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Labour Code revamped
29 Oct 2012 Jana Liptáková Business
AS EXPECTED, a crucial revision to the Labour Code has sailed smoothly through parliament, in which the ruling Smer party holds a majority. Out of 144 deputies present on October 25, 82 voted for the revision while 62 were against. The changes adopted, drafted by the Labour Ministry to redress the balance in relations between employees and employers, which it believes was significantly harmed to the detriment of employees by the previous cabinet of Iveta Radičová, will become effective as of January. The opposition warns that the revamped Labour Code, along with other changes that are awaiting final approval, will damage Slovakia’s competitiveness.
“This revision secures … the setting of such equilibrium, which puts into balance rights as well as duties of the employer as well as the employees,” Labour Minister Ján Richter said, as quoted by the TASR newswire, after the revision was adopted. He added that Slovakia now had a modern and balanced Labour Code.
Opposition deputies criticised the revision, as well as the fact that none of their amendment proposals made it through parliament.
“The government of Robert Fico has decided to prepare a very sad Christmas for thousands of families,” said Juraj Miškov, an MP for Freedom and Solidarity (SaS), as quoted by TASR.
Július Brocka, MP for the opposition Christian Democratic Movement (KDH), said that Smer had caused significant harm to Slovakia, adding that other countries, especially during the current financial crisis, are trying to at least retain a sense of competitiveness, but that with this revision the Fico government is going in the opposite direction.
The revised Labour Code shifts the status of people working on fixed-term employment contracts closer to that of the positions of regular workers in terms of working hours and the minimum wage. The revision also reintroduces the entitlement to a layoff notice period as well as severance pay. In addition, it curbs the ‘chaining’ of fixed-term employment contracts, whereby currently it is possible to extent a fixed-term employment contract three times over three years. As of January it will be possible to do this only twice over a 24-month period.
The revision also changes the definition of dependent work (whereby someone is permanently employed by a company as opposed to working through an independent contract). The objective of this redefinition is to specify which work should be carried out under a standard working contract, securing the rights and protection of employees. The Labour Ministry believes that the current wording enables employers to push their employees into less advantageous working contracts, including so-called false self-employment contracts, and seeks to simplify the definition to prevent employers from doing this.
None of amending proposals to the draft revision proposed by opposition deputies won enough support in parliament. Brocka of the KDH proposed to close shops on Sundays and state holidays. Igor Matovič, chair of Ordinary People and Independent Personalities (OĽaNO), proposed to close shops between 6:00 and 14:00 on Sundays. Jozef Mihál from SaS proposed to keep the definition of dependent work unchanged, to not reintroduce the entitlement to a layoff notice period and severance pay and to not adopt changes to fixed-term employment contracts. The opposition also failed to postpone the effectiveness of the revision by one year.
Luboš Sirota, head of Trenkwalder in Slovakia and vice-president of the National Association of Employers (RÚZ), does not view the revision as having any strengths.
Also, during tripartite negotiations, employers fought to minimise the “evil”, Sirota said after parliament adopted the revision, as quoted by TASR.
According to him, the changes are even more damaging because they are arriving during a time of economic decline and when taxes and payroll levies are increasing.
All of this will exacerbate the worsening conditions of companies and instigate layoffs, said Sirota. He expects that companies will lay off their workers as early as this year to avoid increased costs due to the reintroduction of the entitlement to a layoff notice period and severance pay.
“We have [seen] several signals that this has already been happening in Slovakia and we do not regard the relatively high number of announced mass layoffs to be a coincidence,” said Sirota, adding that Trenkwalder estimates conservatively that the revised labour code will mean a loss of 35,000 to 50,000 jobs.
It has become a custom in Slovakia for each new cabinet to overhaul the Labour Code, the most significant legislation affecting employee-employer relations. The Robert Fico cabinet, which took office after this year’s March election, is no exception. The current version of the Labour Code adopted by the previous cabinet of Iveta Radičová, valid since September 2011, will survive only until the end of the year.
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