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Forums For Adjudicating Employment Disputes

Employment disputes are adjudicated before basic civil courts.

In accordance with the Labour Law, an employee who considers that his/her employment right has been violated, before initiating proceedings before a competent court, is obliged to file a motion for amicable settlement of the dispute before the Agency for Peaceful Settlement of Labour Disputes or before the Centre for Alternative Dispute Resolution. In this case, the employer is obliged to accept the procedure for the amicable settlement of the labour dispute. If the labour dispute is not resolved before the aforementioned authorities, the employee may bring the dispute before the competent court.

On the other hand, an employee whose employment has been terminated, has a right, but is not obliged to initiate proceedings before the said authorities for amicable settlement.

The Main Sources Of Employment Law

Under Montenegrin law there is a hierarchy of labour regulations which starts with the Constitution, ratified international treaties, the Labour Law, the General Collective Bargaining Agreement - for the territory of the Republic of Montenegro as a whole, Special Collective Bargaining Agreement for the respective business branch and Collective Bargaining Agreement applicable for the specific employer.

There are other laws regulating specific employment-related matters: Law on Protection of Montenegrin Citizens at Work Abroad, Law on Occupational Safety and Health, Law on Prohibition of Harassment at Work, Law on Volunteer Work.

National Law And Employees Working For Foreign Companies

The Labour Law applies to all employees – nationals and non-nationals – who work in the territory of the Republic of Montenegro for domestic or foreign legal entities or individuals as well as to employees in governmental structures and public services and employees seconded abroad, if the law does not prescribe otherwise.

National Law And Employees Of National Companies Working In Another Jurisdiction

Law on Protection of Montenegrin Citizens at Work Abroad applies to seconded employees during their work in another jurisdiction. Bilateral tax and social security treaties are also relevant, if such treaties exist between Montenegro and the state to which the employee was seconded.

According to this special law, a national company which seconds employees for temporary work in another jurisdiction is obliged to inform the state administration body in charge of labour affairs – the competent Ministry, no later than 15 days before the secondment, that the conditions for their secondment to temporary work abroad have been met.

Data privacy

Montenegrin Law on Personal Data Protection has been harmonized with EU Directive 95/46, but the law still has not been aligned with the GDPR and its requirements. General data protection regime applies, including obligation of data controllers to always process personal data based on adequate legal ground, for determined and necessary purpose and to provide exercise of the granted rights to data subjects (including right to access collected data, to request modification or deletion of data, etc.). All data controllers in Montenegro are required to perform two basic registrations before the local regulator (Agency for Personal Data Protection and Information of Public Importance): (i) to register themselves as data controllers (one-time obligation), and (ii) to register each personal database they intend to establish before they start processing activities (the same also applies to any subsequent changes).

Legal Requirements As To The Form Of Agreement

Before employees commence with work, an employment contract must be concluded in writing. Law also refers to the mandatory content of the employment contract, whereas the following elements are prescribed as mandatory: employer’s name and seat, employee’s name, address and ID number, work post and job description and required qualification for such position, place of work, type of employment (definite or indefinite term), if definite term – duration of employment and basis for such type of employment, date of commencement of work, working hours, the length of paid leave and annual leave to which the employee is entitled or, if this cannot be stated, the manner of determining paid leave and annual leave, the length of the notice period in the event of termination of the employment agreement, the terms of the collective agreements applicable to the employer, the amount of the coefficient, the amount of the basic salary, the basis for increasing the salary, the time of payment of the salary and other income of the employee, and rights, obligations and responsibilities of the employee and the employer related to protection and health at work.

Mandatory Requirements
  • Trial Period
  • A trial period can be agreed by the employment contract, and it can last for up to maximum of six months.

    In case the employee failed to show satisfactory work performance at the end of the trial period, the employment is terminated at the end of trial period. During the trial period, either employee or employer can terminate employment in line with a collective bargaining agreement and employment contract, with minimum notice period of five days.

  • Hours Of Work
  • The Labour Law prescribes that 40 hours per week as the full-time working hours. A collective agreement can further stipulate that the full-time weekly working hours can be set at a lower number of working hours.

    Reduced working hours shall be introduced for positions where, even with the application of safety and health measures at work, it is still not possible to protect employees from harmful work-related influences. Working hours are reduced to 36 hours per week, while the employee is entitled to the same rights as the full-time employee.

    Overtime may only last as long as it is necessary to remedy the reasons for which overtime work was introduced, with an average working time not exceeding 48 hours per week and within a period of 4 months. In this case, the maximum duration of weekly working time may not exceed 50 hours.

  • Special Rules For Part-time Work
  • A part-time employment contract cannot be concluded for a period shorter than 10 hours per week. This limitation is not applicable for an employment contract with a director.

    An employee can conclude several part-time employment contracts with several employers within a 40-hour working week and thus achieve full-time work.

  • Earnings
  • The employee is entitled to an appropriate salary determined based on the Labour Law, applicable collective bargaining agreement and the employment contract. According to the Labour Law and General collective bargaining agreement, it is not possible to determine a fixed amount of the salary, as the Labour Law provides for rather complex mandatory structure of the salary and numerous mandatory payments which are regulated in details in the General collective bargaining agreement:

    1. Salary for the work performed and time spent at work, which is comprised out of following elements:
    2. — basic salary – determined as multiplication of the prescribed calculated value of the coefficient (EUR 90 for the year 2021) and coefficient for the respective group of jobs (according to the General collective bargaining agreement, basic coefficients are 1.03 up to 4.12, depending on qualification level of the employee),
      — special part of the salary – containing food allowance and 1/12 of allowance for annual vacation,
      — performance part of the salary – determined on the basis of quality and quantity of the work performed, employee’s commitment to work and relation of the employee towards work,
      — increased salary: (i) for work on non-working days of public and religious holidays (at least 150% of the basic salary); (ii) for night work (at least 40% of the basic salary); (iii) for overtime work (at least 40% of the basic salary); (iv) based on a time spent at work (for each started year of service from 0.5% to 1.00% per year of service).
    3. Compensation of expenses – for the time spent on a business trip in the country and abroad, for gas if using his/her own car for business purposes.
    4. Other renumerations – severance payment when retiring, jubilee rewards if provided by the collective bargaining agreement, solidarity aid in case of employee’s death or death of his/her close family member.
    5. Salary compensation – for annual leave, holidays, sick leave, paid leave and similar grounds.

  • Holidays/Rest Periods
  • The following Montenegrin holidays are statutory non-working days: New Year’s Days (1 and 2 January), International Workers’ Day (1 and 2 May), Independence Day (21 and 22 May) and Statehood Day (13 and 14 July). Employees also have the right to celebrate different religious holidays and are entitled to paid leave on those dates, depending on their religion.

    The minimum duration of annual vacation is 20 days per calendar year. Employees working reduced working hours are entitled to at least 30 days of annual vacation. The minimum duration of annual vacation shall be further increased based on criteria determined by the employment contract and the applicable collective bargaining agreement.

    Full-time employees are entitled to a paid daily break during the working hours in duration of minimum 30 minutes, if they work minimum 6 working hours per day. Daily break is calculated towards the working hours. An employee is entitled to a daily rest period of at least 12 hours without interruptions between two working days. Also, an employee is entitled to a weekly daily rest period of at least 24 hours of uninterrupted rest between two working weeks, in addition to the noted daily rest period of 12 hours.

  • Minimum/Maximum Age
  • Minimum age to enter employment is 15 years. However, a 15-year-old who is enrolled at obligatory primary education cannot enter into an employment agreement. Employment is terminated on a statutory basis after a person reaches both 67 years of age and at least 15 years of mandatory employment insurance.

  • Illness/Disability
  • An employee is entitled to sick leave every time there are appropriate medical reasons (sickness, work injury, voluntary blood donation, etc.).The employee can alsobe granted sick leave if he/she has to care for a sick member of their immediate family. During sick leave, the employee is entitled to compensation of the salary.

    Employers are obliged to employ at least one person with a disability if they employ 20 to 50 persons, and at least 5% of total number of employees if they employ more than 50 persons. Employees with severe disabilities of 80% and above counts as two employees with disabilities below 80%. This obligation does not apply to newly established employers during the first 24 months from commencing with the business.

    Employers who do not employ persons with disabilities in this manner, are obliged to pay 20% of the average monthly salary in Montenegro in the previous year, each month, per each employee with a disability they lack in order to be in line with the stated quotas. Exceptionally, employers who employ more than 10 and less than 20 employees and do not have at least one employee with a disability, are obliged to pay 5% of the average monthly salary in Montenegro in the previous year, each month.

  • Location Of Work/Mobility
  • Location of work must be stated in the employment contract. Any changes to that must be conducted in line with special rules and throughout the annex to the employment contract.

    The law permits to establish employment for performance of work outside the employer’s premises, when it is allowed by the nature of business. Such employment contracts contain some other mandatory elements (manner of supervision of work, use of means of work, compensation of expenses related to such work, etc.).

  • Pension Plans
  • The social security system in Montenegro is based on the mandatory public pension (and health and unemployment) insurance. Funds for pension and disability insurance are provided in the budget of Montenegro.

    Participation in any kind of voluntary pension funds is entirely up to each employee and does not create any obligation for the employer.

  • Parental Rights (Pregnancy/ Maternity/ Paternity/ Adoption)
  • An employee is entitled to paid maternity leave in duration of 365 days as of the date of childbirth. The first 70 days of leave may be used by both parents, in case of birth of two or more children.

    A pregnant employee is entitled to one paid day off from work during the month to perform prenatal examinations.

    In case the woman returns to work prior to the expiry of maternity leave, she will be entitled to use 60 minutes daily break during work, in order to nurse her child.

    During the period of maternity leave the employee is entitled to salary remuneration in line with separate law, fully covered by the state funds.

    In general, use of maternity leave, parental, adoptive and foster leave and leave for childcare and special childcare cannot be considered as a justified reasoning for terminating employment. Pregnant women and employees using one of the said leaves are protected from dismissal, except in the case of severe breach of work duties that are unrelated to their absence and almost all cases related to termination of employment. This also includes protection from being declared redundant.

  • Compulsory Terms
  • Apart from the written form and compulsory terms as explained under “Legal Requirements as to the Form of the Agreement” and “Minimum/Maximum age”, the law demands that an employee passes a prior medical examination confirming general fitness for work. Further, for persons under 18 years old, the law requires written consent of the parent, adoptive parent, guardian or custodian, and that such work does not endanger his/her health, development, morals and education, or that it is not prohibited by law.

  • Non-Compulsory Terms
  • Besides the mandatory terms, Employers may establish special terms for the specific positions in their internal act on systematization and organization of positions. Employers can also agree with the employee on some other more favorable terms of the employment in each case.

Types Of Agreement

As a rule, employment contracts are concluded for an indefinite term if the agreement does not state otherwise. Definite term employment can be established exceptionally, for a duration of up to 36 months, by one or several consecutive contracts (and longer in some cases such as replacement of a temporary absent employee, work on a specific project until its completion, engagement of a director and seasonable jobs).


Law on Protection of Unpublished Data regulates safety of unpublished data which represent business secrets, as a separate IP right. Unpublished data is protected if it represents business secrets (i.e. it is not publicly known and available), and for that reason has a commercial value. It is also required that the owner of such data has taken precaution to keep it confidential.

A confidentiality clause usually represents part of the employment contract in business activities where it is applicable.

Ownership of Inventions/Other Intellectual Property (IP) Rights

If an employee creates IP rights during performance of his/her duties under the employment contract, the employer owns the exclusive pecuniary rights for the exploitation of the work within the scope of the employer's registered business activity for a period of five years as of completion of the work, if not otherwise stipulated by the agreement between an employee and employer.

If the IP rights relate to a computer software, the permanent holder of all exclusive pecuniary rights over software is the employer, unless the employment contract provides otherwise.

Pre-Employment Considerations

When employing an individual in Montenegro, an employer is required to notify the Employment Agency of Montenegro on the job vacancy (not applicable in the case of a new employment contract with the same employee upon expiry of the previous contract, transferring to another job with the same employer, or in case of taking over the employee under an agreement between two employers or due to the corporate restructuring).

Besides conclusion of the employment contract in writing, an employer is obliged to notify the employee in writing on rights, obligations and responsibilities related to protection from harassment at work (before commencing with work).

An employer also has to register an employee for mandatory social security insurance within eight days from commencing with work and notify the Employment Agency about hiring within five working days from commencing with work.

Hiring Non-Nationals

Law on Employment and Work of Foreigners prescribes that a non-national may be employed, i.e. work in Montenegro, provided that such a person has a work permit, a permanent residence permit, or a temporary residence permit, and a concluded employment contract or a contract for providing services. The work permit is issued by the Employment Agency of Montenegro.

There are several types of work permits: personal work permit, employment license (and seasonal employment license as a subtype), work permit for cross-border services of foreigners, and work permit for inter-company mobility, each corresponding to specific circumstances of engagement of an employee.

Hiring Specified Categories Of Individuals

The law also introduced specific rules and provides special protection to persons with disabilities, women during pregnancy and after childbirth, which include restrictions regarding overtime and night work and a higher threshold for other rights regarding their terms of employment. Specific medical examinations are required when hiring employees between the age of 15 to 18.

Outsourcing And/Or Sub-Contracting/Temporary Agency Work

The Labour law only regulates the temporary assignment of employees to another employer by the specialized staff leasing agency registered with the competent ministry. The staff leasing agency remains a formal employer of the assigned employees, and the assignment is performed via agreement between the agency and the company to which the employee is assigned (staff leasing user).

Assigned employees are entitled to the same salary level as that which is granted to the employees of the staff leasing user. Also, other rights and obligations of an employee assigned to the employer cannot be less favorable than the rights and obligations of other employees with the employer.

Changes To The Contract

Both parties may propose changes to the employment contract after giving a written offer to the other party which shall contain reasoning for the changes, deadline for response and the legal remedies in case of refusing. The Labour Law contains an exhaustive list of employment agreement changes that entitle the employer to terminate the contract if the employee refuses to conclude the underlying annex (e.g. in case annex relates to salary, transfer to another place of work or position). Any other proposed amendment of the employment contract cannot lead to the dismissal of an employee in case of the employee’s refusal.

Change In Ownership Of The Business

The law regulates the protection of employees in cases of corporate status changes (e.g. mergers, split-offs and spin-offs) or a legal transaction that results in the change of employer.

The employer must notify the employees and trade union or the employees’ representative within the legal deadlines and in the prescribed manner. In the event of change of employer, employees transfer to the employer successor who is bound to respect all of their rights for at least a year.

The EU Directive relating to the safeguarding of employees' rights in the event of transfers of undertakings, businesses, or parts of undertakings or businesses is not directly applicable in Montenegro, however the local legislator has considered its provisions when the Labour Law was drafted.

Social Security Contributions

Social security contributions include pension and disability, health insurance, and insurance for unemployment. The cost of social security contributions are borne by the employer and by the employee, however the employer is obligated to calculate the aggregate social security contribution amounts (including both the employer’s and employee’s contributions) and to withhold the amount from the salary.

Accidents At Work

An employer must implement health and safety measures for each work position in order to ensure a safe working environment for its employees.

In case of any fatal, collective or severe injury at work, or other injury due to which the employee is unable to work for more than three working days, as well as on any dangerous situation that could endanger the safety and health of employees, the employer is obliged to immediately, and no later than within 24 hours, notify the labour inspection.

The employer is obliged to insure the employees against injuries at work, occupational diseases and work-related illnesses and to pay compensation of damage for injury at work to the employee.

Discipline And Grievance

The Labour Law recognizes the division of violations of working duty and, accordingly, prescribes different measures for different severities of violations. The basic list of violations is determined in the Labour Law, and it can be further expanded by the collective bargaining agreement or employment contract.

Depending on a particular breach and its severity, the employer may impose one of disciplinary measures provided by the law such as a warning, pecuniary fine, conditional termination and termination of employment.

The Labour Law envisages various mechanisms for the protection of employees’ rights including a mandatory mediation process before the Republic Agency for Peaceful Settlement of Labour Disputes or Center for Alternative Dispute Resolution. In case of termination of employment or in other cases when previous mandatory mediation fails, the procedure before the courts can be initiated.

The employee is entitled to a grievance procedure, by filing a motion to the employer if he or she considers that any right is jeopardized by the employer. The Employer must respond to such a request in written within 15 days. The employer’s response is final.

Harassment/Discrimination/Equal pay

Protection through internal procedures and court proceedings is provided to employees who were harassed at work, in line with the specific law. Harassment at work is also explicitly forbidden by the Labour Law in a general manner.

The Labour Law protects employees from any form of discrimination in terms of hiring, working conditions, training, promotions and dismissal. Discrimination is defined in a very broad manner. Acts of discrimination represent a misdemeanor for which the monetary penalty is prescribed.

Employees are guaranteed equal salary for the same work or work of the same value. Work of the same value means work for which the same level of education is required, i.e. qualification, knowledge responsibility, skills, working conditions and work results. In case of violation of this right, the employee is entitled to compensation in the amount of the unpaid part of the salary.

Compulsory Training Obligations

The employer is obliged to provide the employee with professional training related to safety and health at work and when the work process requires it. Employees are obliged to attend such professional training. The costs are borne by the employer or from other sources in accordance with the law and the collective bargaining agreement. The training, as a rule, is performed during working hours.

Offsetting Earnings

The employer may collect the monetary claim against the employee by withholding the amount from the salary only or the compensation of the salary on the basis of a final court decision, in cases determined by law or with the consent of the employee.

Based on the final court decision or in case of mandatory support, the employer may offset the maximum of one half of the salary or compensation of the salary. In other cases the employer may offset the maximum of one third of the salary or compensation of the salary.

Payments For Maternity And Disability Leave

Employees are entitled to the compensation of salary during maternity and childcare (parental) leave. This compensation cannot be paid to both parents at the same time. The amount of the salary compensation depends on the duration of the mother’s employment with the employer before the start of maternity leave and on the income made during this period. The compensation of the salary may range from 30% to 100% of the average salary of an employee. This compensation is paid by the employer, however later refunded by the state.

For sick leave, employees are entitled to a certain percentage of the average salary in the previous 12 months: in case of a non-work-related injury or illness at least 70%, and 100% in the case of a work- related injury or professional illness. In general, for the first 60 days of sick leave, the costs are borne by the employer, and as of the 61st day by the state fund. The maximum amounts and the specific rules on determination of the salary compensation are provided by the Law on Health Insurance.

Compulsory Insurance

The social security system in Montenegro is based on the mandatory public pension, health and unemployment insurance. Based on the employment contract or other contract on engagement of an employee, the employer is obliged to submit a single application for compulsory social insurance before the employee commences with work.

Absence For Military Or Public Service Duties

During situations where the employee is responding to a call from the state authority (e.g. military drill), he/she is entitled to paid leave in accordance with the law and the applicable collective bargaining agreement. According to the currently applicable collective bargaining agreement the employee is entitled to 100% of the salary in this case.

Works Councils or Trade Unions

Works councils are not recognized by the law in Montenegro. On the other hand, employees are guaranteed the freedom of trade union organization and action without approval, but with mandatory registration of the union before the competent ministry.

There are a few levels of trade unions which can be established in Montenegro:

  1. trade union within the employer;
  2. trade union in the branch, group, sub-group or business activity, and
  3. trade union on the level of Montenegro

Trade unions can be either representative or non-representative. The specific conditions for acquiring a status of a representative trade union are covered by a special law. The representative trade union within the employer is a trade union which inter alia encompasses minimum 20% of total number of employees within the employer, and as such has some additional rights (e.g. to participate in collective bargaining, to participate in the collective disputes, procedure, etc).

Employees’ Right To Strike

The Constitution guarantees employees’ right to strike where it may be restricted in certain services such as army, police, state authorities and the public service due to protection of the public interest, in accordance with the law. The specifics of this right and the procedure is provided by the Law on strike.

Employees On Strike

The strike committee and the employer are obliged, from the day of the announcement of the strike and during the strike, to try to resolve the dispute amicably or to initiate a procedure for the peaceful settlement of the dispute.

The employer must be notified in writing on the upcoming strike in accordance with the law. The strike must be organized in a way that does not endanger health and safety of persons or property of the employer. The strike committee and the employees participating in the strike cannot prevent the employer from using funds and means to carry out its activities and they must not prevent employees who do not participate in the strike from working.

An employee on strike holds basic employment rights, except for the right to salary. Organizing or participating in a strike in accordance with the law does not represent a breach of working duties, nor a ground for initiating a procedure for determining disciplinary and material responsibility of an employee, for suspension or termination of employment.

Employers’ Responsibility For Actions Of Their Employees

An employer is responsible for actions of its employees. In case the damage was inflicted to the third party intentionally, or due to gross negligence of an employee, the employer could ask for refund of the damages that the employer paid to the damaged party.

Procedures For Terminating the Agreement

The Labour Law covers different grounds on which an employment contract can be terminated (e.g. underperformance, redundancy, breach of working duties). The law provides various formal rules which must be observed in each particular case.

Instant Dismissal

Instant dismissal does not exist under Montenegrin law. Dismissal can only take place in cases governedby the law, following the prescribed formal procedure.

Employee's Resignation

Employees may resign at any time. If the employee initiates the termination, the notice of termination must be delivered to the employer at least 30 days (unless a different notice period is agreed) prior to the day stated as the day of termination. The employee's notice of termination must be certified by a notary, court or municipal authorities. In this case the employer issues a resolution confirming the termination of employment.

Termination On Notice

Both the employee and the employer have to observe a 30 days’ notice period when terminating employment. The law does however allow a few exceptions when a notice period is not mandatory (e.g. violent or abusive behavior towards clients or employees or committed criminal offense at work or in connection with work), and also allows collective bargaining agreement to grant additional exceptions.

Termination By Reason Of The Employee's Age

When the employee reaches both 67 years of age and at least 15 years of employment service, the employment is terminated automatically (ipso iure).

Automatic Termination In Cases Of Force Majeure

The Labour Law does not envisage institute of force majeure in the case of termination of employment, however lists several situations when termination of employment shall occur automatically, by the force of law such as losing working capacity, death, bankruptcy or liquidation, serving an imprisonment sentence which lasts longer than 6 months, turning 67 years old with at least 15 years of insurance service.

Collective Dismissals

The collective dismissal procedure is applied in the case of the planned layoff of at least 20 employees within 90 days. The Labour Law prescribes the duty to initiate consultations with the trade union or the employees (or their representatives) and to notify the Employment Service about the consultations. In addition, the employer cannot employ another person in the position deemed redundant for a period of six months. The employer is obliged to consider all proposals aimed at preventing the redundancy procedure or to mitigate its consequences, as well as to provide a written explanation on each submitted proposal.

Termination By Parties’ Agreement

In case of the termination of employment by parties’ agreement, the exact date of termination must be determined in the agreement. The mutual agreement is legally effective only after it has been certified by a notary, court or municipal authorities.

Directors Or Other Senior Officers

There are no special rules concerning directors or other senior officers, therefore the general rules apply. The Director may however conclude the employment contract for an indefinite or definite term until expiration of the office term, which provides for more flexibility regarding the termination of such agreements.

Special Rules For Categories Of Employee

The Labour Law introduces protection from dismissal during pregnancy, maternity and childcare (parental) leave except in the case of severe breach of work duties that are unrelated to their absence and almost all cases related to termination of employment ipso iure (expiry of a definite term employment contract is not included). Employees during pregnancy maintenance, maternity, parental, adoptive, foster leave cannot be declared as redundant.

The law also prohibits dismissal due to membership in a trade union, use of sick leave and provides protection for participants in legally organized strikes.

Whistleblower Laws

There is no separate, special law in force concerning this matter. The procedure of whistleblowing, protection and specific rights of whistleblowers in the public and private sector are determined by the Law on Prevention of Corruption. The law covers the right to confidentiality, financial rewards for whistleblowers whose disclosures lead to monetary recoveries, protection by the Anti-corruption agency or courts, penalties for failure to protect whistleblowers, etc.

Specific Rules For Companies in Financial Difficulties

The Labour Law regulates protection of employees during bankruptcy proceedings. Under the Law on Bankruptcy, certain financial claims of employees against a bankrupt company are considered as preferential claims (salary or claims related to injuries at work), meaning that they are granted priority collection rights.

Special Rules For Garden Leave

This is not directly covered by the law, however it does contain provisions with a similar purpose. If the employee, at the request of the employer, ceases to work before the expiration of the notice period, he/she is entitled to salary compensation and other rights arising from work, as if he/she had performed regular work until the expiration of the notice period.

Restricting Future Activities

An employment contract may determine jobs that an employee may not perform on his/her own behalf, as well as on behalf of another legal entity or natural person, without the consent of the employer. The prohibition of competition may be established only if there are conditions for the employee to acquire new, especially important technological knowledge or other specific knowledge or skills, a wide range of business partners or to gain possession and knowledge of important business information and secrets.

By an employment contract or an agreement on termination of employment, the employer and the employee may also agree on non-compete following termination of employment, for a period not exceeding two years after termination of employment, provided that an employee is granted special compensation for such an extended non-compete obligation.

Non-solicitation is not regulated by the law.

Severance Payments

Certain cases of dismissal entitles employees to a severance pay, such as dismissal due to:

    — redundancy,
    — opposing a transfer to the successor employer,
    — refusing to conclude an annex which includes salary reduction,
    — retirement,
    — voluntary liquidation of the company.

The law specifies the minimum amounts in each specific case.

Special Tax Provisions And Severance Payments

Minimum severance payment represents a non-taxable amount. Amounts that exceed the minimum are taxed as salary.

Allowances Payable To Employees After Termination

Employers are not required to pay any specific allowances to employees after termination. The employers already contribute during the employment contract through payment of unemployment insurance.

Time Limits For Claims Following Termination

Pecuniary receivables arising from employment become obsolete within four years from the day the obligation was due. Receivables related to the obligation to pay contributions for pensions and disability insurance cannot become obsolete.

In accordance with the Labour Law, an employee who considers that his/her employment right has been violated, before initiating proceedings before a competent court, is obliged to file a motion for amicable settlement of the dispute before the Agency for Peaceful Settlement of Labour Disputes or before the Center for Alternative Dispute Resolution within 15 days from the moment the disputed decision was received by the employee. Court proceedings may be initiated within 15 days from the end of the mandatory mediation. However, in the case of termination of employment, the employee may directly address to the competent court and seek protection within 15 days from the moment the disputed decision was received by the employee.

Specific Matters Which Are Important Or Unique To This Jurisdiction

At-will employment is not allowed in Montenegro.

Besides the mandatory legal framework which establish minimum rights to employees, employers should always observe the currently applicable general collective bargaining agreement and branch collective bargaining agreements for their specific industry, if any, as they may provide additional rights to employees.

The law also prescribes that the employer needs to report the vacant positions to the Employment Service regarding any open position, which authority is obliged, at the request of the employer to make the public announcement of the vacant position.

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Milena Pejović
Karanovic & Partners in cooperation with local lawyers

Boris Radojčić
Karanovic & Partners in cooperation with local lawyers

Miloš Rubežić
Karanovic & Partners in cooperation with local lawyers


© 2021, Karanovic & Partners in cooperation with local lawyers. All rights reserved by Karanovic & Partners in cooperation with local lawyers as author and the owner of the copyright in this chapter. Karanovic & Partner in cooperation with local lawyers 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