Due to relatively low fines employers often assess that a violation is worthwhile, ignoring the fact that a sanction in minor offence proceedings can have far-reaching consequences for their business (e.g. with regard to the employment of foreigners, public tenders, etc.). Recently, there has been a sharp increase in the number of sanctions imposed on employers by the Labour Inspectorate of the Republic of Slovenia (IRSD) for workplace and employment offences, occupational health and safety offences, labour legislation infringements, etc.

Our September issue looked at how workplace inspections are conducted, and the most common infringements and what sanctions are available to the IRSD. Although the fines imposed by the IRSD on employers and their responsible persons are generally not high, IRSD notices issued alongside these fines may affect other areas of the employer's business and have detrimental consequences that are not only of a financial nature. Below we outline key and common consequences of being served with an IRSD employer offence notice. IRSD employer minor offence notices and measures are not usually made public, so there is generally no big risk to the employer's reputation. In any case, an IRSD employer offence notice may tip the scales in favour of a worker in a labour dispute between the worker and employer, where the employer is being investigated for a similar or the same offence as that in the notice.

The courts are not required by law to take into account IRSD employer offence notices nor is it necessary for the court to take the same position as the IRSD. Nevertheless, in practice, courts often rely on IRSD notices as additional evidence that the employer has violated labour laws. Some offences may also constitute a criminal offence of violation of the fundamental rights of workers under Article 196 of the Criminal Code (Official Gazette of the Republic of Slovenia, No. 50/12 as amended, KZ-1), if all elements are met for this criminal offence (i.e. where the employer has breached regulations governing the conclusion of an employment contract, termination of employment, wages, etc., thereby depriving one or more workers of rights arising from the employment relationship). In those instances, the IRSD does not serve a minor offence notice on the employer but files a direct criminal complaint against the employer and the responsible person of the employer. The employer's responsible person could face a term of imprisonment of up to three years and a fine.

Penalties can be even higher if the rights of 20 workers or more have been violated or if the violations were committed over a lengthy period of time. In addition to the employer's responsible person, the employer as a legal person may also be convicted of this criminal offence under the Liability of Legal Persons for Criminal Offences Act (Official Gazette of the Republic of Slovenia, No. 98/04, as amended, “ZOPOKD”), by a fine or by confiscation of the employer's property. Final IRSD employer minor offences notices also affect an employer's ability to participate in public tenders, as many public tenders require employers to have a unblemished record, in line with the Public Procurement Act (Official Gazette of the Republic of Slovenia, Nos. 91/15 and 14 / 18, “LPP-3”).

Article 67a of the ZJN-3 stipulates that employers shall be excluded from the procedure if they have been fined for a minor offence on foot of a final notice or several notices for at least two violations in the three years preceding the tender submission deadline. Offences triggering exclusion include those concerning payroll, working time, rest periods, performance of work under civil law contracts (despite the existence of elements of an employment relationship) or in relation to undeclared employment (i.e. not for every offence). The application of the foregoing provision of ZJN-3 was suspended by way of decision No. U-I-180/19-17 issued by the Constitutional Court of the Republic of Slovenia until a final ruling by the Constitutional Court of the Republic of Slovenia (which had not yet been issued at the time we went to press). Until then and so as to reassure contracting authorities as to their reliability despite grounds for exclusion, employers may present evidence to contracting authorities demonstrating measures they have taken to remedy the shortcomings (e.g. payment or commitment to compensate for any damage caused by infringements, active cooperation with investigative bodies to fully clarify the facts and circumstances and concrete technical, organisational and personnel measures appropriate to prevent further infringements, etc.); the decision on (non) exclusion of the tenderer is then made by the contracting authority itself. Similar restrictions are also envisaged for the procedures for obtaining work permits for foreigners and, consequently, for the employment of foreigners, and a final IRSD employer offence notice may also affect permits already obtained.

The Employment, Self-employment and Work of Foreigners Act (Official Gazette of the Republic of Slovenia, No. 1/18, “ZZSDT”) stipulates that the Employment Service of Slovenia (ESS) shall withdraws its consent (which is a prerequisite for obtaining a single residence and work permit and an EU Blue Card) during the period of validity of a single permit or EU Blue Card if (i) a fine prohibiting the employment and work of foreigners has been legally imposed on the employer in connection with the work of a foreigner holding such a permit, (ii) a fine has been imposed for providing work contrary to the conditions and elements of employment specified in the application for this permit, etc. Similarly, the ESS may revoke a seasonal work permit if the employer has been legally fined for (i) providing work contrary to the conditions and elements of employment specified in the application for such a permit, (ii) for enabling an individual to work despite the fact that no employment, civil or other contract has been concluded, (iii) for the work of an individual with an employer under a civil contract despite the existence of elements of an employment relationship, etc. Furthermore, the ZZSDT prohibits the employment, self-employment and work of foreigners where employers have been fined by the IRSD.

The duration of this prohibition depends on the nature and gravity of the offence, as stipulated in Article 42 of ZZSDT, and ranges from one year up to five years from the date on which the notice becomes final (e.g. for the illegal employment of a third-country national). In addition, the Labour Market Regulation Act (Official Gazette of the Republic of Slovenia, No. 80/10, as amended, ZUTD) also contains provisions that prohibits employers that have been served with an employer offence notice from carrying on activities of providing work to another user (so-called employment agencies). Namely, employers are prohibited from providing this service if they have been fined (by way of a final notice) for infringing employment regulations regarding the employment and work of foreigners, occupational health and safety, undeclared employment and the labour market in the last two years. Finally, it should be noted that a final IRSD offence notice, be it in respect of the employer or its responsible person, may also affect eligibility to incorporate a new company in the future or to acquire shareholder status in accordance with Article 10a of the Companies Act (Official Gazette of the Republic of Slovenia, No. 65/09, as amended, ZGD-1).

Namely, under ZGD-1 persons (legal or natural) who have been (i) sentenced to imprisonment for an employment and social security crime (and where a record of this remains on file) or (ii) have been fined at least twice in the last three years on foot of final IRSD notices for payroll or undeclared employment infringements are disqualified from incorporating a company (or sole proprietor) and acquiring shareholder status.

Moreover, responsible persons convicted of an employment relationship crime may not become a member of the management or supervisory body of a company within a period of five years from the finality of the judgment and within two years of serving the prison sentence. We therefore advise employers to comply fully with their obligations under labour legislation, including collective agreements binding on the employer, and to organise the work process in such a way that the regulations are respected. If in doubt, they should seek appropriate legal advice in advance to assist them in understanding individual requirements and obligations. In view of the conduct the IRSD places under scrutiny, it is important that employers keep all records required by law, provide workers with a sufficient amount of daily and weekly rest, schedule overtime properly and pay them appropriately etc. Employers should also see to it that employment contract termination procedures and disciplinary procedures are conducted properly, that pay wages and contributions are paid appropriately and regularly, etc.

Author: Ana Porenta Vran, Attorney-at-law