An amendment to the Labor Code brings a change, which means that from January 2019 employees may apply to their employer for holiday vouchers. The employer is not required to provide this allowance automatically, the employee must request it.

The new duty applies to employers with more than 49 employees (including contract staff). Entitled to the allowance is every employee, who has been employed for at least 24 months. This allowance is max. 55% of eligible expenditures, but not more than EUR 275 per year.

The employer may decide how to provide this contribution - whether in the form of holiday vouchers or reimbursement of proven expenses.

Since this is a measure to promote tourism in Slovakia, the allowance can only be obtained for recreation in Slovakia. This is especially important, if the employer  reimburses proven recreational expenses.

What is a holiday voucher?

A holiday voucher is issued in electronic form for a specific person, who can redempt it for a recreational stay in Slovakia until the end of the year, in which the voucher was issued. Publishers of vouchers are regulated by a special regulation.

Holiday vouchers can be used for the following services (provided in Slovakia):

1. stay for at least two nights
2. stay for at least two nights, which may include meals
3. holiday package for at least two nights with meals and other recreational services
4. organized multi-day and recreational activities during school holidays for a child attending elementary school or 1-4 grade of eight-year grammar school (gymnázium) ("summer camps for children").

Moreover, the employers are obligated to pay for the recreation of the employees and their family members (spouse, child, child entrusted to a substitute caregiver, adopted child and another person living in the same household with the employee). It is not yet clear how the family ties will be proven, but we assume it will be based on a declaration on honor.

What it means for employees and employers in practice:

Since the contributions mean more administration for businesses, we recommend the employers developing an internal directive, which should cover in particular the following points:

• how staff can apply and which documents need to be submitted;
• how the contribution will be provided. Will it be the same form for everyone? (the Act does not prohibit applying holiday vouchers and reimbursement of eligible costs in one company);
• how to deal with any financial claims that may arise to the employer in relation to employees(for example, if the recreational voucher is purchased for EUR 500, of which EUR 275 will be covered by the statutory allowance, how does the employee pay the outstanding EUR 225 of the voucher received).

For the employer, the statutory allowance for recreation of employees and their members, as well as the fee for issuing recreational vouchers, is a tax-deductible expense.

For an employee, it is income subject to neither taxation nor compulsory social and health insurance contributions. An employee may apply for a holiday allowance once per year by one employer. Therefore, it is advisable to request from employees a declaration on honor that they have not requested the holiday allowance from another employer.

The employee must provide the employer with demonstrable recreational expenses (e.g. an invoice from the accommodation facility) within 30 days of the end of recreation. The employer then pays the employee the holiday allowance with the upcoming wage (unless they agree otherwise).