99% of the expenses of new obligations for entrepreneurs is due to gold-plating

Since Saturday, 18th June, Slovak entrepreneurs will have new types of responsibilities in the area of posting workers, acceptance of works and services from suppliers, as well as towards visiting staff. These are contained in the new Act on Cross-Border Cooperation in Posting Employees to perform work as part of a service delivery, which amends the Labour Code, the Act on Illegal Employment and the Labour Inspection Act.

BRC's task is to carry out assessment and quantification of the impacts of not only proposed but also of already existing legislation with a focus on SMEs. Assessment of the gold-plating effect is a part of this process as well (i.e. requirements’ overlap caused in transposition of EU legislation into the Slovak legislative framework, which goes beyond of what is stated by the directive as necessary). Despite the fact that the Ministry of Labour justifies the adoption of the new regulation by the need to transpose the directive 2014/67, most of the new obligations for entrepreneurs do not originate from EU legislation.

Therefore, BRC, in accordance with its mission, carried out the Analysis of costs and benefits for SMEs, in which it came to conclude that 99 % of costs resulting from new obligations for entrepreneurs are caused by the effects of gold-plating.

In what concrete way does the regulation extend beyond minimum requirements?

  • Pursuant to the directive, liability of the purchaser of service in the Slovak Republic for non-payment of wage to visiting employee of the subcontractor should apply only to employees in the construction industry with an existing option for liberation. The Act in Slovakia states the strict liability for all cases without option for liberation.
  • Directive does not stipulate the obligation for a domestic entrepreneur to inform his domestic employee before his posting, in written form, about work conditions and employment conditions in the State, where he is about to be posted. The Slovak Act arbitrarily introduced this obligation.
  • Directive does not oblige a domestic entrepreneur to enter into a written agreement with a domestic employee before his posting. The Slovak Act also arbitrarily introduced this obligation.
  • Entrepreneur's strict liability upon receiving a work or service from illegally employed person by service provider or work contractor, does not originate from the directive. This obligation is again arbitrarily introduced by the Slovak Act, which brings great amount of bureaucracy in the form of new administrative tasks, the threat of heavy fines up to 200 000 € and a potential for serious disruption of business relations between entrepreneurs.

In light of the results of this analysis, BRC elaborated proposals for measures to reduce the regulatory burden on SMEs. A full analysis of costs and benefits for SMEs is published on our website here.

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