As international companies grow their footprint and tap into new markets, understanding local hiring laws and employment structures becomes vital to building sustainable operations. In this 17-part series, we guide foreign businesses through the legal and strategic aspects of employment in key global jurisdictions.
This installment brings us to Slovakia – a member of the European Union with a stable economy, skilled workforce, and attractive business incentives for foreign investors. While direct employment remains the most widely used model, Slovakia also offers flexible hiring alternatives such as independent contracting, agency employment, and crossborder arrangements. Employers must navigate a wellregulated labor system that balances business efficiency with strong employee protections. Choosing the right hiring model is essential for ensuring legal compliance, optimizing operational costs, and establishing a longterm presence in the Slovak market.
Authored by Rastislav Rosko
Aliant+ Law Firm in Slovakia
1. Are there alternatives to direct employment?
In the Slovak Republic, direct work (dependent work) is work performed in subordinated relationship, personally by the employee for the employer, under the direction of the employer, on behalf of the employer, during working hours specified by the employer.
Direct employment (dependent work) may be performed exclusively in an employment relationship or in a similar employment governed by the Labour Code.
Direct employment (dependent work) may not be performed in a contractual civil law relationship or in a contractual commercial law relationship.
Alternatives to direct employment in Slovakia include:
Independent contractors (freelancing);
- Employers can hire sole proprietors, offering services independently, this work cannot fulfil the criteria of direct employment.
Temporary employment agency;
- Employers can hire workers from temporary employment agencies for temporary assignments. This arrangement is regulated to ensure worker protections.
Agreements with natural persons for auxiliary work performed outside the employment relationship (agreement on the performance of work, agreement on working activity and agreement on temporary work for students).
- Agreement on the performance of work may be concluded with an individual if the scope of works for which the agreement is concluded does not exceed 350 hours in a calendar year irrespective of number of such agreements between the same employee and employer.
- Agreement on working activity may be concluded with an individual if the working activity can be carried out up to a maximum of 10 hours per week or 520 hours in a calendar year if the work activity is seasonal.
- Agreement on temporary student work may be concluded with a natural person who has the status of a secondary school pupil or the status of a full-time university student and who has not attained the age of 26 years. Work may be carried out to a maximum of 20 hours per week on average; the average of the maximum permissible working time shall be assessed over the entire period for which the agreement was concluded.
A phenomenon that occurs in Slovakia is the so called “black system”- it is a method of economic (gainful) activity in which independent contractors (self-employed persons or tradesmen) work for an employer. They carry out the same activities as in a direct employment, work in subordinated relationship, work regularly within working hours at the same place. This system was founded in the 1990s, but since then it has been made illegal as stated above by the legal requirement that direct employment (dependent work) may not be performed in a contractual civil law relationship or in a contractual commercial law relationship under special regulations. This system is beneficial for the employer as they do not have to pay social contributions and taxes of the independent contractor and can therefore offer them higher pay. However, it is detrimental to social security system and was prohibited in 2012.
2.Is it necessary to set up a local entity to hire an employee?
Under Slovak labor and tax regulations, employers are generally required to register in Slovakia to handle income tax, social security, and health insurance contributions. Foreign company does not necessarily need to establish branch or subsidiary, but having employed employees may trigger permanent establishment for tax purposes. Registration with social security authorities is necessary.
3.Direct employment vs. independent contractor: what about costs?
For direct employees, typically gross salary (before taxes) paid monthly is to be negotiated. For contractors, it’s usually a contracted fee or hourly rate (which might be invoiced monthly or upon completion of contracted work). The main difference is that an independent contractor covers his own taxes and social security deductions while social security deductions of the employee are shared between him and the employer, who pays larger proportion. On the other hand, independent contractors may apply tax-free minimum income and lump-sum expenses, which may reduce their effective tax rate to 15%, while employees are taxed at the rate of 19% or 25%.
In Slovakia, salary of an employee is structured as follows:
- super gross wage = total employment cost (gross salary plus taxes and benefits paid by the employer are 36,2% of the gross salary);
- gross salary = salary of an employee (before taxes and benefits paid by the employee);
- net salary = the final amount to be paid to the employee after tax and social security deductions
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