Expert Guide on Use of outsourced IT personnel in Slovakia
- Can IT specialists be engaged/contracted directly by a foreign company?
- Can IT staff be engaged as contractors?
- Should contractors be registered as private entrepreneurs (or equivalent)?
- Can teams be hired via an intermediary (an outsourcing company) and is this common?
- What is the risk of re-qualification into employment relationships?
- Is a local presence for the foreign company mandatory to hire an IT team?
- If a local presence is mandatory, what form should it take?
- Are any regulatory approvals needed to hire an IT team?
- Can a foreign company lease premises locally for the hired team?
- Can a customer compensate a contractor (intermediary) for the leased premises?
- What kind of agreements should be entered into between the IT specialist and a foreign customer?
- What kind of agreements should be entered into between a foreign customer and an intermediary?
- Can payments between the contractor (intermediary) and a customer be made in a foreign currency (USD, EUR, GBP)?
- Can moral rights be transferred to a customer?
- Is ‘work for hire’ recognised in your jurisdiction?
- What documents are necessary to transfer proprietary IP rights properly?
- Are noncompete/non-solicitation arrangements enforceable?
- Can foreign law govern contracts between the customer and a contractor (intermediary)?
- Are warranties/indemnities recognised concepts?
1. Can IT specialists be engaged/contracted directly by a foreign company?
Yes.
2. Can IT staff be engaged as contractors?
Yes.
3. Should contractors be registered as private entrepreneurs (or equivalent)?
Yes.
The contractor can provide services as a private entrepreneur or via a company (usually an LLC).
4. Can teams be hired via an intermediary (an outsourcing company) and is this common?
Yes, common.
5. What is the risk of re-qualification into employment relationships?
If the service provided by contractors does not show signs of “dependent work” under the Slovak Labour Code, the risk is low. This should be assessed on a case-by-case basis in light of the wording of the particular agreement and factual operation of the respective contractual relationship. If the performance of services qualifies as dependent work under the Slovak Labour Code, there is a high risk of re-qualification.
6. Is a local presence for the foreign company mandatory to hire an IT team?
No.
7. If a local presence is mandatory, what form should it take?
N/A
8. Are any regulatory approvals needed to hire an IT team?
No.
9. Can a foreign company lease premises locally for the hired team?
Not recommended. Leasing an office directly without having a local presence can create the risk of a permanent establishment, and related tax risks. Such scenario should be assessed on a case-by-case basis. A risk also arises from the perspective of the dependent work assessment.
10. Can a customer compensate a contractor (intermediary) for the leased premises?
Yes.
This should be assessed on a case-by-case basis given the risks related to the permanent establishment and related tax risks, as well as labour law issues.
11. What kind of agreements should be entered into between the IT specialist and a foreign customer?
IT services agreement or consultancy agreement, or contract for work. These should also include IP assignment provisions. The exact type of contract and its content depend on whether services are provided by an entrepreneur or via an LLC.
A data processing agreement is necessary for the processing of personal data on behalf of the foreign customer.
12. What kind of agreements should be entered into between a foreign customer and an intermediary?
An IP assignment agreement, contract for work or master service agreement with individual agreements, data processing agreement.
13. Can payments between the contractor (intermediary) and a customer be made in a foreign currency (USD, EUR, GBP)?
Yes.
14. Can moral rights be transferred to a customer?
No.
The author may grant consent to interference with their moral rights. Consent to interference with moral rights must be limited in scope and manner and, unless otherwise agreed, may be revoked.
15. Is ‘work for hire’ recognised in your jurisdiction?
Yes.
However, exercise of economic rights is automatically vested only to employers. In B2B relationships, the assignment of the right to exercise economic rights is necessary.
16. What documents are necessary to transfer proprietary IP rights properly?
An IP assignment agreement. From the perspective of copyrightable works, we note that economic rights (the right to their exercise) are transferable, but moral rights are non-transferable.
17. Are noncompete/non-solicitation arrangements enforceable?
Yes.
Yes, but it depends on the governing law of the agreement and specific wording of the noncompete/non-solicitation arrangements. In general, noncompete clauses are in practice easier to enforce than non-solicitation arrangements (regarding the burden of proof).
18. Can foreign law govern contracts between the customer and a contractor (intermediary)?
Yes.
19. Are warranties/indemnities recognised concepts?
Yes.
There is no specific legal regulation, but it is a common part of agreements, similar to the concept that can be incorporated into contracts subject to the local rules.
