Dismissals and Termination of Employment in Slovenia

The Employment Relationship Act (‘Zakon o delovnih razmerjih’ or ‘ZDR-1’) distinguishes between ordinary and extraordinary termination of the employment contract.

Ordinary termination is termination with a notice period, which is only possible due to a business reason, reason of fault, incapacity to work, inability to work due to disability, or the unsuccessful completion of a probationary period, any of which render continuation of employment under the conditions of the existing employment contract impossible.

Extraordinary termination is termination without a notice period and is only possible in the case of severe violations, which are exhaustively stipulated in the ZDR-1 and if, in regard to the circumstances and interests of both parties, continuation of employment until the end of the notice period or until expiry of the employment contract is considered impossible.

Termination notice must be given in writing, providing for an explanation of the reasons for termination and pointing out possible legal remedies available to the employee and his/her rights regarding unemployment benefits.

In the case of ordinary termination of an employment contract due to reasons of fault, the employer must, before serving the employee with termination notice, give the employee a written warning regarding fulfilment of his/her obligations and the possibility of termination if he/she fails to comply. Such a warning must be issued within 60 days of establishing the breach and within six months of the occurrence of the breach. If the employee commits another breach of this or any other obligation from the employment, within a year after the warning and if such breach is serious enough, the employer may terminate the employment contract.

Further, in the case of ordinary termination due to reasons of fault as well as due to incapacity and in the case of extraordinary termination, the employer must notify the employee in writing about the initiated proceeding before serving the employee with a termination notice. This prior notification must include details of the alleged violations of the employee’s obligations or his/her alleged incompetence and thus provide the employee the opportunity to defend himself/herself within a reasonable period. The notice must be given at least three business days prior to the date of the hearing during which the employee can present his/her defence. The employer is (in some exceptional cases) released from such duty if it would be unreasonable to provide the employee such an opportunity. The employee can also request that a representative of his/her trade union and/or a legal representative is present at the hearing.

Ordinary termination

The notice period depends on the reason of termination and length of service with the respective employer.

As a general rule, the statutory minimum notice periods (unless otherwise determined by a collective bargaining agreement, employer's by-laws or an individual employment contract) are:

1. in the case of unsuccessful completion of a trial period: seven days;
2. in the case of ordinary termination by the employee:
   1. 15 days for employees with less than one year of service and
   2. 30 days for employees with more than one year of service;
3. in the case of ordinary termination by the employer due to business reasons or incapacity:
   1. 15 days for employees with less than one year of service;
   2. 30 days for employees with more than one year of service; and
   3. for employees with two or more years of service, the 30-day notice period increases for two days for each year of employment with the employer but cannot exceed 60 days. For employees with 25 years or more years of service, the notice period is 80 days, unless otherwise provided by a collective bargaining agreement.

If the employer terminates the employment contract due to fault of the employee, the statutory notice period is 15 days.

Extraordinary termination: there is no notice period.

In a bankruptcy procedure, the bankruptcy administrator may terminate employment contracts of employees who have become redundant due to initiation of the bankruptcy procedure with a 15-day notice period.

In case of the winding down of the employer for other reasons, the notice period is 30 days.

In the event of confirmed compulsory settlement, the employer may terminate the employment contracts of those employees who have been characterised as redundant in the redundancy programme with a 30-day notice period. Compulsory settlement (or compulsory composition) is a proceeding for an insolvent debtor which: (i) enables financial reorganisation of the debtor; and (ii) assures partial payment of the creditor’s claim, both aimed at ensuring the further operation of the debtor.

Pay in lieu of notice: In accordance with ZDR-1 the employee and employer can agree on an appropriate financial compensation instead of part or the entire notice period. The agreement must be in writing.

International Employees: ZDR-1 does not treat international employees differently from domestic employees. ZDR-1 applies to employment relationships between employers established in the Republic of Slovenia and their employees, regardless of the nationality of the employee. The law also applies to employment relationships between foreign employers and employees concluded in the territory of the Republic of Slovenia. 

If the employer intends to dismiss an employee who is a trade union member, the employer must, at the employee’s request, notify the trade union in writing of its intention to terminate (ordinary or extraordinary termination) the employee’s employment contract. The trade union must give its opinion within six days. Silence is deemed to mean the union does not oppose to the termination. It may oppose the termination if it considers there are no substantial reasons for the termination, or the termination procedure has not been carried out in accordance with the ZDR-1. The employer is not bound by the opinion of the trade union and can continue with the termination despite a negative opinion. If the employee is not a member of a trade union, the employer must, at the employee's request, inform the works council or works representative. In this case, the above applies to the works council/works representative.

Save for exceptional cases, the employer cannot terminate the employment contract of a member of a works council or a workers’ representative, and an appointed or elected trade union representative without the prior consent of the works council or the employees that have elected him/her or the trade union. The immunity applies for the length of the appointment and a year after the lapse of the mandate.

Employee representatives are also involved in collective redundancies.

If the employer intends to dismiss an employee who is a trade union member, the employer must, at the employee’s request, notify the trade union in writing of its intention to terminate (ordinary or extraordinary termination) the employee’s employment contract. The trade union must give its opinion within six days. Silence is deemed to mean the union does not oppose to the termination. It may oppose the termination if it considers there are no substantial reasons for the termination or the termination procedure has not been carried out in accordance with the ZDR-1. The employer is not bound by the opinion of the trade union and can continue with the termination despite a negative opinion.

An employer cannot terminate an employment contract of an appointed or elected trade union representative without the prior consent of the trade union. The immunity applies for the length of the appointment and a year after the lapse of the mandate.

The trade union is involved in mass redundancies (see below).

The approval of the state authorities is reserved only for exceptional cases. For example, the employer may only dismiss an employee who is pregnant, breastfeeding (one year after birth) or on parental leave, and for one month thereafter, only with the prior consent of the labour inspectorate, in the case of extraordinary termination of the employment contract, or if proceedings for terminating the employer’s business have been initiated. Further, in the case of termination of disabled employees due to business reasons without an offer of new employment, an approval by the Commission to establish the grounds for dismissal must be requested as well.

The employer must prepare a redundancy programme if it is established that for business reasons, the work performed by a certain number of employees will become unnecessary in the next 30 days. The numbers of employees who need to be made redundant for this to apply are as follows:

1. at least 10 employees where the employer employs more than 20 and fewer than 100  employees;
2. at least 10% of employees where the employer employs at least 100 employees but fewer than 300
3. employees;
4. at least 30 employees where the employer employs 300 employees or more.

The criteria for determining redundancies shall in particular take into account: the employee’s qualifications, work experience, performance, length of service, medical health and social status, whether the employee is a parent of three or more minors, or if the employee is the sole provider for a family with minors. The employer can determine his/her own criteria instead of those provided by the collective bargaining agreement if the trade union agrees with them.

The employer must inform and consult trade unions, the works council and the Employment Service of Slovenia (‘Zavod za zaposlovanje Republike Slovenije’) about the collective redundancies, whereas the content of the notifications is stipulated in the law. The employer may terminate the employment contracts of the redundant employees, subject to an agreed redundancy programme, but not before the expiry of 30 days from the date of informing the Employment Service of Slovenia. The Employment Service of Slovenia may extend this period to 60 days.

In Slovenia, the termination without a notice period is called extraordinary termination ("izredna odpoved"). It may be given only if:

• it is based on one of the exhaustively provided reasons in ZDR-1;
• taking into account all the circumstances and interests of the employer and employee, continuation of the employment until the end of the notice period or until expiry of employment contract is considered impossible; and
• it is given within 30 days of establishing the reason for extraordinary termination, and within six months of the occurrence of that reason.

If the court finds that the employer has failed to comply with statutory requirements, it will declare the employment termination unlawful and reinstate the employee with retroactive effect (ex tunc), recognising the employee’s period of service and other rights arising from the employment relationship.

Instead of reinstatement, the court may, at the employer’s or employee’s proposal:

1. determine that the termination was unlawful, and that the employment relationship lasted until the first instance judgment was issued;
2. recognise the employee’s period of service and other rights arising out of the employment relationship – the employee is then given the rights arising out of the employment relationship as if the employment contract had not been terminated; or
3. award appropriate monetary compensation of a maximum of 18 months’ salary, calculated based on the average monthly salary received in the final three months preceding the termination.

The employee may seek legal protection due to unlawfulness of termination within 30 days from the service of the termination notice.

An employee whose employment contract has been terminated for a business reason or reason of incapacity, is entitled to a severance payment. The amount depends on the number of (full) years of service with the employer (including employment with the employer’s legal predecessors). The basis for calculation is the average monthly salary, which the employee has received or would have received if working in the last three months prior to the end of employment.

Severance pay is calculated as follows:

• one-fifth of the average monthly salary for each year of employment with the employer if the duration of the employment is between one and ten years;
• one-quarter of the average monthly salary for each year of employment with the employer if the duration of the employment is between ten and 20 years; or
• one-third of the average monthly salary for each year of employment with the employer if the duration of the employment exceeds 20 years.

The amount of the severance payment may not exceed ten times the average monthly salary received in the final three months preceding the termination unless an applicable collective bargaining agreement stipulates otherwise.

In the event of termination of the employment contract for a fixed period concluded for one year or less, generally with few exemptions, the employee is entitled to severance pay in the amount of one-fifth of the base (the base being the employee’s average monthly salary for full-time in the last three months, or during the working period prior to the termination). If the contract is concluded for a period longer than one year, severance pay increases proportionally.

The same provisions regarding severance payment as stated above apply to workers whose employment contract has been terminated in a bankruptcy/liquidation/winding down of the employer or compulsory settlement proceeding. In a compulsory settlement proceeding, however, the employer and worker may stipulate in writing the manner, form or reduction of the severance payment if a greater number of jobs with the employer would be jeopardised by a full payment.

A non-competition clause is only valid if agreed upon in writing in the employment contract. ZDR-1 allows the use of this clause for employment contracts for indefinite term as well as for fixed term employment contracts for managerial workers. The clause can last only up to two years following termination. The clause must stipulate the compensation for observing the non-compete agreement, which cannot be less than one third of his/her average monthly salary (calculated over the three months immediately preceding termination) for each month of the restricted period. If the clause prevents the employee from gaining a comparable salary, the employee is entitled to compensation during the restricted period.

A non-competition clause may be agreed upon only when the employment contract is terminated by mutual agreement, due to ordinary termination of the contract by the employee, ordinary termination by the employer due to reason of fault, or extraordinary termination of the contract by the employer and if the employee has gained technical, production or business know-how and business connections while carrying out work or in connection to his/her work. However, the non-competition clause must not prevent the employee from obtaining appropriate employment.

The parties can mutually agree to waive the enforcement of the clause if they wish to do so.

Not applicable.

Under Slovenian law, the managing director (i.e. a legal representative of the company) does not need to have an employment agreement with the company, or any other type of agreement, in order to be able to represent the company.

Where a managing director has a managing/service agreement, which falls under the regulation of Slovenian obligatory law, only the provisions of the managing/service agreement apply. If aspects of the relationship are not dealt with in the managing/service agreement, the relevant provisions of the Slovenian Obligations Code will apply.

If the ‘managing director’ is in an employment relationship with the company, both corporate and employment aspects must be taken into account. From the employment perspective, the employer and managing director can agree to regulate their employment relationship differently than prescribed by law regarding:

1. the conditions and limitations of fixed-term employment;
2. working time;
3. provision of breaks and rest periods;
4. the remuneration;
5. disciplinary responsibility; and
6. termination of the employment contract.

If the parties do not take advantage of this possibility, the statutory provisions will apply (see the general section above).

The table below sets out the position under Slovenian Companies Act in respect to a ‘managing director’ of a limited liability company, with or without a service agreement. However, if the managing director has entered an employment contract, the termination of the employment contract is the same as described in the previous chapter unless the parties agree to deviate (mentioned above) from the statutory provisions of termination and stipulate their own termination rules in the employment contract. For example, the parties can agree that with (corporate) recall also the employment agreement terminates.

The managing director of a limited liability company may be recalled at any time by a resolution of a general assembly, irrespective of whether the managing director has been appointed for a fixed or indefinite period. The conditions for the recall of the managing director are to be determined in the contract concluded between the managing director and the company (management agreement). If the company has a supervisory board, then the supervisory board appoints and recalls (dismisses) the managing director.

Forms include: valid shareholders’ resolution on revocation of appointment as member of the management board; Registration of this revocation with the court registry; and Termination of the service agreement in the same form in which the agreement has been signed (the Obligations Act provisions shall apply).

According to the Slovenian Companies Act, the appointment of a director of the company can be revoked at any time without notice (for no special reason). Some restrictions (not strictly defined) can be set out in the articles of association.

If the director has a service agreement, the notice period will be as set out in the service agreement.

Pay in lieu of notice: Similar to the notice period, payment in lieu of notice is not automatically provided unless explicitly stated in the service agreement.

International Employees: Not applicable.

No involvement.

No involvement.

The recall resolution must be registered in the court/business register. The registration has a declaratory effect.

Not applicable.

Not applicable.

The managing director cannot be reinstated (even if the recall was unjustified). However, the managing director has the right to compensation or reimbursement for damages in accordance with the general principles of civil law. There is no statutory compensation.

The amount of severance pay is not regulated by the Companies Act. Severance pay may be set out in the articles of association of the company or in the managing director’s contract.

The articles of association of the company may provide a non-competition clause for a maximum duration of six months (in the case of an employment contract, same as in the previous chapter).

Not applicable.