provision of service. Accordingly, if the exercise of business activities is deemed to have been temporary, the establishment of a subsidiary or a branch office would not be required. The freedom of provision of services is also established under the Slovenian Act on Services in the Internal Market.14 Under the Companies Act,15 commercial activities in the territory of Slovenia may be exercised either through an incorporated company (Articles 3 and 6) or through a registered branch office (Article 676). The establishment of a subsidiary or a branch office in Slovenia for business would, in principle, not be required if the business conduct could be deemed temporary. Slovenian legislation does not contain conclusive rules that would define exactly what constitutes a temporary provision of services. Therefore, each case must be assessed, considering the duration, frequency, regularity and continuity of the provision of service, to determine whether the establishment of a subsidiary or a branch office is required. Further, tax legislation provides specific rules and practices when a permanent establishment is deemed to exist.
A foreign employer may hire workers through an agency and a foreign employer may provide workers to the user, subject to local laws.
A foreign company that is not officially registered in Slovenia's jurisdiction may engage an independent contractor but, as mentioned above, if the elements of establishment have been met and the employment relationship exists, then the company must undertake the requisite procedures.
The prohibition on competition is defined in Article 39 of ERA-1 as a legal prohibition of a competitive activity. While employed, a worker may not, without the written consent of the employer, perform business that is within the type of activity that is actually carried out by the employer, and which constitutes or could constitute competition in relation to the employer's activity. The employer may claim compensation damages within three months of the day it learned of the worker's behaviour or within three years of completion of the job.
Nevertheless, Slovenian legislation provides a competition clause to be included in the employment contract. This is a contractual prohibition, applicable after the cessation of the employment relationship, of any competitive activity, used in any instance, if the worker acquired technical, production or business knowledge and business connections while employed, and uses the skills or connections when he or she is no longer working for the employer. The parties must agree to the terms of the competition clause expressly and in writing. The competition clause cannot be binding for more than two years after the cessation of the employment contract and may be concluded only after termination of a employment contract for the following reasons:
- by agreement between the parties;
- lawful dismissal by the employer;
- lawful dismissal of the worker for a reason of culpability (i.e., breach of contractual obligation or other employment obligation); or
- termination of the employment contract by the employer for an exceptional reason.
The clause should not exclude the possibility of the worker engaging in suitable future employment. If compliance with the competition clause precludes the acquisition of earnings comparable to the worker's previous salary, the employer must pay at least one-third of the previous monthly compensation for the entire duration of the prohibition. The worker and the employer may agree by mutual agreement to terminate the competition clause.
i Working time
Full-time employment should not exceed 40 hours per week. Overtime may not exceed eight hours per week, 20 hours per month or 170 hours per year. However, with the worker's consent, overtime may exceed the annual time limit, but must not be more than 230 hours per year). At any time the employer orders overtime work that exceeds the limit of 170 hours per year, the employer must obtain the worker's written consent. The working day can last up to 10 hours. The daily, weekly and monthly time limits may be considered as an average limit over a period, specified under the law or a collective agreement (normally six to 12 months). The worker is entitled, within a period of 24 hours, to a rest period, which lasts continuously for at least 12 hours. In addition to this right to daily rest, the worker is also entitled to a break of at least 24 continuous hours during a working period of seven consecutive days.
Night work is considered to be work carried out between 11pm and 6am the following day. If the working hours are determined as being during the night, eight hours of continuous work between 10pm and 7am the following day shall be considered night work. The working time of a night worker may not exceed an average of more than eight hours per day over a four-month period, and the working hours of a night worker who works in a place where there is a greater danger of injury or risk to health, as established by a risk assessment, shall not exceed eight hours per day.
A worker is entitled to remuneration for work done both during regular hours and as overtime. Article 128 of ERA-1 states that workers are entitled to allowances for work in special working conditions, arising from the allocation of working time as overtime. It also states that the amount of the allowances shall be determined by a collective agreement at branch level, as defined by the Standard Classification of Activities. In recent rulings, the Supreme Court has firmly upheld the position of the European Committee on Social Rights in relation to Part II, Article 4 of the European Social Charter, asserting that overtime pay should always be higher than pay for regular work, since it has required more effort.16 However, another suitable compensation for hours worked as overtime is time off work, provided the employer also pays an appropriate additional allowance. The Supreme Court also ruled that workers are entitled to an overtime bonus for all additional overtime hours, even if the number of overtime hours worked is more than is permitted by the law.17
The limits to the amount of overtime that may normally be performed in a given period are stated in Section VI.i.
According to the Statistical Offices of Slovenia (SURS), foreigners made up 10 per cent of the working population in Slovenia in 2018. The number in 2019, according to SURS, was expected to increase by as much as 22 per cent.18 A majority of foreign workers come from the republics of the former Yugoslavia (mostly from Bosnia and Herzegovina, Croatia, Kosovo and Northern Macedonia). The growth of foreign workers is in part a result of Slovenia's economic growth but also of the Employment, Self-employment and Work of Foreigners Act,19 adopted in 2015. This Act provided workers with favourable solutions and simplified the process for obtaining work permits.
The motivation for adopting the aforementioned law were the inadequate regulation of foreign work permits, which had led to significant violations of workers' rights and the exploitation of workers, and the obligation to codify Directive 2011/98/EU of the European Parliament and of the Council20 into national law. Slovenia has engaged in several bilateral agreements with the countries from which most foreigners workers originate (e.g., The Agreement between the Government of the Republic of Slovenia and the Council of Ministers of Bosnia and Herzegovina on the employment of the citizens of Bosnia and Herzegovina in the Republic of Slovenia, which was ratified by law in 2012), which brings additional legal security to the workers.
In accordance with the Employment, Self-employment and Work of Foreigners Act, a foreigner is a person who does not have citizenship in Slovenia. The law applies to all foreigners, with the exception of certain groups of persons (such as foreign journalists, priests, diplomats, lecturers and athletes). Slovenia, as an EU Member State, is also bound by the EU's legal rules and principles. One of the fundamental principles and values of the European Union is the free movement of workers (Article 45 of the TFEU), which, in relation to employment, remuneration and other working and employment conditions, prohibits distinction and discrimination on the grounds of the nationality of workers from EU Member States. Citizens of Norway, Liechtenstein, Iceland and Switzerland are also entitled to the free movement of workers owing to binding international agreements with Slovenia.
A single permit allows a foreigner to enter, reside and work in the country, and is issued by the administration units (which are set up to perform state administration tasks) for a period of one year, with a possibility of extension. Consent to the issuance must be given by the Employment Service of Slovenia. The permit gives the foreigner access to the labour market – on the basis of which the foreigner may perform work under civil law contracts, get a job with any employer, or several employers, or be self-employed. A single permit does not provide for a foreign worker to perform work as a posted worker for an employer that is established or resident outside Slovenia.
A single permit, issued on the basis of consent for employment being granted, is tied to the actual need of the employer. For this reason, the employer has to participate in the process of granting consent. One of the conditions for issuance is an employment contract, concluded with the employer, in accordance with ERA-1. A foreigner, who has concluded an employment contract in accordance with ERA-1, has the same rights and obligations as citizens of Slovenia. It is important to take this into account for provisions regarding salary, rest, working time and security and health at work, since the majority of violations and abuses that arise in these areas. Once a single permit has been issued, the foreigner may be employed only by an employer who has participated in the process of issuing the single permit, since it is the employer who is required, in accordance with the law, to meet the terms for the foreigner's employment.
In accordance with the Employment, Self-employment and Work of Foreigners Act, the employer is required to fulfil several conditions for a foreigner's employment, including, among other things, ensuring that there are no other suitable unemployed persons on the register of unemployed persons (the employer must obtain written notification from the Employment Service of Slovenia). The employer must also be operating an active business, must not be in a bankruptcy proceeding, or in liquidation. The employer is obliged to register the foreigner in the company schemes for compulsory pension and disability insurance, compulsory health insurance, parental care and unemployment insurance, so that, upon registration of the foreigner, he or she has the same rights as the citizens of Slovenia.
There is no limit on the number of employees or foreign workers an individual employer may employ. The number of foreigners in the labour market can be limited each year by the government with a quota of consents for issuing single permits, or with a quota of permits for seasonal work, taking into account the actual needs of the labour market. In addition to quotas, the government may restrict or prohibit the employment, work or self-employment of foreigners by region, occupation, activity or company. The government may, when it is justified by a public policy, public security, public health, general economic interest and foreseeable movements on the labour market, restrict or prohibit the arrival of new foreigners intending to seek employment or work in Slovenia as a whole or in certain regional areas.
Employers are required by the Labour and Social Security Registers Act to keep records of all workers, and they must, at the request of the competent authority, provide the necessary information.
A worker's obligations relating to the performance of work are set forth in ERA-1 (such as performing work according to the instructions of the employer, compliance with the rules on safety and health at work, and the obligation to inform about any essential circumstances), and the worker and the employer regulate their relationship with an employment contract. The worker undertakes to perform the work in accordance with the instructions and under the supervision of the employer. For a more efficient, uniform and coherent operation (and consequently, uniform instructions and supervision of all workers), the employer can adopt internal regulations and rules relating to works processes, relationships with the employer, and help to clearly define the rights and obligations of both workers and employers. In an internal ruling, a worker's rights and obligations can only be regulated more favourably than foreseen by the law or a collective agreement, if any exists.
If a worker's behaviour or conduct is contrary to the general requirements of the employer or other regulations, he or she violates the obligations arising from the employment relationship. With the disciplinary responsibility of the worker so established, the employer may issue a warning note or other sanctions, as provided in a collective agreement at the branch level, as defined by the Standard Classification of Activities.
The employer must inform the worker of the alleged violations and allow him or her to make a statement within a reasonable time. However, ERA-1 stipulates that a disciplinary sanction may not permanently change a worker's position from the perspective of labour law. A trade union, the works council or workers' representative may participate in any disciplinary procedure (the latter being applicable, for example, if a worker is not a member of a trade union), but only with the worker's consent. The decision resulting from the disciplinary procedure has to be written, explained and delivered to the person to whom it applies. The employer must reach a decision within a relatively short time – the subjective deadline is one month from the day the employer found out about the violation and the objective deadline is three months from the day the violation occurred.
ERA-1 is the principle applicable law, supplemented by various regulations, from which the obligations of employers to adopt several different internal rules or regulations derive. The obligations and content of these depend mostly on the activity in which the employer and the size of the organisation.
In general, there are three types of leave to which parents, and other persons who are insured, are entitled under the Parental Protection and Family Benefits Act (PPFBA-1):21 maternity leave, paternity leave and parental leave. Employers are obliged to provide workers with leave from work in accordance with the law. The right to compensation is granted to those who have the right to take leave and who have been insured under the PPFBA-1 the day before the start of each type of leave. During maternity leave, an insured person is entitled to maternity allowance, during a period of paternity leave of 30 days to paternity allowance, and during parental leave the right to parental allowance. The leave benefit is paid by the state.
To be entitled to the relevant leave, the worker must inform the employer of the intention to take the leave 30 days in advance.
A mother is entitled to maternity leave of 105 days but is obliged to take 15 days of maternity leave. An expectant mother should start maternity leave 28 days prior to the scheduled date of delivery. If this maternity leave is not taken, it cannot be used after the birth of a child, unless the birth occurred before the scheduled date. A father is entitled to maternity leave if the mother (1) dies, (2) leaves the child or (3) is permanently or temporarily incapable, in the opinion of a specialist doctor, of the care of the child. A father is entitled to maternity leave to the same extent as the mother, reduced by the number of days that the mother has already taken, but for not less than 28 days.
A father is entitled to 30 days' paternity leave after the birth of a child or children. This right is non-transferable. A father shall take at least 15 days of this entitlement at one time, as either full or partial absence from work, between the date of birth of the child and one month after expiry of the period of parental leave being taken, or from the entitlement to parental allowance for that child.
Each parent is entitled to parental leave for 130 days. Of this, a mother can transfer 100 days of parental leave to the father; the other 30 days are non-transferable. A father may transfer all 130 days of his parental leave to the mother. One of the parents must use the parental immediately after the maternity leave has expired. If no one is entitled to maternity leave for the child, the right to parental leave shall be recognised immediately after the child is 77 days old.
Workers on parental leave are protected from dismissal by Article 115 of ERA-1. The Article states that an employer may not terminate the employment contract of a worker during pregnancy or who is breastfeeding a child up to one year of age, or parents, at the time they take parental leave in a concise series in the form of full absence from work, and for one month after using this leave. In practice, the prohibition from dismissal applies also to workers on paternity leave, albeit the law uses the term 'parental leave'.
According to the rules of the Act on the use of the Slovenian language, in the territory of the Slovenia, Slovenian must be used by all legal and physical entities that perform a registered activity in the country, in all communications with clients in Slovenia. This said, although employment contracts must be concluded in Slovenian, a bilingual format is permitted. It is the obligation of the employer to determine, for each working post, the adequate level of Slovenian that is required for that particular working post, given the nature and frequency of that working post when it comes to communication with clients, and to set the level of knowledge of Slovenian when posting job vacancies, if workers engaged for the post are required to interact with clients.
Workers' participation in management is a constitutionally protected right in Slovenia, regulated under Article 75 of the Constitution. The Constitution further authorises the legislature to regulate in more detail the methods and conditions for exercising the right to co-decision. The Act that regulates these matters in more detail is the Worker Participation and Management Act (WPMA),22 adopted for the first time in 1993. The WPMA sets out the methods and conditions for employee participation in corporate governance (regardless of the form of property), sole proprietorships with at least 50 workers and cooperatives. This transposes the requirements of European law into national law. Unless otherwise provided in a special law, workers in public utilities, banks and insurance companies shall also have the right to participate in management.
The purpose of employees' participation is the identification and implementation of activities aimed at improving working conditions and, consequently, the successful operation of company business. Workers' participation in management is exercised by the right to initiative and the right to respond, the right to be informed, the right to give opinions and proposals, the possibility or obligation of joint consultations with the employer, the right to participate and the right to withhold employer decisions. An emphasis is also placed on the impact of the content and organisation of work, on activities aimed at improving the working environment and conditions, and humanising the company.
Employees may exercise the rights under this Act both individually and collectively – through a workers' council or a workers' representative, a workers' assembly or other representatives within the organisation. An individual employee may refuse to exercise the right to vote and cannot be forced to do so. These rights are supported by case law: for example, if a voter does not want to vote, it is their right not to.23
The WPMA also mentions the possibility of a workers' council and an employer reaching an agreement regarding other ways in which workers may participate in the management of the company.
A workers' council may be formed if the company employs more than 20 employees with an active right to vote. In companies with fewer than 20 employees with an active right to vote, employees may instead exercise their rights through a workers' representative. The active voting right applies to all who have been employed by the employer for a continuous period of at least six months. Managers, procurators (leading employees) and family members of management staff are not entitled to vote.
The number of council members depends on the total number of employees in the company.
Every employee who has the right to vote and who has been employed by the company for at least 12 months continuously, has the right to be elected to the workers' council (passive voting right). The members of the council are elected by secret and direct ballot. Every employee holds one vote and can vote personally. The decision to call the elections must be published in a way that is accessible to all employees. The WPMA specifies the details of the election process and the initiation of newly elected members. Elections are valid if attended by more than half of the members with an active right to vote. If only half, or fewer than half, have participated, the elections shall be held again, but only after six months have passed.
The term of office of workers' council members is four years with the possibility of re-election. The council will usually meet during working hours, with due respect of working processes and needs. A company is obliged to provide members of its workers' council the right to five paid hours per month for participation at these sessions. Moreover, the employer has to cover necessary expenses for the work of the workers' council, the expenses of the premises required, the cost of material resources and administrative staff.
In companies with between 50 and 300 employees, some members of the workers' council may perform their function within part-time hours; in larger companies (with more than 300 employees), members can be appointed to perform the function professionally.
Employee participation in management within company bodies is realised through employee representatives within company management and control bodies. In a two-tier system of management, participation is exercised through employees' representatives on the company's supervisory board or the supervisory board of the cooperative, or through the workers' representative board of directors of the company or of the cooperative. In a one-tier management system, employee participation in management is exercised through employee representatives on the board of directors and on the committees of the board of directors, but also through a workers' representative within the executive directors of the company or cooperative.
Trade union freedom stems from the fundamental human right to associate. Article 76 of the Constitution stipulates that workers are free to form and operate trade unions and to be member thereof. That being said, it is possible to refer to organisational freedom, in respect of the rights of both employees and employers to establish and join their own organisations, with a prohibition on conditionality. Another aspect is the freedom of action in rights regarding the functioning of organisations (such as adopting internal policies, collective bargaining, election of representatives). Protection of trade union freedom against interference by the state and other social partners is afforded by the Trade Union Representatives Act,24 which determines matters regarding status. Important legal issues regarding the functioning of trade unions are already determined by ERA-1, including certain obligations of the employer towards trade unions, written notifications to trade unions, the position of trade union representatives, the protection of trade union representatives, and so on. Of particular importance is the provision of Article 6 of ERA-1 on the prohibition of discrimination, with reference to the prohibition of discrimination on grounds of union membership. In addition, the role of a trade union is important in the adoption of the general legal regulations of the employer, as the employer must send them to the trade unions for an opinion before adoption. A trade union may also be included in the procedure of a proposed lawful or exceptional termination of an individual employment contract or in the event of a mass lay-off.
Unlike a workers' council, which, in cooperation with employers, aims to improve the company's business performance by improving working conditions, the aim of the activities of a trade union is protecting the rights and interests of all workers with a given employer.
Workers' representative (including trade union representatives, members of workers' councils, workers' representatives or members of a supervisory board representing workers) are protected from termination of their employment contract. An employer cannot terminate an employment contract with a worker's representative without the consent of (1) the workers' council, (2) the workers who elected the representative or (3) the trade union, provided the representative complies with the law, the collective agreement and the employment contract. An employer may terminate the employment contract of an employee who is a workers' representative only for a business reason, that is to say, if the representative refuses an offer of suitable employment with the employer or if the employment contract is terminated during the process of winding up of the employer.
The aim of providing protection against dismissal is to achieve a higher quality of performance during the workers' representative's term of office and applies for the entire duration of the term of office and for a year after cessation of that term.
Data protection is regulated under PDPA-1, which was adopted in 2004. Since the enactment of the EU General Data Protection Regulation in May 2018, despite the efforts of lawmakers, Slovenia has not adopted a new and revised PDPA-2, which will harmonise its provisions with the EU Regulation. However, it is expected to be adopted in 2020.
According to PDPA-1, the processing of personal data represents any form of activity conducted in relation to personal data, in particular the collection, acquiring, entry, managing, saving, adapting, changing, recollection, insight into, use, disclosure with transfer, communication of, spreading, giving for disposal, classification, connecting, blocking, anonymising, deletion or destruction.
Personal data may be processed only if permitted by the law, or if the individual concerned has given personal consent. The purpose of processing must be determined in the law, or the individual must be informed of the purpose of the processing beforehand.
Under PDPA-1, the term sensitive personal data covers data relating to racial, national or ethnic origin, political, religious or philosophical beliefs, trade union membership, health, sex life, entry or deletion from criminal records, and biometric features, subject to the condition that its use could identify the individual in connection with any of the aforementioned circumstances. Personal data may be processed, among other things, (1) if the individual has personally given explicit consent, which is normally in writing, or (2) if the processing is necessary for establishing compliance with the obligations and specific rights of the data controller of personal data in the field of employment in accordance with the law, which also provides adequate guarantees of individual rights. Sensitive data must be specifically designated as such and unauthorised persons should be restricted from being able to access it. During the transfer of sensitive personal data via telecommunications networks, the data is considered adequately protected if transmitted through the use of cryptographic methods and electronic signature to ensure illegibility or lack of recognition during transmission.
The employer may request from the candidate that he or she submits proof of fulfilling conditions for the performance of work. It is prohibited to request information regarding family status, marital status, pregnancy, planning of family, and other similar data, if the information is not directly necessary or in connection with the employment relationship.
Article 89 of ERA-1 states that an employer may terminate a worker's employment contract only if there is a valid reason that prevents the continuation of work under the conditions set under the employment contract. The law considers the following reasons as valid:
- there is no longer a need to perform a particular job under the terms of an employment contract, because of economic, organisational, technological, structural or similar reasons on the employer's side (business reason);
- failure to achieve the expected work results, because the worker does not perform the work on time, professionally and qualitatively, does not fulfil the conditions for performing the work, determined by the law and other regulations, issued on the grounds of the law, which results in the worker not fulfilling, or being unable to fulfil, contractual or other obligations in the work relationship (reason of incompetence);
- breach of a contractual obligation or other employment obligation;
- inability to perform work under the terms of the employment contract because of a disability, in accordance with the regulations governing the pension and disability insurance, or the regulations governing employment rehabilitation and employment of persons with disabilities; or
- not successfully completing probationary work.
The ERA-1 explicitly provides for unjustified reasons of termination, under Article 90. In a case of unlawful termination, the employee may request at the labour court an acknowledgement of the illegality of the termination of contract within 30 days of being served the termination, or from the day he or she learned of the violation of the respective rights.
If so requested by an employee, an employer must notify the trade union of which the worker is a member, of the intended lawful or exceptional termination of the employment contract, when the procedure is initiated. If the worker is not a member of a union, at the request of the employee, the employer must inform thereon the work's council or the workers' representative.
If an employer terminates an employment contract for a business or incompetence reason, the employer may simultaneously offer the employee the conclusion of a new employment contract. If the employee accepts the employer's offer, he or she must conclude a new employment contract within 15 days of receiving the written offer. In the event that a new, suitable, permanent employment contract is offered to the employee, he or she is not entitled to severance pay. It is deemed that suitable employment is that which requires the same type and level of education as the worker needed to perform the work for which the previous employment contract was held, and for the same working hours as previously agreed. Further, the place of work must not be more than three hours' drive in either direction by public transport or by transport organised by the employer from the place of residence of the employee. If the employee does not accept the employer's offer to conclude a new employment contract for a suitable employment and for an indefinite period of time, he or she shall not be entitled to a severance pay. In the event that an employee accepts an unsuitable new post, he or she is entitled to a proportionate part of the severance pay as agreed with the employer.
In the event of termination of an employment contract during a probationary period by either the worker or the employer, owing to a failure to successfully complete the probationary work, the notice period is seven days.
The notice period for a lawful termination of an employment contract by the employer for a business or incapability reason depends on the length of service with the employer:
- up to one year of employment with the employer: 15 days;
- one to two years of employment with the employer: 30 days;
- more than two years of employment with the employer: 30 days. Thereafter, the notice period increases by two days for each completed year of employment with the employer, up to a maximum of 60 days; or
- more than 25 years of employment with the employer: 80 days, unless a collective agreement sets a different notice period, but not fewer than 60 days.
If an employment contract is terminated by the employer for breach of a contractual obligation or other employment obligation, the notice period is 15 days.
When an employer is undergoing bankruptcy proceedings, the insolvency administrator may, subject to a 15-day notice period, terminate the employment contracts of those whose work has become unnecessary as a result of the initiation of bankruptcy proceedings or forced liquidation with the employer. In the case of a court-approved compulsory settlement, the employer may terminate the employment contracts with workers, subject to giving 30 days' notice, if the terminations are provided for as a specific measure in the financial restructuring plan.
The employee and the employer may agree in writing on an appropriate cash benefit in lieu of part or all of the notice period.
There are specific legal protections against dismissal of certtain categories of workers, namely workers' representatives, workers who are due to retire, parents, people with disabilities and those who are absent from work through illness.
Article 108 of ERA-1 states that an employer who terminates an employment contract for business or incompetence reasons is obliged to give the worker a severance payment. The basis for calculating the severance payment is the average monthly wage received by the worker in the three months prior to termination of the contract, or would have received if he or she had worked during those three months.
If the reason for termination of the employment contract is the unsuccessful completion of probationary work, the employee is entitled to severance pay on the same basis as a lawful termination for business reasons.
If the termination of an employment contract is for an exceptional reason at the behest of the employer, the worker is entitled to severance pay, which is determined as for a lawful termination for a business reason, and to compensation of at least the amount of pay due for the length of the notice period.
A worker is entitled to severance pay if his or her fixed-term employment contract is terminated without notice at the end of the period for which the contract was concluded, or when the agreed work is completed, or if the reason for which the contract was concluded no longer applies. A worker is not entitled to severance pay in the event of termination of a fixed-term employment contract that is concluded for the following reasons: (1) replacement of a temporarily absent worker; (2) seasonal work lasting less than three months in a calendar year; (3) performance of a public service; or (4) for inclusion in active employment policy measures in accordance with the law.
If on terminating an employment contract for a business or incompetence reason an employer offers the worker a new, unsuitable employment contract, and the worker accepts, he or she is entitled to a proportionate part of the severance pay to the extent agreed with the employer.
Workers whose contract of employment is terminated during bankruptcy, compulsory winding-up proceedings or in the event of a compulsory settlement are entitled to severance pay.
Unless otherwise stipulated by a collective agreement at branch level, an employer is obliged to give a severance payment at the termination of the contract of employment to a worker who has been employed by the employer for at least five years and is retiring, at the rate of two average monthly salaries in Slovenia for the previous three months or at the rate of two average monthly salaries received by the worker in question during the previous three months, whichever is the more favourable to the worker.
The employment contract may be terminated by a written agreement between the contracting parties. In such an instance, the employer must explain in writing to the worker that if he or she signs the agreement as a way of terminating the employment contract, he or she will not be entitled to unemployment insurance benefits. No severance is prescribed by law.
When considering mass redundancies, an employer must create a proposal stating the criteria for determining the redundancies. In coordination with the union, the employer may, instead of the criteria in a collective agreement, formulate its own criteria. In any event, the following factors shall be taken into account: the professional training or qualifications needed for the work and any necessary additional knowledge and abilities; work experience; work performance; years of service; state of health; social status; and whether the employee is a parent of three or more minor children or the sole breadwinner of a family with minor children. In determining the workers whose work becomes unnecessary, those who have a disadvantaged social status shall be given priority over the same criteria to retain employment.
When a large number of workers are to have their contracts terminated for business reasons, the employer has an obligation to inform and consult the trade union, to inform the Employment Service and to formulate a programme for dismissing redundant workers. Those obligations apply when, for business reasons, work will become unnecessary during a period of 30 days for (1) at least 10 workers where between 20 and 100 workers are employed, (2) at least 10 per cent of workers where between 100 and 300 workers are employed, or (3) at least 30 workers where 300 or more workers are employed.
The notice period shall be 15 days for those who have been employed with the employer for up to one year and 30 days for those who have been employed with the employer for between one and two years. The worker and the employer can agree on an appropriate cash reimbursement instead of working part or all of the notice period; this agreement must be in writing.
The employer is not obliged to offer suitable alternative employment but the option to do so exists. If the employer terminates an employment contract for business or incapability reasons and at the same time offers the worker the option to conclude a new employment contract and the worker accepts the offer, the employer must conclude the new employment contract within 15 days of the offer being accepted.
Transfer of business
Article 75 of ERA-1 states that if a legal transfer of a company, or part of a company, carried out according to a law, another regulation, a legal transaction or a final court decision, or as a result of a merger or division that results in a change of employer, the contractual and other rights and obligations arising from the employment relationships, to which the workers were entitled on the day of the transfer, are transferred from the transferor to the transferee. The transferee must guarantee any rights and obligations arising from a collective agreement, as agreed to by the transferor, for at least one year.
The transferee employer automatically enters into a contractual relationship with the employee, thus resulting in automatic transfer of employment.
If a worker refuses to transfer and perform the work for the transferee, the employment contract of the worker may be exceptionally terminated.
In many of their rulings, Slovenian courts refer to EU case law when ascertaining the criteria to be addressed to evaluate whether a legal transfer or transfer of an economic unit takes place:
- the type of business or undertaking (or its part) involved;
- whether tangible assets and (im)movable property are to be transferred or involved;
- the value of intangible assets;
- whether customers are transferred;
- the degree of similarity of business activities before and after the transfer;
- whether the business activities continue and are unaffected;
- whether the clients and potential clients are the same;
- the transfer of contracts;
- whether the orders are the same;
- whether stocks are taken over; and
- whether a majority of employees are transferred.
In the coming year, as the economy cools, the unemployment rate is set to rise and many interesting matters of employment law will be raised that concern both the courts and other entities involved.
At the beginning of 2021, we expect the adoption of PDPA-2, which will be in line with European data protection legislation.
We expect that issues relating to the rise of non-standard forms of work will continue to be topical. Nevertheless, we are optimistic that the legal culture of both employees and employers will also improve in this area.
1 Petra Smolnikar is an attorney at law, Romana Ulčar is a legal assistant and Tjaša Marinček is a student at Petra Smolnikar Law Firm.
2 Official Gazette of Republic of Slovenia, No. 21/13, with amendments (Zakon o delovnih razmerjih).
3 Official Gazette of Republic of Slovenia, No. 43/11 (Zakon o varnosti in zdravju pri delu).
4 Official Gazette of Republic of Slovenia, No. 96/12, with amendments (Zakon o pokojninskem in invalidskem zavarovanju).
5 Official Gazette of Republic of Slovenia, No. 80/10, with amendments (Zakon o urejanju trga dela).
6 Official Gazette of Republic of Slovenia, No. 40/06 (Zakon o evidencah na področju dela in socialne varnosti).
7 Official Gazette of Republic of Slovenia, No. 94/07 (Zakon o varstvu osebnih podatkov).
9 Meaning those who have, in a given period performed any work for remuneration (pecuniary or non-pecuniary), for profit or family well-being.
10 Official Gazette of Republic of Slovenia, No. 55/17 (Zakon o kolektivnih tožbah).
11 Official Gazette of Republic of Slovenia, No. 97/07 (Obligacijski Zakonik).
12 ERA-1 refers to the specific law regulating the acknowledgement of qualifications for the performance of regulated professions. This relates to citizens of the EU Member States or EEA Member States, who exercise their right to move freely within the European Union for the purpose of employment.
13 The Standard Classification of Activities is the obligatory national standard used for defining the main activity and for classifying business entities and their units for official and other administrative data collection (registers, records, databases, etc.) and for national and international statistics and analyses.
14 Official Gazette of the Republic of Slovenia, No. 21/10 (Zakon o storitvah na notranjem trgu).
15 Official Gazette of the Republic of Slovenia, No. 65/09, with amendments (Zakon o gospodarskih družbah).
16 Supreme Court of the Republic of Slovenia, Labour and Social Department (2015), VSRS Judgment VIII Ips 80/2015 of 12 May 2015.
17 Supreme Court of the Republic of Slovenia, Labour and Social Department (2012), VSRS Judgment and Conclusion VIII Ips 111/2012 of 18 September 2012.
19 Official Gazette of the Republic of Slovenia, No. 47/15 (Zakon o zaposlovanju, samozaposlovanju in delu tujcev).
20 Directive 2011/98/EU of 13 December 2011 on a single application procedure for a single permit for third-country nationals to reside and work in the territory of a Member State and on a common set of rights for third-country workers legally residing in a Member State.
21 Official Gazette of Republic of Slovenia, No. 64/18 (Zakon o starševskem varstvu in družinskih prejemkih).
22 Official Gazette of Republic of Slovenia, No. 42/07 (Zakon o sodelovanju delavcev pri upravljanju).
23 Higher Labour and Social Court of the Republic of Slovenia (2011), VDSS Judgement Pdp 188/2011 of 24 February 2006.
24 Official Gazette of Republic of Slovenia, No. 13/93 (Zakon o reprezentativnosti sindikatov).