The National Assembly of Slovenia has adopted the new Transnational Provision of Services Act regarding the posting of workers (the “Act”). The Act, which is scheduled to come into force on January 1, 2018, implements European Enforcement Directive 2014/67/EU and imposes new conditions for employers posting workers to and from Slovenia.
As defined in Article 26 of the Treaty on the Functioning of the European Union, the free movement of services is, along with the free movement of persons, goods, and capital, among the four basic freedoms necessary for the functioning of the European Union internal market. The free movement of services means that a company or a self-employed person that provides a certain service in its/his/her own country can provide that service anywhere within the EU and in any European Economic Area Member State. An employer can post an employee to another country so that he or she can, within the frame of providing that service, perform work for the employer there. If the legislation of the country of origin at the time of posting a worker to another Member State were to be used, and that legislation offered a lower level of the workers’ rights protection, this could provide a foreign service provider a competitive advantage over local service providers. Thus, the main objective of the Act is to avoid the multiplication of “letter-box” companies that use posting as a way to circumvent employment rules, and provide better protection to posted workers.
In accordance with the Act, the posting of workers from an employer registered in an EU Member State (a “Foreign Employer”) to work in Slovenia (and vice versa) is possible in one of the following ways: (1) the service is carried out on the account and under the supervision of the Foreign Employer under a contract concluded with the party for whom the service is intended; (2) the service is carried out on the basis of an act regulating the posting of workers to an institution or enterprise based in Slovenia which the Foreign Employer has a capital link with; or (3) the posting is carried out as a part of providing the work to a user with a seat or residence in Slovenia (so-called “Agency Workers”).
The Act sets the same basic conditions for Foreign Employers wanting to post workers in Slovenia and Slovenian employers who wish to post workers in other Member States. Both Foreign Employers and Slovenian employers must comply with the following conditions: (1) That employers usually do their business in the Member State of Employment; (2) that the worker being posted abroad usually does not provide services in the Member State in which the work will be carried out; (3) that employers do not violate the most important provisions of employment law regarding workers’ rights, and (4) that employers are duly registered for the services provided by the posted workers in their home States.
Employers fulfilling these conditions can obtain a so-called A1 certificate issued by the competent social security institution in the Member State of Employment. This certificate must be obtained for each individual worker by both foreign and Slovenian employers at least 30 days prior to the worker being posted abroad. It is also useful to prove in which Member State the social contributions for posted worker are being paid.
Before starting to provide services in Slovenia, foreign employers are required to register with the Employment Service of Slovenia and are required to guarantee rights to their workers for the duration of their posting in Slovenia. Such rights must be in line with Slovenian regulations and the provisions of the applicable branch collective agreements regulating working hours, breaks and rest, night work, minimum annual leave, salary, health and safety at work, special protection for workers, and equality guarantees, if Slovenian legislation is more favorable for the worker than the rights guaranteed by the Member State of Employment.
The Act also includes provisions on special subsidiary liability. If a foreign temporary employment agency does not pay wages or social contributions to its workers posted in Slovenia, then the Slovenian user is liable for these payments. Moreover, in the construction sector, if a Foreign Employer that is a direct subcontractor of a Slovenian construction company does not pay wages to its workers posted in Slovenia, then his Slovenian contractor becomes liable for the payment of the wages.
To conclude, the new Act will likely have an impact on many foreign and domestic companies which post workers to and from Slovenia. Such companies should take steps to ensure compliance with the new law.
By Branko Ilic, Partner, and Luka Jesenko, Associate, ODI Law Firm
This Article was originally published in Issue 4.6 of the CEE Legal Matters Magazine. If you would like to receive a hard copy of the magazine, you can subscribe here.