Employer Action Code: Act
In 2007 and 2011, the Slovakian government amended the Labor Code to increase labor market flexibility and competitiveness, and lower labor costs. The changes were generally not well received by employees and prompted the recently elected center-left government to revise the Labor Code again to restore certain employee protections. It eliminated some of the 2011 changes and introduced a series of measures more favorable to employees and labor unions.
Changes under the new law include:
- Redefinition of "dependent work" to address the issue of "misused" independent contracts. Effective Jan. 1, 2013, individuals remunerated by an employer for their services, under guidance or close supervision and on a schedule defined by an employer, will be considered "dependent workers." Health and social security regulations, as well as labor protection, annual leave and working-time provisions, will be also applied.
- Negotiation of dismissals with employees' representatives. The September 2011 amendments abolished previous legislation requiring consultations with employee representatives prior to individual dismissals. Effective January 1, 2013, this clause will be reversed, which means that any dismissal will be subject to prior consultations, or the notice of dismissal will be deemed invalid. The provision stipulates only a duty to negotiate.
- Decrease of fixed-term employment contracts' maximum duration. As of Jan. 1, 2013, the maximum definite employment period was shortened from three to two years. Definite-term employment may be agreed upon, renewed or prolonged for up to a maximum of two years.
- Reduction of overtime work and limitations on flexibility. As of Jan. 1, 2013, total annual overtime will be reduced from a maximum of 400 to 150 hours. The additional maximum of 250 hours possible under collective agreement or individual contracts as well as the additional 150 hours for managers were abolished. Effective Jan. 1, 2013, employers will have four (instead of 12) months to grant time off for flexible time arrangements, unless employee representatives consent to a different timescale agreement.
- Collective agreements only favorable to employees. Effective Jan. 1, 2013, lower-order collective agreements can deviate from higher agreements only to the extent that they are more favorable to employees.
- Termination of employment. The September 2011 amendments set the compensation ceiling for unfair dismissal that can be granted by court decision at nine months' pay, but under the 2012 Labor Code reforms, the ceiling has been increased to 36 months' pay. As of Jan. 1, 2013, there will be a slight distinction between severance due for termination with notice and severance due to mutually agreed upon termination, granting from one up to five months' pay.
Implications for Employers
Employers need to change their employment practices, especially time schedules, booklets and related plan provisions, to conform to the new rules. The reforms are intended to increase employees' protection and enhance unions' participation in regulating the working environment by providing greater termination restrictions. They limit companies' options to adopt atypical employment contracts, and accelerate effective restructuring and reorganization policies.