LABOR WARS: Can the labor inspectorate order the employer to pay the outstanding wages?

It is not an everyday occurrence for a business employing workers in office positions to undergo an inspection by the labor inspectorate. Inspections are much more common in industrial, resp. manufacturing environments, where there is a higher likelihood of violations that could potentially endanger employees' health. However, a paradoxical situation may arise when the labor inspectorate imposes measures to address the identified shortcomings.

In any case, it is important to begin by stating that, in general, we do not question the importance and justification of proper inspections of (including) administrative positions. Although this authority of the labor inspectorate is clearly defined by the Labor Inspection Act (Act No. 125/2006 Coll.), if the inspectorate adds a creative interpretation of legal regulations to its powers, the imposition of measures by the labor inspectorate may appear as a non-systematic element within the Slovak legal system.

The outlined paradox also occurred with our client. After conducting an inspection, the labor inspectorate, in its final report, ordered the employer to pay the employee the wage difference between their actual wage and the wage for a higher level of job difficulty – for the entire duration of their employment with the client. The most significant issue was that, based on the report, our client was obligated to pay the employee even the time-barred wage claims without any opportunity to defend themselves, such as raising a statute of limitations objection. 

We disagreed with the labor inspectorate's opinion, as from the moment the report's results were presented to our client, we were clear in our view that the obligation to compensate wages can only be enforced by courts in the Slovak Republic. This applies regardless of whether the wage claims are time-barred or not. In our opinion, the labor inspectorate clearly assumed the powers of the courts, violated our client's fundamental right to judicial protection, and therefore, in cooperation with our client, we filed an administrative lawsuit against the relevant labor inspection report.

Based on our comprehensive statements, the regional court fully accepted the core arguments of the administrative lawsuit, annulled the labor inspectorate's report, and remanded the case for further proceedings. The labor inspectorate will thus have to prepare the report again, but it will no longer be able to impose the obligation on the employer to pay the wage difference to their employees.

In its ruling, the regional court stated that the administrative authority does not have the competence to impose an obligation on the employer to make a wage payment, as this can only be determined in proceedings where all aspects of the dispute are clarified and the employer is granted full rights to defense, particularly the opportunity to raise a statute of limitations objection. The labor inspectorate’s authority to order the controlled entity to rectify identified deficiencies must be interpreted within the limits of its legal competence, while respecting the authority of other public authorities, especially the general court.

This is a precedent-setting court decision, the consequence of which, we hope, will be that labor inspectorates will stop violating the fundamental rights of employers and appropriating the powers of general courts (which, of course, in no case do we support unlawful interference by employers with the rights of employees, as was not the case in this instance).

From a "precedent" perspective, the most interesting points are paragraphs 31 to 33 of the reasoning, which we have quoted above.

A big thanks for this success goes to the members of our litigation team in the labor law field. - Peter Džurný and Adrián Fedor.