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What global businesses need to know about payroll in Slovenia
In the age of the former Yugoslavia, Slovenia was the most economically prosperous of its republics, and so found it much easier to modernize and embrace global business than some of its neighbors. Since then, it has joined the European Union (in 2004), adopted the euro (in 2007), and gradually increased its level of foreign investment from a very low starting point.
Slovenia is a small country, with a population of just 2.1 million, but its proximity to the likes of Italy and Austria – and a well-educated workforce – makes it a perfect bridge between Eastern and Western Europe. Its economy is fairly service-driven at 66% of GDP, but it’s also a strong base for heavy industry multinationals across information technology, pharmaceuticals, and the automotive sector.
Slovenia benefits from being relatively easy to do business in compared to many Eastern European countries but isn’t without its quirks. For example, payroll regulations in Slovenia rely on a double-entry bookkeeping system, which can make having a global payroll solution a crucial element for success. That’s why it’s important to stay abreast of all the requirements around running payroll in Slovenia – start by reading this guide.
Getting Started
Slovenia is one of the most streamlined places in the world to open up a business, and while officials expect proper documentation, the paperwork is relatively straightforward to complete.
The process starts with formalizing the business name, appointing directors, arranging a business address, preparing Articles and Memorandum of Association. Then a Slovenian corporate bank account should be opened for the share capital deposit: minimum start-up capital for Slovenian businesses is €7500 (approx. £6400; $8200) for limited-liability companies and €25,000 (approx. £21,400; $27,200) for joint-stock companies.
After this, the business can be registered with the Slovenian business register, and then signed up for VAT, permits and licenses, and with the tax administration.
Most business owners will be able to finish everything in one stop, though larger businesses may need to use a notary to complete their paperwork. Owners will need to apply in person and be ready to provide a VAT number. As long as you have the necessary documentation, registration will likely take no more than a week to complete.
Employment Considerations
Collective bargaining is heavily practiced in Slovenia, with workers relying on unions to maintain fair working conditions. This can result in employment arrangements being varied on an industry-specific or company-specific basis. Workers must be given an official written contract upon starting.
Slovenia’s working week is in line with much of the rest of Europe: eight-hour shifts, Monday to Friday, for a total of 40 hours. Overtime is limited to eight hours per week, 20 per month and 170 per year, with a minimum pay rate of 150% of salary. Collective bargaining, however, can influence these levels substantially, and some workers may be accustomed to working overtime without the expectation of additional compensation.
Notice periods are 15 days in the first year of service, 30 days in the second year, and then increase by two days each year. The maximum of 60 days notice therefore applies to employees who have served at least 16 full years. Probation periods can run for a maximum of six months.
Compensation, Bonuses & Severance
The minimum wage in Slovenia has risen by more than 50% in the space of seven years. The rate for 2024 is €1253.90 per month (approx. £1070; $1360). Further increases in the years to come cannot be ruled out, so keeping an eye out for future political developments is recommended.
There are no required bonuses, but it’s not uncommon to give employees a Christmas bonus of one month’s wages, and ‘Jubilee’ bonuses for reaching certain milestones of service. Other bonuses are typically determined via standard contract negotiations or through collective bargaining.
Severance pay varies according to length of service. Those with between one and ten years of service receive a payment of one-fifth of their pay over the last three months, per year of service. This fraction increases to one-quarter after ten years’ service, and one-third after 20 years’ service; however, the latter is limited by the maximum payment cap of ten months’ basic salary.
Tax and Social Security
Like most European countries, Slovenia levies income tax progressively. The first €8755 earned per year (approx. £7500; $9500) is taxed at 16%, after which a rate of 26% kicks in. Beyond this, three higher rates take effect at higher levels, 33% at €25,750 (approx. £22,000; $28,000); 39% at €51,500 (approx. £44,000; $56,000), and 50% at €74,160 (approx. £63,400; $80,700).
The corporation tax rate in Slovenia was increased from 19% to 22% at the start of 2024; the new rate will be in place until at least the end of 2028. VAT is calculated at 22% for standard transactions and a 9.5% reduced rate for certain industries (e.g., food, certain healthcare sectors, newspapers).
There are five types of social security contributions in Slovenia:
- Pension and Disability: 8.85% employer, 15.5% employee
- Health insurance: 6.56% employer, 6.36% employee
- Unemployment: 0.06% employer, 0.14% employee
- Work injury: 0.53% employer
- Parental care: 0.1% employer, 0.1% employee
Holidays and Leave
Paid leave entitlement in Slovenia is 20 days per year, for employees that have at least six months’ service. Up to half of this can be carried over into the first half of the following year, with employer agreement. Employees are also entitled to up to seven days of paid personal leave each year for weddings, births and family bereavements. Slovenia has 15 days of public holidays each year, although generally speaking, employers only give 11 paid days off for them each year.
Maternity leave entitlement is 15 weeks, starting four weeks before the due date, and is paid at full salary by social security (as long as the mother has made sufficient payments into the system).
Paternity leave is 30 days, also paid at full salary by social security, although this is capped at 2.5 times the average Slovenian wage. The same payment and cap applies to parental leave, which can run for up to 130 days per parent; one parent can transfer up to 100 days of their allocation to the other.
Sick leave is paid by the employer for the first 30 days per year at 80% of salary (or full salary if the reason for it was work-related). Social security takes care of sick pay after this point.
In Summary
Slovenia is one of the easier places to set up a business and run payroll in Europe, but that doesn’t mean there’s room to be complacent. Regular increases in the minimum wage and the influence of collective bargaining mean things can change quickly, and it’s vital to stay on the right side of compliance. Working with a global payroll expert can give you the assistance you need, whatever the future might hold.
This article is for informational purposes only and is not intended to convey or constitute legal or any other advice. It is not a substitute for advice from a qualified professional.