Slovenia has a long tradition of employee involvement which started with employee self-management in the 1950s. This tradition of employee participation, including both financial and decision-making participation, was continued during the transition period from the 1990’s onwards and led to a relatively high incidence of employee share ownership in Slovenia, compared to other EU28 countries, though it has been on the decline since the end of privatization.
The tradition of employee participation in corporate affairs is mirrored in both the Slovenian privatization model and in the development of company law. Unlike other Eastern European countries, there has been relatively strong political support for employee financial participation so far and respective draft laws were introduced in 1997, 2002 and 2005. However, Parliament did not pass any of them. However, associations supporting this development and promoting a legal framework have been formed.1
Their efforts finally led to success, with the Employee Financial Participation Act being adopted by Parliament on 29 February 2008 and coming into effect in April 2008. It offers strong tax incentives for employees to purchase company shares and for share-based profit-sharing schemes. In 2010 the Slovenian government presented a draft modernising the law on workers’ participation.2
The government plans to remove bureaucratic obstacles and thus to boost workers’ financial participation. In particular, tax incentives for profit-sharing schemes are to be retained and in future it will no longer be necessary to register such schemes with the tax authorities.
Employee ownership emerged in the privatization process, with employees able to acquire up to 60% of a company’s shares. According to the method of mass privatization and particular regulations on internal buy-outs, employees could partly obtain shares against vouchers (20%). In the first years of privatization, tradability of shares was limited in order to restrain the reduction of employee share ownership.3
As minority shareholders, employees have only a limited possibility to influence the decisions of the general meeting. However, the employees have a relatively strong position in decision-making due to the Slovenian co-determination model. 4 Transposition of EU regulations into Slovenian law before and after the EU accession supported the development of employee financial participation.5
Wilke, Maack and Partner (2014) Country reports on Financial Participation in Europe. Prepared for www.worker-participation.eu. Reports first published in 2007 and fully updated in 2014.