LABOR AND EMPLOYMENT DESK BOOK. SLOVAK REPUBLIC Cechova & Partners

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1 LABOR AND EMPLOYMENT DESK BOOK SLOVAK REPUBLIC Cechova & Partners CONTACT INFORMATION Tomas Rybar Cechova & Partners Do you have a plant closing law in your jurisdiction and if so, what does it require? (For U.S. jurisdictions, please answer: Is there a Baby WARN Act in your state and if so, what does it require?) Yes. Under Slovak law, the employer is free to decide upon so-called organizational changes allowing it to close the plant and to dismiss employees employed therein. In case the plant of the employer is being closed, there is a statutory ground for serving a written notice of termination of employment to employees (employed in such plant) pursuant to Section 63 Para. 1 a) of Act No. 311/2001 Coll. Labor Code, as amended. Prior to serving the notice of termination, dismissal has to be consulted with employee s representatives, otherwise the notice is invalid. Employment is terminated upon expiry of statutory notice period of two months (three months for employees employed with that employer for more than five years) unless the employer and employee have agreed on longer notice period in the employment contract. The notice period starts on the first day of the month following the delivery of the written notice to employee. The employee remains employed during the notice period and he/she is entitled to his/her regular salary. If the employer dismisses more than 20 employees within 90 days by notice due to so called organizational changes, the collective redundancy procedure applies. Under this procedure, at least one month before planned mass redundancies the employer is obliged to negotiate with employees representatives, if they exist, if not, with the affected employees, measures preventing such collective redundancies and to supply them with information on planned

2 collective redundancies. Following such negotiations, the employer is further obliged to submit written information to the Office of Labor Social Affairs and Family and employees representatives indicating the outcome of such negotiations. The employer may serve written notice to employees or proposal for agreement on termination of employment only one month after delivery of information pursuant to previous sentence. 2. Are there special rules on releases/waivers in your jurisdiction? Yes. Generally, any legal action of the employee, whereby he/she waives its future statutory rights arising to him/her from employment is considered to be null and void. Accordingly, the employee may not agree with the employer in the employment contract not to bring a claim against employer e.g. for not paying him/her statutory severance payments (compensation of salary during employees vacation, etc.) if the employer is obliged to do so under Slovak Labor Code; the employee may not waive any statutory benefits granted to him/her by the relevant provisions of Slovak labor law. 3. What are the equal employment opportunity/ non-discrimination categories in your jurisdiction (For U.S. jurisdictions, please answer: Are there protected categories beyond Title VII in your state?) The Slovak labor law stands on the principle of equal treatment of employees in employment relations. Under this principle, the Antidiscrimination Act (Act No. 365/2004 Coll. as amended) prohibits any discrimination (whether, direct, indirect or harassment) in employment relations on grounds of gender, religion or faith, race, national or ethnic origin, physical or mental disability, age or sexual orientation, color of skin, Furthermore, the Labor Code provides that under an equal treatment principle it is forbidden to discriminate employees on grounds of marital status and family status, color of skin, language, political or other belief, labor union activities, national or social background, property, gender or other status. Parties to employment relations have to exercise their rights and obligations in compliance with bona mores (good morals). 4. What are the minimum wage and overtime rules (and exemptions) in your jurisdiction? Minimum wage of employees is set by the Act on Minimum Wage (Act No. 663/2007 Coll. as amended) and the implementing government regulations; currently it is EUR per hour or EUR 295,50 per month. The Slovak Government reviews it regularly to increase these numbers based on consumer prices, employment index, average wage in national economy and subsistence as well as other indicative figures of the Slovak economy for two years preceding the year for which the minimum wage is determined. Working time is in general 40 hours per week at maximum; however, working time of employee who works (i) in a two-shifts operation is 38 and ¾ hours per week at maximum, (ii) in a three-shifts or continuous operation is 37 and ½ hours per week at maximum. Certain

3 exceptions apply to an employee working with proven chemical carcinogen at working processes with a risk of chemical carcinogenity. The working time of employee, including the overtime work, may be 48 hours per week at maximum. The employer may order overtime work only in temporary and acute increase need of labor force up to 150 hours per calendar year. However, due to serious reasons the employer may agree with employee on additional overtime work up to 250 hours per calendar year. 5. Is there employment-at-will, or some other rule, in your jurisdiction? What are the exceptions? Generally, the employment-at-will concept does not exist in Slovakia. The employer is entitled to unilaterally terminate employment with an employee only on grounds set by the Slovak Labor Code. As an exception to this rule, the employer (as well as employee) may terminate the employment for whatever reason or without stating the reason in case of employment for shorter period of time than 10 hours per week. In such case employment is terminated upon lapse of 15 day notice period commencing on the date of delivery of the notice to the employee. Another exception would be termination of employment during probationary period. Upon commencement of employment the employer and the employee may agree upon probationary period of maximum 3 months starting on the first day of employment. During this period employer and employee may immediately terminate employment by delivery of written notice to other party. In other cases termination may occur unilaterally by the employer only with notice or by way of immediate termination of employment. In case of termination by notice employment is terminated upon lapse of the notice period as described in Question 6 below; on the other hand, immediate termination of employment is effective immediately upon delivery of notice of immediate termination to the employee. For details on reasons upon occurrence of which the employer may immediately terminate the employment or terminate employment by notice please see Question 6 below. 6. What are the legal obligations upon terminating an employee in your jurisdiction? Under Slovak law, employment termination is possible by: a) agreement of the parties, whereby employment is terminated on the agreed day; b) lapse of term of employment if it has been agreed for definite period of time; c) notice from part of employer or from part of the employee; d) termination with immediate effects. Written notice from part of employee may be served for any reason or without stating reason. Notice of employment termination has to be delivered to the employer; employment is terminated upon expiry of notice period of 2 months (3 months for employees employed with that employer for more than five years) starting on the first day of the month following the delivery of the written notice to employee.

4 Employment from part of employer may be terminated only on grounds set by the Labor Code which are as follows: a) organizational reasons; b) the employee has lost the capability to perform work due to health problems; c) the employee does not meet prerequisites specified by the special legal regulation for performance of work (e.g. a driving license) does not meet special prerequisites specified by the Labor Code does not meet, without fault of the employer, prerequisites for performance of agreed work determined by the employer in its internal regulation, or the employee has achieved unsatisfactory work results in spite of the fact that the employer, during the last six months, called upon him in writing to eliminate the deficiencies and the employee failed to eliminate them within a reasonable period of time; d) the employee has seriously violated the work discipline (for ongoing but less serious violations only if he was warned in writing of the possibility of such a termination). The employee may immediately terminate labor relation by written notice delivered to employer if: a) based on medical examination the employee may not perform agreed work without threat to its health and the employer did not transfer the employee to other suitable work within 15 days from submitting of the medical exam b) the employer failed to pay the salary or compensation of the salary or part thereof within 15 days from their maturity c) health or life of the employee is directly endangered. The employer may immediately terminate employment by written notice of the employer if: a) the employee has been finally sentenced for intentional criminal offence b) has manifestly breached discipline at work. Termination by notice or immediate termination from part of employer has to be consulted with employees representatives, if there are any, before it is served, otherwise it is invalid. For certain termination reasons, a duty to offer other suitable position that is available applies before giving notice. 7. Are there any family and/or medical leave laws in your jurisdiction, and if so, what do they require? (For U.S. jurisdictions, please answer: Are there family and/or medical leave laws in your state beyond FMLA and if so, what do they require?) Yes. The Slovak Labor Code provides for the maternity leave to a pregnant woman in length of 28 weeks. If the woman gave birth to 2 or more children at the same time, maternity leave shall be 37 weeks. Maternity leave usually starts on the first day of sixth week before date of

5 expected childbirth. Woman on maternity leave remains employed with the employer during such leave. However, she is not receiving salary from the employer during the maternity leave, but the social insurance payments from the state Social Insurance Company instead, if she fulfils criteria set by Slovak social security regulations. The employer is also obliged to provide employee being a mother or a father of child with vacation up to 3 years of age of child if they require so (so-called parent vacation). During parent vacation employees remain employed and they are not receiving salary but the social insurance payments from the state Social Insurance Company instead, if they fulfill criteria set by Slovak social security regulations. In case of sickness of employee, the employer is obliged to excuse employees absence at work. Sickness has to be confirmed by medical practitioner. During sickness (starting form eleventh day of sickness) the employee does not receive salary but payment from the state Social Insurance Company instead if he/she fulfils criteria set by the Slovak social security regulations. Generally, the employer pays to employee salary compensation (ranging approximately from EUR 2.21 to EUR 8.25 per day for the first 3 days of sickness and EUR 4.87 to EUR 18. per day from fourth to tenth day of sickness). As of eleventh day of sickness the employer does not pay salary compensation and the employee receives social security payments from the state Social Insurance Company instead, if he/she fulfils criteria set by the Slovak social security regulations. 8. Please list any miscellaneous, interesting or oddball laws in your jurisdiction, and state under what circumstances they pertain. Following political changes in former Czechoslovakia in 1989 after fall of communist regime, the Czechoslovak and later Slovak labor law has gradually shifted to standard labor regulation accepting most of standards and agreements of the International Labor Organization (ILO) and whole legislation of the European Communities. Despite that the Slovak labor law is currently regarded as liberalized and employer-friendly, it could be argued by the foreign investors that it has several oddball provisions compared to foreign jurisdictions. For example, basic statutory entitlement for vacation per each calendar year is 20 working days. However, employees that have been employed for at least 15 years after reaching age of 18 (while years of study at the university are regarded as employment in this case), are entitled to 25 days of vacation. Another example would be impossibility to agree upon non-competition clause binding upon employee after termination of the employment. Slovak law recognizes only a statutory obligation to observe non-competition with the employer s scope of business for the employee during employment, unless employer expressly grants its consent thereto only during term of employment. Unfortunately, under Slovak law non-competition obligation cannot survive termination of employment. Due to this fact it is common that employers use other forms of contracts for engagement of key personnel, mostly contracts of commercial

6 (not labor) nature (e.g. mandate agreements) allowing existence of non-competition clause even after termination of the contract. Slovak law grants influence to employees representatives in case of termination of employment. Any termination of employment by unilateral action of employer must be consulted with employees representatives before making such termination, otherwise it is considered to be null and void. However, employees representatives do not have power to veto decision of employer to terminate employment. In case of overtime work employees are entitled to be paid salary of at least 25% above their regular average salary. However in case of certain work positions, it may be agreed in employment contract that overtime work of up to 150 hours is covered by the base salary. In case of work during public holidays, employees are entitled to be paid salary of at least 50% above their regular average salary. The employees working in the night shifts are entitled to a bonus to their regular salary depending on the degree of severity of work. Employees are also entitled to extra statutory bonuses to their regular salary for work in the environment damaging health; amount of such bonuses is dependant basically on the level of danger and is set in more detail in the Labor Code and other legal regulations. The Collective Bargaining Agreement may set even higher rates for any of the above. Liability for damages caused to the employer by negligent action of the employee is limited by law. 9. Does your jurisdiction have a law requiring employers to give employees access to, or a copy of, their personnel records? Generally, the employee is not entitled to freely access employer s personnel records, statistics or other documents prepared by the employer. However, the employee is entitled to demand from the employer information on status and scope of processing of employees personal data in the information system of employer and the employer is obliged to provide such information to the employee free of charge. Within 15 days from request of the employee, the employer shall issue a written working reference to the employee. The employer is not obliged to do so earlier than 2 months before termination of employment. Furthermore, upon termination of employment the employer is obliged to issue to employee confirmation of employment and state inter alia period of employment and type of employees work. 10. Does your jurisdiction outlaw or restrict drug tests, alcohol tests, genetic tests or any other kind of testing? When hiring employee, the employer may require only information that relate to the work performed. Therefore, it is excluded to examine or require health examination that do not relate to the work to be performed by employee. However, if there is a special physical or psychical requirement for performed work, the employer may employ only persons fulfilling

7 such criteria; these criteria are usually confirmed by medical examination. Furthermore, it is expressly prohibited by law to demand information on pregnancy of employee. Act No. 124/2006 Coll. on Health and Safety Protection at Work, as amended, provides for the statutory right of the employer to systematically control whether its employees are under influence of alcohol or drugs during his/her working hours. Details of such controls may be set by the employer in its internal by-laws; such by-laws have to be approved by employees representatives, otherwise they are invalid. As regards genetic information, it is considered to be a sensitive personal data and thus special regime set by the Personal Data Protection Act would apply under which a special consent of the employee would be required for processing thereof. 11. Does your jurisdiction have any special rules on the payment of sales commissions? There are no special rules on payment of commissions to employees. It is a statutory right of employees to receive salary for performed work but the law is silent upon payment of commissions. In principle, it is not excluded to agree in the employment contract upon combined salary including fixed salary (which may not be lower than minimum wage (see Question 4 above)) and extra sales commissions e.g. based upon earned revenues. 12. What are the basic rules on enforcing non-competes and related agreements in your jurisdiction? As mentioned in Question 8 above, a non-competition clause prohibiting employee to perform other gainful activity identical or similar to the scope of business activities of the employer without prior written consent of the employer is effective and may be remedied only if the breach thereof occurred during existence of employment. Slovak law does not permit survival of a non-competition clause after termination of employment. Breach of non-competition clause by employee could be regarded as a manifest breach of discipline at work and could be the ground for immediate termination of employment (as described in answer to Question 6 above). Further, employee is fully liable for any damages and lost profit incurred to the employer by his/her breach of non-competition clause during existence of employment. Employers claim for damage may be remedied by the court on the basis of the lawsuit filed by the employer.