10. June 2016

Posting the employees

On 18 June 2016, the Act No. 351/2015 Coll. on cross-border cooperation within posting the employees for works at providing the services as amended (the “Act”) enters into force. Except establishing new obligations for the employers, the Act amends and supplements Act No. 311/2001 Coll. Labour Code (the “LC”). The Act transposed Directive 96/71/EC concerning the posting of workers in the framework of the provision of services. All of the Member States are obliged to transpose the Directive; therefore the rules in this particular area should be in principle the same in all Member States.

Cross-border posting of employees is now provided in Section 5 of the LC and refers to both Slovak employers posting their employees to the other Member State and also to foreign employers posting their employees to the Slovak Republic. In relation to this legislation the Act regulates obligations of hosted employer a home employer toward the labour inspectorates and also regulates the cooperation between concerned authorities in all Member States when monitoring the compliance of the rules of the posting.

Neither the transposed Directive nor the Act or the LC defines the term “provision of services” which may lead to the application difficulties, mainly when differentiating between work activities, which are (i) executed through business trips, (ii) based on posting the employees, or (iii) through other legal institutes (work permit, residence permit for foreigners, etc.).

Section 5 para. 5 and para. 6 of the LC introduces new terms:

Posting employer is:

  1. hosted employer – the employer seated in the other state of European Economic Area (“EEA”)[1]than the Slovak Republic, who is posting the employee for works at providing the services from the other Member State of EEA to the Slovak Republic;
  2. home employer – the employer seated in the Slovak Republic who is posting the employee to perform works as regards the provision of services from the Slovak Republic to the other Member State of EEA.

Posted employee is:

  1. hosted employee – the employee who performs work as regards the provisions of services in the Slovak Republic for the certain period of time, but usually works in other Member State of EEA;
  2. home employee – the employee who performs work as regards the provisions of services in the other Member state of EEA for the certain period of time, but usually works in the Slovak Republic.

Section 5 para. 4 of the LC defines three categories of posting a worker to perform work as regards the provisions of services:

  1. posting on the account and under the direction of posting employer under the contract concluded between posting employer as cross-border provider of service and recipient of this service, provided there is an employment relationship between posting employer and posted employee during the period of posting. This is the case when employer posts its employee to cross-border performance of service to the recipient of the service. There is not the contract between recipient of the service and service providing employee, employee provides the service on behalf and on the account of posting employer and employee is under the direction of posting employer. According to the explanatory statement to the Act this type of posting is providing service for beneficiary of the service who is not using employer (see let. c) below);[2]
  2. posting between controlling and controlled person or between controlled persons,[3] provided there is an employment relationship between posting employer and employee during the period of posting. National Labour Inspectorate[4]refers to this type of posting as posting within the group, which is characterized as cross-border posting of the employee between controlling and controlled person or between two controlled persons. The LC does not require the contract between posting employer and controlled person (however the contract will be probably concluded to solve mutual claims, for example the reimbursement of the costs), however the contract on posting between posting employer and posted employee according to Section 5 para. 12 of the LC has to be concluded;
  3. temporary placement to using employer, provided there is employment relationship between posting employer and employee during the period of posting and there are objective operational reasons at the posting employer. In this case the employee is directed by using employer, to whom the employee was placed; this is the cross-border form of temporary placement according to Section 58 of the LC.

Posting of employees for work vs. cross-border business trip

New legislation of posting and typical business trip need to be differentiated because there are two different labour-law categories and main differences between posting and business trip are:

  1. in the case of cross-border business trip employee exercises works on behalf of the employer and for its benefit, e.g. business meetings; in the case of posting the employee provides the service for the benefit of the recipient of the service;
  2. work performance on the business trip is not the provision of service, but it is just a performance of duties according to the employment contract; in case of posting the employer posts employee to provide service to the recipient of the service.

Abovementioned absence of definition of the term “service” shall lead to difficulties with assessment of certain activities, where it is not absolutely clear, whether it is necessary to apply the institute of business trip or the posting. This problem will arise mainly in cases of the posting within the group.

In this regard the question is whether the performance of the function of the statutory body or the member of the statutory body in the Slovak company by person who is at the same time an employee of the company in the other Member State of EEA is the posting of an employee or the cross-border business trip. The interpretation that performance of the function of the executive manager in the Slovak company by employee of the foreign sister company is performed within the cross-border business trip, and thus for benefit of the foreign sister company, in our opinion does not have any grounds in the Slovak legal system. Performance of the function of the statutory body or the member of the statutory body in the commercial company or the cooperative, including the responsibility for the performance of this position is governed exclusively by the Commercial Code, and thus it is impossible to apply labour-law institutes.

If the posted employee is supposed to provide certain controlling and administrative activities in respect of the management of the controlled entity, we believe that this situation could be assessed as the posting within the group and thus as the providing of service to the beneficiary employer. On the other hand, providing of services which may be provided to anyone and by anyone because of their scope and character, even outside the group, could be assessed as the provision of management services.

National Labour Inspectorate on its website has stated that “performance of the function of the member of the statutory body or the position of the employee responsible for the management of the controlling / controlled entity in the Slovak Republic… is not considered as providing of service to the recipient of the service, but as posting of the employee on a cross-border business trip, where employee acts on behalf of the employer, but doesn´t provide any service to foreign (Slovak) employer.” It is possible to argue against this simplified reasoning. We have discussed the performance of the executive manager by the foreign employee at the foreign business trip above. On the other hand, it is unclear why top manager employed in the foreign sister company could not provide service to Slovak company if his job description includes the management of the Slovak company. The argument that by managing the Slovak company this employee only performs his job based on his employment contract with the foreign employer (e.g. position of director for the Czech and Slovak Republics) leaves his right to manage and take responsibility for managing the Slovak company without any legal grounds according to Slovak law. Such legal grounds may be (should be) the posting of the employee for works at providing the services for sister company. This question remains open and it is likely that only the practice and case-law will provide the answer to question what legal regime will govern this type of situation.

Written agreement on the posting

Home employer may post the home employee from the Slovak Republic to the other Member State of the EEA only on the basis of the written agreement concluded with the employee, which contains mainly:

  1. date of the start and of the end of the posting,
  2. type of work during the posting,
  3. salary conditions during the posting,
  4. place of work during the posting.

In addition to the agreement in writing, the home employer is obliged to inform the home employee about working conditions and conditions of employment of the Member State of the EEA where the home employee is posted. Informative overview of working conditions of the Member States of the EEA may be found online.[5]

The working conditions of the state where the employee is posted, forming the so-called “hard core“ of Directive 96/71/EC, are applicable to the posted employee. The hard core provisions of the Directive are:

  1. length of working time and rest period,
  2. length of paid holiday,
  3. minimum wage, minimum wage claim and pay supplements for overtime work,
  4. occupational safety and health,
  5. working conditions of women, adolescent employees and employees caring for a child younger than 3 years of age,
  6. equal treatment of men and women and prohibition of discrimination.

National Labour Inspectorate has processed basic working conditions in the Slovak Republic, which are the basis for fulfilling of notification obligation of foreign employers, who post employees to the Slovak Republic.[6]

New obligations of posting employer according to the Section 4 of the Act

A. Obligations of hosted employer:

– is obliged on the date of the posting at the latest in writing or electronically to the National Labour Inspectorate (Masarykova 10, 040 01 Košice, respectively nip@ip.gov.sk):

  1. to notify its identification data, in case of (i) a legal person: business name, registered seat, Id. No. and register in which it is registered, (ii) an individual: name, surname, permanent residency, Id. No. and register in which he/she is registered,
  2. to submit estimate number of posted employees including name, surname, date of birth, permanent residency and citizenship of each of them,
  3. to submit the date of the start of the posting,
  4. to submit place and type of work during the posting,
  5. to submit name of the service, which hosted employer will offer through the employee posted to the Slovak Republic,
  6. to designate a liaison person for the delivery of documents and decisions who must be present in the Slovak Republic during the posting period.

– is obliged at the place of work of posted employee:

  1. to keep employment contract confirming employment with posted employee (other document confirming the work arrangement with the posted employee),
  2. to keep evidence of working time of posted employee according to Section 99 of the LC,
  3. to keep documents related to paid salary during the posting.

– is obliged upon the request of the labour inspectorate:

  1. to submit employment contract concluded with the posted employee, evidence of working time according to Section 99 of the  LC, documents related to the paid salary to the posted employee,
  2. to deliver employment contract with the posted employee, evidence of working time according to Section 99 of the LC, documents related to the paid salary to the posted employee, this applies even after the end of the posting,
  3. to submit the Slovak translation of employment contract concluded with the posted employee, evidence of working time according to Section 99 of the LC, documents related to paid salary to the posted employee, within the period of time set by the labour inspectorate.

B. Obligations of home employer:

– is obliged upon the request of National Labour Inspectorate or the (regional) labour inspectorate to provide information for the purposes of identification of the posting and control of compliance of rules of the posting and further information related to the posting (see Section 4 para. 4 and Section 5 para 1 a) of the Act).

This information does not serve as a legal advice. Please do not hesitate to contact us in a concrete case of posting the employee.


[1] EEC includes all European Union states, Iceland, Norway and Liechtenstein. Switzerland is not the member of EEC.
[2] Explanatory note to the Act is available online in Slovak language at: http://www.nrsr.sk/web/Default.aspx?sid=zakony/zakon&MasterID=5627
[3] Terms controlling person and controlled person are defined at Section 66a of the Commercial Code
[4] Available online in Slovak language at: http://www.nip.sk/?id_af=502
[5] http://www.eures.sk/zivotne_podmienky.php
http://ec.europa.eu/social/main.jsp?catId=726&langId=en
[6] available in Slovak language at: http://www.nip.sk/?id_af=500&ins=nip