Mrsić’s Law on Wage Insurance Harms Companies in Distress

We will discuss the procedures of the Law on the Insurance of Workers’ Claims in the Event of Employer Bankruptcy (ZOPRSSP). Using the example of the company Efektiv from Vinkovci (which produces solid wood furniture), we will show how this law can push even companies that are already in distress into bankruptcy.

Due to uncollected claims, claims the owner of Efektiv, Dragan Zakšek, they have encountered problems, and they paid the salary for September on November 5 instead of by October 31 (which is the legal obligation). However, on November 16, labor inspector Dubravka Matić from Vukovar issued a decision to block 36,400 kuna because Zakšek, as the director of Efektiv, did not submit a request for forced collection of wages over his company to Fina, nor did he submit a request for the payment of minimum wages to the Agency for the Insurance of Workers’ Claims (Agency), although he was required to do so under ZOPRSSP.

Slow Procedure After the block, Zakšek brought bank statements to Fina as proof that this amount was paid on November 5, but Fina told him that they would be unblocked only when the inspector issued a new decision. He called the inspector, who told him that the Inspectorate received an order from the Agency and that until the Agency confirms in writing that the funds were paid, the inspector would not lift the block. Zakšek also called the Agency, and they told him that they had nothing to do with it (they confirmed this to us as well), suggesting that he take the evidence to the one who blocked him, which was (again) the Inspectorate. He called the inspector again, ‘she said she would check and get back to him.’ But she was clearly ‘stringing him along’ because after a few hours she contacted him and practically admitted that she made a mistake because the Agency neither issued nor could issue an order for the account block. She only told him to prepare all the evidence (statements, but certified by Fina and the Tax Administration) and send it by registered mail.
− She said, if everything is in order, she would issue a new decision on unblocking. But she warned that it does not go that quickly because the procedure must be followed, and they are busy – says Zakšek.
Due to such a procedure, his company remains blocked, even though it paid salaries for September. Indeed, the Agency confirmed that the company Efektiv submitted a request on December 4 for the payment of minimum wages to workers (this time) for October, as it did not pay salaries by November 30. Due to the block, future salaries are also in question because when the block for the September salary is resolved, there will be another one for October…

Possible Solution Although inspector Matić was clearly not familiar with part of the procedure, she still complied with ZOPRSSP. The problem lies in Article 20d, paragraph 3, which states that funds in the amount of gross wages will be forcibly seized if the employer does not submit a request to Fina for a block and does not foresee a situation where the block can be lifted if the company subsequently pays wages.
The Labor Inspectorate operates within the Ministry of Labor and Pension System (they did not respond to our questions). Therefore, we propose to Minister Miranda Mrsić (or whoever takes his place) to amend this article so that a company is not blocked if it has already paid wages late. We must take into account the grim economic reality and do our utmost to assist entrepreneurs. However, entrepreneurs must also comply with the law, so if they violate it, there is Article 22, to which we propose adding that the company and the director will be fined a certain monetary amount if they do not submit a request for a block to Fina and a request to the Agency for the payment of minimum wages to workers. This will mitigate the damage to companies, while legal deadlines will still need to be respected.