Category: Slovenia

ODI Law has advised Tus Holding and AH Invest 1 on the sale of Engrotus to Fortenova. Rojs, Peljhan, Prelesnik & Partners reportedly advised Fortenova subsidiary Mercator.

The transaction remains contingent on regulatory approval.

The Fortenova Group is a food producer and retailer based in Zagreb.

According to Fortenova, the merger between Mercator and Engrotus will strengthen the market position of both retailers and provide new development opportunities for Slovenian suppliers and employees.

“It is our great pleasure to close the year with yet another great acquisition in retail,” Fortenova Group CEO Fabris Perusko commented. “Following Franca markets in Montenegro, the acquisition of Tus stores is the second major expansion of our retail network within a short time, whereby we have definitively affirmed the status of the region’s strongest domestic retail chain, proving what we had announced when we integrated Mercator into Fortenova Group’s network in 2021.”

The ODI Law team included Managing Partner Uros Ilic, Partner Primoz Mikolic, Senior Associate Masa Drkusic, and Associates Milan Stankovic and Eva Hafnar.

With the aftermath of the devastating floods that hit Slovenia this year still being felt across multiple sectors, the country is also facing legal challenges – from new taxation policies to upheavals in the healthcare system – according to Fatur Menard Partner Andrej Fatur.

“Floods have caused significant damage to Slovenia, with the subsequently emerging legal ripples dominating the legal landscape, particularly in environmental law and insurance claims,” Fatur begins. “The damage to infrastructure has raised questions about liability and compensation, which are complex and will require thorough legal scrutiny.”

In the wake of the floods, the Slovenian government began discussing the possibility of additional taxes being introduced to counteract the damages. Specifically, Fatur mentions a new tax on banks. “This wasn’t a public discussion before the floods,” he says. “This move is ongoing and poses a significant challenge for lawyers in banking and finance, dealing with the newly proposed framework as well as the potential constitutional challenges coming out of it.”

Taxes are a bit of a hot ticket in Slovenia, given that, as Fatur puts it, a “more left-wing government, elected last year, promised tax reforms, which usually signals tax increases for the country. There’s been a pledge to not introduce additional taxes on natural persons but to foresee taxes on companies, which caused a backlash in the corporate community,” he explains. Such issues come as the country “grapples with the tail-end of COVID-19, the ongoing war, and its effects on energy prices and inflation. These pressures have a sort of domino effect on various sectors, including banking, taxation, and public finance.”

Furthermore, Fatur reports that Slovenia adopted a new FDI mechanism, following suit with the rest of the EU – but not as smoothly as expected. “The new FDI regulations, implemented during the COVID-19 period, have unexpectedly required notifying the authorities even in those cases when the investors were coming from the EU,” he says. “This has since been rectified, and the FDI mechanism now applies to potentially problematic investments from outside the EU – a positive development which not only eases the bureaucratic burden but also makes the business environment a more predictable one, at least for EU companies looking to invest in Slovenia,” Fatur explains.

Turning to issues within the healthcare system, Fatur points out some friction in the field. “Slovenia’s healthcare system is primarily financed through a public healthcare fund, with an additional private health insurance fund introduced about three decades ago to avoid surcharges for certain services – the issue was, however, how to integrate this additional insurance into the public system. This seems straightforward but impacts taxes and other areas significantly,” he explains. “Recently, there were moves to increase health insurance fees, but the government abruptly terminated this, leading to significant financial implications for private insurance companies.”

Finally, Fatur reports that, in October, “Slovenia’s Supreme Court ruled that certain agreements between banks and customers concerning loans in Swiss francs were null and void. The court found that banks failed to adequately inform customers about the risks,” he says. “This is a significant decision and is likely to be challenged in the constitutional court,” he concludes.

On 7 November 2023, the National Assembly of the Republic of Slovenia adopted an amendment to the Employment Relationships Act (“ERA-1D“) that entered into force on 16 November 2023.

The ERA-1D transposes Directive (EU) 2019/1152 on transparent and predictable working conditions in the European Union and the Directive (EU) 2019/1158 on work-life balance for parents and carers to Slovenian legislation. In addition, the ERA-1D also introduces other changes, some of which are outlined below.

1. Work-life balance measures

1.1 Carers’ leave

The ERA-1D introduces the institution of carers’ leave for employees providing care or support to a family member, or to a person who lives in the same household, for medical reasons that do not entitle the employee to use care leave under health insurance rules. This is a form of unpaid absence from work of up to five working days per calendar year. The employee will have to prove to the employer that he or she is entitled to this type of absence by submitting a statement explaining the reasons for the absence, along with the details of the person who is in need of significant care and the relevant supporting documents (medical certificate, certificate from social services, etc.).

1.2 Right to disconnect

The ERA-1D stipulates the employer’s obligation to ensure employees’ right to disconnect, so that they are not at the employer’s disposal during periods of rest or justified absence from work. In this respect, under the ERA-1D, employers are obligated to implement measures by way of amending the collective bargaining agreements or internal acts that are necessary to provide for the right to disconnect, within one year of the entry into force of ERA-1D (i.e. by 16 November 2024).

Furthermore, ERA-1D establishes a presumption that, in the event of a dispute where the employee claims that the employer has violated his or her right to disconnect, the burden of proof is on the employer.

1.3 The right to part-time work for parents and carers

An employee caring for a child under the age of eight will now be able to propose to the employer that they work part-time based on an employment contract for a fixed period, during which the employee’s existing employment contract will stay dormant. The same option will be available to carers. The employer will have to respond to such a proposal from the employee and justify their decision within 15 days. An employee who enters into a part-time employment contract on this basis will enjoy the same social security rights as if they worked full-time.

2. Measures for transparent and predictable working conditions

2.1 Predictable and improved working conditions

Employment contracts concluded after the entry into force of ERA-1D will have to include, as mandatory elements, provisions on payment of allowances and provisions on training provided by the employer. The time spent on education and training that are required for the work process is regarded as working time.

An employee who has been employed by the employer for at least six months and whose probationary period has expired, may propose to the employer to change his/her employment contract. Such a change could be in the form of a transition from a fixed-term contract to a contract for an unlimited period or from a part-time to a full-time contract, in order to improve the working conditions. The employer will have to respond to such a proposal and justify their decision in writing within 30 days.

2.2 Higher compensation for agency workers

Agency workers who are temporarily laid off will now receive a higher salary compensation of 80 % of their salaries (instead of the previous 70 % of the minimum wage in the Republic of Slovenia).

2.3 Higher level of protection and security for employees posted to a user

An employer must inform an employee who has been posted to work for a user undertaking, in writing, regarding the user, the working conditions and the employee’s obligations and rights during their work for the user, including details related to the remuneration for the work in question.

3. Measures for additional protection of employees

3.1 Employee’s defence in the event of a warning before dismissal for culpability

If a warning is given to an employee, the employer will now be required, at the employee’s written request, which may be made within three working days of receipt of the written warning, to give the employee the opportunity to make a statement regarding the alleged violations within a reasonable period of no less than three working days and no more than 30 days. The employer will have to give the employee their decision, in writing, on the written warning within eight days following the defence meeting.

The ERA-1D shortens the period during which an employee must not repeat a violation of his or her obligations while employed, in order to avoid being dismissed for culpability, from one year to six months. The maximum period allowed in collective bargaining agreements will change from two years to 18 months. In practice, it is often difficult to determine whether the reason for a violation is culpability or incompetence. The shorter reference period makes it more difficult for the employer to decide on this matter, while at the same time forcing them to monitor the employee even more closely.

3.2 Rights of employees’ representatives

The ERA-1D provides that the suspension of the effect of termination, with respect to an employment contract with employees’ representatives, may be extended until the dispute is resolved in a court of first instance, or within a maximum of six months. If the employer prevents said employee from working, the employee will be entitled to a higher compensation of 80 % (instead of the previous 50 %) of the employee’s salary. These provisions apply 12 months after the entry into force of the ERA-1D.

3.3 Additional leave and part-time work for victims of violence

The ERA-1D introduces paid absence for employees who are victims of domestic violence so they may manage their personal affairs. Such employees are entitled to five days of paid leave per calendar year to arrange for protection, manage legal matters and other institutional procedures and to deal with the consequences of domestic violence. The employee will be required to provide the employer with a certificate from the social services with an assessment of the risk of domestic violence, proof of having reported the instance or instances of violence to the police and proof of making use of measures to ensure the employee’s safety.

An employee who is a victim of violence may also propose to work part-time based on a fixed-term employment contract.

3.4 Longer period to carry over the unused leave

If the employee is absent due to illness, injury, maternity leave or childcare leave, the period for carrying over annual leave shall extend from 31 December of the following year, to 31 March of the year following the year to which the annual leave may be carried over. We recommend examining the case law of the EU Court of Justice in individual cases where the employee will not be able to exercise this right before the end of the extended carry-over period, for example due to long-term illness.

3.5 Expiry of notice in the event of absence due to illness or injury

The ERA-1D makes it clear that, if in the event of termination of an employment contract due to business reasons or incapacity, the employee is absent from work due to illness or injury at the end of the notice period, said period will expire on the last day of the employee’s absence and the employee’s return to work will no longer be relevant. The objective time limit for the expiry of the notice period remains as six months following the expiry of the notice period.

4. Additional obligations and fines for employers

4.1 Subsidiary liability in construction

In the construction sector, the ERA-1D introduces subsidiary liability of the contractor towards the employees of its direct subcontractor when the latter is unable to provide salaries to its employees.

4.2 New violations and fines for employers

Violations of the right to disconnect, of the obligation to enable the use of carers’ leave and parental leave, of the obligation to enable a victim of violence to use additional leave and the obligation to respond to employees’ proposals to amend their employment contract are punishable by a fine ranging between EUR 1,500 and EUR 4,000 for the employer and between EUR 450 and EUR 2,000 for the responsible person.

 

By Teja Balazic Jerovsek, Partner, and Iva Sturm Kopac, Associate, Wolf Theiss

In the wake of catastrophic floods, Slovenia has been grappling with several legal and economic challenges as well – from implementing healthcare reform to combating high inflation – according to Minu Anamaria Gvardjancic, a Partner of Ketler & Partners, member of Karanovic.

“The floods were really a major catastrophe for Slovenia,” Gvardjancic begins. “The legal implications are multifaceted, ranging from environmental regulations to insurance claims and infrastructure repair contracts. The government is working diligently to allocate resources and funds to address these issues, particularly with winter approaching,” she explains, underlining that the key is to ensure that “all negative effects are mitigated effectively and fairly.”

Floods and their associated turmoil aside, Slovenia has also been experiencing a high inflation rate, contrasted by a strong positive note – quite low unemployment levels. “The inflation rate blew past 7% recently, much higher than in the EU,” Gvardjancic reports. “Still, this September also saw the lowest unemployment rate since becoming independent, with fewer than 50,000 people being unemployed.” So low is the unemployment rate that the country has moved to smoothen the barriers to entry of certain foreign labor. While a positive step, Gvardjancic stresses the need to undertake this facilitation carefully. “It must be done within the framework of existing labor laws and regulations. The legal system will need to adapt to accommodate this influx of foreign workers while ensuring their rights are protected,” she explains, adding that skilled foreign labor is mostly needed in the construction sector.

Furthermore, Gvardjancic indicates that healthcare reform is likely on the horizon for Slovenia. “The reform of the sector has been much debated, ever since the elections. It was made abundantly clear that this will be a major task for the new government, but until now not much has taken shape.”

Speaking of reforms, there is also talk that there might be an overhaul of the tax framework, too. “With reforms and updates to the tax landscape being all but heralded, we are all fearing what these changes might bring in the future,” Gvardjancic says. “Slovenia already has a high tax rate, for example when it comes to personal income, so any new changes would probably be received with trepidation.”

Trepidation, however, is not present in the M&A sector, with Gvardjancic reporting a number of “high-volume transactions which are keeping lawyers busy. Also, there is a high number of litigation procedures lately, especially in the banking sector concerning the validity of CHF credit contracts, so it cannot be said that the legal market isn’t experiencing dynamism.”

The rising interest rates in Slovenia are reshaping the banking sector, while the renewables sector is looking at potentially clear skies and the M&A sector is experiencing vibrant SME activity on account of a generational change, according to Sibincic Krizanec Novak Partner Matic Novak.

“The rising interest rates have had a significant effect on the financing and banking landscape in Slovenia,” Novak begins. “Companies are now opting for alternative approaches, with many seeking alternative financing roads and avenues. This shift has been impacting our workflow heavily, as we witness an increasing number of companies seeking alternative means of funding to counteract the strong march of interest rates.” Additionally, he reports that the banking sector has been undergoing consolidation and that the “final green light on the merger and takeover of Sberbank by NLB marks a significant development in this area. The process is now finally nearing completion,” he reports.

Turning to interesting activity in other sectors, Novak says “the renewable energy sector, particularly greenfield investments, is experiencing a notable surge in activity.” According to him, even though “foreign direct investments in renewables like wind or solar are not yet substantial in the Slovenian market, there has been a substantial increase in the past quarter.” As he explains, as a consequence, “there are indications that major investments in solar and wind projects will be announced soon. Moreover, the associated industry developments in the production of relevant parts for wind and solar will also likely follow, which will generate effects felt over multiple sectors.”

Furthermore, Novak reports interesting developments in the Slovenian SME landscape. “SMEs have a significant presence in the Slovenian market, and have had it for a long time,” he says. “These days, we are seeing a proper generational change, with baby boomers now selling their family-owned businesses, which have been the backbone of Slovenia’s economy for the longest time. The M&A market is witnessing deals ranging from EUR 10 to EUR 15 million, primarily privately negotiated,” he says. “As each deal involves family-owned businesses, they possess unique characteristics that demand individual attention, making it quite dynamic and, in turn, making it impossible to apply a carbon copy approach: each deal stands for itself with its own idiosyncrasies,” he explains, adding that it is “expected for this trend to continue, and potentially grow further, in the last two quarters of the year.”

Finally, he reports that the political climate in Slovenia has been experiencing a “continuous focus on improving the country’s health system. The previous health minister was dismissed and, currently, the prime minister is overseeing the ministry temporarily, until a new one is appointed,” he reports. “One significant legislative update worthy of sharing,” he says in the end, “is the implementation of the new FDI regulation. This move has alleviated bureaucratic burdens on M&A deals, as screening is no longer required for EU companies. The relaxation in regulations has significantly improved the ease of doing business in Slovenia and opened up new investment opportunities,” Novak concludes.

Schoenherr Attorney at Law Matej Crnilec has become a new Local Partner in the firm’s Slovenian office.

Crnilec’s primary focus is on banking and finance, corporate and M&A, litigation, and restructuring and insolvency. He has been with Schoenherr since 2017. Before that, he spent six months in-house with the Bank Assets Management Company. Earlier, he spent four years with the Versic-Percic law firm, between 2011 and 2015, joining as a Junior Associate and making Associate in 2014.

Crnilec holds an LLB degree from the University of Ljubljana’s Faculty of Law and an LLM degree from the College of Europe in Bruges.

The EU Directive on Work-life balance was implemented in the Slovenian national legislation on 01 April 2023, resulting in notable changes and obligations for employers. As for the EU Directive on Transparent and predictable working conditions, its provisions will be incorporated within the amendments to the Employment Relationship Act, which will anticipatedly be presented to the National Assembly for adoption in the upcoming autumn. What implications do these directives hold for businesses?

This report is designed to help companies to understand the requirements and how they have been implemented.

Implementation of EU Directive on Work-Life Balance (EU Directive 2019/1158)

Has the directive been implemented in the jurisdiction?

Yes.

What is the status of the implementation or draft implementation?

The Act Amending Parental Protection and Family Benefits Act (“The Act”) has been adopted to implement in Slovenia the provisions of EU Directive 2019/1152. The Act was adopted on 24 November 2022, and applies from 01 April 2023.

What are the key changes for employers and employees?

1. Paternity leave (“ocetovski dopust”)

• The new law changes the way paternity leave is taken.
• The duration of paternity leave − which a father can take between the child being born and reaching 3 months of age − was reduced from 30 to 15 days. However, this difference of 15 days was included into an increase of the non-transferable element of parental leave (point 2. below).

2. Parental leave (“starsevski dopust”)

• The new law changes the number of days of parental leave and how it is divided and allocated.
• The length of parental leave for each parent is extended from 130 days to 160 days; although 100 days of the parental leave can be transferred from one parent to another, the remaining 60 days are non-transferable.
• The non-transferable element may be used until the child is 8 years old at the latest.

3. Reimbursement for full absence from work (“nadomestilo za polno odsotnost z dela”)

• The maximum amount of parental allowance continues to be limited to 2.5 times the average monthly salary. However, the Act takes a new approach in calculating the average salary, which the legislator expects to result in
  an increase of the actual maximum amount of the parental allowance.

4. Part-time work due to parenthood (“delo s krajsim delovnim casom zaradi starsevstva”)

• The period of part-time work for the care and protection for at least two children is being extended until the youngest child reaches the age of 8 (previously until the end of Year 1 of primary school). For one child, the period remains the same as before the adoption of the Act, i.e. until the child is 3 years old.
• Both parents will now be able to work part time to care for their children at the same time, up to a combined maximum of 20 hours per week. Previously, only one parent could exercise this right, not both at the
  same time.

5. Partial payment for loss of income (“delno placilo za izgubljeni dohodek”)

• If the child is in an institution where he or she receives free all-day care, one of the parents will now also be entitled to proportional partial payments for lost income for 10 / 20 / 30 hours respectively a week for a period of one year if the child has been at home for at least 90 / 180 / 270 days and, in all cases, the parents have actually cared for him or her in the last year before the application is made. Until now, the proportional partial payment for loss of income was limited to ¼ of the full amount (i.e. only for 10 working hours a week) if the child was cared for at home for at least 90 days within the last year before the application.

What are the main actions for HR departments in preparing for the changes?

• Review and revise internal labour documentation, especially those employment policies and practices that are applicable to employees with relation to their parental entitlements and employment contracts.
• Training to acquaint HR colleagues with the new rules.

Implementation of EU Directive on Transparent and Predictable Working Conditions (EU Directive 2019/1152)

Has the directive been implemented in
the jurisdiction?

No.

What is the status of the implementation or draft implementation?

The provisions of EU Directive 2019/1152 will be transposed into the legal order of the Republic of Slovenia by the adoption of the Act Amending the Employment Relationships Act (ZDR-1). The proposal of the latter has been recently (in June 2023) subject to a public discussion and is currently undergoing coordination within the government. The finalized text is anticipatedly expected to be presented to the National Assembly for adoption in the upcoming autumn. Nevertheless, please note that many provisions of the Directive are already included in the current ZDR-1.

What are the key changes for employers and employees?

1. Information about the employment relationship and minimum requirements relating to working conditions:

• Major changes to existing legislation are not foreseen, since under the current legislation the employer must already give the employee a written proposal of the employment contract containing employment terms (e.g. place of work, duration and conditions of the probationary period, amount of paid leave etc.) at least 3 days before it is due to be concluded. Moreover, any changes to the work conditions have to be made in written form already under the current legislation (either with an annex to the employment contract or even an obligatory conclusion of a new employment contract).
• Slovenian legislation already contains provisions on factors including probationary period (a maximum duration of 6 months), parallel employment, predictability of the working schedule and work assignments, on-demand contracts (for agency workers), permissible absence for educational purposes etc.

2. Amendments are required in the following areas:

• The regulation of the potential for the employee to request a form of employment following a 6-month probationary period with more predictable and secure working conditions (i.e. the transition to another form of employment).
• The proportionate limitation of the probationary period in the case of a fixed-term contract, and the prohibition of a probationary period in the case of a new successive contract of employment.
• To some degree, regarding (i) the regulation of employee training and (ii) the protection of those employees who exercise their rights under the Directive.

What are the main actions for HR departments in preparing for the changes?

• Review and update labour documentation such as employment contracts, templates for additional information, employment policies and practices etc.

By Anja Primozic, Senior Legal Associate, and Nika Logar, Legal Associate, Deloitte Legal Slovenia

This communication contains general information only, and none of Deloitte Touche Tohmatsu Limited (“DTTL”), its global network of member firms or their related entities (collectively, the “Deloitte organization”) is, by means of this communication, rendering professional advice or services. Before making any decision or taking any action that may affect your finances or your business, you should consult a qualified professional adviser. No representations, warranties or undertakings (express or implied) are given as to the accuracy or completeness of the information in this communication, and none of DTTL, its member firms, related entities, employees or agents shall be liable or responsible for any loss or damage whatsoever arising directly or indirectly in connection with any person relying on this communication. DTTL and each of its member firms, and their related entities, are legally separate and independent entities.

Fatur Menard has advised the Trigal RE Fund on its acquisition of the Situla commercial building in Ljubljana from Centauro Holdings. The Brezovec law firm reportedly advised Centauro Holdings.

The Trigal RE Fund, managed by Trigal subsidiary Trigal Funds, manages investments in real estate in Slovenia and Croatia.

According to Fatur Menard, “by acquiring the Situla Business Center, Trigal RE Fund aims to meet the rising demand for high-quality office spaces in Ljubljana. The Situla Business Center was built in 2012 and offers advanced business facilities over a remarkable net leasable area of 12,500 square meters.”

The Fatur Menard team included Partner Maja Menard and Senior Associates Lea Vatovec Miklavcic and Martin Carni.

Editor’s Note: After this article was published, the Brezovec law firm confirmed it had advised Centauro Holdings. The firm’s team included Attorneys at Law Luka Brezovec and Jana Bozic.

The business situation in Slovenia remains solid, although several challenges worsening prospects for the future are present – from the worker shortage to increasing prices and indications of a potential slowdown – while the country works on its green transition and considers reforming its tax, pension, and health systems and employment legislation, according to Kirm Perpar Partner Jan Gorjup.

“For the last few years, both businesses and lawyers in Slovenia were dealing with multiple challenges, including a shortage of raw materials and workers, and consistent price increases leading to inflation,” Gorjup begins, noting that “those challenges are not unique to the country, but are prevalent among medium-sized and larger companies, particularly those focused on exports.” To mitigate the increased costs, he says “businesses seek to pass them on to customers and buyers. However, the ability to do so varies across different sectors. It is crucial for European countries to work together to address these challenges collectively, as the consequences extend beyond the borders of any single state.”

As an example, Gorjup mentions “the recent announcement from Germany regarding changes to their criteria for foreigners to start working or be employed in Germany. Slovenia acts as a transit country for people from the Balkans who are seeking employment in Germany and other northern European countries. The easing of restrictions by Germany, particularly for less qualified positions, could potentially impact Slovenian companies that rely on foreign workers.”

And while the shortage of raw materials has somewhat improved, Gorjup reports “there are indications of a potential decrease in business activity. We are still busy, as are our clients, but there is a sense of change in the market.” One contributing factor, according to him, “is the increasing interest rates, which are still on record levels. Additionally, concerns have been raised about high real estate prices across Europe, all this potentially leading to a slowdown in economic activity.”

For instance, in Slovenia, “we recently saw a notable change in the trend with a decrease in real estate prices in Ljubljana during the first quarter, marking the first time since the COVID-19 pandemic began,” Gorjup says. “This could be seen as a natural slowdown following a period of high economic activity. The impact of the pointed out market conditions varies across different fields, making it difficult to provide a comprehensive overview.”

The regulation of prices has also been a prominent topic in Slovenia, driven by the government’s objective to curb inflation and its negative consequences. According to Gorjup, “initially, the focus was on energy products, with the reintroduction of regulations for fuel prices, followed by electricity and gas prices. More recently, attention has turned to regulating prices for additional health insurance.” And broader reform discussions in Slovenia are ongoing, he points out, “with not much clear other than scarce information of such reforms on taxes, the pension and health systems, as well as on employment relations, especially in the public sector.”

Turning to the green transition, Gorjup says “Slovenia remains committed and has recognized the need for a second nuclear power plant. The project is to be developed near Krsko, but limited information is available to the public about its current stage.” According to him, “the green transition topic is significant across Europe, with ESG the natural next step from a legal perspective. The EU is developing legislation in this area, and states will follow, but large corporate systems are already introducing their own ESG rules, which are relevant for Slovenian companies operating in the global market today.”

On 22 March 2023, an amendment to the Transnational Provision of Services Act (Zakon o čezmejnem izvajanju storitev – ZČmIS-1, “Act on Cross-Border Services“) was adopted and partially came into force on 18 April 2023, with individual provisions becoming effective on 1 January 2024.

The basis for payment of social contributions for posted employees will increase

The Act on Cross-Border Services abolishes paragraph 2 of Article 144 of the Pension and Disability Insurance Act, according to which the basis for the payment of social contributions for employees posted from Slovenia abroad is equal to the salary that the employee would receive for the same kind of work in Slovenia. In practice, the Slovenian minimum wage is used, which typically results in a considerably lower amount of social contributions that a Slovenian employer would need to pay compared to the social contributions payable by an employer in the host country. Such an arrangement means a much lower cost burden for employers, and thus representing unfair competition in relation to employers in other countries, as well as in relation to local employers whose employees perform similar work domestically. It also means lower inflow into the Slovenian pension fund, and, as a result, posted employees will be entitled to much lower pensions compared to other employees who receive the same salaries. From 1 January 2024 onwards, this privilege for employers posting employees from Slovenia abroad has been abolished and the basis on which social contributions for posted employees will be paid will be the salary which the employee actually receives (including all relevant supplements to the salary).

Stricter regime for employers who work with posted employees

In accordance with the Act on Cross-Border Services, employers posting employees abroad must not have been punished with a fine for more than one violation in relation to payment for work, working hours, undeclared work or individual provisions of the Health and Safety at Work Act (Zakon o varnosti in zdravju pri delu – ZVZD-1) (risk assessment for safety and health at work, training employees for safe work or ensuring a safe working environment and the use of safe work equipment) or more than one violation of obstructing the implementation of inspection control, during the previous three years. Employers who do not pay taxes may also post employees.

Simultaneous work in two EU member states

The Act on Cross-Border Services more precisely defines the conditions for the cross-border provision of services by Slovenian employers, when an employee habitually carries out his/her work for one employer in at least two EU member states.

Registration of work by a foreign employer

Going forward, it will not be sufficient to merely obtain an A1 certificate. Rather, foreign employers must register each individual posted employee with the Employment Service of Slovenia (Zavod Republike Slovenije za zaposlovanje, “Employment Service of Slovenia“) before any services are provided. The following information must be provided in the application: name and registered office of the foreign employer, information regarding the employer’s authorized person for contacts with supervisory authorities, type of service, information regarding the employee and his/her job title, posting period and location where the employee performs work. Based on such an application, the Employment Service of Slovenia issues a certificate to the foreign employer.

Targeted supervision by the Ministry of Labour

Compliance with the law will be supervised by the Labour Inspectorate of the Republic of Slovenia, Infrastructure Inspectorate of the Republic of Slovenia, the Financial Administration of the Republic of Slovenia, the Ministry of Labour, Family, Social Affairs and Equal Opportunities (“Ministry of Labour“) and the police. The Ministry of Labour will carry out a risk assessment and define the industries and the circumstances in which foreign employers most often provide cross-border services or in which violations are most often established. Based on said assessment, the Ministry of Labour will at least once per year propose to the respective supervision authorities that they carry out a targeted supervision of foreign employers.

Fines

The Act on Cross-Border Services provides for fines between EUR 2,000 and 60,000 for violation by a foreign employer, and fines between EUR 200 and 6,000 for the responsible person of the foreign employer. A foreign employer violates the law if it provides cross-border services despite not fulfilling the statutory requirements, without prior registration or based on incomplete registration of services, without translating and storing the documents, not submitting the documents to the competent supervisory authority.

Foreigners Act

The amendment to the Foreigners Act (Zakon o tujcih – ZTuj-2, “Foreigners Act“) was adopted on 22 March 2023 and later again in April 2023, due to the suspensive veto of the National Council of the Republic of Slovenia. Most provisions of the amendment will enter into force on 27 April 2023.

Proficiency in the Slovenian language

The Foreigners Act provides that in order to extend the residence permit of the family members of foreign employees, it is necessary for the latter (who are between the ages of 18 and 60) to pass within the period of one year the Slovenian language exam at the A1 level, which is the basic skill level for the language. This provision has already been included in the previous amendment of the Foreigners Act, but its effective date has been postponed for 18 months, therefore the provision will come into force on 1 November 2024. The government aims to facilitate the process of integration of foreigners, primarily with free language courses, which will allow for an easier integration of foreigners into Slovenian society.

Simplified change of the employer and job position

The Foreigners Act simplifies the procedure of switching job positions with the same employer and the process of changing the employer within the scope of the foreigner’s existing uniform permit or an EU blue card. In such cases, the competent authorities no longer have to issue decisions on the written approval of the change. The switch is already possible based on the consent by the Employment Service of Slovenia, which makes the procedures faster and simpler for foreigners.

Furthermore, the Foreigners Act allows for the streamlining of foreigners’ applications processing related to the issuance of a single permit for health care, social care and education professionals. The relevant consent is granted by the Employment Service of Slovenia and no longer by the administrative unit.

The Foreigners Act significantly expands the possibilities for handing over permits or decisions to a foreigner, thereby eliminating administrative obstacles (e.g. foreigners who are in the process of renewing their residence permit are allowed to cross the national border; foreigners can also be served their renewed temporary residence permit per post).

Employment, Self-employment and Work of Foreigners Act

The Employment, Self-employment and Work of Foreigners Act (Zakon o zaposlovanju, samozaposlovanju in delu tujcev – ZZSDT, “Employment, Self-employment and Work of Foreigners Act”) was amended on 28 March 2023. Most of the amendments came into force on 8 April 2023 and the rest will become fully effective on 8 July 2023. Its content is harmonized with the amendment of the Foreigners Act insofar as both acts regulate the employment, work and residence of foreigners in a comprehensive (substantive and procedural) manner.

The Employment, Self-employment and Work of Foreigners Act enables asylum seekers to exercise their right to free access to the Slovenian labour market after only three months of asylum seeker status and no longer than nine months.

How can we support you?

Wolf Theiss offers comprehensive, and at the same time, customized solutions for ensuring business compliance, namely:

• preparation of all necessary documents for hiring foreign employees;
• preparation of employment law documentation for posting of employees or performing the work of employees in two EU member states;
• legal advice in the field of employment law and employment of foreigners; and
• an experienced team of lawyers specializing in employment law.

By Markus Bruckmueller and Teja Balazic Jerovsek Partners, Ziga Dolhar, Counsel, Wolf Theiss