The government of Janez Janša presented the draft reform proposal last summer, but it took more than six months for the final version of the reform, which includes a new employment relationships act and changes to the labour market act, to be ironed out by the social partners.

Though touted as a major achievement, there seems to be widespread agreement among businesses that it falls short of full-fledged reform despite steps in the right direction. Indeed, businesses have said new reform talks should start as soon as possible.

Most notably, the changes reduce the gap between fixed-term and indefinite-term contracts, the main source of labour market segmentation: in 2011, fixed term contracts accounted for three in four of all new contracts.

This has kept youths in particular in a precarious position while shielding well-protected full-time workers.

The new laws make the employment of workers on fixed-term contracts less attractive for employers and provide for severance pay, which is designed to encourage employees to hire on indefinite-term contracts.

Businesses have also had to consent to higher contributions for unemployment insurance for those on fixed-term contracts, which will rise to 0.3% from 0.06% of gross pay.

To placate the unions fearing that the disincentives for fixed-term contracts will just lead to the mass hiring of temporary workers, the new laws put a 25% cap for temping agency workers, except for small employers.

Moreover, freelancers and sole proprietors who make more than 80% of their income from a single client will enjoy some protection, as they will be entitled to notice periods and severance pay.

These provisions were put in place due to the widespread practice of the tax-friendly hiring of sole proprietors for jobs that have the nature of full-time employment.

Indefinite-term contracts, on the other hand, will be loosened, including with a cut in the maximum notice period to 80 from 120 days.

Severance pay will be reduced on a graded scale depending on years of service. Retirement allowance, special payments that employees are entitled to when they retire, will be restricted to only those employed by a company for the last five years.

Contrary to initial proposals, unemployment benefits have not been changed, while employees will continue to benefit from a paid lunch break and years of service bonus.

The reform also simplifies hiring and dismissing proceedings, including by waiving the obligation that every job vacancy needs to be registered with the Employment Service.

It also introduces a special scheme for temporary work for pensioners, determining that pensioners may work up to 60 hours per month and earn up to EUR 6,300 per year, but there is a cap on hours worked depending on company size.

Provisions designed to curb abuse include making the pay check an official document enforceable in court and allowing employees to leave the job free of obligations if the employer fails to pay social contributions for three months in a row.