GENERAL NOTICE

In January 2025, this online platform will be integrated into Boomportaal (www.boomportaal.nl), after which this platform will be discontinued. From that moment on, this URL will automatically redirect to Boomportaal.

DOI: 10.5553/EELC/187791072023008002008

European Employment Law CasesAccess_open

Case Reports

2023/19 When does using agency workers lead to a concealed employment relationship between the workers and the user company? (SI)

Keywords Temporary agency work, Employment status
Authors
DOI
Show PDF Show fullscreen
Abstract Author's information Statistics Citation
This article has been viewed times.
This article been downloaded 0 times.
Suggested citation
Petra Smolnikar and Tjaša Marinček, "2023/19 When does using agency workers lead to a concealed employment relationship between the workers and the user company? (SI)", European Employment Law Cases, 2, (2023):97-99

    The Supreme Court of the Republic of Slovenia has issued a judgment concerning the contractual relationship between a worker who had an employment relationship with a de facto employment agency (the ‘agency’) but was continuously working for a port operating company. Given that the ‘agency’ was not registered for the activity of providing labour to a user company and that the agency work was not temporary, the Court found such behaviour constituted a breach of the fundamental requirements arising out of Directive 2008/104/EC on temporary agency work.

Dit artikel wordt geciteerd in

    • Summary

      The Supreme Court of the Republic of Slovenia has issued a judgment concerning the contractual relationship between a worker who had an employment relationship with a de facto employment agency (the ‘agency’) but was continuously working for a port operating company. Given that the ‘agency’ was not registered for the activity of providing labour to a user company and that the agency work was not temporary, the Court found such behaviour constituted a breach of the fundamental requirements arising out of Directive 2008/104/EC on temporary agency work.

    • Facts

      In December 2022, the Supreme Court of the Republic of Slovenia issued rulings in nine cases (VIII Ips 8/2022, VIII Ips 9/2022, VIII Ips 10/2022, VIII Ips 11/2022, VIII Ips 12/2022, VIII Ips 13/2022, VIII Ips 18/2022, VIII Ips 19/2022 and VIII Ips 20/2022) involving workers who had appealed against the judgments of the Court of Second Instance rejecting their claims seeking to establish the existence of an employment relationship and the recognition of rights arising out of the employment relationship with a port operator. In this case report, we will take a closer look at the first judgment, that is VIII Ips 8/2022.
      The worker in this case was employed by a port service provider (the ‘agency’) under an employment contract to carry out the work of harbour transport, for a minimum wage and during irregular working hours. On the basis of his employment contract, the port service provider posted the worker to work at the port operator, where they worked continuously and for several years only on its premises, within its work organization and under its supervision, until his employment contract was terminated by the ‘agency’. The port operator was the only business partner of the ‘agency’ and on which they were completely dependent. This method of taking on workers was also the way in which the port operator dealt with other port service providers and their employees.
      The ‘agency’ terminated the worker’s employment contract in 2019 for business reasons, ie due to a reduction in turnover.
      Although the ‘agency’ and the port operator had a contractual relationship under contracts for the provision of various services, such as port handling services, which had the legal nature of subcontracts under the Code of Obligations, it was in fact fictitious since the alleged port service provider (although a de facto ‘agency’) did not provide port handling services and other services. The ‘agency’ only provided the port operator with workers who were formally employed by the ‘agency’, on a permanent and exclusive basis, even though the ‘agency’ was not registered for the activity of providing labour to a user in accordance with the provisions of Article 163 of the Labour Market Regulation Act. Moreover, the employment contract between the worker and the ‘agency’ did not contain the specific features of an employment contract between an employee and an employer engaged in the activity of providing workers to another user, as it should have pursuant to Articles 59 and 63 of the Employment Relationships Act.
      The Court of First Instance found that the worker’s employment contract with the ‘agency’ was void. However, the Court held that, in view of the manner in which the worker worked during the period at hand and the abuse of the institution of labour transfer to the user, the worker was deemed to have an employment contract with the port operator established for the entire period of their employment with the ‘agency’ (for the period from 1 April 2011) and also from the termination of his employment relationship with the ‘agency’ onwards, given that the Court found that the relationship between the worker and the port operator had all the elements of an employment relationship.
      The Court of Second Instance disagreed with the Court of First Instance’s finding that the elements of an employment relationship existed between the worker and the port operator. It found that the worker was formally employed by the ‘agency’. The worker’s employment relationship with the ‘agency’ was in fact carried out and the ‘agency’ also provided the worker with certain rights arising from that relationship (payment of salary, recording his working time, etc.). Although the port operator exercised supervision in the context of its obligation to manage the port under the concession contract and the subcontracting agreements, the Court held that this did not constitute supervision under Article 4(1) of the Employment Relationships Act.
      The Supreme Court had to tackle the issue of whether the worker could claim an employment contract with the port operator, and the recognition of all retroactive rights (for the entire period of actual work) and the restoration of employment. The Supreme Court held that the business model of the two defendants was unlawful and constituted an abuse of the business of the port service providers and the port operator, to the detriment of the workers. Pursuant to Article 163 of the Labour Market Regulation Act and Article 61 of the Employment Relationships Act, posted workers’ work can only be temporary, the Supreme Court held. In the case at hand, the workers were working for the port service providers on a continuous and permanent basis. Furthermore, the Supreme Court found this also constituted a breach of the fundamental requirements arising out of Directive 2008/104/EC on temporary agency work. Thus, not only did the port service company not have the legal conditions required for employers providing workers to another user, it also did not carry out the activity of supplying workers to users within the legal framework as well.
      Moreover, the Supreme Court observed that these workers were put at a disadvantage compared to the other workers who had employment contracts with the port operator, as they worked for lower pay (minimum wage) and during less favourable working hours. The Supreme Court found that the employment relationship of the port service providers’ worker in this business model was in fact a concealed employment relationship with the port operator. It was an externalisation of the employment relationship, which is outsourced, with the actual employer (the port operator) retaining a decisive influence on the activities of the other employer (port service company) and its recruitment and the content of the employment relationship. Such outsourcing of employment relationships to external contractors, who are themselves wholly dependent on their business partners and even operate illegally, usually reduces workers’ rights for the profit of the companies involved in such transactions, as was also found in the case at hand.
      In light of the above-mentioned abuse of rights and concealed employment relationship, the Supreme Court ruled that the worker had a valid claim for the existence of an employment relationship with the port operator as of the date of termination of the employment contract with the port service provider. However, as the worker had an existing employment relationship with the port service provider until the termination of the employment contract, the Supreme Court could not recognize two parallel employment relationships at the same time. While the Supreme Court did not retroactively recognize an employment relationship with the port operator, it did recognize that, as a result of the breach of the worker’s rights (wages and other benefits), the port operator was liable for depriving the worker of their employment benefits even during the period of their existing employment relationship with the port service provider.

    • Commentary

      The ruling by the Supreme Court of Slovenia in these nine cases involving workers and a port operator was long-awaited. For years, the port operator had been recruiting its workers through these ‘agencies’ disguised as port service companies instead of hiring employees directly. This had put workers, such as the worker in case VIII Ips 8/2022, at a disadvantage when compared to other workers who had an employment contract directly with the port operator. These workers were often paid lower wages, worked during less favourable hours, and were not subject to the provisions of a collective agreement or general acts that directly hired workers were bound to. This ruling by the Supreme Court has been seen as a victory for such workers.
      The Supreme Court’s decision to recognize the concealed employment relationship and the rights arising from such relationship has made a strong impact and will definitely continue to influence agency work and similar contractual relations between companies so as to prevent them from deciding on concealed legal relations.

    • Comment from other jurisdiction

      Germany (Andre Schüttauf / Tim Rossmann, Luther Rechtsanwaltsgesellschaft mbH): In Germany, the Act on Temporary Agency Work (Arbeitnehmerüberlassungsgesetz, ‘AÜG’) has been in existence since 1972 and has been modified several times, adapted to the current European requirements. The basic requirements for temporary employment are the following:

      • Employers who, as lenders, wish to provide temporary workers to third parties (hirers) require permission from the employment agency to do so.

      • The written contract – before the beginning of temporary employment – between lender and hirer must explicitly designate the assignment as a supply of temporary workers.

      • Temporary workers must be specified with reference to the contract prior to the assignment.

      • The duration of the temporary employment may not exceed 18 months (collective agreements may provide for other periods of temporary employment).

      • In addition, the lender is obliged to grant the temporary worker the same basic working conditions as apply to a comparable employee of the hirer in the hirer’s company, including remuneration, for the duration of the assignment (principle of equality).


      If the case at hand were to take place in Germany, these conditions would not be fulfilled in several respects.
      The legal consequences of a violation of the above requirements are regulated in the AÜG itself. Accordingly, in the event of the abovementioned failings, the contract between the lender and the temporary worker is invalid in any case if the temporary worker does not declare in good time in writing that they wish to continue with the employment contract. In the event of a lack of permission, the contract between the lender and the hirer is also invalid. Violations of the principle of equality are not effective.
      The ineffectiveness of the contract between the lender and the temporary worker also has the far-reaching consequence that an employment relationship is deemed to exist between the hirer and the temporary worker from the start of the intended temporary employment. As a result, the hirer (and, depending on the situation, the lender as well) is liable for the proper payment of social security contributions, which in the case of (intentional) non-payment of social security contributions would even lead to a risk that a criminal offence has been committed. In any case, illegal hiring of temporary workers in some cases expressly mentioned in the AÜG constitutes a public offence punishable by a fine.
      Lenders and hirers are therefore well advised to adhere to the requirements of the AÜG.

      Subject: Temporary Agency Work, Employment Status
      Parties: Anonymous
      Court: Supreme Court of the Republic of Slovenia
      Dates: 20 December 2022
      Case number: VIII Ips 8/2022
      Internet publication:http://sodnapraksa.si/?q=id:2015081111463157&database[SOVS]=SOVS&database[IESP]=IESP&database[VDSS]=VDSS&database[UPRS]=UPRS&_submit=i%C5%A1%C4%8Di&id=2015081111463157


Print this article