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Tug-of-war on labour code

NEGOTIATIONS over changes in Slovakia’s Labour Code could easily turn into a lengthy tug-of-war: the trade unions are happy with the law’s current form; employers are demanding that it be made simpler, more flexible and more understandable; and foreign investors are saying it should reflect the specifics of the country’s economy and social system while preserving Slovakia’s competitiveness. The government of Iveta Radičová has several times declared its intention of making the country’s labour law more flexible so that it supports job creation in Slovakia – which still registers double-digit unemployment.

NEGOTIATIONS over changes in Slovakia’s Labour Code could easily turn into a lengthy tug-of-war: the trade unions are happy with the law’s current form; employers are demanding that it be made simpler, more flexible and more understandable; and foreign investors are saying it should reflect the specifics of the country’s economy and social system while preserving Slovakia’s competitiveness. The government of Iveta Radičová has several times declared its intention of making the country’s labour law more flexible so that it supports job creation in Slovakia – which still registers double-digit unemployment.

Labour Minister Jozef Mihál has stated that the trade unions and employers have already tabled some opposing proposals in their first discussion: trade union leaders are calling for a reduction in overtime hours and shortening of regular working hours while employers want more flexible working hours and would like to erase requirements for pay during a layoff notice period as well as severance pay.

But Mihál, a nominee of Freedom and Solidarity (SaS) party, said there are a couple of areas in which accord is possible between unions and employers.

The unions say they are willing to yield on changes to provisions in the current labour code that cause serious operational problems to employers, though they have also expressed the opinion that no such provisions currently exist.

All in all the current wording of Slovakia’s Labour Code suits the Confederation of Trade Unions (KOZ) and the confederation will resist any substantial changes to it, Otto Ewiak, the spokesman of KOZ, told The Slovak Spectator.

“It took a lot of effort to bring it into its current form, which by the way does not mean limitless advantages [to employees],” he said, adding that Slovakia’s legislation corresponds with standard European definitions of the rights and duties of employees in a dignified manner.

“We are in Europe and we do not want to be like some countries in Asia,” Ewiak said.

The National Union of Employers (RÚZ) wants to have a metamorphosed labour code and one as brief as possible.

“The Labour Code should leave the widest possible room for individual agreements between an employee and an employer and should be understandable,” RÚZ secretary Martin Hošťák said, as quoted by the SITA newswire.

Employers are also proposing that the notice period for layoffs should be shortened and that there should be a longer probationary or trial period for newly-hired employees.

The American Chamber of Commerce in Slovakia (AmCham), which groups over 300 companies doing business in the country, has contributed to the discussion of the country’s labour law by calling for changes which AmCham said would take into consideration the specific nature of Slovakia’s economy and social system and support growth in employment while preserving the basic preconditions of Slovakia’s competitiveness.

AmCham representatives met Minister Mihál on October 26 and suggested that making the legal definition of ‘dependent work’ more specific, and that making termination of work contracts more flexible, would benefit the labour market. Slovakia’s labour code generally only covers those employees with ‘dependent work’ established through an employment relationship and the labour code does not apply to business or trade activity based on contractual civil-law or commercial-law relationships.

More flexibility for employers to regulate working hours including overtime or night shifts, along with removal of what the chamber called unjustified powers of representatives of trade unions also appear on AmCham’s list of suggestions. The chamber also proposed expanding the possibility for employers to use temporary employees.

Mihál stated he had a positive opinion about most of AmCham’s proposals, adding that he is most bothered by the current definition of dependent work which he said needs to be more precise and dynamic. Mihál stated that the number of people who are paid under work contracts or as self-employed contractors has been growing. Currently, about 1.7 million people are employed on the basis of ordinary employment relationships, while about 700,000 people have work contracts or are considered self-employed, Mihál said, as reported by SITA.

Ewiak told The Slovak Spectator that since negotiations have just started it is not possible to speculate about possible compromises on the part of KOZ. Mihál began discussions about possible changes in the Labour Code at a tripartite meeting of union, employer and government representatives on October 25.

“First, representatives of the employers and employees should next week define the limits of how far they are willing to go because in the event of absolutely contradictory proposals it would make no sense to go back and forth endlessly,” Ewiak told The Slovak Spectator.

Ewiak said that then experts should meet and try to whittle down the sharp edges so as to give birth to a “common child” for modifications in the Labour Code. However, he told The Slovak Spectator that he does not view this as a very realistic scenario based on the statements made thus far by representatives of the employers as well as by the trade unions.

“The employers would love to make the whole Labour Code as flexible as possible, which we interpret – based on previous experiences – as not an effort to increase employment but as a way for easier manipulation of employees,” Ewiak said. “Not only to employ them at any time but also to fire them and pay them the least possible sum.”

One of KOZ’s priorities is also to unambiguously define dependent work. Ewiak says that doing so is very important because during the economic crisis a huge number of self-employed people emerged after employers “directed” their employees and job applicants into “forced self-employment” if they wanted to land a job or continue in a work position. By doing so these employers eliminated their obligation to pay compulsory social insurance contributions because self-employed persons are not considered employees.

“We are also against the wider use of agreements allowing temporary work,” Ewiak said. “The truth is that payment of payroll taxes for such employees has disappeared. A very serious side of the coin is that the state has lost millions of euros which should have flowed to the social insurer. Now, ruling politicians are seeking ways to consolidate public finances.”

The unions consider the possibility of shortening weekly working time and restricting overtime work to be a prospective approach and Ewiak said the union confederation believes that “this could help in the creation of new jobs”.

Representatives of automobile producers Volkswagen Slovakia, Kia Motors and PSA Citroën recently met Prime Minister Radičová and said they would like to have greater flexibility under the country’s labour code, the TASR newswire reported.

The Association of Employer Unions (AZZZ) has stated that it wants employers to have more flexibility and offered its support for proposals that would allow more hiring of agency workers or temporary employees as well as simultaneous cancellation of the notice period for layoffs and severance pay.

AZZZ is also proposing that the status of unions and employee councils be equalised within companies, that employers have more legal certainty in protecting trade secrets, and that employees have more responsibility for damages caused to the company, among others, SITA wrote.

Ewiak said that calling for flexibility can be understandable in principle but that in practice many companies interpret flexibility as manipulation of their employees.

“Many employers do not have honest intentions [when calling for] flexibility and a simple nature for the Labour Code,” Ewiak said, adding that he does not think that the current provisions of the law make it difficult for companies to appropriately deal with poor quality employees while also denying that unions would typically take sides with such employees.


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