Slovakia Payroll and Benefits Guide

What global businesses need to know about payroll in Slovakia

Slovakia has now been an independent country for more than 30 years, after its amicable separation from what is now the Czech Republic in 1993. Since then, its economic transformation has been remarkable.

Its GDP is now around six times what it was at the time of independence, and is approaching $120billion a year. It joined the European Union as part of its eastward expansion in 2004, and adopted the euro at the start of 2009. It also enjoys a healthy mix of services and industry in its economy: while services now represent more than 60% of GDP, Slovakia still retains a strong industrial core across cars, metal, energy, and a vast range of household and commercial goods.

Geographically, Slovakia is handily central within Europe, and its capital Bratislava is just 55 kilometers (as the crow flies) from its Austrian equivalent, Vienna. So if you’re looking for a place to do business in Eastern Europe, this country of around 5.5 million people is a stand-out choice. Here’s what you need to know from a payroll and employment perspective.

Getting Started

Most foreign businesses entering the Slovakian market will be set up as limited liability companies, which come with a minimum share capital requirement of €5000 (approx. £4300; $5400). 

Start by drafting and notarizing Articles of Association and the certificate of business name reservation. These can then be deposited at the relevant authorities for trade licenses, income tax and health insurance registration.

Companies can use a foreign bank account or set up an account with a Slovakian bank, a process that generally takes 1-2 days. With this in place and share capital deposited, applications can then be made to the district court for full commercial registration, after which VAT registration can also be completed.

Employment Considerations

Employees in Slovakia should have written contracts detailing job description, work location, start date, salary amount, a list of paydays, work hours expected, holiday or vacation details, and notice information.

The standard working week is 40 hours, spread over five eight-hour shifts, and overtime is paid for work beyond this. Overtime is paid at 125% of normal salary, rising to 140% for work at night, 150% for work on a Saturday, and 200% for work on a Sunday. The overtime regulations do not apply to managers and executives.

Notice periods start at one month, rising to two months after a year’s service and three months after five years’ service. Probation periods are a maximum of three months, except for managerial roles, which have a maximum of six months.

Compensation, Bonuses and Severance

At the beginning of 2024, the national minimum wage in Slovakia was increased from €700 to €750 per month (approx. £640; $810), which means it has more than doubled in the space of ten years. As the rate has been increased every January 1 for over a decade, be prepared for further increases in the near future.

Employees are entitled to €3.22 per day (approx. £2.75; $3.50) in meal vouchers, and those with at least two years’ service are entitled to recreation vouchers worth €275 per year (approx. £235; $300). There is no requirement for a 13th-month salary bonus, but discretionary bonuses can be agreed in employment contracts.

Severance pay entitlement is one month’s salary for less than two years of service, then rising to two months. Higher rates apply of three months’ salary at five years of service, four months at ten years, and five months at 20 years.

Tax and Social Security

Income tax in Slovakia is levied at a flat rate of 19%, without any exempt allowance, up to a maximum of €41,445.46 per year (approx. £35,400; $44,900). Corporation tax is levied at 21%, and VAT is 20% with some exemptions applicable.

While the tax regime is simple, the range of social security contributions is considerably more complex. These include:

  • Sickness insurance: 1.4% employer, 1.4% employee
  • Pension: 14% employer, 4% employee
  • Disability insurance: 3% employer, 3% employee
  • Unemployment insurance: 1% employer, 1% employee
  • Guarantee insurance: 0.25% employer
  • Accident insurance: 0.8% employer
  • Solidarity Reserve Fund: 4.75% employer
  • Health insurance: 10% employer, 4% employee

Holidays and Leave

The standard paid leave entitlement in Slovakia is 25 days per year. However, this is reduced to 20 for employees under 33 years of age, and increased to 33 days for certain professions. Unused leave within a calendar year can be carried over to the following year. There are 15 days of public holiday each year, but any holidays at weekends are ‘lost’ as far as time off is concerned.

Maternity leave entitlement is 34 weeks, rising to 37 for single mothers and 43 in the case of multiple births. Leave begins 6-8 weeks before the due date, and must last a minimum of 14 weeks. Social security covers maternity pay at 75% of normal salary. If a mother goes back to work before the end of their maternity entitlement, then fathers can claim paternity leave at the same rate for a maximum of 28 weeks. Single fathers can claim 31 weeks.

Employers cover sick leave at 25% of salary for the first three days of a medically certified absence, and 55% for the following seven days. After ten days, social security covers sick pay at 55% of salary.

In Summary

A combination of relatively low wages, and superb trading and geographical links, make Slovakia a prime candidate for any expansion into Eastern Europe. However, its rules and regulations are changing all the time, especially with the minimum wage consistently rising at pace. To ensure you start on the front foot, and maintain full payroll compliance throughout your Slovakian adventure, we would always recommend leveraging the expertise of a global payroll partner.

This article is for informational purposes only and not intended to convey or constitute legal or any other advice. It is not a substitute for advice from a qualified professional.

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