Karanovic & Partners

1

GENERAL PRINCIPLES

Forums For Adjudicating Employment Disputes

The Serbian law does not set out special judicial courts settling employment disputes. Such disputes are settled by specialised judges or council of judges within the regular civil courts – basic and higher courts. Higher court is authorized to resolve more complex disputes such as those concerning discrimination, harassment at work, collective agreements, strike etc. The competent court takes particular care of the need for an urgent resolution of labour disputes, which is reflected in the shorter duration of the court proceedings.


The Main Sources Of Employment Law

Serbia is a civil law country, so the main source of employment law is legislation. The Constitution sets out main principles, while the Labour Law establishes a general framework for the legal regime applicable to labour relationships and represents the main source of the employment law. There are also numerous supplementary laws and bylaws in this field.

There is a hierarchy of labour regulations which starts with the Labour Law followed by General Collective Bargaining Agreement (for the territory of the Republic as a whole), Special Collective Bargaining Agreement (for the territory of local self-government/territorial autonomy, or an industry branch) and Company’s Collective Bargaining Agreement or Employment Rules (general enactments valid for the specific employer). These acts must be consistent and each level cannot provide less protection in terms of quantity and quality to employees than as provided by the higher level act, otherwise provisions of this higher level act will apply directly. Individual employment contract must respect the provisions of the Labour Law, all applicable Collective Bargaining Agreements and the Employment Rules (if any), and any non-compliant provision will be deemed null and void.


National Law And Employees Working For Foreign Companies

The Labour law exclusively applies to all employees, both nationals and non-nationals, if they work in the territory of the Republic of Serbia, both for local or foreign legal entities or individuals.


National Law And Employees Of National Companies Working In Another Jurisdiction

The Law on Conditions for Secondment of Employees to Temporary Work Abroad and their Protection regulates the status of Serbian nationals seconded abroad. Bilateral tax and social security treaties are also relevant, if these treaties exist between Serbia and the state in which a Serbian national is seconded. The employer is obliged to sign an annex of employment contract with the seconded employee, additionally regulating the most important issues of the secondment.


Data privacy

General data protection regime applies. Employees, as any other data subjects, have a wide range of rights under the Law on Personal Data Protection. The new Law on Personal Data Protection, which was adopted back in August 2019, substantially used the EU General Data Protection Regulation (GDPR) as its role model and therefore the provisions of the Law on Personal Data Protection comply with the provisions of the GDPR to a great extent.

2

HIRING THE EMPLOYEE

Legal Requirements As To The Form Of Agreement

Employment contract must be concluded in writing and should contain all the compulsory elements required by the Labour Law such as name and registered seat of the employer, name and place of residence of the employee, work post and job description, place of work, type of employment (definite or indefinite term), basic salary on the date of conclusion of the employment contract. Employer is obliged to enter into an employment contract with the employee before the commencement of work.


Mandatory Requirements
  • Trial Period

    • Trial period can be provided only in case of an employee who is establishing the employment for the first time with the specific employer. Maximum duration of trial period is six months. During the trial period, either party may terminate the employment with at least 5 working days notice period.

  • Hours Of Work

    • Full-time working hours are set at 40 hours per week or less, but not less than 36 hours per week. For certain harmful or dangerous jobs the working week may go down to 30 hours (reduced working hours), when it is treated as full time working week.

    Maximum working week is 48 hours (40 hours of regular work and 8 hours of overtime). The maximum daily working time is 12 hours (including overtime). Exceptionally, under hours-averaging schemes (rescheduling of working hours), the maximum working week is 60 hours and the daily maximum is 13 hours.

  • Special Rules For Part-time Work

    • Part-time working hours are defined as less than full-time working hours. Minimum duration of part-time working hours is not set. Part-time employees generally have the same rights as full-time employees, in proportion to the time spent at work.

  • Earnings

    • The employee is entitled to an appropriate salary determined in the relevant employment contract. The Labour Law provides for a rather complex mandatory structure of the salary, and apart from the basic salary and performance part of the salary it envisages numerous mandatory payments such as increased salary for years of service with particular employer - 0.4% of the basic salary per month, increased salary for overtime work, night work and work on holidays, retirement payment, compensation of funeral expenses.

    Employees in Serbia are entitled to minimum wage for standard performance and time spent at work. The minimum wage refers to the basic salary only. Minimum salary is each year determined by a decision of the socio-economic council, or by the Government of Republic of Serbia. The Government has set the hourly minimum wage for 2021 at RSD 183.93 net.

  • Holidays/Rest Periods

    • The minimum duration of annual vacation is 20 days per calendar year. The minimum duration of annual vacation shall be further increased based on contribution to work, working conditions, years of experience, qualification of the employee and other criteria determined by the employment contract or the applicable collective bargaining agreement/Employment Rules (if any).

    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, 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. There are also around 10-12 public holiday days a year, depending on a calendar year.

  • Minimum/Maximum Age

    • An employment relationship can be established with a person of at least 15 years of age. For employees who have less than 18 years, a written consent of parent is necessary, as well as prior health check-up. Maximum age for establishing employment is not set out.

  • Illness/Disability

    • Under the law, an employee is entitled to a sick leave every time there are appropriate medical grounds determined by the competent doctor, and sick leave duration cannot be limited in time. The employee can be granted a sick leave regarding his/her health, or if he/she has to care for sick or injured child. During the sick leave, the employee is entitled to compensation of the salary which may be borne either by the employer or by the state funds, depending on the reason for sick leave and its duration.

    Employer which employs from 20 to 49 employees should employ at least one person with disability, and employer which employs 50 and more employees should employ at least two persons with disabilities. After that, for employment of each subsequent 50 employees one additional person with disability should be employed.

  • Location Of Work/Mobility

    • Place of work is mandatory element of the employment contact. The Labour Law introduces the possibility that employees work from home part of the agreed working time, which requires content of both parties. Under the Labour Law, the transfer of employees to another place of work is allowed only under certain conditions. Such changes to the place of work are made through an annex to the employment contract.

  • Pension Plans

    • Besides mandatory state pension which is strictly regulated, all other pension plans are completely voluntary and treated as additional benefits to the employees.

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

    • The law sets out a range of parental rights including maternity leave, childcare leave and leave for special care of a child in the case of severe disability of a child. During these mentioned leaves, the parent using the leaves is entitled to salary compensation from the budget of the Republic of Serbia and these employees are protected from termination of employment.

  • Compulsory Terms

    • The Labour Law sets out certain minimum terms and conditions in relation to employment such as mandatory content of the employment contract, minimum age for entering into employment (15 years of age), minimum days of annual leave (20 working days), mandatory payments, minimum salary, mandatory breaks, working hours etc. The parties cannot agree to specific terms if such terms are less favourable than statutory rules, applicable Collective Bargaining Agreements and the Employment Rules (if any).

  • Non-Compulsory Terms

    • Beside mandatory elements of the employment contract, the parties can agree to any terms of their choice, provided those terms are not less favourable than statutory rules, applicable Collective Bargaining Agreements and the Employment Rules (if any).


Types Of Agreement

Employment contacts exist in several different forms including full-time, part-time, definite or indefinite term contracts, work from home contracts etc. All of them must be concluded in writing and contain mandatory elements.


Secrecy/Confidentiality

The Law on Business Secretes regulates confidentiality matter in general, where very broadly defines business secret as any undisclosed information that has commercial value because it is not generally known or accessible to third parties who could generate economic benefit by using or disclosing such information, which is adequately protected by its owner and the disclosure of which could cause damage to its owner. Employers tend to include confidentiality clause in the employment contract where its breach represents one of the reasons for termination of employment. Entering into separate non-disclosure agreement is also a possibility.


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 from completion of the work. The employer's general act or the individual employment contract can provide otherwise. The employee who created the IP rights is generally entitled to a special remuneration.

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


Pre-Employment Considerations

An applicant must provide the employer with documents and other evidence proving that meets the requirements for working in the relevant position. The law imposes certain limitations with respect to what type of information may be requested from candidates (such as information relating to his/her family and marital status and family planning, and any other documents and evidence that are not directly significant for the position).

In addition, direct and indirect discrimination of jobseekers and employees is prohibited.


Hiring Non-Nationals

All foreign nationals intending to reside and work in Serbia must obtain a proper temporary residence and work permit. Workers from certain countries may also need to obtain a visa prior to entering Serbia for the purpose of working.

 

Hiring Specified Categories Of Individuals

The Labour Law provides for several restrictions and limitations that concern hiring of employees who have from 15 to 18 years of age, pregnant women, disabled persons and persons with health problems which refer to overtime work, night work, type of work, requirement of the consent of parents etc.


Outsourcing And/Or Sub-Contracting/Temporary Agency Work

Outscoring of business functions/activities is still not regulated in Serbia and there are no formal requirements set out. On the other hand, recently adopted Law on Agency Employment regulates and sets out strict requirements for leasing of work force i.e. assignment of employees to work for another employer (staff leasing), allowing such activities to licensed employment agencies only. The law introduces equal treatment of assigned employees and other employees of employer user in respect to numerous employment rights (such as working hours, salaries and other rights).

3

MAINTAINING THE EMPLOYEE RELATIONSHIP

Changes To The Contract

Employer may change the employment contract only if an employee agrees, after given written notice containing reasoning for changes, deadline to respond and legal remedies available to the employee in case he/she refuses the change. The law lists cases in which employer can request changes to the contract, and only in those cases employer can terminate the contract if employee refuses the proposed amendments. Refusal of any other change to the contract cannot lead to the dismissal of an employee.


Change In Ownership Of The Business

A change in ownership of the business by transfer of shares or assets does not the impact employment contracts of employees within the company. Serbian law explicitly regulates protection of employees only in cases of corporate status changes (e.g. mergers, split-offs and spin-offs).

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 applicable in Serbia, nor is the local legislation fully harmonized with its provisions. We expect further steps toward harmonization with the EU rules in the future.


Social Security Contributions

Social security contributions include pension and disability, health insurance, and insurance for unemployment. The cost of social security contributions should be borne by the employer and by the employee. The aggregate social security contribution amounts (both the employer’s and employee’s contributions) are calculated, withheld from salary and paid by the employer.


Accidents At Work

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

The employer is also obliged to pay compensation of damage for injury at work to the employee.


Discipline And Grievance

The list of behaviours which represent disrespect of work discipline is determined generally in the Labour Law and may be further elaborated in the Collective Bargaining Agreement or Employment Rules and employment contract.

If the employer considers that there are certain extenuating circumstances or that disrespect of discipline is not of such nature that it should lead to dismissal, the employer may impose one of the disciplinary measures.

The Labour Law does not envisage any specific grievance procedure, but provides for various mechanisms for protection of employees’ rights (e.g. court proceedings, additional protective mechanisms in case of revealing information on violation of regulations, violation of human rights).


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.

The Labour Law protects employees from any form of discrimination in terms of hiring, working conditions, trainings, promotions and dismissal. It even defines acts of discrimination by the employer as a misdemeanour for which the monetary penalty is prescribed.

Employees are guaranteed equal salary for the same work or work of the same value. Work of same value means work for which the same level of education is required, i.e. qualification, knowledge and abilities, in which the same work contribution has been achieved with equal responsibility.


Compulsory Training Obligations

The employer is obliged to provide the employee with education and professional trainings when the work process or new manner and organization of work require it. On the other side, employees are obliged to attend such educational and professional trainings. The costs are borne by the employer.

Further compulsory training obligations refer to training for safe and healthy work and fire protection training of employees.


Offsetting Earnings

The employer may collect the monetary claim against the employee by withholding of the amount from the salary only 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 and in cases determined by law, the employer may offset maximum of one third of the monthly salary (or compensation of salary) of the employee.


Payments For Maternity And Disability Leave

Employees are entitled to the compensation of salary during maternity and childcare leave. This compensation cannot be paid to both parents at the same time. Compensation of salary depends on how long the mother worked during the period of 18 months before the start of maternity leave and on how much her income was during that time. The amount paid to an employee cannot be higher than three average salaries in Serbia. The costs are borne by the Republic Health Insurance Fund.

For sick leave, employees are entitled to a certain percentage of the average salary in previous 12 months (but not less than minimum salary): in case of non-work-related injury or illness 65%, and 100% in the case of work-related injury or illness. The costs are borne by the employer For first 30 days of sick leave, and as of the 31st day by the state fund, unless the sick leave is caused by the work-related injury when the cost is borne fully by the employer.


Compulsory Insurance

The social security system in Serbia is based on the mandatory public pension, health and unemployment insurance.


Absence For Military Or Public Service Duties

Employment related rights and obligations of an employee are suspended during military service and public service if it requires the employee to temporarily stop working for the employer. An employee has the right to return to work within 15 days from the day of completion of the service.


Works Councils or Trade Unions

Employees of an employer with more than 50 employees may form work council.

Employees can also form trade union organization and action without any prior approval, but with mandatory registration of the union.

There are three levels of trade unions in Serbia (i) trade union within the employer; (ii) trade union in the branch, group, sub-group or business activity and (iii) trade union for the area of territorial autonomy, local self-governance and territory of Serbia.

Trade unions can be either representative trade unions and non-representative trade unions. The representative trade union within the employer is a trade union which encompasses minimum 15% 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 redundancy procedure, etc).


Employees’ Right To Strike

The Constitution of the Republic of Serbia guarantees employees’ right to strike. The specific of this right and the procedure is provided by the Law on strike.


Employees On Strike

The strike committee and the representatives of the bodies to which the strike was announced are obliged, from the day of the announcement of the strike and during the strike, to try to resolve the dispute amicably.

The strike committee and employees participating in the strike are obliged to organize and lead the strike in a way that does not endanger the safety of persons and property and human health, prevents immediate material damage and allows work to continue after the strike is over. They 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.


Employers’ Responsibility For Actions Of Their Employees

Employer is responsible for actions of its employees. In case the damage is done to the third party intentionally, or due to ultimate negligence by the employee, the employee has to refund the amount of damage to the employer paid to damaged party.

4

FIRING THE EMPLOYEE

Procedures For Terminating the Agreement

Procedures for terminating the agreement are very formal and differ depending on the ground for termination. In order to effect a valid termination of the employment, the employer must observe a number of procedural issues that differently apply depending on the circumstances of the particular case: sometimes employer needs to issue a prior written warning, or to observe time-bar for certain dismissal reasons, to abide by the special delivery requirements, to provide previous instructions for improvement of work skills, to observe specific form of each document in termination procedure, or to abide by the specific redundancy related procedural issues (and include trade union and National Employment Service in the procedure), etc.


Instant Dismissal

Serbian law does not recognize instant unilateral dismissal, as in each case certain procedures have to be conducted prior to the dismissal, which can take certain amount of time.


Employee's Resignation

Employee may resign at any time without explaining the reasons behind it, as long as he respects the notice period provided by the employment contract (or the Labour law, in case it was not specified in the contract).


Termination On Notice

Employee may terminate employment respecting the notice period of at least 15 days. Employer may determine longer notice period – up to 30 days, in his general enactment or in the employment contract with the employee.

When employer is terminating the employment, the Labour Law provides for mandatory notice period only in case of termination due to underperformance or lack of required knowledge or abilities. In this case, the notice period is prescribed by an employment contract or employer’s general enactment, but it may not be shorter than 8 nor longer than 30 days.

During trial period, either party may terminate the employment with at least 5 working days’ notice period.


Termination By Reason Of The Employee's Age

Employment is terminated by the law when an employee fulfils pension retirement conditions of 65 years of age and at least 15 years of service. Parties may, however, agree to continue employment even when these conditions are met.


Automatic Termination In Cases Of Force Majeure

Serbian Labour law does not provide automatic termination in cases of force majeure. It does, however, prescribe cases when employment is terminated under the virtue of law, such as: death of an employee, upon expiry of the agreed term, when the employee fulfils pension retirement conditions of 65 years of age and at least 15 years of service, loss of working ability, official prohibition of further work activities, prison sentence or termination of employer's business activities.


Collective Dismissals

Under the Labour law, the employer is entitled to terminate the employment contract if due to technological, economic or organizational changes, performance of a particular job becomes unnecessary, or the workload becomes reduced. If certain thresholds in number of redundant employees are met, National Employment Service has to be included in finding new jobs for redundant employees, and opinion of trade union has to be requested.

Before employment contracts are terminated, employer has to pay severance to employees to be declared as redundant.


Termination By Parties’ Agreement

Employment can be terminated by mutual agreement between the parties, at any time. The employer has the obligation to inform the employee that in case of termination of employment by mutual agreement, employee loses his unemployment benefits provided by the state.


Directors Or Other Senior Officers

The Labour law provides that the director or other legal representative of the company can be engaged under employment agreement or alternatively through non-employment management agreement.

If director is engaged through employment agreement such agreement may be concluded either for indefinite term or for definite term – for the duration of his/her term of office, in line with the foundation enactments. In the case of a definite term employment, expiry of corporate term of office automatically triggers termination of director’s employment. On the other hand, in the case of indefinite term employment of director, expiry of corporate term of office does not directly terminate employment relation. Such director can be transferred to other suitable position (if existing) or his employment may be terminated in line with the Labour law.

If director is engaged through out-of-employment management agreement, limitations of employment relation do not apply to such agreement. The parties are free to agree the amount of remuneration and any other mutual rights and obligations that they deem adequate.


Special Rules For Categories Of Employee

During pregnancy, maternity leave, leave for childcare and leave for special childcare, the employer may not terminate the employment contract. For that time, employment contract for definite term is prolonged until the end of absence.

An employer may not terminate an employment contract or otherwise disadvantage an employee because of his/her status or activity as an employee representative, union membership, or participation in union activities.


Whistleblower Laws

Law on Protection of Whistle-Blowers protects employees in case of revealing information on violation of regulations, violation of human rights, exercise of public authority contrary to the purpose for which it is entrusted, etc. This protection relates to the prohibition of placing whistle-blowers in a more unfavourable position, right to a compensation of damages caused to a whistle-blower, as well as court protection of whistle-blowers.


Specific Rules For Companies in Financial Difficulties

Companies in financial difficulties may introduce minimal salary for their employees. The reasoning for introducing minimal salary must be envisaged in employment contracts or by the general enactment. Every six months, employer must justify further payment of minimal salary to the trade union (if one is established among his employees).

The Labour law allows the possibility of sending an employee on, so-called, forced leave, in case of interruption of work, i.e. reduction of workload, without employee’s fault or in case of interruption of work which is imposed by the decision of a state body or employer due to failure to prevent health and safety risks or in other cases. In this case employees are entitled to compensation of salary.

Finally, employers undertake collective dismissal procedure due to the economic reasons.


Special Rules For Garden Leave

There are no special rules for garden leave. It is up to employer to send employees on garden leave until the notice period expires.


Restricting Future Activities

Restricting future activities is possible throughout the non-compete clause after the termination of employment, if during employment the employee can acquire new, highly important technological knowledge, wide circle of business partners, as well as exceptionally proprietary and confidential information and secrets of the employer.

This clause and its validity after the termination (for a maximum of two years) must be provided in the employment contract in order to be effective. Also, a certain renumeration for obeying to such restrictions after termination of employment must be provided to the employee.


Severance Payments

There are two types of severance payments in Serbia: for redundancy and for retirement.

The amount of severance payment to a redundant employee should be prescribed by a general enactment of the employer (employment rulebook or collective bargaining agreement) or by an employment contract but could not be less than the minimum amount of severance prescribed by the law: 1/3 of the redundant employee’s salary per each full year of employment with the current employer, its legal predecessors or affiliates. The term “salary” here means average monthly salary paid in the last three months preceding the month of payment of severance.

The amount of severance payment for a retiring employee is at least two average salaries in Serbia published by official statistics.


Special Tax Provisions And Severance Payments

Severance payments (for redundancy and retirement) are exempt from taxation up to the minimal amounts of severance payments guaranteed under the Labour Law. The excess is subject to tax on other income at the 20% tax rate. This payment is not subject to social security contributions.


Allowances Payable To Employees After Termination

All outstanding payments which an employee earned until the termination date shall be paid within 30 days as of the termination of employment.

After termination of employment, employee may be entitled to monthly compensation if employer wishes to maintain non-compete clause upon the termination (for a maximum of 2 years).


Time Limits For Claims Following Termination

Employee may raise a claim against a decision on his employment related rights and obligations before the competent court within 60 days as of delivery of such decision. In the case of monetary claims the time limit is 3 years as of the date when they were due.

5

GENERAL

Specific Matters Which Are Important Or Unique To This Jurisdiction

Out-of-employment engagement

The employer may also conclude outside of employment agreements for engagement of work force, subject to conditions prescribed by the Labour law. These agreements do not establish the employment relation and therefore do not fall under employment limitations (regarding salary, working hours, leaves, termination reasons etc.). These agreements include:

    — service agreement – it can be concluded for performance of independent intellectual or physical work which falls outside the scope of the employer’s business activities;
    — agreement on temporary and periodical work – it can be concluded for work which by its nature does not last longer than 120 working days per calendar year (unemployed persons, retired persons, persons working part-time up to the full working hours and members of youth organisations);
    — agreement on professional training – it can be concluded with trainees, when this is set as a special condition for independent professional work or other persons for the purpose of upgrade and acquiring specific professional knowledge and specialist training. This agreement may be concluded even without remuneration agreed; and
    — agreement on additional work – an employee working full working hours may enter into agreement on additional work with another employer, for up to 1/3 of their full working hours;
    — engagement of employees via staff leasing agencies – in this case employees conclude employment relationship with the staff leasing agency, and the employer is only obliged to conclude the agreement on business cooperation with such agency.

     

New Labour law expected

There are some announcements that a new Labour Law will be adopted in the next 12 months. It is said that the new law will be more liberal and closer to EU regulations, however no official drafts or further information is available at the time of writing.



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Milena Jakšić Papac
Karanovic & Partners
Serbia


Milijana Tomić
Karanovic & Partners
Serbia


Đurđa Domanović
Karanovic & Partners
Serbia


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