Employee board-level representation in Slovakia exists in both private and publicly-owned companies. Neither unions nor employers were consulted about the transposition of the directive but both seem happy with the final outcome.
In the private sector in Slovakia, employees have a right to one third of the seats on the board in limited companies with shares and a capital of SKK 1 million or more (approximately €25,000), and more than 50 full-time employees. In state companies, employees have the right to half the seats on the supervisory board – though not the chair – irrespective of size. The issue of employee board-level representation is therefore of direct relevance.
In order to meet the transposition deadline the government rapidly pushed through legislation implementing the directive. Draft legislation was submitted to the tripartite economic and social council, then known as the RHSD, but it was not debated. Both unions and employers’ associations criticised the government for failing to consult them. However, neither side objected to the content of the legislation, which was broadly welcomed. There appears to have been no public debate.
Directive was transposed by law in September 2004, a month before the October 2004 deadline.
The directive on employee involvement in European companies was transposed through legislation passed on 9 September 2004. The full title of the legislation is Act of 9 September 2004 on European companies and amendments to some acts (Zákon z 9. septembra 2004 o európskej spoločnosti a o zmene a doplnení niektorých zákonov).
The Act covered both employee involvement and the changes necessary to adapt Slovak company legislation to the Regulation on European companies. It came into effect on 1 November 2004.
Special negotiating body (SNB)
Slovak SNB members for a European company are chosen using the same legislation as that for the choice of SNB members for a European works council. This states that they are chosen through agreement by the existing employee representative structures – both unions and works councils. Only if there are no existing representational structures is there a direct election.
The legislation itself has only a brief reference to the Slovakian membership of the SNB, saying that “nomination or election of members of the special negotiating body” is “governed by a special act” (§38). This special act is the Slovak Labour Code and the paragraph referred to is §244, which lays down the arrangements where a special negotiating body is set up to negotiate the establishment of a European works council. Under these arrangements Slovak SNB members are appointed by the existing employee representatives through joint negotiation. In these joint negotiations, votes are allocated between the employee representatives in line with the number of employees they represent. Employee representatives are defined elsewhere in the Labour Code as “the competent trade union body, works council or works trustees” (§11 of Labour Code). Works trustees are individuals elected in small workplaces, with fewer than 50 employees, who have the same rights as the works council.
Where there are no existing employee representatives, either the union or the works council/works trustee, SNB members are directly elected by the employees.
External union representatives are specifically permitted to be members of the SNB.
The legislation specifically states that Slovak employees may be represented on the SNB by an individual who is “not an employee” of the companies involved, provided that this has been authorised by the employee representatives. Where there are no employee representatives and the SNB members are elected directly, they must be employees (§38).
Funding limited to a single expert “for a given area”.
The companies involved must bear the costs of the SNB, although the legislation states that they may “earmark in advance a corresponding volume of financial resources within a budgetary framework for payment of necessary expenditure”. The SNB can invite expert advisors to consultations, although regardless of the number invited, the companies should pay the costs of “only one expert for a given area” (§39).
This potentially allows for more than one expert to be paid for, if several areas are being examined.
Standard rules under the fallback procedure
Members of the SE representative body are chosen in the same way as Slovak members of the SNB – through agreement by the existing employee representative structures – both unions and works councils. There are direct elections only where these structures do not exist.
Slovak members of the SE representative body, known in the legislation as the employees’ committee (Výbor zamestnancov) are chosen largely in the same way as Slovak members of the SNB. In other words, they are chosen at joint meetings by existing employee representatives, who can be unions, works councils or works trustees (the individuals with similar powers to works councils in smaller companies). The votes at these joint meetings are allocated pro rata with the number of employees represented. If there are no existing employee representatives in part of the company the employees elect a representative “to participate at the joint session”. In this area the legislation does not allow for external union representatives to be members of the representative body (§44).
The company should bear the costs of the representative body, including one expert advisor “for a given area”.
The legislation states that the same provisions that govern the funding of the SNB also govern the funding of the representative body (§44). This means that the European company must bear its costs, including “translation and interpreting, travel, board lodgings and the costs for expert advisors”, although the legislation also states that the company should pay the costs of “only one expert for a given area”. This potentially allows for more than one expert to be paid for, if several areas are being examined. The company is allowed to “earmark in advance a corresponding volume of financial resources within a budgetary framework for payment of necessary expenditure” (§39).
Employee representatives at board level from Slovakia are directly elected by the employees.
Board members who represent Slovak employees in a European company are directly elected by the employees themselves in the same way as employee board-level representatives in a Slovakia company. The legislation states (§53) that they are chosen in line with §200 of the Slovak Commercial Code. This provides for an election which should be organised by the board of directors in cooperation with the unions, or, if there are no unions in the company, with the employees who have a right to vote. Nominations must come from the unions, or be supported by at least 10% of the employees and employee board-level representatives must be employees.
Misuse of procedures and structural change
The issue of misuse of procedures is not dealt with in the Slovak legislation.
The Slovak legislation does not refer to the misuse of procedures and so there is no protection where an SE is set up in order to deprive employees of their right to participate in company decisions.
There is no requirement in the Slovak legislation to renegotiate the agreement if there has been structural change.
There is nothing in the legislation that requires the agreement to be renegotiated if there are structural changes after the SE has been set up.
Unions and employers were not consulted on the introduction of the legislation and neither side made detailed comments on the legislation.
Although draft legislation was submitted to the tripartite economic and social council, it was not discussed before the legislation was adopted. Both the main union confederation KOZ SR and the employers’ associations expressed their regret that they had not had been consulted. Neither unions nor employers made any comments on the contents of the legislation, although both recognised it was important for the directive to be transposed. More generally, KOZ SR welcomed the legislation as a way of strengthening employee involvement and it supports the provisions of the Labour Code, which give clear rights to the trade unions. For more details see report from Peter Ondruška (KOZ SR) November 2004.
L. Fulton (2008) Anchoring the European Company in National Law - Country Overviews (online publication, prepared for worker-participation.eu)
Peter Ondruška (KOZ SR expert)
On 9 September 2004 the Slovak Parliament adopted Act No. 5621/2004 Coll. of Laws on the European Company, which came into force on 1 November 2004. This deals with transposition of Council Regulation (EC) No. 2157/2001 of 8 October 2001 on the Statute for a European Company and provisions of Council Directive 2001/86/EC supplementing the Statute for a European Company with regard to employee involvement. Naturally, given the brief time since promulgation of the law, so far no SE has been established in the Slovak Republic. Furthermore, expert opinion holds that there will be little interest in the foreseeable future.
Peter Ondruška (KOZ SR expert)
The Slovak Republic is committed to transposing the acquis communautaire as a whole, with some derogations, by the date of EU accession, 1 May 2004. Under the auspices of the Ministry of Justice and the Ministry of Labour, Social Affairs and Family a new Act on the European Company (hereafter “SE”) was drafted, and on 13 May 2004 submitted for debate by the Council of Economic and Social Agreement (hereafter “CESA”). The Act was discussed and approved by the Slovak government on 26 May 2004, although it has not yet been discussed by the CESA. According to the legislator, a significant impact on employment is not expected. A negative impact could derive from the transfer of an SE’s registered office to another member state, but it is anticipated that this would affect relatively few jobs.
By means of the Law on the SE, the Slovak Republic must transpose the parts of Council Regulation (EC) No. 2157/2001 of 8 October 2001 on the Statute for a European company (SE) and of Council Directive 2001/86/EC supplementing the Statute for a European company with regard to employee involvement where the EU has left regulation up to the member state.
This Regulation became part of Slovak legislation from the moment the Slovak Republic became a full member of the EU (that is, from 1 May 2004), although it will enter into force from 8 October 2004, as in all other EU member states. The Directive must be transposed by the same date as the Regulation.
The Act on the SE, except for transposition of the Directive, represents a “supplementary” legal arrangement in relation to the Regulation. This means that the Act does not regulate those matters directly regulated by the Regulation, but rather solves either the issues which are expressly authorised for treatment by “national law” or ensures, by amending and supplementing national law, the coincidence of Slovak law with the different articles of the Regulation.
Under Slovak legislation, the legal framework regarding the legal status of a European company (SE) shall be applied with the following order of authority:
- the provisions of the EU Regulation;
- the Statute for a European company (SE) as regards the issues left by the Regulation for regulation by the member state through the said Statute;
- provisions of the Law on the SE;
- provisions of company law applying to public limited liability companies on the issues not regulated in the previous three instruments;
- the company statutes on issues not regulated in any of the above.
Technically, it would be possible to integrate the European company directly into company law, in a section regulating companies formed under Slovak law. However, given the special character of the SE, its direct legislative antecedents in EU law and its specific issues concerning regulation of the status and management of SEs, the Slovak Republic proceeded to prepare a separate law.
The aim of the Slovak legislator is to introduce as few limitations and restrictions as possible concerning the formation of an SE and its operations on the territory of the Slovak Republic (with a view to both taxation and investment, as well as employment). The relevant law will therefore apply a regime of “minimalist” regulation.
The Act is divided into two sections:
(i) section one of the Act regulates the creation of an SE, its legal status and its management;
(ii) section two regulates employee involvement in an SE, dealing with particular provisions of the Directive on employee involvement.
In the territory of the Slovak Republic, a European company is considered a legal entity under company law. It should have a similar status to a Slovak company. In its main features a European company corresponds mostly to a classic public limited liability company formed under Slovak law. This means that those matters not regulated by the Regulation, referred to in company statutes or in this Act will be subsequently regulated by provisions of company law regulating the status and activities of a public limited liability company.
The second section of the Act regulates employee involvement in an SE and confers a right to such involvement. The right to information and consultation is applied to those matters exclusively concerning the SE as a whole, its subsidiaries or organisational components in the territory of another Member State or which exceed the powers of the decision-making organs in a single member state.
When defining the contents and exercise of the right of employees to participate in an SE priority is given to an agreement on the manner and scope of employee involvement in an SE.
In accordance with the Directive, the number and composition of members of a special negotiating body is regulated, as well as the duration of negotiations concerning employee involvement in an SE, the procedure governing the election or appointment of members in the employees’ representative body, and so on.
In addition, the Act regulates such important – particularly from the trade union point of view – issues as the following:
- time off for members of the representative body to receive the training needed to carry out their duties with regard to wage issues;
- the opportunity to call on experts of its own choice when serious matters are to be discussed;
- obligation of the SE to ensure conditions for the adequate functioning of the representative body (financial, material, organisational);
- protection of employees’ representatives with the same scope as that provided for employees’ representatives by national legislation and/or practice in their country of employment.
The Act regulates employee involvement in detail, as follows:
- The contents of the right to information, that is, what kind of information and how frequently the SE is obliged to provide it to the employees’ representative body. Also, it stipulates the obligation of the employees` representative body to inform the employees on the
outcome of consultations.
- Cases and conditions under which the management may refuse to provide information (for example, if the disclosure of such information would seriously harm the functioning of the SE). The designation of information as confidential is also regulated, including what the employee side can do if it disagrees with the management’s decision to maintain confidentiality.
- The contents of the right to consultation, including detailed regulation of procedures in situations in which an appropriate body of the SE decides to act contrary to the employees’ representative body or its select committee.
- The right of employees to influence the composition of company bodies.
The Trade Union Point of View
- KOZ SR fully supports transposition of the Directive into Slovak law.
- KOZ SR regrets the fact that the draft law was not prepared in cooperation with the social partners and was not subject to amendment and discussion in the CESA.
- KOZ SR makes no comment on the contents of the Act.
- More positively, KOZ SR regards the Act as an instrument enabling deeper employee involvement.
- The Act backs up the provisions of the Labour Code which regulate the position and competencies of employees’ representatives, especially trade union organisations.
The Employers’ Point of View
- Adoption of the Act is a necessity, particularly given the Slovak Republic’s EU membership;
- Although the Act principally transposes the text of the Directive, it was a mistake to prepare it without the involvement of the social partners on a tripartite basis.
- The employers make no comment on the contents of the Act.