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FOREIGN AFFAIRS

Work contracts: Keep that green card

"What do you foreigners have tongues in your heads for, if not to announce changes in your work status?"
Coming as it did last week from a peevish, fat-jowled bureaucrat in Bratislava's social benefits firm, Sociálna poisťovňa, the question wasn't meant to be answered, even if several cutting ripostes offered themselves, like eager students for the pretty teacher.
But we'll get to those soon enough. First, I should explain that I had had a call in early June from a distraught friend, who had received a letter from Sociálna poisťovňa saying he owed the state over 69,000 crowns ($1,350) and had two weeks to pay up. I was asked to tag along to poisťovňa and plead his case while he looked suitably penitent and impoverished. It wasn't that difficult a role - this guy is forever borrowing cash to make ends meet, and is one of the slowest to pull his wallet out when the bar tab arrives.

"What do you foreigners have tongues in your heads for, if not to announce changes in your work status?"

Coming as it did last week from a peevish, fat-jowled bureaucrat in Bratislava's social benefits firm, Sociálna poisťovňa, the question wasn't meant to be answered, even if several cutting ripostes offered themselves, like eager students for the pretty teacher.

But we'll get to those soon enough. First, I should explain that I had had a call in early June from a distraught friend, who had received a letter from Sociálna poisťovňa saying he owed the state over 69,000 crowns ($1,350) and had two weeks to pay up. I was asked to tag along to poisťovňa and plead his case while he looked suitably penitent and impoverished. It wasn't that difficult a role - this guy is forever borrowing cash to make ends meet, and is one of the slowest to pull his wallet out when the bar tab arrives.

The problem had arisen when my friend foolishly agreed in 1999 to give up his work permit and full-time contract with his employer in return for a part-time contract the employer said would result in his paying fewer taxes and social funds.

For a time, this was true - as of July 1999, on a salary of roughly 27,000 crowns a month, he received about 22,800 in his pay packet, rather than the 20,200 he had been getting until then. He then registered to pay almost two thousand crowns a month in unemployment, health and pension insurance combined, and wound up most months about $50 to the better. All, he believed, according to the letter of the law.

What my friend didn't know, however, was that the 2,000 crowns he began paying in 'social funds' as of July 1999 was calculated at a minimum during the first year; the following year, Sociálna poisťovňa checked the tax return he had filed as an indendent wage-earner, and charged him an additional 69,000 crowns in back-payments.

Employers are naturally anxious to find other ways of hiring staff than on internal contracts, as they pay a 38% surcharge that goes to social funds on each full-time employee's salary. The problem is that what one parrty doesn't pay the other winds up having to - a major drawback of 'external' employee contracts.

Naughty

So there we were, sitting like schoolboys on chairs in front of 'Mrs. Director' at Sociálna poisťovňa, waiting patiently for her to figure out how to open her computer so she could answer our questions. She was everything that you would expect from a life-long bureaucrat - rude, coarse, unhelpful, unsympathetic and a chain smoker.

When she finally cracked the mystery of her Microsoft Word programme, she informed my friend that his debt was actually 80,000, not 69,000, and that she could not offer a payment schedule. What average citizen had 80,000 crowns laid by to pay past insurance debts? I asked. Perhaps the kind of citizen who tried to evade his responsibilities to the state, she responded.

We finally did walk out of there with a six month payment plan, but not after having been told the unfortunate fellow still would have to pay a year of back-dues on his 2000 salary - in other words, that he would be forking out insurance dues for the privilege of having been self employed well into 2002, 18 months after he had taken another job on a full-time contract. What is more, similar debts may exist with the health insurance company and the labour office, meaning that my friend may actually end up 'seeing' about 12,400 crowns of that 1999 monthly salary of 27,000. If he doesn't pay these dues, they will eventually be turned over to the police, and will certainly prevent him from ever getting another green card, if not actually being arrested at the border.

One of 'Mrs. Director's' minions, who walked us to the door, asked that we not harbour ill-feelings towards her or her co-workers, who were just doing their jobs. As laughable as it seemed then, however, she was right.

There were only three guilty parties here - the employer, for not finding out the whole truth, the employee for not doing his own research, and the people who come up with such complicated labour legislation in the first place.

The main problem is that self-employed people are expected to have all kinds of deductions they can write off their incomes, and thereby lower the basis for calculation of social funds contributions. Foreigners, however, are unlikely to own flats or cars, or to have telephones, gas and electricity bills registered in their names. With nothing to write off, independent wage-earning fools like my friend find themselves on the hook for more than they bargained for.

Hence the moral of the story, which borrows from the musical South Pacific - one you have your green card, never let her go. And beware of any schemes to make you richer by taking away the only form of employment security you are likely to enjoy.

Foreign Affairs is a bi-weekly column devoted to helping expats and foreigners navigate the spills and thrills of life in Slovakia.
The next Foreign Affairs column will appear on stands July 2, Vol. 7, No. 26.

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