Argentina  How to Hire & Fire: A Global Guide  Bosnia and Herzegovina

Karanovic & Partners

1

GENERAL PRINCIPLES

Please note that Bosnia and Herzegovina (“BH”) is a complex state which consists of three separate territorial units i.e.: (i) the Federation of Bosnia and Herzegovina („FBH“); (ii) the Republic of Srpska („RS“); and (iii) Brčko District Bosnia and Herzegovina („BD“). Apart from the state (BH) level jurisdiction, the three territories also constitute separate jurisdictions. Although there are many similarities between the relevant legislations, there are also some crucial differences. Please find below a review of the applicable laws provided separately for Rs and FBH, where applicable. In case the same response would be applicable to certain questions below with regard to employment matters in both RS and FBH, a unified response shall be provided applicable to employment relations in both jurisdictions.


Forums For Adjudicating Employment Disputes

FBH: An employee can approach the employer with a formal request to protect employment related rights within 30 days of learning about a breach or oversight of the employer. In such situations, the employer should render a decision within 30 days.

If the employee is not content with the decision of the employer or the employer fails to render a timely decision, the employee can seek further protection from the court in the place of residence of the employee within a further 90 days.

An employee who does not approach the employer with the formal request to protect employment related rights as described in the first paragraph of this Section, cannot seek protection from the court, except in cases of employment termination.

Labour disputes are considered urgent and the employees are freed from any court tax payment obligation, however, in practise, the procedures usually drag out to a year or even longer.

RS: An employee can approach the employer with a formal request to protect employment related rights within 30 days of learning about a breach by the employer. The employer is obliged to decide on the employee's request within 30 days from the day of submitting the request, if the employer does not decide within 30 day period, it will be considered that the employees’s request has been accepted.

An employee may submit a proposal for the peaceful settlement of a labour dispute to the competent authority (Agency for the Peaceful Settlement of a Labour Dispute of RS) or a lawsuit to the competent court for the protection of that right. The employee is entitled to file a proposal and a lawsuit irrespective of prior addressing of the employee to the employer for protection of rights. A proposal for the peaceful settlement of a labour dispute may be submitted by the employee within 30 days from the day of learning of the breach of rights, and no later than within three months from the day of the breach.

An employee may file a lawsuit for the protection of rights no later than six months from the day of learning of the breach of right or the day of the breach.


The Main Sources Of Employment Law

The main source of employment law are:

FB: FBH Labour Law published in the Official Gazette of FBH nos. 26/16 and 89/18.

RS: Labour Law published in the Official Gazette of RS nos. 1/16 and 66/18

(jointly “Labour Laws ”)


National Law And Employees Working For Foreign Companies

If the place of work is in BH (for work which should be conducted in BH), the relevant legislation in BH will apply, namely, employment, tax, social security and foreign exchange regulations. If the place of work is not in BH (for work which should be conducted abroad), the legislation in BH will not apply, except potentially tax, social security and foreign exchange legislation applicable directly to the employee if the employee is considered a resident of any of the jurisdictions in BH.


National Law And Employees Of National Companies Working In Another Jurisdiction

If the place of work is not in BH (for work which should be conducted abroad), the legislation in BH will not apply, except potentially tax, social security and foreign exchange legislation applicable directly to the employee if the employee is considered a resident of any of the jurisdictions in BH. (“ Data Protection Law”).


Data privacy

The main law governing data protection and privacy in BH is the Law on Protection of Personal Data (“Official Gazette of BH”, nos. 49/06, 76/11 and 89/11) (“Data Protection Law”).

Under the Data Protection Law there a special rules for processing personal data, regardless of their types, categories of data subjects and scope of a particular processing.

The Labour laws in BH prohibits the collection of certain types of data. When concluding an employment agreement an employer must not request from an employee information that is not directly related to their employment, such as data about pregnancy, sexual orientation, marital status, family obligations, age, disability, language, religion, political and other opinions, nationality, social origin, property status, birth, race, colour, membership or non-membership in political parties and trade unions, health status.

2

HIRING THE EMPLOYEE

Legal Requirements As To The Form Of Agreement

The employment agreement must be in writing and must contain the information and provisions defined by law.:


Mandatory Requirements
  • Trial Period

    • A probationary period, which cannot be longer than six months, may be agreed upon while concluding the employment agreement. If the probationary period is terminated before the agreed period expires, the termination notice period shall be seven days.

  • Hours Of Work

    • The employment contract may be concluded with full-time work or part-time work. Full time work durations are determined by the employer but cannot be longer than 40 hours per week. Part time work durations are also determined by the employer and can be any duration shorter than full time determined by the employer. In cases in which it is necessary for the employee to work more hours than stipulated in the employment agreement, the provisions on overtime apply.

    FBH: Overtime work is allowed in the case of force majeure, sudden increase in workload and in other similar cases. It is limited to 8 hours per week, whereas the overtime work has to be reported by the employer to the competent cantonal labour inspection, if overtime is occurring for three consecutive weeks or more than 10 weeks within one calendar year. An employee is entitled to payment of overtime work in accordance with the Bargaining Agreement, employment rules or employment contract. The FBH Labour Law does not prescribe the minimum or maximum amount of the increase, it only prescribes that a salary increase is due.

    RS: The employee is obliged to carry out overtime work in the case of force majeure, sudden increase in workload and in other similar cases, at the written request or order by the employer. It is limited to 10 hours per week and 4 hours per day. However, the duration of overtime work is limited to 180 hours per calendar year. The overtime work has to be reported by the employer to the competent labour inspection, if overtime is occurring for three consecutive weeks or an employee’s overtime exceeds 10 weeks within one calendar year. An employee is entitled to payment of overtime work in accordance with the Bargaining Agreement, employment rules or employment contract. In accordance with the Decision on salary increase based on the employment and contribution, the employees in RS are currently entitled to a 25% increase in salary for overtime work.

  • Special Rules For Part-time Work

    • Part time work durations are determined by the employer and can be any duration shorter than full time determined by the employer. An employee, who has an employment agreement for part-time work, may have several such contracts in order to achieve full-time working hours.

  • Earnings

    • FBH: The salary in FBH is determined in the employment agreement, employment rulebook as well as collective bargaining agreements (if applicable) and consists of three mandatory elements: the basic salary; the performance-based salary; and salary increases.The basic salary is the salary agreed with the employee for full working hours stipulated in the employment agreement and for standard work performance. The performance-based salary should serve as a part of the salary which should motivate the employee to achieve specific goals, key performance indicators, work results or any other performance goals in accordance with the business needs of the employer.

    There is generally no regulation on the minimum or maximum amounts of the salary or the specific mandatory salary elements, except that the salary cannot be lower than what is determined by the FBH Government after consulting with the FBH Economic-Social Council. Furthermore, the Canton 10 Labour Law prescribes that the minimal salary cannot be lower than 50% of the average salary in Canton 10 in the previous three months.

    The basic salary cannot be less than the minimal salary determined by the Government of FBH which currently amounts to BAM 410 (approx. EUR 209.63).

    RS: Pursuant to the RS Labour Law the salary consists of part of the salary for work performed and time spent at work, salary increase prescribed by the RS Labour Law, general enactments and employment contract and other income based on employment, in accordance with the law, general enactments and employment contract. The basic salary is determined based on working requirements for the specific job for which an employee entered into an employment contract determined by the general act and the time spent at work. The employer and employee are free to stipulate the amount of the basic salary, however the basic salary cannot be less than the minimal salary determined by the Government of RS which currently amounts to BAM 520 (approx. EUR 260) after taxation.

  • Holidays/Rest Periods

    • Employees are entitled to the following breaks and leaves:

      — Daily break for the duration of at least half an hour for employees working at least six hours per day.


      FBH: daily break is not considered part of the work time duration; Based on the request of the employee, the employee should be granted one hour of break per week for one working day of the week (if the daily break is less than 1 hour).


      RS: daily break is considered to form a part of work time duration

      — A break between two working days for the duration of at least 12 consecutive hours.

      — Weekly break for the duration of at least 24 consecutive hours. Exceptionally, if business dictates such a need and the employee has to work on his/her weekly day of break, the employer must ensure that the unused weekly day of break is used in the next two weeks instead of one working day (FBH) / in the next week (RS).

      Annual leave

      FBH: Annual leave for the duration of at least 20 working days but no longer than 30 working days, to be used in one or two parts. The first part of at least 12 working days must be used by 31 December of the relevant calendar year. The remaining unused days can be used no later than 30 June of the next calendar year. Exceptionally, the employee is entitled to use one day of annual leave at any time with at least three days’ notice. The employee who is establishing employment for the first time or has had a break between two employments longer than 15 days, obtains the right to annual leave after six months of employment, with one working day of leave for each month up to six months.

      RS: The employee is entitled to annual leave for the duration determined by the general enactments and employment contract, for at least 20 working days. The annual leave shall be increased based on years of service.

      Employees subject to special working conditions are entitled to annual leave of at least 30 working days, which shall be increased in accordance with the years of service and based on other grounds determined by the Labour Law.

      — Paid leave for the duration of up to seven days in one calendar year (FBH) / up to 5 working days (RS) in situations determined in the FBH Labour Law/RS Labour and the employment agreement such as marriage, death of an immediate member of a family or household, donating blood etc.

      — Religious holidays:

      FBH: For the duration of four days in one calendar year, two used as paid leave and two used as unpaid leave.

      RS: For the duration up to 3 days in one calendar year, two used as unpaid leave.

      — Sick leave for the duration of the sickness with the possibility of the employer to seek compensation from the health insurance institutions in cases of prolonged sick leave.

    The employees can also be granted additional days of paid or unpaid leave, based on the specific requests of the employee and the internal policy of the employer.

  • Minimum/Maximum Age

    • An employment agreement may not be entered into with a person under 15 years of age, nor can such person be employed for any type of work.

    The general age for retirement is 65 if the employee has reached at least 20 years of pensionable service (cumulative conditions) or if based on the records it is determined that employment of the employee lasts for 40 years (which in FBH is not compulsory in comparison to RS).

  • Illness/Disability

    • An employer cannot terminate an employment agreement to an employee who has suffered an injury at work or has developed an occupational disease, during his/her medical treatment or rehabilitation, unless he/she committed a severe offence or breach of work obligation.

  • Location Of Work/Mobility

    • Employment agreements can be established in which the place of work is not the premises of the employer, but another place of work including work from the home of the employee or another suitable place of work determined or provided by the employee. Such an agreement can be established for all appropriate work activities except work which is dangerous or damaging to the health of the employee or the environment.

  • Pension Plans

    • Contribution by the employers and employees to a pension plan is mandatory.

  • Parental Rights (Pregnancy/ Maternity/ Paternity/ Adoption)

    • During pregnancy or weaning of a child, a woman may be assigned to other jobs if this is in the interest of her health condition as established by the certified medical doctor. In case the employer is unable to secure an assignment, the employee is entitled to paid absence of work. During pregnancy, confinement and care of the baby, the woman is entitled to maternity leave for the duration of one year without interruption, for twins, third or any next child, the woman is entitled to maternity leave for the duration of 18 months without interruption. Additionally, after the expiration of the maternity leave, a woman with a baby of up to one year of age is entitled to work half work hours, and for twins, third or each following child she shall be entitled to work half work hours up to the completion of two years of age of her baby. After the baby reaches one year age one of the parents shall be entitled to work half work hours up until three years of age of the baby, if the baby, according to the finding of the certified health institution, requires intensified care.

  • Compulsory Terms

    • As a general principle under the RS Labour Law and FBH Labour Law of Federation, if a certain employees’ right or entitlement is defined differently in the employment agreement, the Act, internal employment rulebook or any other document such as a collective bargaining agreement, the provision most beneficial to employees will apply.

  • Non-Compulsory Terms

    • Notwithstanding the mandatory rules that do not allow for the parties to establish otherwise, as a general rule, parties are free to set forth any provisions, as long as they are not contrary to the mandatory ones.


Types Of Agreement

Employment may be established for an indefinite term or a fixed term.

FBH: Maximum duration of fixed term employment is up to 3 years. In case of an explicit or tacit renewal of the fixed term employment contract with the same employer, or in the case where an employee explicitly or tacitly concludes consecutive fixed term employment contracts with the same employer for a period longer than 36 months without an interruption, such a contract will be considered as an indefinite term contract.

RS: Fixed term employment contract is line with the law in following cases:

    —The employment duration is determined in advance by objective reasons in accordance with certain the deadline, or
    —In case of performance of particular work or in an occurrence of a predetermined event, the employer and the employee may conclude a fixed-term employment contract.

The employer and the employee may conclude one or more employment contracts within a period which (consecutively or not) may not exceed a 2 year period. An interruption shorter than 30 days shall not be deemed as an interruption of the period referred above. However a fixed-term employment contract may be concluded for a period longer than 24 months: i) if it is necessary due to the replacement of a temporarily absent employee, until he/she returns, ii) for work on a project whose duration is determined in advance, until the end of the project, and up to 60 months and iii) with an unemployed person who lacks up to five years to the fulfilment of one of the pension requirements, up to the fulfilment of the requirements stipulated by the relevant pension regulations.


Secrecy/Confidentiality

A specific Secrecy/Confidentiality clause may be agreed upon between the employee and employer within the employment agreement, however there are no mandatory provisions in terms of confidentiality stipulated by the Labour Law, except for the data protection provisions with regard to data protection rights and obligations stipulated by the applicable labour law and Data Protection Law (please refer to the response provided above under Data Privacy Section ).


Ownership of Inventions/Other Intellectual Property (IP) Rights

FBH: An employee shall inform the employer about the invention, industrial design, or technical innovation he/she has made at work or in relation to work. Furthermore, an employee shall inform the employer about his/her invention or industrial design not created at work or in relation to work, if such an invention is associated with the activity of the employer and offer them the assignment of rights related to the invention in writing. Furthermore, inventions and/or industrial design made at work or in relation to work shall belong to the employer, and the employee shall be entitled to remuneration defined in the collective agreement, employment agreement, or a separate contract. If an employer has applied the technological improvement and/or technical solution arrived at through the streamlining, i.e., innovative solutions proposed by an employee, the employer shall pay to the employee the remuneration defined in the collective agreement, labour contract, or a separate contract.

RS:An employee shall inform the employer about the invention, or technical innovation he/she has made in relation to the activities performed by the employer and to offer the employer a right of pre-emption, unless otherwise stipulated by the employment contract.

In case the employer does not respond to the offer to purchase the invention within 60 days or declares that he/she has no interest in the invention, the employee is free to dispose of the invention, provided that he/she is obliged not to share any information on the invention within that period and during negotiations with the employer.


Pre-Employment Considerations

Employers should refrain from asking prohibited questions and collecting excessive personal data. The processing activities shall be conducted in accordance with the principles of data protection (confidentiality, lawfulness, etc.).


Hiring Non-Nationals

Non-Nationals can be employed in the BH in accordance with the Labour Law and FBH/RS Law on the Employment of Foreign Citizens.

Non-Nationals needs to have:

    —A work permit;
    —Temporary residence;

Hiring Specified Categories Of Individuals

In the case of hiring minors, additional conditions for establishing employment must be met, such as the consent of parents/guardians until the minor is 18 years of age and obtained a medical certificate from a competent doctor or health institution confirming the minor’s general health ability to work.

FBH: Each Employer must employ one person with a disability proportionally to every 16 employees without disabilities or alternatively pay the Fund for Professional Rehabilitation and Employment of Persons with Disabilities a monthly amount of 25% of average salary in FBiH for each person with disabilities that it should have employed.

RS: Employers who are not subject to the obligation to employ disabled persons (only RS public service authorities i.e. administration authorities, municipal authorities, judicial authorities are subject to such an obligation) may employ persons with disabilities, thus ensuring certain tax reliefs based on such employment in accordance with the applicable Law on Rehabilitation, Training and Employment of Persons with Disabilities. Otherwise, the companies are obliged to pay a special contribution in the amount of 0.1% of the paid monthly gross salaries of all employees to the public revenue account of RS on a monthly basis.


Outsourcing And/Or Sub-Contracting/Temporary Agency Work

Outsourcing is not regulated in BH, however pursuant to the recent decision rendered by Constitutional Court of BH it is not prohibited even though it lacks explicit regulation.

3

MAINTAINING THE EMPLOYEE RELATIONSHIP

Changes To The Contract

FBH: FBH Labor Law did not prescribe the possibility to agree on an annex (changes) to the employment agreement. The employer may terminate the employee's employment agreement while offering an amended employment agreement to the employee.

RS: The employer may offer the employee a change to the content of the employment contract (the annex to the employment contract) in the case of transfer to another job with the same employer, for the purpose of assignment to a suitable job with another employer, in accordance with the redundancy program, if there have been changes in salaries, cash benefits and other incomes of workers on the basis of work or in other cases determined by the employment rules and the employment contract. The employer is obliged to submit the offer for conclusion of the annex to the contract, in written, stating the reasons for the offered change, the deadline within which the employee must respond to the offer and the legal consequences that may arise from rejecting the offer. The employee is obliged to respond to the offer for conclusion of the annex to the contract within the deadline determined by the employer, within a minimum deadline of 8 working days. If the employee does not respond to the offer within a minimum deadline stipulated in the offer, it shall be considered that the employee has rejected the offer for concluding the annex to the employment contract.


Change In Ownership Of The Business

In the case of a change in the status of an employer (merger, acquisition, division, transformation of the company’s legal form, etc.) or in the case of change in the ownership of the employer’s equity, all employment agreements valid on the date of the change of the employer, with written consent of employees, shall be transferred to the new employer (employer – legal successor).


Social Security Contributions

Regarding social security contributions (including pension insurance, unemployment insurance, health insurance) in FBH, the employer and employee share the contributions for the social insurance.

In RS in addition employer has to pay contributions for child protection. In RS, mandatory social security contributions are calculated on gross salary and have to be withheld by the employer, as an income payer. There are no employer’s social security contributions in RS.


Accidents At Work

An employer cannot terminate the employment agreement with an employee who has suffered an injury at work or has developed an occupational disease, during his medical treatment or rehabilitation, unless he/she committed a severe offence or breach of work obligation.


Discipline And Grievance

The employer can issue internal work rules, which shall define the rights and obligations of the employees and of the employer under the employment relationship and shall regulate the work organisation at the enterprise according to the specific nature of the activities thereof. A culpable failure to fulfil any employment duties shall constitute a breach of work discipline.


Harassment/Discrimination/Equal pay

Discrimination of employees and job seekers is prohibited based on gender, sexual orientation, marital status, family obligations, age, disability, pregnancy, language, religion, political and other opinions, nationality, social background, financial standing, birth, race, skin colour, membership or non-membership in political parties and trade unions, health status, or any other personal characteristic.

Employers and other persons employed with an employer cannot harass employees at work or in relation to work (mobbing), including job seekers.


Compulsory Training Obligations

An employer may, in accordance with the needs of business, facilitate education, vocational training, and professional development of employees. Additionally, an employer shall ensure education, vocational training, and professional development is provided to an employee when introducing changes or new methods or organization of work.


Offsetting Earnings

An employee’s salary or compensation of salary may be withheld by force of law, in line with the regulations governing enforcement procedure, according to which enforcement on salary, remuneration, remuneration for part-time work and remuneration due reduction of salary and pension, is restricted up to the amount of ½ of the total amount of salary or remuneration.


Payments For Maternity And Disability Leave

FBH: During maternity leave, the employee is entitled to the remuneration, which cannot be lower than the amount of minimum wage in FBH. In FBH the wage remuneration in case of illness, amounts to at least 80% of the net salary of the employee, provided that the wage remuneration cannot be lower than the amount of the minimum wage.

RS: During maternity leave, a woman is entitled to a salary remuneration equivalent to 100% of the average salary she earned during the last 12 months before the start of maternity leave.

The salary remuneration shall be paid by the employer, however the employer is entitled to reimburse the remuneration paid during the maternity leave, from the RS Public Fund for Child Protection. In RS the wage remuneration in case of illness, amounts to 70% - 90% of the salary of the employee (after taxation).


Compulsory Insurance

The employment must be reported to the competent Tax Authority (for registering the employee in the social security insurance system) no later than one day prior to the commencement of work and pursuant to the employment legislation the Tax Authority is authorized to fine the employer with severe monetary sanctions in case of any delays, in amounts ranging from BAM 5,00.00 to BAM 2,000.00 (FBH) / BAM 5,000.00 to BAM 20,000.00 for the legal entities. Monetary fines ranging from BAM 500.00 to BAM 2000.00 may be imposed to the authorized person of the company. Pursuant to the taxation legislation the Tax Authority is authorized to fine the employer for amounts ranging from BAM 5,000.00 to BAM 100,000.00 in FBH and from BAM 10.000,00 to BAM 30.000,00 in RS.


Absence For Military Or Public Service Duties

FBH: Rights and obligations arising from employment relations shall be suspended at the request of an employee elected for public service, however for the maximum of four years from the day of the election.

RS: Rights and obligations arising from employment relations shall be suspended at the request of an employee elected for public service, however for the maximum period of 2 mandates of performing the public service. If the employer due to economic reasons, organizational and technological change of work and business may not provide the employee with his/her previous job or other appropriate job, the employer shall terminate the employment contract, with the employee's right to severance pay, in accordance with the RS Labour Law.


Works Councils or Trade Unions

FBH: The Labour Act differentiates work councils from trade unions. Establishment of work councils is possible with employers with 30 and more employees, and the representative union with the employer is considered to be the union with the least membership of 20% of employees out of the total number employed. Trade unions should be also registered by the Ministry of Labour, upon their establishment. A trade union shall be considered to be representative, if it is: (i) registered with the competent authority; (ii) financed predominantly out of membership fees and other own sources; (iii) with a qualified percentage of members from among the employees.

RS: Labour Act differentiates work councils from trade unions. Establishment of work councils is possible with employers with 15 and more employees, and trade unions are not limited in number. Establishment of the work councils and trade unions depends on how fast employees can get organized. Trade unions should be also registered by the Ministry of Labour, upon their establishment.


Employees’ Right To Strike

FBH: A trade union is entitled to call a strike and carry it out for the purpose of protecting and exercising economic and social rights and interests of its members (20% of the total number of employees working for an employer – representation of trade unions with employers; 30% of total number of employees in the respective branch in the territory of FBH and/or canton – representation of trade unions for area of economic activity; 30% of total employees in FBH – representation of trade union in the territory of FBH).

RS: Employees are free to decide on their participation in the strike and the employer may not prevent the employees from organizing or participation in a strike, nor can he/she use any threats to end the strike. The right to strike of employees in branches or activities of a general interest may be granted subject to specific requirements stipulated by the Law on Strike. The decision to go on strike or a warning strike with the employer shall be made by the competent body of the representative majority union or more than half of the employees at the employer.


Employees On Strike

An employee may not be put at a disadvantage compared to other employees for organizing or participating in a strike. Additionally, an employee may in no manner be forced to participate in a strike.


Employers’ Responsibility For Actions Of Their Employees

An employee who has deliberately or due to ultimate negligence caused damage to a third party at work or in relation to work, and the employer has compensated the damage, shall compensate the employer for the amount of compensation paid to the third party.

4

FIRING THE EMPLOYEE

Procedures For Terminating the Agreement

Please note the specific and very formal rules on unilateral termination of employment by the employer as there is only a limited number of reasons for such a decision i.e. Regardless of the specific reason for employment termination, the employer must render a decision in writing containing a detailed explanation of the reason and the termination procedure as well as information on the employee`s post-termination rights and obligations such as notice period duration, severance payment (if any), non-compete obligations (if any), privileged information, return of employer`s property, intellectual property issues and similar issues.


Instant Dismissal

An employment contract cannot be terminated without previous written warning issued to the employee. The FBH Labour Law recognizes two types of breaches i.e. light breaches of duties and severe breaches of duties, whereas the breaches are not listed themselves. The employer should make a list of both types of breaches in the Employment Rulebook. In addition, such breaches can be listed in collective bargaining agreements whereas an individual employment agreement would not be appropriate to avoid any different treatment of employees. In case of light breaches of duties, the employee should first be given a written notice turning attention to the breach with a formal notification that in case the light breach is repeated in the next six months, the employer intends to terminate the employment.

In case of severe breaches of duties, the employment can be terminated immediately, without notice period and without severance payment, with the exception of the following procedural requirements:

    1. the breach has occurred within the last year;
    2. the employer learned about the breach in the last 60 days (general rule for FBH);
    3. the employee was given a chance to state his/her defence prior to the decision to terminate employment.

Employment contracts cannot be terminated without previous written warning issued to the employee. The RS Labour Law differentiates the following types of breaches i.e. light breaches of duties, severe breaches of duties and severe breaches of work discipline. Both severe breaches of duties and severe breaches of working discipline are listed by the RS Labour Law. In case of severe breaches of duties and severe breaches of working discipline, the employment can be terminated immediately, without notice period and without severance payment, with the exception of the following procedural requirements:

    1. the employer may terminate the agreement based on the above stated procedure within 3 months of the day he/she learned of the breach and 6 months from the day the breach has occurred, at the latest;
    2. the employee was given a chance to state his/her defence prior to the decision to terminate employment.

Employee's Resignation

FBH: The Employee may terminate his/her employment at any time, by a written statement with a minimum seven days’ notice (FBH) unless collective bargaining agreements, Labour Enactments or the Employment Contract prescribe longer notice periods. In any case, the notice period for termination of employment by the Employee may not be longer than one month. The Employee is not obliged to justify the reasons for such termination. If the reason for such termination is breach of duties by the Employer, there is no obligation of providing a notice period. Based on the Employee’s notice on termination, the Employer issues a Resolution on Employment Termination.

RS: The Employee may terminate his/her employment at any time, by a written statement with a minimum 15 days’ notice period. The Employee is not obliged to justify the reasons for such termination. If the reason for such termination is breach of duties by the Employer, the employee shall give notice to the employer on the employment termination at least one day prior to the employment termination day. Based on the Employee’s notice on termination, the Employer issues a Resolution on Employment Termination.

The employee may terminate the employment contract based on the above stated procedure of termination in case of breach of duties by the Employer, no later than 15 days from the day of learning that the employer has violated the obligations stipulated by the law or employment contract.


Termination On Notice

According to the Labour Laws, the notice period is only mandatory in the case when the employee is being dismissed due to underperformance, if an employee refused to sign the annex and when termination of employment is due to technological, economical or organizational reasons, when the notice period is at least 30 days. In all other cases of employment termination by the Employer, the employment terminates on the date when the Resolution on Employment Termination is delivered to the Employee (unless internal employment regulations of the specific Employer provide for a notice period). In case of a court dispute, the Employer is obliged to provide proof for existence of justifiable reasons for termination.


Termination By Reason Of The Employee's Age

In case of retirement, the Employer may unilaterally issue a Resolution on employment termination (without the Employee’s consent or request) only if the employee has reached 65 years of age and at least 20 years of pensionable service (cumulative conditions) or if based on the records it is determined that employment of the employee lasts for 40 years. In other cases, when the employee has fulfilled conditions for early retirement which are prescribed by special retirement regulations (although he or she has not reached 65 years of age and 20 years of pensionable service) the employee’s request is mandatory. In such cases, when the employee submits a request, the Employer issues a Resolution or enters into Mutual Agreement with the employee which confirms employment termination due to retirement.


Automatic Termination In Cases Of Force Majeure

Employment agreement may be terminated upon objective impossibility for the execution of the employment contract.


Collective Dismissals

FBH: In cases in which an employer employing more than 30 employees is to terminate employment of at least five employees in the next three months due to technical, economical or organizational reasons, a collective redundancy procedure requirement is triggered which includes primarily the obligation to consult with the workers` council or union. Consultation must start at least 30 days before the terminations are intended.

The employer must in such cases draft a collective redundancy program with the content legally required.

The collective redundancy procedure usually takes up to 5 - 6 months.

Please note that based on the aforementioned assumptions in relation to the Transaction, the Company does not meet the prescribed requirement (neither in RS, nor in FBH) in relation to the number of employees, which would trigger the obligation of the employer to draft a redundancy program as described above.

RS: The employer is obliged to adopt a Redundancy Program for resolving redundancies (hereinafter: the program), in case he/she determines that due to technological, economic or organizational reasons, within a period of 90 days, the need for employment of employees who are employed for an indefinite term will cease, for at least:

    1. 10 employees with an employer employing more than 30 employees and less than 100 employees for an indefinite period of time;
    2. 10% of employees with an employer employing more than 100 employees for an indefinite period of time;
    3. 30 employees with an employer employing over 300 employees for an indefinite period of time.

Please note that the redundancy program shall be adopted by the employer who plans to terminate the employment relationship with 30 workers within a period of 90 days, for the reasons stated above, regardless of the total number of employees with the employer. The redundancy program must comply with the legal requirements.

The Redundancy Program must first be aligned (consulted) with the Council of Employees (if formed) and Union (if formed). If no such organizations are formed, it is advisable to consult directly with the employees.

The employer is obliged to submit the draft redundancy program to the Union or the Council of Employees no later than eight days from the day from the day of determining the draft redundancy program proposal, with the request to the Union or Council of Employees to provide their opinion on the program.


Termination By Parties’ Agreement

The Employee and Employer can enter into a Mutual Agreement on Employment Termination. The content of this Agreement is subject to free arrangement between the parties. In any case this agreement should regulate all mutual rights and obligations in relation to employment termination (termination notice, severance payment, non-competition clause, repossession of items, etc.). We highlight that, from the Labour Law perspective, severance payment is not mandatory in this case but it can be stipulated by the parties. Also, if a non-compete clause is agreed, the maximum period is up to two years (FBH) / one year (RS) after the termination of employment and the Employer is obliged to pay to Employee at least 50% of his/her average salary in three months prior to employment termination, for each month of duration of the non-compete clause.


Directors Or Other Senior Officers

The engagement of a Director/Management Board can be executed through establishing employment for an indefinite or fixed term or without establishing employment, in which case a separate Contract on mutual rights and obligations in accordance with the employment rules of the employer is mandatory.

FBH: It is important to note that sections of the Labour Law that regulate working hours, breaks and leaves, protection of employees, salaries and termination of employment are not applicable to Directors/CEOs and it is recommendable for these matters to be regulated in the Contract.

RS: Please note that the director is entitled to remuneration for work which is considered as a salary and other rights, obligations and responsibilities in accordance with the contract. Such provision of RS Labour Law imposes an obligation to a company to agree on at least a minimum salary in the employment/management contract with the director.


Special Rules For Categories Of Employee

Employers cannot terminate employment during pregnancy, temporary inability to work due to sickness or injury sick leave for work related reasons, maternity leave and the childcare period as prescribed by the Labour Laws.


Whistleblower Laws

There are no specific regulations regarding Whistleblower Systems, however there are two laws regarding the protection of persons who report corruption:

    — On state level Law on protection of persons who report corruption in BiH institutions (''Official Gazette of Bosnia and Herzegovina'' No. 100/13);
    — On entity level in the Republic of Srpska ("RS") - Law on protection of persons who report corruption (''Official Gazette of Republika Srpska No. 62/17).

Specific Rules For Companies in Financial Difficulties

In case of financial difficulties i.e. if a bankruptcy proceeding is opened over a company, all employment contracts are terminated in accordance with the applicable Bankruptcy Act. Upon the opening of the bankruptcy proceedings over a company, the employees are entitled to request compensation of damages due to early termination of the employment contract, severance pay or other rights acquired until the day of opening the bankruptcy proceeding, and are considered as creditors in the bankruptcy proceeding against the company.


Special Rules For Garden Leave

There is no specific provision regarding garden leave.


Restricting Future Activities

An employer and an employee may agree a contract stipulating that the employee, for a specific period of time following the ending of an employment agreement, however no longer than two years (FBH) / one year (RS), may not be employed with a competitor of the employer, and that he/she may not, either for his/her own account or for the account of a third party, enter into


Severance Payments

FBH: The statutory severance payment is awarded to the employee whose indefinite term employment contract is being unilaterally terminated by the employer for reasons which are not breaches of duties, after at least 2 years of employment. The minimal amount is 1/3 of the average salary of the employee (calculated based on the last three months prior to employment termination) for each year of work for the employer. The maximum amount should be six average salaries of the employee; however, the employer and employee can agree on a higher compensation which is not considered statutory severance payment.

RS: The statutory severance payment is awarded to the employee whose indefinite term employment contract is being unilaterally terminated by the employer for reasons which are not breaches of duties, after at least 2 years of employment. The minimal amount is 1/3 of the average salary of the employee (calculated based on the last three months prior to employment termination) for each year of work for the employer. The maximum amount should be six average salaries of the employee (calculated based on the last three months prior to employment termination). However, the employer and employee can agree on a higher compensation which is not considered statutory severance payment.


Special Tax Provisions And Severance Payments

FBH: Severance will not be taxed only when the employer is the one terminating the employment contract with the employee. When the employment agreement is terminated by the employee, as well as in the case of a mutual termination of the agreement, the severance payment is taxable. In these cases, the employer is obliged to calculate, not only the income tax, but also all contributions.

RS: Severance will not be taxed if:

    — severance paid upon retirement up to the amount of the last three salaries paid to the person retiring,
    — paid upon termination of employment paid up to the minimum amount prescribed by the labour law.

Allowances Payable To Employees After Termination

Employers are not required to contribute to any allowances payable to employees after termination, as employers already contribute during the employment agreement through payment of unemployment insurance.


Time Limits For Claims Following Termination

FBH: Regardless of the reason for employment termination, the employee can challenge the decision of the employer within 30 days from such a decision in a non-formal procedure directly between the employer and employee. The employer would in such cases render a decision within the next 30 days. The employee, if not satisfied with the new decision of the employer, can approach the court within the next 90 days. In case a court finds that the employment termination was wrongful either due to lack of proof on the reasons for termination or due to procedural mistakes made by the employer, the employee can request reinstatement and payment of all salary compensations and social security contributions and other remunerations which would usually be awarded to the employee for the whole period since termination to reinstatement. It should be noted though that except in cases in which the employee is seeking monetary claims (unpaid salaries or salary compensations and other work-related remunerations), he/she might lose the right to access the court if he/she has not approached the employer in the non-formal procedure before the employer in a timely manner.

RS: The employee can challenge the decision of the employer within 30 days from such a decision in a non-formal procedure directly between the employer and employee. The employer would in such cases render a decision within the next 30 days. The employee may also approach the court within 6 months from the day on which the employee found out about the breach of his/her rights by the employer, to request the protection of his/her employment rights. The employee is entitled to request a protection of its employment rights i.e. to challenge the lawfulness of termination of the employment contract before the competent court, requesting the court to decide that the employee shall be reinstated, compensated for damage, and that his/her contributions for compulsory social insurance shall be paid for the period in which the employee has not been working.

5

GENERAL

Specific Matters Which Are Important Or Unique To This Jurisdiction

N/A



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Contact a Contributing Author:
Nevena Tomić Lučić
Karanovic & Partners
Bosnia and Herzegovina


Disclaimer:

© 2021, Karanovic & Partners. All rights reserved by Karanovic & Partners as author and the owner of the copyright in this chapter. Karanovic & Partners has granted to Multilaw non-exclusive worldwide license to use and include this chapter in this guide and to sublicense Lexis Nexis, a division of RELX Inc. and its affiliates certain rights to use and distribute this Guide.

The information in the How to Hire and Fire Guide provides a general overview at the time of publication and is not intended to be a comprehensive review of all legal developments nor should it be taken as opinion or legal advice on the matters covered. It is for general information purposes only and readers should take legal advice from a Multilaw member firm.

Publication Date: June 2021