On October 21, 2017 the amendment of Labour Inspection act (ZID-1) entered into force as a response to increasing issue of precarious work. It brought additional powers to the Labour Inspectorate of the Republic of Slovenia in events of violations and consequently also new fines for employers.
Precarious work is a atypical, short-term and only occasionally paid form of work that has many negative characteristics for an individual compared to a regular employment relationship, such as: job instability, low income, unbalanced power relations, lack of collective bargaining, lack of control over working time and, in general, the absence of rights and legal security belonging to regular employees.
In accordance with the change of legislation, an inspector who identifies the performance of a (precarious) work on the basis of a civil law contract (such as a sole proprietor, through a student referral, contract for a copyrighted work…), contrary to the applicable legislation, instructs the employer to hand over a written employment contract to an employee, who performs such work, whereby the contract must be concluded within three working days and correspond to the actual state of work performed by the employee.
If the employer fails to hand over the duly employment contract to the precarious employee within 30 days of the notification of the decision, a fine of 4.500 to 20.000 EUR shall be imposed on him, while at the same time, the employee has the right to judicial protection before the competent labour court. The judicial proceeding is somewhat facilitated for the precarious employee because the reversal of the burden of proof, which means that the absence of the elements of the employment relationship will have to be proven by the employer.
In addition, there is also a risk of negative tax implications for an employer related thereto. The basic principle of taxation of natural persons is namely taxation according to the economic content of the relationship. Therefore, if the tax inspector finds that this is a disguised form of employment, he will charge the employer the payment of taxes and contributions arising from the employment relationship for the full period of precarious work.
Accordingly, precarious work presents considerable risk for employers, and can impose additional expenses, therefore we advise you to review your relationships with natural persons with whom you cooperate in order to exclude such risks.