Employer of Record (EOR) Slovakia

Employment Contracts in Slovakia

In Slovakia, an employment relationship is established through a written contract between the employer and the employee. The employer is required to provide a copy of this contract to the employee. The contract must specify key elements, including:

• The type of work the employee will perform and a brief description of the role.
• The location of the workplace (whether it’s a specific municipality, part of a municipality, or another designated place).
• The agreed-upon start date of employment.
• The wage conditions, unless these are already outlined in a collective agreement.

If the working conditions are defined in a collective agreement, a reference to the agreement is sufficient in the employment contract.

Any changes to the agreed terms of the contract can only be made with mutual consent, and such amendments must be documented in writing.

The details of the employment relationship and contract are governed by Section 41 of the Labor Code.

Working Hours

In Slovakia, the standard working hours for employees are generally set at a maximum of 40 hours per week, with the average weekly working time, including overtime, not exceeding 48 hours. However, there are several exceptions to this rule based on factors such as the work schedule, the nature of the job, and the age of the employee. 

For instance, employees working in a two-shift system are limited to a maximum of 38.75 hours per week, while those in a three-shift or continuous operation can work up to 37.5 hours per week. Additionally, workers exposed to chemical carcinogens or ionizing radiation in controlled zones are restricted to 33.5 hours per week. There are also age-related exceptions, where juvenile employees under the age of 16 can work no more than 30 hours per week, and those aged 16 or 17 can work up to 37.5 hours per week. These provisions are in place to ensure employee health and safety, particularly for those in hazardous roles or younger workers.

Probation Period

In Slovakia, the duration of the probationary period specified in the employment contract is typically capped at three months. However, for senior employees who are directly involved in the management of a statutory body, or for members of the statutory body themselves, this period can be extended to six months. It is important to note that the probationary period cannot be extended beyond the initial agreement, and it cannot be applied when renewing fixed-term employment contracts. These guidelines are outlined in sections 42 to 45 of the Labor Code.

13th Month Salary

Effective from May 1, 2018, monetary compensation given by the employer to an employee for work during the summer vacation period (commonly referred to as the 13th salary) and for the Christmas holidays (the 14th salary) is classified as part of the employee’s salary. While these payments are not mandatory, they provide employers with the option to reward employees with additional compensation in June and December, in addition to their regular salary.

Termination, Severance Pay, and Notice Period

Termination

Termination of Employment by Mutual Agreement

When both the employer and the employee mutually agree to end the employment relationship, it will terminate on the agreed date. This agreement must be documented in writing. If requested by the employee, or if the termination is due to specific reasons, such as the relocation or closure of the employer’s business, redundancy, or the employee’s inability to continue working due to health issues or an occupational disease, the agreement must include the reasons for termination.

Termination of Employment by Dismissal

Both parties—employer and employee—may choose to terminate the employment relationship through dismissal. Such termination must be made in writing and delivered to the other party; otherwise, it will be considered invalid. The employer can only terminate the contract for legally defined reasons, which must be clearly stated and cannot be changed afterward.

• Immediate Termination: An employer may immediately terminate the employment contract if the employee has been legally convicted of an intentional crime or has seriously breached work discipline. Similarly, an employee may terminate the contract immediately if a medical report deems them unfit for work, and the employer fails to assign suitable work within 15 days, or if the employer fails to pay wages or compensation within the same time frame. Immediate termination, whether by the employer or employee, must be documented in writing, specifying the reason, which must be clear and non-ambiguous, and delivered within the required timeframe.
• Termination During the Probationary Period: During the probationary period, either the employer or the employee can terminate the employment relationship in writing, for any reason, or even without providing one. However, special protections apply to certain employees: a pregnant woman, a mother until the end of her ninth-month post-birth, a breastfeeding woman, and a man on paternity leave cannot be dismissed during this period unless it is for an exceptional reason unrelated to their pregnancy, maternity, or parental leave. Such dismissals must also be documented in writing and justified, or they will be deemed invalid.

Severance Pay

Severance pay is calculated based on the duration of the employment relationship and the reason for termination. Below are the guidelines for severance pay when the employment is terminated by the employer.

Notice period (see the table)

In Slovakia, if the employer and employee do not agree on the length of the notice period, the duration is determined by the law. The notice period varies depending on the length of the employment relationship, as outlined in the table below.

Employees vs Independent Contractors Slovakia

Running a business requires flexibility in staffing to meet varying needs. Sometimes you need employees to work full-time, 40 hours a week, while other times, you may only need help for specific, short-term tasks. Deciding between hiring employees or independent contractors is an important choice that can impact your budget, workflow, and the way your company operates. Each option has its own benefits and drawbacks, so understanding the distinctions is key to making an informed decision. Whether it’s for a project-based task or ongoing work, let’s break down the differences to help you make the best choice for your business needs.

Social Security in Slovakia

The amount of social insurance contributions, both minimum and maximum, is determined by the minimum and maximum assessment bases, which for the year 2024 are calculated as follows:

• The maximum assessment base is set at seven times the average monthly salary from two years ago. For 2024, this is based on the average monthly salary of €1,304 in 2022, multiplied by 7, which equals €9,128.

For self-employed individuals (SZČO) who are either receiving a retirement or early retirement pension, or those who have reached retirement age and are receiving a long-service pension, the contribution rates differ. These individuals do not pay premiums for disability insurance. Their minimum monthly premium is €177.01, and their maximum premium is €2,478.25.

Minimum and Maximum Social Insurance Contributions for 2024

As of 2023, there were 201,384 self-employed individuals who made social insurance contributions. Of these, 160,132 (approximately 80%) paid the minimum premium amount. The remaining self-employed individuals, numbering 290, contributed the maximum premium. Over the last six years, the number of self-employed individuals has steadily risen, along with the proportion of those paying the minimum contributions. In 2018, 75% of self-employed persons paid the minimum contribution for old-age insurance, while this figure rose to 80% in the following year.

Payroll in Slovakia

Minimum Wages: According to § 119, paragraph 1 of the Labor Code, every employee is legally entitled to a wage that is at least equal to the minimum wage. The minimum wage is regulated by Act No. 663/2007 Coll. on the Minimum Wage, as amended. This law applies not only to employees in an employment relationship or similar working arrangements but, since January 1, 2013, it also applies to individuals performing work for an employer based on any of the agreements related to work performed outside the employment relationship (such as agreements for work performance, student work agreements, or agreements for work activities).

Payroll Cycle:

In Slovakia, employees are typically paid on a monthly basis, with wages disbursed by the end of the following month. The specific payment date is usually outlined in the employee’s contract.

Overtime Pay

According to § 121 of the Labor Code, employees are entitled to a wage benefit of at least 25% of their average earnings, or 35% if they perform hazardous work. However, employees lose the right to overtime pay if they agree with the employer to take compensatory time off for overtime. Additionally, employees whose overtime is already included in their agreed wage cannot claim further compensation or take compensatory time off. Wage conditions can only be negotiated with senior employees, those under direct management of a senior employee, or employees engaged in complex, creative, or managerial tasks.

Mercans’ payroll capabilities

• Payroll Cycle: Discover the effectiveness of Mercans’ comprehensive payroll cycle management. Our services ensure accurate and timely payments to both employees and contractors, all in the local currency. With Mercans, your payroll process becomes streamlined, efficient, and fully localized for a hassle-free experience.
• Payroll Setup, Processing, and Administration: Mercans offers more than just standard payroll services, providing complete, end-to-end solutions. From careful payroll setup to precise processing and smooth administration, we handle every detail with a focus on compliance and accuracy. Entrust your payroll to Mercans, and concentrate on what matters most—your core business.
• Statutory Filings and Payments: Easily navigate Slovakia’s regulatory requirements with Mercans by your side. Our experienced team manages all statutory filings and payments, ensuring your business remains compliant with legal standards. Count on Mercans for timely and accurate submissions, so you can confidently fulfill your statutory obligations.

Personal Income Tax in Slovakia

In Slovakia, the personal income tax rate for 2024 is determined based on the tax base achieved during the year. The tax base is essentially the total amount of income from various sources, including employment, rental properties, and self-employment. The tax rate applied to an individual’s income is primarily dependent on the total tax base, which is split into different thresholds.

For 2024, the income tax rates for individuals are as follows:

• Income Tax Rates for Employment and Other Income:
  • 19% applies to the portion of the tax base that does not exceed EUR 47,537.98 (equivalent to 176.8 times the subsistence minimum).
  • 25% is applied to any portion of the tax base exceeding EUR 47,537.98.
• Income Tax Rates for Business and Self-Employment:
  • 15% applies if the taxable income of an individual does not exceed EUR 60,000.
  • 19% applies to the portion of the income that falls under EUR 47,537.98, if the total taxable income exceeds EUR 60,000.
  • 25% is applied to the portion of income that exceeds EUR 60,000.

An important change for 2024, as outlined in the consolidation package, is the increase in the income threshold for applying the lower 15% tax rate. Previously, this threshold was set at EUR 49,790, but it is now EUR 60,000, which applies to both self-employed individuals and legal entities. This change is part of the government’s effort to improve public finances and encourages more businesses to benefit from the lower tax rate.

Moreover, the status of micro-taxpayer, which grants certain tax benefits, also uses this EUR 60,000 threshold. However, claiming the lower tax rate does not automatically mean a taxpayer qualifies as a micro-taxpayer.

To summarize, whether a self-employed individual or entrepreneur applies the 15%, 19%, or 25% tax rate depends on their total taxable income for 2024, with the key thresholds being EUR 60,000 and EUR 47,537.98. This structure aims to promote a more equitable tax system while ensuring that tax obligations remain manageable for businesses of different sizes.

Slovakia Employee Hiring Cost

When calculating the total cost of employing someone in Slovakia, it’s essential to consider both the gross salary and the additional employer costs, such as mandatory social and health insurance contributions. Here’s an example to demonstrate this:

In this case, the gross salary is EUR 100,000, while the employer incurs an additional EUR 34,621 in mandatory contributions. As a result, the total annual cost for the employer to employ this individual is EUR 134,621. The employer’s additional costs will vary depending on salary and specific statutory obligations, making it crucial to factor these when calculating the full cost of employment in Slovakia.

Employee Benefits in Slovakia

In Slovakia, employees are entitled to both mandatory and supplementary benefits. These benefits are designed to protect employees’ financial wellbeing, provide for their health and security, and improve their work-life balance.

Mandatory Employee Benefits in Slovakia

• Pension Contributions: The Slovak pension system is funded through mandatory contributions from both employees and employers. This system operates through two main pillars. The first pillar involves contributions paid to the state-managed Social Insurance Agency (Sociálna poisťovňa). The second pillar gives employees the option to choose between the state or private licensed providers, offering various investment funds with different risk profiles.
  Additionally, there is a third pillar that is voluntary for employers to contribute to, although it is mandatory for employees in certain high-risk occupations, such as miners. Private providers manage the third pillar, which similarly offers a range of investment funds.
• Legislative Leave / Paid Time Off: Slovak law provides employees with a range of leave entitlements. These include paid short-term leaves for illness, funerals, doctor visits, or study purposes, some of which are partly or fully funded by the Social Insurance Agency. Long-term leave for maternity or parental care is also available, with a typical duration of up to three years (or longer if the child has special needs).
  Paid annual leave is legally required, with 20 days of vacation per year for most employees. Employees over the age of 33 are entitled to 25 days of paid vacation annually.
• Unemployment Insurance: Employees in Slovakia are automatically covered by unemployment insurance, which is a mandatory part of the salary taxes paid by both the employee and employer. If an individual has paid contributions for at least 730 days over the past three years, they are eligible for unemployment benefits for up to six months, should they become unemployed.
• Meal Vouchers or Workplace Canteens: Employers in Slovakia must provide their employees with lunch or meal vouchers, with at least 55% of the cost borne by the employer. Many employers offer additional subsidies, even covering the entire meal cost. Employees can choose between receiving meal vouchers or having the equivalent amount added to their salary.

Supplementary Employee Benefits & Perks

In addition to mandatory benefits, employers in Slovakia may offer supplementary perks that enhance employee satisfaction and work-life balance. Common supplementary benefits include:

• Company Car: Often provided for business and private use.
• Additional Vacation Days: Some employers offer extra leave beyond the statutory minimum.
• Group Life or Accident Insurance: Many employers provide this for additional financial security.
• Company Apartments: Some companies offer housing benefits, particularly in remote areas or for specific roles.
• Cafeteria Services: Employees may have access to in-house dining options or meal discounts.

Work Permit in Slovakia

Slovakia, as a member of the Schengen Area, requires foreign nationals from non-visa-exempt countries to obtain a Schengen visa to enter the country. Depending on the purpose of the visit and the length of stay, there are several types of Schengen visas, with the following being the most common:

• Airport Transit Visa: This visa allows foreign nationals to transit through Slovakia while en route to another destination within the Schengen Area.
• Entry Visa: A short-term visa that permits foreign nationals to enter Slovakia for a limited duration, typically for tourism or business purposes.
• Long-Stay Visa: Issued to foreign nationals who plan to stay in Slovakia for an extended period. This type of visa is for those intending to work, study, or reside in Slovakia for more than 90 days.
• National Visa: This visa allows highly-skilled foreign nationals to live and work in Slovakia for a period of up to one year, typically for those in specialized roles requiring additional qualifications.

Foreign nationals seeking to work in Slovakia must not only apply for the appropriate visa but also obtain a work permit and residence permit.

Requirements for Obtaining a Slovak Work Visa

To apply for a Schengen visa, foreign nationals must submit the following documents:

• A completed visa application form
• A valid passport with at least two blank pages
• Two recent passport-sized photographs
• Proof of sufficient financial means to support the stay in Slovakia
• Proof of travel medical insurance for the duration of the stay
• An employment contract with a company registered in Slovakia

To apply for a work permit, the following documents are typically required:

• A valid passport
• A signed application form (in the Slovak language)
• An employment contract or an official job offer from a Slovakian employer
• Official translations of documents verifying the applicant’s professional and educational qualifications
• Additional documents may be requested by the Slovak Labour Office depending on the applicant’s situation

Requirements and Application Process for Slovak Work Visas

Before applying for a work permit, the employer must notify the Labour Office about the available job position. This process allows the Labour Office time to attempt to find a qualified Slovakian candidate for the role. Once 15 business days have passed, the foreign national can proceed with their work permit application.

Foreign nationals can initiate their work visa application process at the Slovakian embassy or consulate in their home country. However, employers often handle the application on behalf of the employee by submitting the work permit request directly to Slovakia’s Ministry of Labour, Social Affairs, and Family.

In addition to the work permit, foreign nationals must apply for a residence permit from the Ministry of Foreign and European Affairs if they intend to live and work in Slovakia.

EOR Solutions in Slovakia 

• Employer of Record (EOR) Solutions for Slovakia: Mercans offers comprehensive Employer of Record (EOR) services for businesses looking to hire in Slovakia. We manage the entire employee lifecycle, ensuring full compliance with Slovak labor laws and regulations. Whether you’re hiring directly or expanding into Slovakia, our EOR services ensure a smooth and legally compliant process.
• EOR & Recruitment Services in Slovakia: For companies in need of talent acquisition assistance, Mercans provides a combined EOR and recruitment service. We leverage our vast network and expertise to identify, onboard, and retain top talent in Slovakia, simplifying the hiring process and supporting your expansion efforts in the Slovak market.
• Visa Sponsorship and Global Mobility for Slovakia: Mercans simplifies the complexities of relocating international employees to Slovakia with our visa sponsorship and global mobility services. We handle all aspects of the relocation process, ensuring your employees’ immigration and employment documentation is in full compliance with Slovak laws.
• Assistance on Record (AOR) for Contractor Payments in Slovakia: Managing contractor payments can be challenging, but Mercans makes it easy through our Assistance on Record (AOR) services. We take care of all the intricacies of contractor payments, ensuring that all transactions are accurate and fully compliant with Slovak regulations.
• Converting Freelancers to Employees in Slovakia: Mercans supports businesses transitioning independent contractors to full-time employees in Slovakia. Our team ensures a smooth conversion process while adhering to local labor laws and regulations, making the transition efficient and compliant.
• HCM Integration for Slovakia: Mercans’ EOR services integrate seamlessly with your Human Capital Management (HCM) system in Slovakia. Our solution enables real-time data exchange, enhanced compliance, and cost efficiencies, offering a unified and streamlined approach to workforce management and payroll operations in Slovakia.

Best Employer of Record Slovakia

Why Mercans is the Top Employer of Record in Slovakia:

• Compliant with the Ministry of Labour, Social Affairs and Family of the Slovak Republic:
  Mercans ensures full compliance with all employment regulations set by the Ministry of Labour, Social Affairs and Family of the Slovak Republic. We strictly adhere to local labor laws, ensuring your business meets all statutory requirements, including social security, pension contributions, and other mandatory benefits, protecting both employers and employees.
• Independent Entity: Mercans operates as a standalone company, offering customized and reliable employment services, independent from other organizations.
• Supports Diverse Employment Types: Whether you’re hiring employees, contractors, freelancers, or managing expats, Mercans provides flexible and effective solutions tailored to your specific workforce needs.
• Tailored for Large Enterprises: Mercans is designed to support the needs of large businesses with complex organizational structures, offering scalable and sophisticated services that grow with your company.
• Multi-Currency Payroll Management: With Mercans, managing payroll in multiple currencies is seamless, supporting global businesses and simplifying financial operations across different markets.
• Global Reach and Multi-Country Payroll Expertise: Mercans offers comprehensive multi-country payroll solutions, backed by an extensive global network, ensuring smooth international operations and payroll management in numerous countries.
• Data Protection and Security Standards: Mercans adheres to the highest security standards, including GDPR compliance and certifications in SOC 1 and SOC 2, safeguarding your company and employee data.
• ISO Certified: Mercans holds ISO 20000 and ISO 27001 certifications, reflecting a commitment to excellence in IT service management and information security for optimal operational efficiency.
• Security Standards Compliance: Mercans meets the OWASP ASVS 3.0 standards, ensuring that all application development and management practices are secure and robust.
• HRBlizz Platform: Mercans’ proprietary HRBlizz platform streamlines global payroll and talent management processes, ensuring compliance with local labor laws and business protocols, supported by a team of over 1,000 in-country experts.
• G2N Nova Global Payroll Engine: Mercans uses the advanced G2N Nova payroll system, providing gross-to-net payroll processing in over 100 countries. Available as a SaaS or service delivery platform, it integrates seamlessly with major Human Capital Management (HCM) systems.