Grey economy (by Government’s evaluation) presents between 8.5 and 12.2 per cent of Slovenia’s GDP in reality this number is much higher, just under.

Tackling Undeclared work in Slovenia

Legal frame and main goals

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Grey economy (by Government’s evaluation) presents between 8.5 and 12.2 per cent of Slovenia’s GDP in reality this number is much higher, just under 30 % of GDP.

ESTIMATION

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In the Official Gazette No. 32/2014 the new Prevention of Undeclared Work and Employment Act (ZPDZC-1) was published, which applied as on August 18th 2014,

except for the provisions in connection with personal supplementary work that applied as of January 1st 2015.

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Includes following topics: General provisions Exceptions not deemed undeclared work Supervision Penal provisions

Prevention of Undeclared Work and Employment Act (OG 36/2000, 118/2006, 54/2012, 2/2014)

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The main modifications introduced by the new Act relate to:- definitions of terms used by the Act, namely undeclared work and undeclared employment, - amendments to the concept of personal supplementary work, - the introduction of new supervisory bodies (the replacement of labour inspectors by the customs officers in cases of personal supplementary work),- supervisory procedures and higher fines, - the possibility to claim any profit/proceeds arising from undeclared employment to the introduction of sanctions to exclude employers that illegally employ third-country nationals from public procurement (they shall be blacklisted).

Act stipulates undeclared work and undeclared employment, which are both

prohibited

Undeclared work Undeclared employment

a legal entity pursues an activity that is not recorded in the register of companies or carries out

an entrepreneur pursues an activity that is not recorded in the relevant register

a legal entity or an entrepreneur pursues an activity despite a temporary ban on carrying out such an activity

a foreign company fails to carry out activities in the Republic of Slovenia through an affiliated company or carries out an activity without an appropriate permit

an individual who is not registered or notified as stipulated by this or any other Act carries out an activity or work.

An entrepreneur that fulfils the conditions for carrying out an activity:

fails to conclude an employment contract or a civil law contract on the basis of which work can be carried out, and fails to register a worker for health, and pension and disability insurance;

employs an alien or a stateless person in contravention of regulations governing the employment of aliens;

allows a student to work without a student referral form issued by an authorised job-brokerage agency, or uses the referral form for another person.

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An unemployed person engaged in undeclared employment as shall be deemed to have employment contract concluded for an indefinite period. Employer shall deliver a written contract of employment for an indefinite period to this worker within three days after a labour inspector established undeclared employment.

Should the contract not be delivered in the stipulated time limit, the worker may seek judicial protection.

Safety for unemployed worker

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If a person carries out work on the basis of a civil law contract, one copy of the contract must always be at the location of work.

The Health Insurance Institute of Slovenia may demand indemnification from the employer in cases of an occupational disease, injury at work or death of a person that is employed undeclared.

Indemnification from the employer

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The Act also defines two other categories

A participant in undeclared work

Illicit advertising

A legal entity, an entrepreneur or an individual who knowingly enables one or more people to carry out undeclared work shall be deemed a participant in undeclared work.

A legal entity, an entrepreneur or an individual who concludes a contract with another legal entity, entrepreneur or individual and understands that undeclared work is involved shall be deemed a participant in undeclared work.

It shall be prohibited to commission or publish advertisements (illicit advertising) in newspapers, journals, on radio, television or other electronic media (advertising media) or communicate or publicise advertising messages in any other way accessible to the public if:

– a legal entity, an entrepreneur or an individual offers or advertises undeclared work;

– a legal entity, entrepreneur or individual announces the need for a worker whose work is not linked to the registered or notified activity.

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UNDECLARED WORKEXCEPTIONS

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Mutual neighbourly help shall mean work carried out by neighbours if the neighbours' residences are located in a defined spatial proximity, if there is no contract concluded between the neighbours, if the work is not paid or carried out by a legal entity or an entrepreneur engaged in an activity directly linked to the work in question; it shall also mean other forms of neighbourly help stipulated by law.

Neighbourly help

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Work for one's own account shall include any work on immovable property, unless otherwise stipulated by a special act, and on movable property in personal ownership.

Help of relatives, directly or indirectly related up to include the third degree or in affinity by marriage up to include the second degree is allowed when free of charge.

Work for one's own account

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Emergency work to prevent accidents or mitigate the consequences of natural and other disasters shall include any work intended to prevent natural disasters (floods, avalanches, etc.) or to mitigate the consequences of natural (removal of rubble or alluvial material) or other disasters (mitigation of the effects of fire, etc.).

Emergency work

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Short-term work shall include unpaid work in a micro-company, a private institute or with an entrepreneur with a maximum of 10 employees if carried out by a spouse of the entrepreneur or the company's or private institute's owner or co-owner or carried out by a relative to the first degree, provided that the work does not exceed 40 hours per month.

The employer will have to keep a record on the short-term free-off charge work.

Short-term work

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(1) Humanitarian, charity, voluntary and aid work shall include unpaid work for organizations registered as humanitarian or charity organizations, and organized voluntary work within other non-governmental organizations. (2) Charity work shall include unpaid work for the benefit of residents of occupation and care centers, pupils and students in educational institutions, patients in hospitals and residents of residential homes for the elderly.

Humanitarian, charity, voluntary and aid work

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(1) Personal supplementary work shall include works of assistance with housework and other minor works for natural persons, collection and sale of forest fruits and herbs, hand-made cottage industry and handicrafts etc, unless otherwise stipulated by special regulations. (2) Personal supplementary work shall also include the personal manufacture of domestic art and craft

Personal supplementary work

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The modifications include the introduction of a personal voucher system.

The voucher system is based on the concept that 'every work counts'. Its aim is to make personal supplementary work - PSW more widely applicable.

A personal voucher system (PSW)

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People believe that the system is too complicated from an administrative point of view and not socially just.

Let us see why…

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- Before starting PSW, the individual have to declare it – electronically through the web portal AJPES (Agency of the Republic of Slovenia for Public Legal Records and Related Services) or personally at the administrative unit;

-Income out of PSW for one half of the calendar year may in sum not exceed three average monthly net salaries in SLO for the previous calendar year;

- An individual have to report on the achieved income every half of a year;

- AJPES publish a list of individuals that have declared PSW, with their name, type of PSW, their successive number and contact.

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Before starting PSW voucher/valuable, valid for one calendar month, is need to be acquired;

The valuable is acquired through the portal e-administration (e-uprava) or personally at an administrative unit by filing an application and paying a sum of EUR 9.00.

The valuable

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In cases when PSW is pursued as an assistance with housework and similar, the person that requires assistance with housework is also the payer of the valuable;

in other cases the payer is the individual that pursues PSW.

An assistance with housework

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EUR 7 out of the EUR 9 is intended for old age pension insurance contribution and EUR 2 for health insurance contribution.

With this payment the person is insured for work injury and occupational disease and will also be recognised with a proportional part of insurance period in the pension and disability insurance.

1 valuable = 1 day pension insurance

PSW is applied for …

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FIRST EFFECTS IN 2014

STATISTICS

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In 2014 it was carried out in: - 1819 of the control procedures of undeclared work, in which it was found, on average, 12% of infringements.

In 2014 there were 4947 controls carried out by Customs administration procedures work, illegal employment and illicit advertising. On average, 11% of the infringements was found.

The amount of the fines: (EUR) 282 931

- 2988 operations control illegal employment, in which it was found, on average, 10% of infringements

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GOVERNMENT’S PROJECT FIGHTING GREY ECONOMY

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(1) Introduction of certified cash registers

(2) Amendments to the Company Act, which seek to prevent unfair practices, particularly the sequencing of companies.

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Slovenian Government has accepted law, which prescribes introduction of fiscal cash registers from 2nd of January 2016. It is expected, due to strict control of cash transactions, increase of 70 million Euro per year of VAT income.

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WHAT IT MEANS:

Use of certified cash registers to all companies operating in all sectors.

Entire annual turnover will be registered, and improve the transparency of business transactions.

The certified registers will be connected with a central information system of the Financial Administration, and data will be updated in real time. Recording transactions or issuing invoices by hand will be permitted only exceptionally (field work, power failure, etc.).

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Amendments to the Company Act

The government seeks to prevent phenomena such as sequencing of companies, setting up additional companies as vehicles of sell-offs, operating without active transaction accounts, setting up companies by foreigners to acquire work permits, avoiding the payment of fines, etc.

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The amendments also seek to prevent the practice of withdrawing the minimal capital from the transaction accounts of new companies in order to set up new companies and sell them to physical and legal persons for a few hundred Euros.

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Thank you for your attention

[email protected], Ministry of Labour, Family, Social affairs and Equal

oportunities, Slovenia