Changes in cross-border assignment („posting“) of employees effective from 18 June 2016

Changes in cross-border assignment („posting“) of employees effective from 18 June 2016

Dear clients!

In view of the fact that many of your business activities have international character, in which many times mother company’s employees are assigned to perform some tasks for the Slovak subsidiaries, or, many times, you act as recipients of services rendered by foreign providers (including your mother companies), we hereby wish to inform you about some new legislation that soon will be in force.

On 18 June 2016 the Act N. 351/2015 Coll. on cross-border cooperation in assignment of employees in provision of services (hereinafter only Cross-border Assignment Act or Act) will enter into force. The new legislation provides for a detailed set of conditions applicable on the assignment of employees from other EU member states on the territory of the Slovak republic. There are new rules to be adhered to by both the assigning foreign employer, as well as by the recipient Slovak entities.

The reason why the Act was enacted is the Slovak republic’s duty to implement the Directive 2014/67/EU of the European Parliament and of the Council of 15 May 2014 on the enforcement of Directive 96/71/EC concerning the posting of workers in the framework of the provision of services.

The result of undoubtedly positive intentions of the legislator is, unfortunately, a new heavy administrative burden, which shall have to be respected by the businesses.

First of all, the Cross-border Assignment Act introduces a set of obligations for the assigning employers, i.e. the employers established in another member state that send employees on the territory of the Slovak republic. Such an employer, no later than on the date of the start of the assignment itself, is obliged to notify the Slovak Labour Inspectorate, among other things, on the estimated number of the employees assigned, personal data of the assigned employees, start and end of the assignment, place of the assignment, the description of the service to be rendered through the assigned employees and to indicate an entity in charge of accepting correspondence on behalf of the foreign employer in the territory of Slovakia.

In addition, the assigning foreign employer is obliged to ensure that, during the assignment, at the place of the assignment, the following documentation be deposited: (i) employment contract or other document proving that the employment exists, (ii) the records of the working hours of the assigned employee, (iii) documents proving the payment of the salary to the assigned employee. In order to make sure that the new obligations are sure to be plentiful (sorry for the sarcasm), in case it deems necessary, the Labour Inspectorate may insist on an official translation of the said documents in Slovak

Since the Act also modifies the Labour code by providing for new definitions of, for instance, the concept of the assignment of employees, we may conclude that the assignment includes any kind of sending of a foreign employee, in the framework of provision of services, on the territory of Slovakia, even if the assignment should take one day only.

The Act provides for enhanced protection for the assigned employee, which, if the foreign employer fails to pay the salary, is entitled to seek the payment from the supplier of the service on the territory of the Slovak republic. Practically, this will be the local business, which uses the services of the foreign employer in a sub-contracting scheme.

The Act introduces new obligations also for Slovak employers, should they assign their employees to provide services abroad. A Slovak employer may assign a local employee to perform works in the framework of the provision of services on the territory of another member state only based on an agreement. Such an agreement must contain, in particular, the definition of the start and end of the assignment, scope of the assignment, place of the assignment and on the salary conditions applicable during the assignment. The Slovak employer must respect the fact that the working conditions of the assigned employee shall be governed by the law applicable in the territory of the assignment. Moreover, the Slovak employer, before the assignment starts, is obliged to inform the employee about the working conditions applicable in the place of the assignment (information on the working hours and the quantity of holiday must be notified in writing!).

The Slovak employers should however be vigilant also when receiving a service or works, when such services or works are supplied by foreign or local suppliers by means of assigned employees. The Act modifies the Act on illicit work, which authorises the Labour Inspectorate to fine the local recipient of a service for the breach of the ban to receive a service or work by means of illicit workers. In cross border provision of services the presence of illicit workers must be for more than five days in order to qualify for a fine; in local provision of services there is no minimum time limit. Minimal amount of the fine is Euro 2,000.00 Euro. The cap is Euro 200,000.00. Therefore, it is the recipient of the service who shall be obliged and responsible to make sure that the service provider is providing the services by means of legitimate workers, by asking and controlling documentation from the provider, proving a due employment relation with the employees assigned on the job.

In case you suppose that the aforementioned legislation may have ramifications on your business and any of the new rules appears to be confusing or unclear, please do not hesitate to contact us. Likewise, the topic should also be discussed with your local accountant.

Biksadsky & Partners’ team

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