European Trade Union Institute, ETUI.

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Labour market reforms in Slovakia: background summary (updated April 2019)

Since 2000 labour market reforms in Slovakia have been mostly determined by the alternation of power between left- and right-wing governments. Whereas liberal oriented governments introduced a number of measures aimed at flexibilisation of the labour market, the left-leaning governments focused on increasing protection of workers. Labour market reforms took place in the context of high unemployment rates in Slovakia, global economic crisis and the growing emphasis of the EU on fiscal discipline. In recent years these changes were mostly informed by post-crisis economic recovery and an associated lack of an available workforce.

Main reforms

Labour market liberalization and flexibilization began in 2001 with the adoption of a new Labour Code (Act no. 311/2001 Coll.) which united, harmonized and incorporated all relevant amendments to the previous Labour Code valid and amended since 1965 (Act no. 65/1965 Coll.). Examples include: introducing definitions and a regulatory framework for remuneration conditions (e.g., wages; minimum wages; wages for overtime work; wage compensation for public holidays; premia for night work and for work in a demanding and harmful environment); and institutionalization of several precarious employment forms, including assignment contracts virtually without any social protection for the employees (e.g., the work performance agreement) (c.f. Czíria 2003 and Munková and Czíria 2002). The labour legislation reform was intended to increase flexibility, but the adopted employment policy failed to combat the persisting unemployment despite an economic boom in mid 2000s.

Changes in the Labour Code introduced between 2001 and 2004 were mostly aimed at liberalization of the labour market:

  • The obligation to provide simultaneously a paid notice-period and severance pay was cancelled, resulting in a reduction of redundancy costs. In general, the termination of an employment contract was simplified.
  • The working hours were deregulated so that working time could be designed according to the nature of the job and the type of work, and an employee could work for as many employers as he/she liked. This opened the way to extensive overtime work through several contracts’ deployment. Overtime work per employment contract was limited to 150 hours annually, which could be increased upon agreement between employer and employee. Also, working time under a work performance agreement (one of the precarious forms of working contract) increased to 300 hours per year, which was a significant increase on the earlier stipulation of 100 hours per year.
  • Employment relations were flexibilised by allowing unlimited renewal of fixed-term contracts and facilitating their use and termination. Signing and terminating contracts was facilitated also in the case of part-time contracts.
  • Trade union approval was no longer needed for flexible working time. Moreover, the amendment extended the limits for overtime agreed with the employee and deleted the requirement for employers to ask for the consent of trade unions and the National labour Office for such an extension.
  • Trade unions lost the effective veto power over the organisational changes and firing of workers, and their power was generally weakened. Moreover, the compensation of their representatives for the time they spent on trade union duties was abolished. On the other hand, the power of works councils was strengthened. Collective bargaining, however, remained in the hands of trade unions only.

Since these adjustments mirrored in a gradual institutionalization of precarious employment forms, bargaining decentralization and limiting the involvement of social partners in policymaking, trade unions represented by the Confederation of Trade Unions of the Slovak Republic opposed the Labour Code amendments and searched political allies to reverse some of the changes.

As a result, before the Parliamentary Elections in 2006, trade unions made an agreement with the Social Democratic party SMER-SD to upset some of the changes adopted in previous years. Since SMER-SD won the elections and became the main party in the government coalition, some changes were indeed reversed by a new Labour Code amendment in 2007:

  • The obligation to provide both a paid notice-period and severance pay was restored and the amount of severance pay was increased for specific cases of redundancies.
  • Standby duty was included in overtime hours.
  • The potential to extend and renew fixed-term contracts was limited to one contract in 3 years. The termination of a fixed-term and part-time contract became more difficult.
  • A definition of dependent work to uncover forced self-employment was introduced in response to growing bogus self-employment in the country.
  • The trade union representatives were again paid to perform union-related tasks. The wage was partially or fully compensated by the employer and the level of compensation depended on the number of employees in the company.  

However, the economic crisis obliged the social-democratic government to take steps towards a higher level of flexibility of the labour market. Thus, in a new amendment to the Labour Code of 2009 it introduced a flexible working time account (‘flexikonto’). The accounts allowed to keep the workforce in spite of production breaks and enabled workers to accumulate paid un-worked hours, which were later compensated by unpaid overtime (cf. Zachar and Goliaš 2010).

The Labour Code was partly liberalised under the centre-right government operating from July 2010 to April 2012 (cf. Domonkos 2016).

  • The flexikonto was transformed from a temporary measure introduced in the context of economic crisis into a permanent flexibility instrument in 2011.
  • The obligation to provide both a paid notice-period and severance pay was again abolished, and the length of notice period became more differentiated according to the seniority of worker, the reasons for the termination of employment and the contractual party terminating the contract. The redundancy procedure was again simplified.
  • A more flexible treatment of fixed-term contracts was introduced.
  • In accordance with the Directive 2008/104/EC, equal treatment principle of temporary agency work was reinforced by broadening the definition of “working conditions and terms of employment” that have to be as equally favourable as those of other employees of the user employer.

Nevertheless, the return of the Social Democratic Smer to power in 2012 resulted soon in withdrawal of a number of these changes. The Labour Code amendment from 2012 in particular (re-)introduced stricter rules on the renewal of fixed-term contracts, bogus self-employment, and overtimes, it restored the accumulation of paid notice-period and severance pay, levelled to some extent the employment conditions of contracted workers and core employees, strengthened the position of trade unions etc. (e.g. Domonkos 2016). On the other hand, the flexikonto was abolished, or more precisely, it has been merged with the institute of working time account, resulting in a new stipulation of working time accounts (including compensatory periods), which has been no longer defined as an anti-crisis measure (see Čarská and Dobrovolná 2013; Márton 2012; FUTEJ & Partners 2012).

Recent important changes in the labour-related legislation include:

  • The enrolment of atypical workers (those who work based on out-of-employment contracts) in the standard pension insurance scheme and unemployment protection since 2013;
  • The regulation of temporary agency work through imposing stricter rules on agency work providers, as a huge misuse of this form of employment occurred in the post-crisis period. Another important regulation included limitation of how many times one agency worker can be assigned to one user employer to limit the misuse of this form of employment (cf. e.g. Kahanec and Sedláková 2016).

Further changes, introduced after 2016, were prompted mostly by the tight labour markets and were aimed at strengthening labour position when searching for job. Examples include compulsory posting of proposed wages in job offers or prohibiting employers´ ban to reveal received wage among employees.