Victims of legal loophole



Zagreb, 061118.
Sanja Boban Sotski, majka od koje HZZO trazi da vrati porodiljnu naknadu jer je firma u kojoj je radila otisla u stecaj.
Foto: Davor Pongracic / CROPIX
Davor Pongračić / CROPIX

Sanja Boban Sotski

They have to repay maternity and sick leave allowances because Algorithm went bankrupt.

Four employees of the foundered Algoritam, a Zagreb-based publishing and retail bookstore company — two young mothers who have just completed their maternity leave and their two colleagues on long-term sick leave (spinal cord surgery and colon cancer therapy, respectively) — could receive orders from the Croatian Health Insurance Fund (HZZO) to repay all maternity benefits and reimburse the Fund for all the costs of the health services they have used since June — because the state has just found out that they do not even have the basic health insurance cover.

Namely, being on sick leave and maternity leave, their employment contracts could not be terminated. The company that employed them went under. The bankruptcy procedure started on June 6 and closed on the same day, because the company, legally, did not have any assets. According to the law — says bankruptcy administrator Iva Petanjak — taking a company off the Commercial Court Register automatically annuls all employment contracts, including those of employees on sick leave or maternity leave.

No notice

However, the law does not prescribe who informs the employees about the fact, so the four were not informed at all. Had they received official notice, they would long ago have regulated their status by registering with the Croatian Employment Service (HZZ), which would provide them with the replacement health insurance cover. However, they had no idea they were not employed anymore.

Others had no idea either. The state institutions are obviously not connected on a network that would share the data. Other institutions thus had the employees of the now nonexistent company still registered as employed. They were regularly, from month to month, issuing various official chits, dully accepted by other institutions, including HZZO. One of the four 'ghost employees' even received a certificate of employment and regular current service increment from the Croatian Pension Insurance Institute (HZMO) on October 30 — that is, less than a week ago; almost five months after the termination of the Algoritam company.

Everyone is surprised

In reality, however, no one has been paying health or pension insurance dues — neither their supposed employer, which no longer existed, nor the state, which covers unemployment insurance, because they are not registered as unemployed. To attain the status of unemployed persons they must first have their employment contracts officially terminated. Given that they do not have health insurance, they are obliged to repay all the "unduly received funds" and reimburse the cost of all health care services provided to them.

— That's tens of thousands of kuna — says Danica Roić (48) of Đakovo, who is fighting colon cancer, in a resigned tone. — I have not done anything wrong. Three weeks ago, I underwent the third heavy surgery. After years of work and paying health care dues I have to deal with this threat instead of concentrating on recovery.

Sanja Boban Sotski (39) of Zagreb, who ended her year-long maternity leave on October 13, found out about the situation by accident. After completing the leave, she made inquiries about her status.

— After the bankruptcy of the company in June, I was expecting a notice of termination of contract — she says. — However, it never did arrive, so I tried to find out what my situation was. People at HZMO were surprised and told me I was still registered there as an employee of Algoritam. They suggested I apply for the procedure to establish my employment record, which would show what status I had. [The procedure is a routine settling and update of the employment record, normally necessary for old age pension to be calculated.] The clerks at HZMO also suggested I check my status at the HZZO.

No severance allowance

— I was received there by a kind young legal counselor who did not know what to do — says Boban Sotski. — She consulted with several colleagues and explained to me that the company had been removed from the Court Register on June 6, and that I was actually neither employed nor unemployed. I did not have health insurance on any grounds. I should therefore repay all the maternity benefits I had received since June and reimburse the costs of all the physicians I had used.

— I went to the Bureau for employment, but I could not get the status of unemployed person there because I did not have the notice on the termination of employment. I am not eligible for severance allowance from the Employee Claim Insurance Agency (AORT) either, because I missed the deadline for the application. I went to the Commercial Court to ask for an explanation, but they told me that, in order to get it, I had to initiate an administrative lawsuit. But who do I sue?

She also called on the bankruptcy administrator and former company director, but neither could issue the termination notice anymore. After the door-to-administrative-door tour of institutions and the complete absence of their response — her memos to the Ministry of Demography, the Ministry of Labor and some others elicited no response or muddled answers at best — she realized that the only recourse was going public with the problem. She turned to the 24 sata daily paper first, and it ran the story on Tuesday.

She also learned she was not alone — there was a colleague from Bilje, and another who had undergone his second spine surgery last September. — I am still on sick leave — says the latter, former Algoritam employee Dario Marušić of Orešje. — I still get medical insurance chits and receive confirmation that I am still registered and insured through a company that does not exist anymore. It is incredible.

Paying for the operation and all the medical examinations, he says, is out of the question. He has no idea what will happen next. When he completes the medical rehabilitation, he says, he will need a document on the termination of employment, which no one can issue...

Shifting the blame

— What happened to those people is simply scary — says Petanjak. — I did not have the authority to terminate their employment. The bankruptcy procedure opened and closed on the same day. According to the Labor Act, their employment contracts are automatically void when the company is taken off the Commercial Court Register. However, the law does not define anyone as responsible for informing the people involved of that fact. In my opinion, the HZMO should do it. It should monitor which companies have been removed from the Register and inform the employees about it.

The HZMO, however, thinks otherwise. They point out that the Algorithm company was taken off the Register on June 6 and that, in accordance with the Bankruptcy Act, the bankruptcy administrator was obliged to submit to the HZMO the notices of termination of pension insurance for every employee of the bankrupt and liquidated company. The same law stipulates that once the bankruptcy proceedings are on, both the bankruptcy administrator and the employee can terminate the employment contract irrespective of legal protection, even if the worker is on a sick leave or maternity leave.

— Given that the bankruptcy administrator did not terminate the employment contract and the prescribed notices of cessation of pension insurance have not been produced, the insured persons can submit requests to the competent district office to establish the termination of the insured status — says the HZMO in a written response. It had nothing to say about the cases when the bankruptcy procedure opens and closes on the same day.

Even if the hapless former employees managed to get notices of dismissal now, it would not help them very much. All the deadlines for registration with the HZZ — which would provide health insurance cover — have passed. In other words, they would become officially unemployed, as of the day they get the notice, but to re-acquire basic health insurance they would have to settle all the debts to the system accrued since June 6 first.

Inačica na drugom jeziku / Alternate language version