The Slovak economy is the 3rd fastest growing economy in Eurozone and one of the fastest in Europe. It is a developed and high-income economy with its GDP equals to 76% of the European Union’s average. Currently, Slovakia with a nominal per capita GDP of $16,499 ranks 40th among the richest countries in the world. The country is an attractive destination for foreign investors largely due to its low tax rates, skilled workforce, and low wages. Slovakia continues to exhibit strong economic growth backed by low public debt, sound financial sector, and large inward investment.
Principal language: Slovak
Government: Parliamentary Representative Democratic Republic
Capital City: Bratislava
Major Cities: Košice, Prešov, Nitra, Žilina
Employment contracts must be in writing, but even unwritten contracts are allowed in Slovakia. Under the Labor Code, the contracts must contain:
- a brief job description
- payment terms
- place and starting date of work
- duration of the paid vacation
- work hours
- the required length of notice period
Fixed-term employment contracts are valid but should not be more than 2 years. The contracts can be extended twice within 2 years. Probationary periods are limited to 3 months.
Regular work schedule in Slovakia is 8 hours per day and 40 hours per week. A normal week has 5 working days and 2 rest days which are usually Saturday and Sunday or Sunday and Monday. However, workers employed in sectors such as healthcare can work up to 56 hours in a week. Night work or work done between 10 p.m. and 6 p.m. is paid at 20% of regular pay.
Employees cannot work for more than 48 hours in a week including overtime. Overtime is paid at 25% premium over regular wages. Employees cannot be asked to work for more than 150 hours in a year. Medical staff can be asked to work overtime up to 250 hours in a year. Employees can voluntarily work overtime of up to 400 hours in a year. Work done on a day of rest or a holiday is paid at 50% premium over regular remuneration.
The following national holidays are observed in Slovakia:
- January 1: Day of the Establishment of the Slovak Republic
- January 6: Epiphany
- Good Friday
- Easter Monday
- May 1: Labor Day
- May 8: Victory Over Fascism Day
- July 5: St. Cyril and Methodius Day
- August 29: Slovak National Uprising Anniversary
- September 1: Day of the Constitution of the Slovak Republic
- September 15: Day of Our Lady of Sorrows
- November 1: All Saints' Day
- November 17: Struggle for Freedom and Democracy Day
- December 24: Christmas Eve
- December 25: Christmas Day
- December 26: St. Stephen's Day
Employees who have worked for a year with the same employer are entitled to 4 weeks’ of paid annual leave. Those who have worked for at least 60 days in a year are entitled to annual leave prorated according to the number of months worked in a year. Employees with 15 years of continuous service or those who have reached the age of 33 are entitled to annual leave for 5 weeks. Unused vacation only in excess of 4 weeks is compensated. Vacation can be split into several periods but at least two weeks’ of vacation must be taken continuously.
Pregnant employees are entitled to 34 weeks’ of maternity leave. The duration of leave is increased to 37 weeks in the case of single mothers and to 43 weeks in the case of multiple births. Employers are not required to pay compensation during the maternity leave since it is paid by the Social Insurance Agency.
Employees can take 2 days’ of paid leave: one after the death of a child or a spouse and another to attend the funeral. Paid leave for 1 day can be taken to attend a close relative’s funeral and another day if the employee is arranging the funeral.
Employees are given one day's paid leave for marriage.
After maternity leave, fathers or mothers can take parental leave until the child reaches the age of 3. In case the child has chronic health problems, parental leave can be taken until the child is 6 years old.
Employers must pay employees during the initial 10 days of sick leave. After that, employees are paid by the Social Insurance Agency for sick days. Employers are also required to provide 7 days of paid leave in a year for treatment or check up in a medical facility.
Pension and Social Security
The legal retirement age in Slovakia is 62 years. Employees who have contributed to the pension system for at least 15 years are eligible for a full pension. Social security benefits include pensions, death benefits, maternity pay, sick leave pay, and work accident payments. Employees need to contribute 4% of their wages to the social insurance program while employers contribute 14%.
Mandatory pension insurance is administered by the Social Insurance Agency and funded on an ongoing or PAYG (Pay As You Go) basis. Employees who contribute to this mandatory pillar can redirect 9% of their gross salaries to their individual accounts. The contribution rate is 28.75 % of gross wages out of which employers pay 21.75% while employees pay 7%. The contribution rate is split between the public pension program (19.75%) and the new mandatory pillar (9%). Public pension cost is likely to increase to 11.2% of GDP in 2050 while the corresponding figures in the European Union will average between 10.6% and 12.8%.
The occupational pension system is financed by capitalization and administered by single-purpose private pension management companies or PFMCs. Three different funds with different risks are given:
- Conservative Fund: 100% allocation into money market instruments and bonds with no equity exposure
- Balanced Fund: A maximum of 50% equity share with at least 50 % allocation into money market instruments or bonds
- Growth Fund: A maximum of 80% equity share
Individuals who have registered as a job seeker with the labor office and contributed to the social insurance system for at least 2 years in the last three years are eligible for unemployment insurance benefits. The benefits equal to 50% of the daily assessment basis are paid for up to 6 months. The daily assessment basis is based on wages earned during the 2 years before unemployment and the total earnings used to determine contributions. Funding is:
- 1% of covered earnings by employees
- 2% of declared earnings by self-employed individuals
- 1% of covered payroll by employers
- The remainder is funded by the government
How GPS can Help
With our Global PEO/Employer of Record services, companies can expand into Slovakia and hire their employees without having to establish a branch office or subsidiary in Slovakia.
- Your candidate is hired via our Slovakia PEO. If needed, we can also help you find the right talent in any country with our comprehensive global staffing services.
- Your new employee begins work quickly as we take care of employment contracts, statutory and non-statutory benefits, and running their payroll - all in full compliance with Slovakia laws.
- Global PEO Services experts manage all day-to-day operational issues such as employee expenses, and severance/termination if required.
- With no contractor risks, pass on the compliance burden to Global PEO Services.
Spin Off/M&A Support
- Ensure continuity of payroll, benefits and HR support when acquiring or spinning off a business with employees overseas.
24/7 Support in 100+ Countries
- Empower your teams with 24/7 support and a single point-of-contact model in which experienced client services directors are in continuous communication with information and advice.
- We are backed by a mix of 300+ multidisciplinary experts from HR, Payroll, Finance, Tax, and Legal domains who are ready to respond to the expected and unexpected needs of your business on the shortest notice.
Easy Visibility into Your Employee Time & Attendance and Benefits Data
With our Global PEO, you get access to Mihi, our proprietary SaaS solution for time and attendance, vacation, leave management and benefits enrollment and management. Mihi enables clients to have easy access to employee data in real time. It is designed specifically for companies with a global workforce, especially when working in multiple countries with low headcount.
Ready for Growth When You Are
When ready, we can seamlessly transition you from the PEO/EOR model to your own legal entity and provide ongoing international HR, finance, legal, compliance and staffing support. Learn more about our end-to-end international expansion services.