(Non)working Sundays in retail

New Trade Act

Krešimir Lipovšćak, Partner

(Non)working Sundays in retail

July is usually the month when we celebrate the anniversary of joining the European Union (this year we celebrate the tenth anniversary) and the beginning of the high-season in tourism (although we have fewer crowds this year than last - allegedly due to soaring prices and a "negative campaign" in foreign media).

This year, July is also the month of yet another try to ban/restrict Sunday working hours for retailers (depending on which perspective you look at this phenomenon and whether you are a pessimist or an optimist).

Previous bans and restrictions of Sunday working regime were abolished by the Constitutional Court of the Republic of Croatia.

In this article, we will explain how this new regime is different from previous tried and failed concepts, and whether there is hope or danger (depending on the viewing perspective) that the said restrictions/prohibitions will be, once again, abolished by the Constitutional Court.

Retail stores opening hours.

The working hours of retail stores are determined by the merchant from Monday to Saturday for a total duration of up to 90 hours per week. These ninety working hours are distributed freely by the merchant within the framework of the working week. Therefore, these statutory provisions are regulating the working time schedule of the employees, but the working hours of the retail store. The employee working hours are determined by the Labor Law, taking into consideration that the employees must arrive early to prepare the store for opening, and have to stay after the store's opening hours for cleaning, paperwork, and etc. Of course, the employees work in shifts, and one employee does not work continuously throughout the store opening hours, unless the store has shorter opening hours.

Work on Sundays and public holidays

Work on Sundays and public holidays is generally prohibited.

However, the Government of the Republic of Croatia may, by decision, determine retailers that are obliged to work on public holidays in Croatia. It should be clarified that, for example, pharmacies are not regulated by the commerce law, but fall under another law and are subject to separate rules for determining their working hours.

Rad nedjeljom

Exemption #1

The first exemption to the restriction/prohibition on Sunday working hours concerns the number of working Sundays when work is allowed. The merchant can independently (if desired) designate 16 Sundays of the year as working days, with the fact that 15 hours are added to the working hours of the retail store, which the merchant allocates from Monday to Sunday. Given that this rule came into force in July 2023, there are a few more working Sundays left in 2023.

Exemption #2

The second exemption concerns certain types of retail stores which, according to the "logic of things", should be open on Sundays. These are stores at:

railway and bus stations, airports, harbors, ships, airplanes, and ferries
gas stations
hospitals
hotels, areas of cultural and religious institutions, museums, visitor centers or interpretation centers, nautical marinas, camps, family farms
protected areas of nature

Furthermore, the purchase of primary agricultural products, the sale of one's own agricultural products at stands and benches at retail markets and the sale of one's own agricultural products at stands and benches at wholesale markets, occasional sales at fairs and public events, sales via vending machines are exempted from the ban/restrictions, as well as non-physical sales (this is, as a rule, internet sales, telephone sales, etc.).

rad nedjeljom

Rad nedjeljom

Exemption #3

The third and last exemption refers to the distribution of press through kiosks as a special form of sales outside of retail stores (so not within a shopping mall). The kiosk can be open on Sundays and public holidays from 7:00 a.m. to 1:00 p.m. It is interesting that, unlike other retailers, kiosks have set working hours.

Merchant obligations

The merchant must keep records of working hours for each working Sunday during the current year in the form of a written document or an electronic record.

The merchant must allow the tax inspector to inspect the records during the inspection.

To implement the inspection procedure, the Tax Administration is obliged to submit data from the fiscalization system on the merchant's working week to the tax inspector, upon his request.

Penalties

Of course, the new rules come with far greater penalties than before. The fine paid for the merchant is not a tax-deductible expense, and the fine paid on behalf of the responsible person or director represents income in kind, so it increases the fine at least twofold. Therefore, even with the usual discount of 30% for prepayment, these fines are still expensive.

Constitutionality and conclusion

The government pointed out that this change in the trade law, i.e. work ban/restriction of work, is the result of insight into practices of other EU member states, as well as the result of the desire for a better position of families, while some exemptions are justified by supporting the needs of tourism, i.e. the protection of small agricultural producers.

In its earlier judgments, the Constitutional Court confirmed that there is a right of the legislator or other authorized legislator to regulate the weekly and daily hours of retail stores in a different way, but with respect for the corresponding fundamental constitutional values or protected constitutional goods.

However, the Constitutional Court pointed out the discrimination between retailers who are allowed and those who are not allowed to work on Sundays. Therefore, the Constitutional Court previously asked the question: did the legislator manage to achieve a constitutionally acceptable balance between the rights of retailers who are allowed to work on Sundays and the rights of those who are prohibited from working on Sundays.

The fact is that the number of exceptions this time has been narrowed compared to previous legislative decisions and that the law is better explained, although not for all exceptions, and a certain number of Sundays and flexibility in determining working hours that earlier proposals did not have were additionally given. Some exemptions to the rule are logical, provided that they are controlled and do not lead to abuse, for example, such as selling exclusively own products at markets.

It is a fact that various EU countries have different approaches to the regulation of work on Sundays and public holidays. Thus, for example, Germany and Austria practice a complete prohibition of work on Sundays and public holidays. However, Mediterranean countries oriented towards tourism, thus more like Croatia, have a very flexible approach to this issue. Therefore, we assume that the legislator therefore gave sixteen working weeks corresponding to a period of four months, which coincides with the duration of the tourist season in Croatia.

The first financial data related to non-working Sundays have arrived. According to available data, the trade sector has a general turnover decline, but this does not have to be confirmed in statistical losses, because prices have increased, so revenues may be higher compared to last summer.
The data show a drop in turnover of almost 22%, as far as retail stores are concerned, with revenue lower by 30 million euros. Also, 13% less fiscalized invoices were issued.

Source: HRT

In any case, we will see if this solution will survive next July, when the assessment of the effects of this restriction or ban is scheduled.

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