Slovenia implemented the SE Directive in June 2006.
Country overview
Slovenia already has employee representation at board level and the discussions on the implementation of the SE directive played a part in producing changes in the national system, which mean that companies can now choose between a one-tier and two-tier board.
Employee representatives have between a third and a half of the seats on the supervisory board of Slovenian companies, where companies have this two-tier board structure. Until 2006, most larger and medium-sized companies had to have such a supervisory board, but legislation introduced in April 2006 allowed them to choose between a two-tier and a one-tier board. In companies with a one-tier board, employees’ representation is reduced to a maximum of a third of the seats on the board.
The legislative change of April 2006, which was initially temporary but was made permanent by the 2007 Worker Participation Act, was in part a result of the discussions on the implementation of the European company directive. The government decided that national Slovenian companies should also have the flexibility to choose between a one and two-tier board structure just as European companies can. There was a lengthy debate on the implications this might have on employee representation at board level, with the original draft legislation proposing only very minimal employee involvement. However, under the final compromise employees have the right to choose something under one third of board members where there is a single-tier board. There is no right at all to have an employee member on the board if the company is considered a “small” company – in other words, it meets two of the following three conditions, fewer than 50 employees, sales below €7.3 million and asset value below €3.65 million. For more details see report from Janja Hojnik (University of Maribor) June 2006.
Slovenia is, therefore, one of the few countries where the implementation of the directive led to a substantial national debate on the overall role of employee representatives at board level.
The debate on changes to Slovenian national company legislation and a change of government in 2004 both contributed to a lengthy delay in transposing the directive, which only occurred in March 2006.
Directive was transposed by law in March 2006, almost a year and a half after the October 2004 deadline.
The directive on employee involvement in European companies was transposed through legislation adopted by the Slovenian parliament on 2 March 2006. The full title of the legislation is Participation of Workers in Management of the European Public Limited-Liability Company Act (SE) (ZSDUEDD) (Zakon o sodelovanju delavcev pri upravljanju evropske delniške družbe (SE) (ZSDUEDD)). The Act was promulgated by the President of the Republic of Slovenia on 10 March and came into effect a few days later on 17 March 2006, when it was published in the Official Gazette.
The legislative changes necessary to adapt Slovenian company legislation to the Regulation on European companies were included in the revised Slovenian Companies Act, which also gave Slovenian national companies the opportunity to choose between a one-tier and a two-tier board (see introduction). This was passed in April 2006.
Special negotiating body (SNB)
Slovenian SNB members are elected by all employees in a secret ballot.
Members of the SNB from Slovenia are elected by all employees in a secret ballot. Nominations can be made by the company works council, by “representative unions” in the company, or by at least 50 employees (Article 8). (The main union confederations are all representative at national level and other unions can be representative at company level, provided they have at least 15% of the company’s employees as members.)
The presence of external union representatives on the SNB is neither specifically prohibited nor specifically permitted by the legislation in Slovenia.
The section of the legislation on the choice of members of the SNB from Slovenia makes no reference to the issue as to whether or not they may be external union representatives (Article 8). This is in contrast to the position for the SE representative body set up under the fallback procedure, where the legislation states that only employees may be members.
Funding limited to a single expert.
The companies involved must bear “all costs relating to the negotiations and operation” of the SNB. However, the legislation goes on to say that this includes the costs of “only one expert” (Article 11).
Standard rules under the fallback procedure
Slovenian members of the SE representative body are chosen in the same way as Slovenian members of the SNB – through a secret ballot of all employees.
Slovenian members of the SE representative body, known in the legislation as the works council of the SE (Svet delavcev SE), are elected by all employees in a secret ballot. Nominations can be made by the company works council, by “representative unions” in the company, or by at least 50 employees (Article 21). (The main union confederations are all representative at national level and other unions can be representative at company level, provided they have at least 15% of the company’s employees as members.)
These arrangements are exactly the same as those for Slovenian members of the SNB. The only difference is that, in contrast to SNB members, the legislation specifically states that members of the representative body “may only be employees of the SE” (Article 20). External trade union representatives cannot therefore be elected.
The company should bear the costs of the representative body, although only those of a single expert.
The European company must bear the costs of the representative body, “in particular, the costs of the organisation of meetings and the provision of interpretation services and the travel and accommodation expense of the members”. However, the company is required only to bear the expenses of “one expert” invited to help the SE representative body with its work (Article 29).
Employee representatives at board level in Slovenian registered European companies are chosen by the SE representative body.
The SE representative body, known in the Slovenian legislation as the SE works council, chooses employee board-level representatives in SEs registered in Slovenia (Article 33). This is in line with the arrangements for the choice of employee board-level representatives in Slovenian national companies, who are chosen by the national works council. The legislation does not lay down specific arrangements for the choice of Slovenian members on the boards of SE companies registered outside Slovenia.
Misuse of procedures and structural change
The issue of misuse of procedures is not dealt with in the Slovenian legislation.
The Slovenian legislation does not refer to the misuse of procedures and so there is no protection where an SE is set up in order to deprive employees of their right to participate in company decisions.
There is no requirement in the Slovenian legislation to renegotiate the agreement if there has been structural change.
There is nothing in the legislation that requires the agreement to be renegotiated if there are structural changes after the SE has been set up.
SEEurope Report
Janja Hojnik (Law Faculty of University of Maribor, Slovenia)
The process of implementing the SE statute in Slovenia began in November 2004, when the Slovenian government confirmed amendments to the Companies Act (amendment ZGD-H). However, in December 2004 the amending law was passed without provisions on the European Company. The reasons for this delay were the change of government and the strong influence of the SE regulation and the SE directive on Slovenian company and industrial relations law. Hence, Slovenia was one of the Member States furthest behind regarding implementation of the SE statute and was warned by the European Commission to speed up the implementation process, receiving an official letter in December 2005.
I. Implementation of European Company Statute in Slovenian Law
The process of the SE-Statute implementation in Slovenia began in November 2004, when the Slovenian government confirmed amendments to the Companies Act (amendment ZGD-H). However, in December 2004 the amending law was passed without provisions on European Company.[1] The reasons for this delay lied in the change of government and in strong influence that the SE-Regulation and SE-Directive had on the Slovene national company and industrial relations law. Hence, Slovenia was one of the most delaying Member States regarding the implementation of the SE-Statute and has in this regard been warned by the European Commission to speed-up the implementation process and even got an official letter in this respect in December 2005.
Despite Slovenia’s delay in implementing the SE-Statute, there has for some time existed and agreement among commentators that the SE-Regulation and the SE-Directive should have been implemented separately. The SE-Regulation has consequently been implemented by amendments to the Slovenian Companies Act in April 2006 and the SE-Directive was implemented in February 2006 in a separate act, not incorporated in the existing general Act on Participation of Workers in Management.
Transposition of the SE-Regulation
With the aim of maintaining the integrity of Slovenian company law and regulating a number of open issues of the Regulation on the European Company, implementation of SE legislation has been achieved by means of an amendment to the Companies’ Act (it is in fact a renovated version of the Act now in force, Zakon o gospodarskih druzbah, ZGD-1), the Slovenian company law code.
The SE-Regulation is transposed in the new Slovenian Companies Act in the fifth chapter – in Articles 430 - 463, divided into five main sections: General Provisions, Transfer of an SE’s Registered Office, Formation, Management and Winding Up.
The Companies Act regulates those matters that are mandatory for the harmonisation of Slovenian law with the SE-Regulation and optional matters related to corporate affairs, capital structure of minority shareholders and SE management. The Act does not regulate employee involvement, but merely refers to the need to reach agreement on employee involvement before an SE can be registered and to the future act implementing the SE Directive.
The SE-Regulation only regulates some of the company law aspects of the future SE. In some areas, however, member states have a choice and can refer to national company law. The Companies Act refers, where possible, to existing provisions on corporations.
Slovenian jurisprudence regards the choice between a one-tier and a two-tier structure as one of the most important novelties of the SE-Regulation. The Slovenian Companies Act has hitherto not regulated one-tier management: this is now dealt with in the new chapter on SEs. As mentioned above, the Act also provides the management system option for national companies, reflecting the wishes of the business sector in Slovenia.
One of the most important issues of the SE-Regulation is the possibility to transfer the SE’s registered office. In this regard rules governing conflicts between laws and rules on the home state of the company in question are important. Approaches to this issue include the theory of incorporation and the “real seat” theory. The Slovenian Companies Act applies the real seat theory in relation to companies, while for other legal entities the general rules are slightly different.
As far as other rules are concerned, special emphasis must be put on minority shareholders’ rights in SE companies which were harmonised with Slovenian law to the extent permitted by the SE-Regulation. Shareholders’ and creditors’ protection must not differ in similar legal situations.
TRANSPOSITION OF THE SE-DIRECTIVE
The Slovenian Companies Act prima facie does not address employee involvement in European Company. However, Article 431 of the Companies Act provides that registration of a European Company shall be carried out in line with the rules on the registration of national companies, whereas an application for SE registration must be accompanied by:
- an agreement on employee involvement in SE management, concluded under the terms of the act regulating employee involvement in SE management; or
- a decision on termination of negotiations, concluded under the terms of the act regulating employee involvement in SE management; or
- a statement from all management-board members confirming that an agreement on employee involvement was not reached in the specified period of time.
The full transposition of the SE-Directive has been achieved by a specific law – Act on participation of workers at management of European Company (SE), which has been adopted in February 2006 and published in the Slovenian Official Gazette on 17th March 2006. The Act on the participation of workers in management of 1993 therefore remains the fundamental law in the field of workers’ involvement, with primarily nation-wide provisions, while particular fields with supranational application are regulated in specific laws – EWC Act and in the SE-Act. Each of the three acts is a “stand-alone” measure with its own principles, objectives and legal logic.
The new Slovenian Act on participation of workers at management of European Company (SE) consists of 40 Articles, divided into the following eight chapters:
I. General provisions (Arts 1-3: aims of the Act, validity and definitions);
II. Negotiations’ procedure (Arts 4-15);
III. Involvement of workers at SE management on the basis of an agreement (Arts 16-17);
IV. Involvement of workers at SE management on the basis of the Act (Arts 18-34);
V. Principles of co-operation and safe-guard clause (Arts 35-37: duty of mutual trust, confidentiality clause and protection of workers’ representatives);
VI. Dispute settlement (Art 38 – competence of Slovenian specialised labour is provided for any disputes under the Act);
VII. Penalty provision (Art 39 – penalty of app. 21.000 euros is determined for any misdemeanor in relation to proper information of workers in the process of establishing an SE – this penalty may be imposed upon any of the participating companies; in addition to this penalty of 2.100 euros may be imposed upon a responsible natural person);
VIII. Final provision (Art 40 – beginning of validity of the Act).
It is a rather technical Act, considering specific nature of the SE-Directive’s provisions, which do not foresee many options for national parliaments as regards workers’ involvement in the SE. As regards the few options left to the Member States to decide, the Slovenian Parliament adopted the following solutions:
Article 8 of the Act provides elections of SNB Members from Slovenia. It states that workers’ representatives from Slovenia are to be elected by the general meeting of employees using secret ballots. The right to propose candidates for the SNB have works’ councils, representative trade unions of the participating companies and at least 50 workers of a participating company. The same applies for formation of works’ council of the SE afterwards (Article 21 of the Act).
As regards experts Article 10 provides that the SNB may require expert assistance of its choice, including trade unions’ representatives at the EU level. These experts may on request of SNB be present at negotiations’ meetings as counsels. SNB may also decide to inform representatives of relevant external organisation on the commencement of the negotiations. Article 11 provides that all expenses regarding negotiations and activities of the SNB are to be recovered by the participating companies. However, the expenses for expert assistance are limited to one expert only. The same limitation applies for experts’ assistance to the SE works councils (Article 29).
Slovenian members of the SE works council are protected by the general Slovenian provisions on protection of workers’ representatives (Article 37). Accordingly, the Act on the Participation of Workers in Management (Art 67) states:
“A workers' council member who during the discharge of his duties behaves in accordance with the effective laws, collective agreements and the agreement provided by this Law may not without the consent of the workers' council:
- be assigned to another work post or another employer;
- be included among any redundancies.
If a workers' council member behaves as cited in the preceding paragraph it shall not be possible to lower his salary, institute disciplinary or indemnification proceedings against him or place him in any other way in a less favourable or subordinate position.
Another important protective provision is stated in Article 113 of the Employment Relationships Act:
(1) The employer may not terminate the employment contract:
to a member of a works council, a workers’ representative, a member of a supervisory board representing workers, a workers' representative in the council of an institution…(2) The protection against termination for the persons referred to in the previous paragraph shall be applied the entire period of their term of office and another year after its expiry.
Conclusions
Slovenia is one of few EU Member States regulating employee participation at board level. Process of EU Accession, formation of the European Company and general globalisation trends put Slovenian workers participation model on probation. Following the implementation of the SE-Regulation and SE-Directive the Slovenian Parliament adopted one-tier management system in addition to the two-tier system not only for European Companies but also for Slovenian national joint-stock companies. Comparative law and practice say that both systems can work effectively, providing that they are well exercised.[2] From the point of view of workers representatives, two-tier system has proved successful. On the other hand business wants more effective and faster decision-making, referring to the corporate governance trends, and hence requires a flexible system. However, in this regard it is very important to take an appropriate approach towards employee involvement, which is a constitutional category in Slovenia.
RESEARCH ACTIVITIES
The Law Faculty of the University of Maribor has been researching SE legislation within the framework of the research project “Corporation management structure”, chaired by Prof. Dr Marijan Kocbek. Janja Hojnik has researched the SE-Directive and published the results in legal journal Podjetje in delo (Nos 3–4/2004, pp. 646–72).
Footnotes:
[1] The proposal for implementation of the SE Regulation has foreseen a chapter added to the Companies Act (Chapter 4A) after Article 398. The chapter would consist of 63 articles (398a–398bl), divided into five main sections: General Provisions, Transfer of an SE’s Registered Office, Formation, Management and Winding Up.
The proposal provided for regulation of those matters that are mandatory for the harmonisation of Slovenian law with the SE-Regulation and optional matters related to corporate affairs, capital structure of minority shareholders and SE management. The proposal did not anticipate for the Companies Act to regulate employee involvement, but merely referred to the need to reach agreement on employee involvement before an SE can be registered and to the future act implementing the SE-Directive.
[2] Bratina B., ref. above.
Janja Hojnik (Law Faculty of University of Maribor), June 2006
A list of research articles published in Slovenia.
The Law Faculty of the University of Maribor has been researching SE legislation within the framework of the research project “Corporation management structure”, chaired by Prof. Dr Marijan Kocbek. Janja Hojnik has researched the SE-Directive and published the results in legal journal Podjetje in delo (Nos 3–4/2004, pp. 646–72).
Other articles:
Hojnik, Janja: Vloga predstavnikov delavcev pri ustanovitvi in upravljanju evropske delniške družbe: iz evropske zakonodaje o delavskem soupravljanju, Industrijska demokracija, Vol. 8, No. 8 (2004), pp. 3-9
Kocbek, Marijan: Evropska delniška družba in njena vključitev v slovensko pravo družb, Revizor, Vol. 16, No. 1 (jan. 2005), pp. 89-101.
Hojnik, Janja: Delavska predstavništva v enotirnih sistemih upravljanja gospodarskih družb v Evropski uniji, Industrijska demokracija, vol. 9, No. 8 (avgust 2005), pp. 8-12.
Hojnik, Janja: Societas Europea - evropska družba brez evropskega davka?, Davčno-finančna praksa, Vol. 5, No. 3 (2004), pp. 26-28.
Gostiša, Mato: Enotirni sistem upravljanja in delavsko soupravljanje, PP, Vol. 24, No. 43 (17. nov. 2005), pp. 6-8.
Senčur Peček, Darja: Sodelovanje delavcev pri upravljanju: udeležba za Evropsko delniško družbo, Dnevi slovenskih pravnikov 2004, Ljubljana: Podjetje in delo, Vol. 30; No. 6/7), pp. 1465-1480
Pšeničnik, Dušan: Soodločanje delavcev - evropska in domača d.d., čezmejna združitev in prenos sedeža, Dnevi slovenskih pravnikov 2005 – Ljubljana, Podjetje in delo, Vol. 31; No. 6/7), pp. 922-931
Prelič, Saša: Evropska delniška družba (SE) in slovensko pravo gospodarskih družb, Dnevi slovenskih pravnikov 2004 – Ljubljana, Podjetje in delo, Vol. 30; No. 6/7, str. 1428-1440
Bratina, Borut: Societas Europaea – evropska delniška družba, O računovodstvu, reviziji, davščinah in financah, XIX. posvetovanje, Maribor, 23. in 24. september 2004