First set of novelties to the Employment Relationships Act

First set of novelties to the Employment Relationships Act

Author: Gregor Novljan

The Government of the Republic of Slovenia has set a plan to reform the Employment Relationships Act (“ZDR-1”) in two steps. Following negotiations with social partners, employers, and labour unions, they have prepared a proposal for an amendment to ZDR-1 (hereinafter also referred to as the “amendment”), which introduces the first set of updates to the fundamental labour act.

The National Assembly of the Republic of Slovenia adopted the amendment to ZDR-1 on November 7, 2023, and it will come into effect the day after its publication in the Official Gazette of the Republic of Slovenia. Some provisions of the ZDR-1 amendment will only apply after a transitional period, which we will specifically mention in this article.

Below, we will briefly present the essential novelties introduced by the ZDR-1 amendment that will have the most noticeable impact on the position of employees and employers in practice.

 1. Transposition of EU Directives

 The ZDR-1 amendment incorporates two EU directives into the legislation of the Republic of Slovenia, namely:

  • the Directive (EU) 2019/1152 of the European Parliament and of the Council of June 20, 2019, on transparent and predictable working conditions in the European Union, and
  • the Directive (EU) 2019/1158 of the European Parliament and of the Council of June 20, 2019, on work-life balance for parents and carers and repealing Council Directive 2010/18/EU insofar as it relates to the implementation of labor rights and obligations.

2. Minor updates to existing institutes

Employment contracts concluded after the entry into force of the ZDR-1 amendment will be required to include, among other obligatory provisions (such as the date of commencement of work, the place of work, the duration of the contract, etc.), a clause regarding training provided by the employer. In addition, employment contracts will now include provisions about other components of an employee’s salary, payment periods, payment dates, and about the additions to the salary. Both aspects of the contract will be able to refer to laws, collective agreements, or employer’s internal policies. In this regard, it is not superfluous to emphasize that these two provisions must also be appropriately included in the annexes to existing employment contracts that will be concluded after the amendment enters into force, as individual annexes re-establish, even if only to a certain extent, the rights and obligations arising from the employment relationship.

Under the new provisions, employees will be allowed, after the expiration of six months from the commencement of the employment contract or after the completion of the probationary period (if it lasts longer than six months, e.g., due to the employee’s absence), to propose to the employer the conclusion of a new employment contract or an amendment to the existing contract to improve working conditions. The employer will be required to provide a written justification for their decision on the proposal within 30 days. However, the obligation to provide a written justification does not apply if less than one year has passed since the employee’s previous equal proposal. The concept of an “equal proposal” is not clearly defined, whether it relates to the same area in which the employee suggests improvement or if it covers only the quantitative aspect of that area. Similarly, the legislator has not specified how the employer should handle a “similar proposal” from an employee given within the mentioned one-year period.

Regarding the suspension of an employment contract, the period during which an employee has the right and obligation to return to work after the suspension is extended from five days to five working days after the cessation of the reason for the suspension.

The salary compensation for agency workers when the agency does not provide work at the user company is increased from at least 70% of the minimum wage to 80% of the base amount specified in the seventh paragraph of Article 137 of the ZDR-1. This aligns it with the compensation for workers on a temporary layoff. The agency will also be required to inform the agency worker in writing about the user company, the working conditions at the user company, and the rights and obligations at the user company in a manner that allows the worker to print the notice.

The ZDR-1 amendment introduces proportionality in the duration of the probationary period agreed upon in fixed-term employment contracts. With this proposal, the requirement from Directive 2019/1152/EU is being transposed into the law, which stipulates that in the case of a fixed-term employment relationship, the duration of the probationary period should be proportionate to the expected duration of the employment contract and the nature of the work, and that in the event of concluding a new employment contract, a new probationary period should not be established. This means that when a new consecutive fixed-term employment contract is concluded for the same position, it may not include a probationary period.

In legally specified cases, the employer will now have the right to withhold not only the employee’s salary but also the reimbursement of expenses and other work-related benefits.

Employees will have the right to use all their unused annual leave that was not taken in the current calendar year or until June 30 of the following year due to absence caused by illness, injury, maternity leave, or childcare leave, until March 31 of the year following the year in which the annual leave could be carried over. This extends the period from just December 31 of the following year to March 31 of the second following year. For example, if an employee cannot use their annual leave in 2023 due to the mentioned reasons, they will be able to use it until March 31, 2025, instead of just December 31, 2024, as was the case previously.

The ZDR-1 amendment explicitly states that the time spent by an employee on training, further education, or improvement after being sent by the employer is considered as working time.

3. Updates regarding termination of employment contracts or employment termination

The ZDR-1 amendment introduces a new obligation for the employer when giving a written warning before terminating an employment contract due to misconduct. Upon the employee’s written request, which can be made within three working days of receiving the written warning, the employer must allow the employee to provide a statement of his/her alleged violations (a statement of alleged violations) within a reasonable period, not shorter than three working days and not longer than 30 days, unless there are circumstances that would make it unreasonably expected from the employer. This provision allows the employee to have a defence hearing regarding the alleged violations, and upon the employee’s request, a workers’ representative or another person authorized by the employee may also be involved. The employer’s obligation, in accordance with which it must allow the employee to present his/her defence hearing upon request, is similar in essence to the obligation envisaged in the process of determining the disciplinary liability of the employee. In the next step, the employer must, within eight days of the employee’s statement regarding alleged violations, make a decision on a written warning before regular termination of the employment contract due to misconduct. The decision must be in writing, substantiated (including the employee’s statement on alleged violations), and delivered to the employee.

To ensure additional legal protection for employees when receiving a written warning before the termination of an employment contract due to misconduct, the amendment also shortens the period during which the employee can be terminated if he/she commits a breach or fail to fulfil his/her contractual or other obligations after receiving a written warning. The period during which the employee must not commit another violation is reduced from one year to six months. Additionally, the maximum allowed period specified in a sectoral collective agreement for such cases is shortened from two years to 18 months.

The ZDR-1 amendment introduces two new unjustified termination reasons, namely, termination due to the use of caregiving leave and termination due to working from home or on a reduced or flexibly scheduled work hours to balance professional and private life or proposing such a way of working. With the implementation of the preceding, the employees are ensured with additional protection. The employer is also prohibited from taking any action that is necessary for terminating an employment contract or hiring a new employee (including recruiting) if the termination of the employment is a consequence of the employee exercising their rights with the employer. This prohibition is established to deter terminations by the employer as a retaliatory measure when an employee proposes the use of his/her rights.

The ZDR-1 amendment introduces a suspension of the effects of termination for workers’ representatives and union representatives until a decision by the first-instance labour court, or up to a maximum of 6 months, and it grants them higher compensation for being prohibited from working (instead of 50%, they will be entitled to 80% of the base amount specified in the seventh paragraph of Article 137 of the ZDR-1) and legal protection against a written warning before termination. The amendment allows for the establishment of a special fund, the purpose of which is to reimburse the salary compensation paid to the employee for the period of being prohibited from working during the suspension of the employment contract when the first-instance court determines that the termination of the employment contract was lawful. Details regarding the fund are determined by a sectoral collective agreement.

The amendment also increases the legal protection of employees in cases of extraordinary termination by the employer. Now, an employee can terminate their employment contract even if the employer fails to pay the salary compensation (previously, the employee could only terminate the contract for cause in specific cases related to non-payment of the salary, not the salary compensation).

The ZDR-1 amendment also changes the rules regarding the termination of employment for employees whose contracts have been terminated for business reason or due to incapacity, and who are absent from work due to temporary incapacity caused by illness or injury at the end of the notice period. Under the new rules, the employment relationship will terminate at the end of the last day of absence from work due to temporary incapacity caused by illness or injury, but, as before, not later than six months after the end of the notice period.

4. Updates on the area of balancing professional and private life

Conclusion of fixed-term part-time employment contracts

An employee who cares for a child up to the age of eight or provides care under the new fourth paragraph of Article 182 of the ZDR-1 (part-time work due to caregiving, absence from work due to caregiving leave for significant caregiving needs for a family member (spouse, unmarried partner, child, adopted child, parent), or a person living in the same household as the employee, when the employee is not entitled to leave under health insurance regulations) can propose the conclusion of a fixed-term part-time employment contract for the purposes of balancing professional and private life during the term of employment. The employer must provide a written decision regarding the employee’s proposal within 15 days, and it can also be delivered electronically to an email address provided and mandated by the employer. If the employee is already employed for an indefinite period, the effects of the existing employment contract will be suspended during the term of the fixed-term employment contract.

An employee who is a victim of domestic violence can propose the conclusion of a fixed-term part-time employment contract during the term of employment for the purposes of balancing professional and private life. The contract is associated with the period of seeking protection, legal and other proceedings, and addressing the consequences of domestic violence. In this case as well, the employer must provide a written decision regarding the employee’s proposal within 15 days, or electronically. If the employee and employer enter into such employment contract, the employee is entitled to payment for actual working hours, while other rights and obligations related to employment and social insurance rights will be similar to those of a full-time employee unless otherwise specified by the ZDR-1.

Other measures in balancing professional and private life

An employee can also propose the signing of a contract for work from home during the term of employment for the purposes of balancing professional and private life. The employer must provide a written (or in electronic format) decision regarding the employee’s proposal within 15 days.

In the context of work schedule arrangements, an employee during the term of employment can propose a different work schedule for the purposes of balancing professional and private life, including caregiving. The employer, while taking into account the needs of the work process, must provide a written (or in electronic format) decision regarding the employee’s proposal within 15 days.

5. Subsidiary liability in the construction industry

The ZDR-1 amendment introduces subsidiary liability for the subcontractor’s co-contractor for non-payment of salary to an employee employed by the subcontractor. This legal concept, which applies to contracts for the provision of construction services concluded after the enactment of the amendment, is limited exclusively to the construction industry. Previously, this form of liability was limited to foreign employers who employ workers within the framework of cross-border service provision. Therefore, the co-contractor, whose immediate subcontractor is an employer who has not paid salaries to the employee, will be held subsidiary liable.

With this provision, the Republic of Slovenia eliminates a discriminatory situation in the form of a barrier to the freedom to provide services, as identified by the European Commission.

6.Right to disconnect

Under the right to disconnect, the employer must ensure that during the employee’s time off or justified absence from work in accordance with the law, collective agreement, or a general act, the employee will not be available. The employer must take appropriate measures for this purpose within one year of the amendment coming into effect, primarily as defined in the sectoral collective agreement or at a more specific level, and with the involvement of employee representatives. Employers not bound by a sectoral collective agreement and without employee representatives can adopt these measures analogously, as outlined in Article 10 of the ZDR-1, in a manner consistent with the enactment of any other internal policies by the employer.

7. Caregiving leave

An employee is entitled to up to five working days of unpaid caregiving leave in a single calendar year when providing care. This entitlement is applicable when there is a significant need for care due to the health reasons of a family member (spouse, cohabiting partner, child, adoptee, parent), or a person living in the same household. The employee has the right to use caregiving leave when they are not entitled to other forms of leave according to health insurance regulations. The employee must inform the employer about the reason for the absence before the start of the absence. If, due to objective circumstances, this is not possible, the employee must notify the employer within three working days after the absence begins. The employee must request this leave in writing, stating the reasons for the eligibility for leave (the person in need of care and the reasons for the absence) and attach the necessary documentation, which may include personal information about the person in need of care.

8. Rights of victims of domestic violence

Victims of domestic violence, according to the ZDR-1, are individuals who have experienced one of the forms of domestic violence within the last two years. They are now entitled to up to five days of paid leave for the period when they need to address protection, legal proceedings, and other issues related to the consequences of domestic violence at institutions (e.g., social work centers and courts). This right can be used for every individual case of domestic violence. Before using this leave, the victim (employee) must notify the employer of the intended absence at least three working days in advance and provide proof of the assessment of the risk of domestic violence (issued by the Social Work Center), a report filed with the police, and documentation related to the management of domestic violence issues. It is mandatory for the employee (victim) to report the case of domestic violence to the police. If the employee “misuses” this absence for another purpose, they will be denied the use of this leave for the next two years, starting from the unauthorized use.

As explained earlier (section 4), victims also have the right to reduced working hours, and the employer must facilitate their better balance between professional and care-related responsibilities. The employer can assign the employee (victim of domestic violence) to work beyond regular working hours, unevenly distribute working hours, or temporarily reschedule working hours or assign night shifts, but only with the prior written consent of the employee.

9. Additional protection for caregivers

With the amendment to ZDR-1, besides employees who have previously enjoyed special protection due to pregnancy and parenthood, caregivers are also entitled to special protection. According to ZDR-1, caregiving includes:

  • Working part-time due to caring for a child up to eight years old,
  • Significant caregiving needs for health reasons for a family member (spouse, cohabiting partner, child, adoptee, parent),
  • Caring for a person living in the same household when the employee is not entitled to other forms of leave as per health insurance regulations.

For these categories of employees, employers must ensure better work-life balance, but this protection does not apply in the case of termination of the employment contract, as it does for pregnant women and individuals taking parental leave..

Employers are required to provide employees who are caregivers with the right to take time off from work or have reduced working hours. After the caregiving period ends, the employer must allow the employee to return to work under the same conditions.

Any rights or improvements acquired during the absence can be exercised immediately upon returning to work. Regarding the employee’s claim for ensuring these conditions or rights, in the case of a judicial assessment of the validity of the claim, the court will determine the existence of the employment relationship and working conditions retroactively only within the framework of a preliminary question procedure, which means that this determination will only have an effect within the specific procedure.

If there is a dispute between the employer and the employee regarding the exercise of special protection, the burden of proof is on the employer.