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.
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 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.
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.
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.
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.