Legal Journal: Recreation allowances and child sports allowances made new

Recreation allowances and child sports allowances have grown in popularity with employees over the last few years, who try to use them especially during the summer and winter holidays. We are of the opinion that the provision of a recreation allowance for employees has a positive impact on the regeneration of employees and their motivation to spend time with their families in the beautiful environment of the Slovak Republic. If employees do not use the recreation allowance, they can still claim the child's sports activity allowance and thus provide their children with a nice experience with new adventures.

As of 1 January 2025 there is a change in the application of the rules on recreation allowances, which comes with amendment to Act No. 172/2024 Coll. amending Act No. 311/2001 Coll. on the Labour Code as amended (hereinafter referred to as "Labour Code") and supplementing Act No. 91/2010 Coll. on the Promotion of Tourism as amended (hereinafter referred to as the "amendment").

Who is subject to the obligation to provide recreational and sports allowances for a child?

The employer is obliged to make these contributions subject to the following statutory requirements:

• it employs more than 49 employees,
• the employment of the employee lasts continuously for at least 24 months,
• the employee requests the relevant contribution.

An employer may voluntarily choose to make these contributions to its employees even if it employs fewer than 50 employees. In that case, it must comply with all the requirements under Labor Code § 152a.

What is the amount of the recreation allowance and the child's sports activity allowance?

Regardless of whether it is a recreation allowance or a child's sports activity allowance, the amount of the allowance is 55 % of the eligible expenses, up to a maximum of EUR 275 per calendar year, and for the child's sports activity allowance, it must be stated that it is the total for all the employee's children.

The recreation allowance and the child's sports activity allowance shall be rounded up to the nearest euro cent.

Who can claim the recreation allowance and the child's sports activity allowance?

The recreation allowance can be claimed by any employee who has been employed for a continuous period of at least 24 months and whose employer employs more than 49 employees. Persons on maternity and parental leave are also entitled to the recreation allowance. In contrast, employees who work under an agreement for work outside the employment relationship are not entitled to the recreation allowance.

Newly, the employee's parents will also be able to claim the holiday allowance, i.e. the employee will not claim the holiday allowance for themselves, but will pass the holiday allowance on to their parents. This amendment is an even greater effort to promote tourism in the Slovak Republic and at the same time to allow parents of employees who have a lower disposable income to take part in at least one recreation during the year, the primary purpose of which is to regenerate their physical and psychological strength and to improve their quality of life.

Any employee who has a child may claim the child's sports activity allowance, and the Labour Code defines precisely what legal status of the child will be taken into account for the purposes of obtaining the sports activity allowance. According to Section 152(b)(3) of the Labour Code, a child is deemed to be:

• The employee's own child,
• a child entrusted to the employee's care on the basis of a court decision,
• a child entrusted to the employee's care before the court's adoption decision; or
• another child living in the employee's household who has reached the age of 18 years or less in the calendar year for which the employee is claiming the child's sports activity allowance and has been a person with an affiliation to a sports organisation under a special regulation for at least six months.

The recreation allowance and the sports activity allowance can only be claimed from one employer.

What is considered eligible expenditure?

The following four headings are considered eligible expenses for an employee to receive a recreation allowance under the Labour Code:

1. tourism services connected with accommodation for at least two overnight stays in the Slovak Republic, e.g. services of travel agencies and travel agencies, guide services, transport services (e.g. road, rail, cable cars, ski lifts, etc.), spa and health services and many others,
2. a holiday package including accommodation for at least two nights and catering services or other services related to recreation in the Slovak Republic, e.g. wellness services, travel insurance services, etc.;
3. accommodation for at least two nights in the Slovak Republic, which may include catering services,
4. organised multi-day activities and recovery events during school holidays in the territory of the Slovak Republic for a child of the employee attending primary school or one of the first four years of a grammar school with an eight-year educational programme; a child of the employee is also considered to be a child of the employee entrusted to the employee for foster care on the basis of a court decision or a child entrusted to the employee for care prior to a court decision on adoption or another child living in the employee's shared household.

A necessary condition for an employee to be fully able to claim eligible expenses for these allowances is that the specific employee (e.g., first and last name), or newly the employee's parent (first and last name of the employee's parent), who has claimed the allowance in question must be clearly identified.

The employee must also provide the Employer with proof of eligible expenses for other persons who are participating in the recreation with the employee, expanding this to include the employee's parent or the spouse of the employee's parent. We summarize that these are the following persons:

• the employee's parent or the spouse of the employee's parent,
• to the spouse of the employee,
• the employee's child,
• a child entrusted to the employee for foster care by a court order, or
• a child entrusted to the employee's care before the court's adoption decision; and
• any other person living in the same household as the employee who is participating in a recreational activity with the employee or the employee's parent.

From a data protection perspective, we have a question regarding the processing of additional personal data that the employer has not had to record in its employee registers so far, i.e. the name and surname of the employee's parents and their permanent / temporary residence, which will be indicated on the tax document, i.e. the invoice that the employee's parent (presumably via the employee) must submit to the employer in order for the holiday allowance to be recognised and also paid to the employee. The employer will need to be able to deal with this, prior to the actual processing of the personal data.

Neither the legislator nor the Explanatory Memorandum addresses the issue of the payment of the recreation allowance if it is claimed by the employee's parent. Will this recreation allowance be transferred to the employee's bank account and the employee will then transfer the amount to the parent's bank account or will the employer transfer the amount of the recreation allowance directly to the bank account of the employee's parent? So far, even the Financial Administration of the Slovak Republic has not addressed this issue in its recommendations.

When protecting personal data, it is important that employers only process the amount of personal data that is necessary to carry out the processing operations and that must be in accordance with the data protection principles. There is also the question of how the employer will verify that the employee is the parent of the employee, as the amendment to the Labour Code will allow the parent of an employee to take his/her spouse on holiday with him/her, which does not have to be the employee's biological parent. How the employer will verify this fact is neither addressed in the Labour Code nor in its explanatory memorandum, e.g. requiring birth certificates.

The employee is required to prove eligible expenses no later than 30 calendar days after the end of the recreation by submitting receipts. That is, the employee should also prove the eligible expenses of the parent who used the recreation allowance in the employee's place.

RECOMMENDATION

The Labour Code does not precisely define what internal steps employers must take in relation to this amendment and leaves it to the discretion of employers to decide how to deal with the situation. However, it is recommended to have an internal regulation entitled "Directive on the provision of recreation allowances and allowances for children's sporting activities", which will set out the basic criteria that will be required of employees in order to be granted an allowance for the relevant recreation. The bylaw may include various affidavits if a person close to the employee or a person close to the parent of the employee participated in the recreation, as well as an Application for the relevant recreation allowance.

Contact us, we will be happy to provide you with the necessary advice.