Employment Services Act

What it means

The Employment Services Act is Act No. 5/2004, which governs the work of the offices of labour, social affairs and family, the register of jobseekers and active labour market policy instruments. These include subsidies for creating jobs, training and support for self-employment.

The act also governs employing foreign nationals from outside the EU, such as work permit conditions and vacancy reporting, and the activities of temporary work agencies providing temporary agency work.

An important part is the disability employment quota. Employers above a certain headcount must employ a set share of people with disabilities or meet the obligation in alternative ways, such as purchasing from sheltered workshops or paying a levy.

How it works in practice

Employers can obtain subsidies through the labour office, for example for creating a job for a disadvantaged jobseeker, for a graduate work placement or for employing people with disabilities. Conditions vary by programme and region and should be checked before applying.

The disability employment quota is assessed per calendar year and the employer must demonstrate compliance to the labour office. If it does not meet the quota directly, it can use substitute fulfilment by buying goods and services from sheltered workshops or pay a levy.

In collective redundancies, the employer must, in addition to its Labour Code duties, notify the labour office. The office then helps the dismissed employees find new jobs and may offer retraining or other services.

What to watch out for

When employing third-country nationals, the procedure under this act and the act on residence of foreigners must be followed, for example reporting the vacancy and obtaining a permit. Illegal employment of foreigners is severely punished with fines and exclusion from public procurement or subsidies.

Labour office subsidies come with conditions, such as keeping the job for a certain period. If the employer fails to meet them, it may have to repay the subsidy. It is therefore wise to read the agreement with the office carefully and monitor compliance.