Establishment of a Temporary Employment Agency

In this article, we outline the procedure for establishing a Temporary Employment Agency.

Both legal entities and natural persons can operate a temporary employment agency (ADZ). A permit for ADZ activity can be requested either by a newly established legal entity (such as a limited liability company or another type of business entity) or by an existing company already active in the market, regardless of its length of operation or business activities. The same applies to natural persons —this can either be an individual with an assigned company identification number (IČO) or even a non-business individual.

If a new limited liability company (established in the same year it applies for the permit, where “established” refers to the registration of the company in the commercial register and not just the signing of the founding documents) wishes to apply for the permit to operate as an ADZ, it must have a minimum registered capital of at least 30,000 EUR.

If an existing company that has been operating in the market for a longer period applies for a permit, it must possess equity in the same amount, but this must be proven through a published financial statement; the share capital amount registered in the commercial register will not be sufficient.

In practice, we also encounter cases where the Central Office accepts extraordinary financial statements published during the calendar year, not only the regular ones.

The following conditions must be met by an individual or legal entity that wishes to obtain a permit to operate an ADZ:

Some conditions are demonstrated through the applicant’s sworn statement, while the Central Office can independently request confirmations from certain authorities, eliminating the need for the applicant to submit them.

The rules regarding the registered office of a temporary employment agency (ADZ) follow the provisions of § 2 of the Commercial Code:

An established business can apply for a license to operate a Temporary Employment Agency (ADZ). Such an existing company must ensure it has no outstanding tax liabilities with the tax and customs office or any unpaid health insurance or social insurance contributions, including obligations towards mandatory contributions for old-age pension savings. In other words, the company must not have any debts with health insurance companies or the Social Insurance Agency. If the existing company is listed as a debtor by these institutions, even if the debt originates from its other business activities, the Central Office of Labor, Social Affairs, and Family will not issue a license for temporary employment agency activities. In this case, purchasing an existing temporary employment agency may be an option.

Furthermore, a company recognized as an ADZ should not have any liabilities in the future either. If tax authorities or the Social Insurance Agency identify a breach of legal regulations regarding tax or insurance contributions, they may propose the revocation or suspension of the ADZ’s license.

An existing company (established in the same year as the application) must demonstrate financial security through its paid-up share capital recorded in the commercial register.

An existing company (established before the year of application) must demonstrate financial security through its equity as published in the financial statements for the previous year.

The application must be accompanied by several attachments:

Communication with the Central Office of Labour can also be carried out electronically via slovensko.sk. Through the general submission section of the Central Office, it is possible to submit an application for a permit to operate a temporary employment agency, supplement applications, or submit other requests (e.g., for issuing duplicates, permit cancellation, etc.). We have not encountered any requirements for document conversion; electronic signatures have been sufficient.

Projekt vykonávania činnosti ADZ sa prikladá k žiadosti o vydanie povolenia na vykonávanie činnosti agentúry dočasného zamestnávania. Obsahuje najmä údaje o žiadateľovi, je v ňom popísané jeho doterajšie pôsobenie na trhu práce, skúsenosti v danej oblasti, konkurencia vrátene jeho silných a slabých stránok. Projekt by tiež mal obsahovať aj popis investícií a zdrojov, ktorými disponuje. Projekt by mal byť zameraný aj na opis spôsobu získavania uchádzačov o zamestnanie. 

Projekt na ADZ by mal obsahovať napríklad nasledovné informácie v týchto oblastiach:

Projekt ADZ by mal obsahovať identifikáciu žiadateľa, ako dlho už pôsobí na trhu práce, prax, skúsenosti, počet zamestnancov, ich úroveň vzdelania. Rovnako by mal odpovedať na otázky: Aký je dopyt po Vašich službách? Aká je cieľová skupina, ktorá bude využívať Vaše služby? Kto bude mať záujem o služby? Aké služby budete poskytovať? S kým budete spolupracovať? Ako budem služby distribuovať („posúvať“) svojim klientom? Aká je konkurencia v tejto oblasti? Kto sú hlavní konkurenti? V čom sa líšite? V čom ste lepší? Aké sú silné a slabé stránky Vášho predmetu podnikania ? Aké sú príležitosti a hrozby, ktorým budete čeliť? Ako ich prekonáte?). Čomu sa venujete, ako mienite rozšíriť svoje podnikanie, čo Vás k tomu vedie, aké služby budete ponúkať, poskytovať, akým spôsobom ? Čím sú Vaše ponúkané služby výnimočné? Ako chcete realizovať službu (samostatne alebo v spolupráci – s kým)? 

The project for conducting the activities of a Temporary Employment Agency (ADZ) must be submitted along with the application for obtaining a permit to operate as an employment agency. It primarily includes information about the applicant, describing their current market presence, experience in the field, competition, and an analysis of strengths and weaknesses. The project should also detail the applicant’s investments and resources. It should focus on how the agency plans to recruit job candidates. We can help you with the preparation of this Projekt.

The ADZ project should include the following areas:

The project must identify the applicant, provide information about how long they have been in the labor market, their experience, the number of employees, and their education levels. It should answer questions like:

Additionally, you should describe your current focus, how you plan to expand, why you are pursuing this, and how you plan to offer and deliver your services, emphasizing their uniqueness.

The Central Office of Labor also provides a recommended outline for the ADZ project on its website.

The fee for the Central Office of Labor is 1,000 EUR if a legal entity applies for a Temporary Employment Agency (ADZ) permit. For a natural person, the fee is half, amounting to 500 EUR.

If the application is submitted electronically by a legal entity, the fee is reduced to 930 EUR.

Our office charges a legal service fee of 1,000 EUR + VAT for the entire agency permit acquisition process.

To operate, an agency should expect approximately 1.5 months until the ADZ permit becomes legally effective. If you wish to start business activities immediately, purchasing an already established ADZ with a valid permit is a viable option.

The purchase of a Temporary Employment Agency (ADZ) refers to acquiring a business entity that holds a valid permit to operate as an ADZ. It is not possible to transfer the ADZ permit itself to another individual without transferring the entire company.

The ADZ permit is issued by the Central Office for Labor and is valid indefinitely. It includes specific information about the entity it is granted to. The permit contains:

If a new limited liability company (s.r.o.), established in the year it applies for the permit, seeks an ADZ permit, it must have a minimum share capital of 30,000 EUR registered in the commercial register.

An existing company, one that has been operating for a longer period, must prove it has the same amount of equity based on its published financial statements.

In practice, the Central Office may also accept interim financial statements published during the calendar year, which show an increased equity (not only the regular annual financial statements). There are several ways to increase equity, and it is advisable to consult the company’s accountant.

For a company established in the same year as the application, it is possible to increase the share capital in the commercial register, which then serves as proof of equity.

It is important to note that an ADZ must maintain equity of at least 30,000 EUR throughout its existence. In practice, there have been cases where the Central Office initiated proceedings to revoke an ADZ permit for a company that failed to meet this requirement during one year of its operation. The Central Office verifies this compliance proactively.

If an individual or a legal entity wants to apply for an ADZ permit, they must also designate a person who will act on behalf of the ADZ. The necessary information for obtaining a criminal record check according to § 10 para. 4 letter a) of Act No. 330/2007 Coll. (the Criminal Records Act) must be provided in the application (name, surname, maiden name, original name if it was changed, nickname if applicable; date of birth, identification number, place and district of birth, permanent residence address, and for those born abroad, the country of birth; nationality; ID or passport number; gender; parents’ names and maiden names).

Additionally, an authenticated copy of the diploma confirming the attainment of a second-level university education for the person acting on behalf of the ADZ must be submitted to the Central Office.

If the representative obtained their education during the existence of Czechoslovakia, the Central Office accepts diplomas issued in the Czechoslovak Republic.

According to § 29, paragraph 3 of the Employment Services Act, one of the conditions for obtaining a permit to operate as a temporary employment agency (ADZ) is (among other things) that:

a) The person must have no criminal record; for a legal entity, this condition must also be met by the person acting on behalf of the ADZ.

g) The person must have a second-level university education; for a legal entity, this condition must be met by the individual acting on behalf of the ADZ.

The act of representing a legal entity is governed by Act No. 513/1991 Coll., the Commercial Code, as amended.

According to § 13, paragraph 1 of the Commercial Code, a legal entity acts through its statutory body or a representative.

A person acting on behalf of the statutory body of a legal entity usually acts based on a written power of attorney or, in special cases, based on a mandate declared in the minutes of the relevant body. A person acting as a representative of a legal entity can only act within the scope of their authority.

The Employment Services Act does not stipulate that a natural person acting on behalf of the ADZ must be in an employment relationship with the agency.

Regarding the employment relationship of the statutory body or a member of the statutory body of a legal entity, the National Labor Inspectorate maintains that it is not possible to establish an employment relationship for the activities of the statutory body or a member of the statutory body. An employment relationship with a natural person who is the statutory body or a member of the statutory body of the company can only be established for other activities that constitute dependent work.

For more detailed information regarding the status of the person acting on behalf of the ADZ, please contact the relevant Labor, Social Affairs, and Family Office. (Source: National Labor Inspectorate)

“The Central Office for Labor, Social Affairs, and Family (hereinafter the ‘Central Office’) agrees with the content of the NIP’s opinion; however, we would like to note that the NIP’s response does not address the essence of the matter.

NIP pointed out:

a) That this issue does not fall under their jurisdiction, with which the Central Office agrees. b) The NIP focused on the activity of the statutory body or a member of the statutory body, stating that an employment relationship is not established except for the fact that companies appoint another responsible person acting on behalf of the ADZ (not the statutory representative), which creates a problem when the statutory representative does not meet the educational requirement. In such cases, the Central Office would not issue the permit for the ADZ’s operation.

We believe that if such a responsible person performs administrative activities related to the ADZ, it constitutes dependent work.” (Source: Central Office for Labor)

“On September 14, 2022, in response to our previous answer, you requested our opinion on the Central Office’s statement, in which the Central Office raised objections to our conclusions regarding the legal relationship of a natural person acting on behalf of a legal entity applying for a permit to operate as an ADZ, if this natural person is not the statutory representative.

In response to your new request, the National Labor Inspectorate states:

As mentioned in our previous response, one of the conditions for obtaining a permit to operate as an ADZ is that:

a) The person must have no criminal record; for a legal entity, this condition must also be met by the person acting on behalf of the ADZ. b) The person must have a second-level university education; for a legal entity, this condition must be met by the individual acting on behalf of the ADZ.

Representation of a legal entity is governed by the Commercial Code, which stipulates that a legal entity acts through its statutory body or a representative. Acting on behalf of a legal entity (hereinafter referred to as the ‘company’) is not dependent work. The statutory body or representative must have an appropriate contractual commercial or civil relationship to act on behalf of the company (e.g., a contract for the performance of a function, a mandate contract, a power of attorney agreement, or other unnamed contracts).

This does not exclude the possibility that a person acting on behalf of the company (including a company that is an ADZ) may also perform other activities for the benefit of the company, which constitutes dependent work.

According to § 1, paragraph 2 of the Labor Code: ‘Dependent work is work performed under the authority of an employer and the subordination of an employee, personally by the employee for the employer, according to the employer’s instructions, in the employer’s name, during the working hours set by the employer.’

According to § 1, paragraph 3 of the Labor Code: ‘Dependent work can only be performed within an employment relationship, an analogous employment relationship, or exceptionally under conditions established by this law in another employment relationship. Dependent work cannot be performed under a contractual civil or commercial relationship according to special regulations.’

Based on the response provided by the Central Office for Labor, Social Affairs, and Family, we would like to point out that performing administrative tasks related to the ADZ is dependent work if the criteria of dependent work as defined in § 1, paragraph 2 of the Labor Code are met. A person performing dependent work for the company must have an employment relationship, an employment contract outside the employment relationship, or a similar employment relationship (e.g., state employment relationship).

Therefore, it is necessary to clearly differentiate between what activities the person, who is not the statutory representative, actually performs for the company:

Without examining the work activities carried out by this person for the ADZ, it is not possible to confirm the necessity of establishing an employment relationship. It is possible that, apart from performing the formal function of a representative (where the National Labor Inspectorate is not aware of the content and scope of activities and responsibilities of this representative), the person may also perform administrative tasks that meet the criteria for dependent work, legally requiring an employment relationship, analogous employment relationship, or another employment relationship.

The National Labor Inspectorate reiterates that interpreting the provisions of Act No. 5/2004 Coll. on Employment Services does not fall within its competence. We draw your attention once again to the relevant provisions of the Employment Services Act that regulate the conditions for obtaining a permit to operate as an ADZ. In § 29, paragraph 3, it is examined whether the conditions of a clean criminal record and second-level university education are met for the ‘person acting on behalf of the ADZ.’ The law does not refer to Act No. 455/1991 Coll. on Trade Licensing (the Trade Licensing Act) in this case, as it does for the ‘responsible representative’ of a legal entity providing employment brokerage for a fee according to § 25 of the law.

The activity of the ADZ is not a trade in the sense of the Trade Licensing Act, and therefore, in our opinion, the conditions applicable to the ‘responsible representative of a legal entity providing employment brokerage for a fee’ cannot be analogously applied to the ‘person acting on behalf of an ADZ.’

Given the above, the National Labor Inspectorate stands by its original position.

In conclusion, we would like to note that the National Labor Inspectorate is not an authority authorized to issue binding opinions on matters falling under the jurisdiction of labor inspection. The above opinion is solely our legal view, and we do not exclude the possibility that it may be overridden by the opinion of a decision-making authority in the future. Interpretation of the laws according to § 8, paragraph 3 of Act No. 757/2004 Coll. on Courts and Amendments to Certain Acts is conducted by the Supreme Court of the Slovak Republic through its judicial activity.”

A foreigner can act as a representative for a Temporary Employment Agency (ADZ). In this case, their educational degree must be recognized in Slovakia.

The Central Office for Labor also requires a criminal record extract from the foreigner’s home country with an official translation. Additionally, the following information must be provided for the office to obtain a Slovak criminal record extract:

In practice, we often encounter clients who want to establish a “work agency” but are unsure whether they are interested in temporarily assigning employees or merely mediating employment. The question is whether they want to obtain a permit for operating as a temporary employment agency (ADZ) or an authorization for a regulated trade – employment mediation for a fee.

We determine the answer by understanding whether the client intends to employ people under a work contract and “loan” them to another employer (temporary assignment) or only wants to find jobs for people (mediate), with another party signing the employment contract. The former relates to temporary employment agency activities, while the latter pertains to the business of employment mediation for a fee.

This is also outlined in § 58, paragraph 1 of the Labor Code, which states that “…a temporary employment agency may agree in writing with an employee in an employment relationship to temporarily assign them to work for a user employer according to a specific regulation.”

The list of regulated trades is available on the website of the Ministry of Interior of the Slovak Republic, and for the activity named “Employment Mediation for a Fee (excluding sports agents),” a minimum of a first-level university degree (e.g., a bachelor’s degree) is required. This is based on § 25, paragraph 2 of Act No. 5/2004 Coll., which stipulates that “An intermediary may perform employment mediation for a fee if they have completed at least a first-level university education. In the case of a legal entity, this requirement must be met by the responsible representative according to a special regulation.”

A Temporary Employment Agency (ADZ) is defined in Act No. 5/2004 Coll. on Employment Services, specifically in § 29. The main difference between an ADZ and employment mediation is that an ADZ employs the individual directly in an employment relationship. This means the ADZ signs an employment contract with the applicant, even if it only employs them temporarily to assign them to a user employer in Slovakia to perform work under their supervision and direction or to dispatch them according to the Labor Code.

In contrast, in employment mediation for a fee, the entrepreneur mediates job opportunities for applicants with other employers without directly employing them; instead, the entrepreneur has a mediation contract with the job seekers for job placement services.

For an ADZ to operate, it needs a permit from the Central Office for Labor. In contrast, to perform employment mediation for a fee, the entrepreneur must approach the relevant District Office, specifically the trade licensing department, and request a certificate for this activity. Since this is not a free trade, the entrepreneur must also appoint a responsible representative.

We briefly outline the obligations of intermediaries in employment mediation for a fee. According to the law, an intermediary cannot charge the individual seeking employment for the mediation services. Fees can only be charged to the legal entity or individual for whom the intermediary is finding an employee, and the amount must be agreed upon between the intermediary and the employer.

Likewise, a temporary employment agency (ADZ) is prohibited from charging temporary employees for their assignment to a user employer or for entering into an employment contract with the user employer after the assignment ends. Instead, ADZs can charge the user employer a fee agreed upon for the provision of temporary employees.

When an intermediary provides employment mediation services for a fee, they must enter into a written agreement with the individual. This agreement includes:

Intermediaries can also facilitate employment abroad.

No, they cannot. As per § 58(1) of the Labor Code, “…a temporary employment agency may agree in writing with the employee that they will be temporarily assigned to perform work for the user employer.” Thus, the employee must be in an employment relationship with the agency.

According to § 42(1) of the Labor Code, “An employment relationship is established by a written employment contract between the employer and the employee unless otherwise provided by this law.”

Therefore, an employment contract is necessary for an employment relationship.

Agreements under the Labor Code (such as agreements on work performance, work activity, and student work) are concluded for work outside of employment relationships. These agreements are covered under the ninth part of the Labor Code, titled “Agreements on work performed outside the employment relationship.”

While ADZs are not required to submit documents proving the employment relationship between the agency and the employee to the Central Office, they must submit an annual report of their activities by March 31 of the following year. The report includes sections mentioning these agreements, as per the Labor Code.

In practice, we have encountered cases where ADZs were unaware of the requirement to assign only employees under employment contracts and mistakenly included “contractors” in their reports. The report must reflect the actual situation, so it’s crucial to comply with the requirement to employ based on an employment contract, not an agreement.

If an ADZ (Temporary Employment Agency) wants to employ third-country nationals for temporary assignments, it must have been operating for at least three years before submitting the application for a temporary residence permit for employment or its renewal for the foreign worker.

While an ADZ can employ a third-country national as its employee, this employment cannot be for the purpose of temporary assignment.

Regarding the assignment of Ukrainian nationals with refugee status before an ADZ has been active for three years, the Ministry of Labor provided the following statement:

The conditions for temporary employment agencies and the employment of third-country nationals in Slovakia are regulated by Act No. 5/2004 Coll. on Employment Services.

According to § 29 (1) of this act, a temporary employment agency is a legal or natural person that employs an individual for temporary assignment to a user employer in Slovakia.

According to § 21 (1) of the act, an employer may employ a third-country national who:

According to § 21 (4), an ADZ cannot temporarily assign a third-country national, except if the ADZ has been operating for at least three years before the application for the temporary residence permit. The assignment is only allowed for occupations with labor shortages in specific regions.

However, there is no provision in the law that requires an ADZ to operate for three years to assign third-country nationals who have been granted temporary protection.

An ADZ may temporarily assign its employee to a user employer. Per § 58 of the Labor Code, this requires both:

The employment contract must include:

The agreement between the ADZ and the user employer should specify:

ADZs are permitted to post employees abroad under § 5 of the Labor Code. However, the agency must also assign employees within Slovakia to comply with regulations and prevent any attempts to circumvent the law.

Not all professions can be temporarily assigned. Our law firm has identified all the positions eligible for temporary assignment. Upon the client’s request, we apply to the Central Office of Labor, Social Affairs, and Family for authorization for all permissible positions, specifying any exceptions.

The obligations of a Temporary Employment Agency are outlined in § 31 (1) of the Employment Services Act. The agency must:

The activity report must typically be submitted by March 31. The 2019 report was delayed due to the COVID-19 pandemic.

Under the Labor Code, an employment contract must be concluded with the agency for temporary assignments.

Any entity holding a license for operating as a Temporary Employment Agency must submit an annual activity report to the Central Office of Labor, Social Affairs, and Family for the previous year.

The report can only be submitted electronically via the provider’s portal.

Instructions and templates can be found at this link.

Failure to submit the report results in the revocation of the ADZ license. We have observed instances where the Central Office enforced this rule even for delays of just a few days. The report is mandatory even if the agency was inactive during the previous year.

If your ADZ license was revoked, you can read about legal remedies in our article.

The law outlines revocation sanctions if the ADZ:

According to the interpretation confirmed by the Central Office, “one year” means 12 months from the date of license approval, not a calendar year. For example, if the license was granted on December 31, the agency must assign an employee by the end of November of the following year.

Even if no employees are assigned during the year, the ADZ must submit a report. Failure to do so will prompt the Central Office to start revocation proceedings.

An agency may also request the revocation of its license by submitting a written application to the Central Office, with no associated fee. The Central Office will then issue a revocation decision.

If an agency’s license is revoked under § 31 (2), it may apply for a new license only after three years.

The Central Office may suspend or revoke the license based on recommendations from various authorities, such as:

An agency may request a duplicate license for its operations. The application must include a 5 EUR fee.

To obtain a temporary employment license in Germany, if interested, we collaborate with a Slovak-speaking lawyer in Germany to secure such a license for our clients. For more information click here.