New powers of the Labour inspectorate
Slovenia is in the process of adopting the Act Amending the Labour Inspection Act. Since the Act is being adopted in the shortened legislative procedure, it should enter into force relatively quickly – most likely in autumn 2017.
According to the new Act, the Labour inspectorate will have more power in cases referring to (i) hidden employment relationship and (ii) violation on salary provisions.
Hidden employment relationship
The highlight of the Act are new provisions referring to the growing problem of more and more individuals performing work via civil agreements rather than via employment agreements. In order to prevent this, the Labour inspectorate has been granted new powers. If the Labour inspectorate establishes that elements of employment relationship are present in the case at hand, it will not only be able to ban performance of work (as to date), but will also have the authority to order the employer to offer the employee an employment agreement within three days. According to the explanatory notes of the draft Act, such measure does not represent establishment of the employment relationship, but merely imposes to the employer to hand out an employment agreement to the employee. Establishment of the employment relationship for the period prior to that is (remains) subject to the decision of the competent labour court.
The employment agreement should correspond to the actual status and shall enter into force upon the day of conclusion. The individual shall have to conclude the agreement within 3 working days. If the individual decides upon their own judgement to reject the offered employment agreement, such individual shall have to stop performing work for the company. If the employment agreement is not offered in accordance with the Act, the individual/employee will be able to file a lawsuit within 30 days after lapse of the deadline or after the day they have become aware of the breach.
To make sure that these measures are truly effective, monetary fines between EUR 4,500 to 20,000 may be imposed upon employers (lower fines for small employers), and between EUR 350 to 2,000 upon the responsible person of the employer who fails to comply with the above-mentioned provisions.
Violation on salary provisions
The second change refers to violation on salary provisions, which are the most often established violations by the Labour inspectorate from 2009 onwards. According to the Act, the Labour inspectorate will have the power to impose a banning decision: the inspectorate will be able to ban performance of work by employees with an employer, if the inspectorate establishes that a final decision on violation of provisions on salary date payment was established with the employer at least two times in the last 12 months. Before the amendment, the inspectorate could only impose a sanction within its competences, but did not have the possibility to compel the employer directly to a certain act.
It is yet to be seen whether these changes will actually decrease the number of hidden employment relationships. However, it is certain that they will trigger additional monetary costs for the employers and create new issues in practice.
With the view of the fast approaching adoption of the amendments, we believe it is vital for all companies to reassess their relations with individuals based on civil agreements, which might include possible elements of the employment relationship, and rethink if actual employment agreements should be in place before the Labour inspection knocks on their door.
It is important to note that although the employer will/will not conclude an employment agreement based on the instruction of the inspectorate, this will have no effect on the actions of the employer where employees perform work based on civil agreements (while the employment relationship elements exist). These actions of the employer will then be decided upon in a separate misdemeanour procedure. However, the actions will have effect on future decisions of the inspectorate in reference to the sanction (fine or just reminder).