Labor & Employment Guidance
Contributed by

Gecic Law

 
Introduction

The cornerstone of ​​labor and employment law in the Republic of Serbia is the Labor Act. Apart from the Labor Act, issues related to employment are regulated by other pieces of legislation, such as Prevention of Harassment at Work Act, Occupational Safety and Health Act, Discrimination Prevention Act, Pension and Disability Insurance Act, Health Insurance Act, Strike Act, Agency Employment Act, Foreign Nationals Employment Act, Whisteblower Protection Act, etc.

The competent state authority for labor and employment related issues is the Ministry of Labor, Employment, Veteran and Social Issues (hereinafter: the Ministry). The Ministry is authorized to pass secondary regulation aimed at implementing labor laws and the Government's labor and employment policies, as well as ensuring the functioning of the labor market in Serbia.

The Labor Inspectorate is the Ministry’s organizational unit responsible for monitoring employers’ compliance with labor legislation and ensuring respect of employee rights.

Apart from the Ministry and the Labor Inspectorate, a crucial role is played by the National Employment Agency, a public service agency responsible for keeping records of unemployed individuals, providing training and counseling and facilitating employment of unemployed persons, as well as handling unemployment benefits requests.

 
Employment status

The employment relationship is established when the employer and the employee execute the employment agreement, after which the employer must promptly register the employee with the Central Registry of Mandatory Social Insurance.

The employment agreement must be executed in writing before commencement of work, while employment-related rights and obligations arise as of the day of commencement of work. If the employment agreement is not executed in writing before commencement of work, the employee will be considered employed indefinitely as of the day of commencement of work.             

In addition to the employment agreement and the Labor Act, the employment status, i.e. mutual rights and obligations of employer and employees, may also be regulated in collective agreements as well as employer’s bylaws, such as:

  • Rules of Procedure;
  • Job Organization and Classification Rules;
  • Workplace Safety and Health Rules;
  • Rules on Prevention and Protection Against Harassment at Work;
  • Whistleblower Rules.

It is important to note that collective agreements, employment agreements, or employer’s bylaws may not diminish employee rights or protections as provided for in the Labor Act.

 
Immigration and hiring foreign nationals

Employment of foreign nationals in the Republic of Serbia is regulated by the Foreign Nationals Employment Act.

Principally, foreign nationals may establish employment in the Republic of Serbia in line with Serbian laws and international treaties. The Foreign Nationals Employment Act singles out EU nationals, stipulating that nationals of EU Member States shall be entitled to equal access to the Serbian labor market as Serbian citizens. However, these equalizing provisions shall apply as of the date of Serbia’s accession to the EU.

At present, foreign nationals seeking employment in Serbia must obtain a work permit issued by the National Employment Agency as well as a permanent or temporary residence permit issued by the Ministry of Internal Affairs. Although their employment in Serbia is limited to the scope of the work permit, employed foreign nationals are entitled to the same employment-related rights and obligations as Serbian citizens.

Work permits for foreign nationals may be issued either as regular employment permits, special employment permits (e.g. for referred employees, employees moving within a company, independent professionals, as well as for persons referred to professional development), or self-employment permits.

The validity and renewal of work permits depend on the type of the particular work permit.

 
Terms of employment

In order to be employed, persons must be of legal age, which, in Serbia, is 18. Only exceptionally, minors older than 15 years of age may be employed, with written permission from parents or other legal guardians, and a medical certificate confirming that such employment would not be detrimental to their health.

Terms of employment must be specified in employment agreements which need to contain elements prescribed by the Labor Act, such as business information about the employer, employee’s personal information, place of work, work position, list of duties, requirements for performance of those jobs, and salary. Elements such as list of duties or requirements for performance of those jobs do not to be specified in the employment agreement if they are determined in a collective agreement or bylaws, in which case the employment agreement must refer to such instruments.

Employment agreements may be concluded for a fixed or an indefinite period. An employment agreement is deemed concluded for an indefinite period if not otherwise stipulated in the agreement itself. On the other hand, fixed-term employment agreements must provide reasons why fixed-term employment is contracted for a specific job and such employment may last for a maximum of 24 months.

Furthermore, the employment agreement may be concluded either for full-time employment, part-time employment or employment with reduced working hours. Full-time employment encompasses 40 working hours per week. Shorter full-time employment may be stipulated in collective agreements or employer’s bylaws, however the minimum is 36 working hours per week. Part-time employment exists when an employee works fewer hours than full-time employment, but maintains the same employment-related rights as employees engaged full-time. Reduced working hours regime is contracted for such jobs that are particularly difficult or harmful to health, regardless of the protective measures taken, in which case weekly working hours may be reduced by up to 10 working hours. Employees working reduced working hours are entitled to the same employment-related rights as employees working full-time.

The Labor Act also allows for a probationary period, during which an employee’s knowledge and skills necessary for performance of the relevant duties are assessed. This probationary period can last up to 6 months and employment will be terminated upon expiry of the probationary period if the employee fails to demonstrate the necessary knowledge and skills.

 
Wages

In line with the Labor Act, salaries are paid in cash, no later than the end of the current month for the previous month.

Salaries consist of earnings for work performed and time spent at work, earnings based on employee’s contributions to the employer's business success and other employment benefits, and are increased in case of work on public holidays, shift work, night work, and in other cases prescribed in the Labor Act, collective agreements, bylaws and employment agreements.

Salaries depend on the complexity of the job, expertise, knowledge, education of the employee, etc. Salary discrimination between employees on any ground is prohibited, as the Labor Act expressly stipulates that employees are entitled to equal pay for equal jobs performed at the same employer.

In the Republic of Serbia, a minimum wage is guaranteed by law, which means that employment agreements may not contract salaries whose net value is less than the prescribed minimum wage. Minimum wage is determined yearly by the Socio-Economic Council and is calculated per working hour excluding taxes and contributions. For 2020, the minimum wage is set at RSD 172.54 or approximately EUR 1.5 per working hour, which is multiplied by the number of available working hours in each month, meaning that the monthly minimum wage will vary slightly from month to month.

 
Collective agreements

Collective agreements are legal instruments that raise the level of protection of employees' rights vis-à-vis the protections under the Labor Act. Collective agreements govern employees' rights to salaries, annual leave, absences, insurance, working hours, and other working conditions that are more favorable for employees than those prescribed in the Labor Act.

Collective agreements may be concluded as general collective agreements, special collective agreements, and employer-specific collective agreements, depending on the level of their negotiation and conclusion. General and special collective agreements are negotiated by representative workers’ trade unions and professional organization of employers in relevant industries or branches. Employer-specific collective agreements are negotiated directly by employees or trade union with employers.

Collective agreements apply to all employees, regardless of union membership.

Collective agreements are valid for 3 years. Collective agreements cease to produce effect upon expiry of the three-year period, unless the parties thereto have agreed otherwise no later than 30 days before expiry of the three-year period.

 
Pension and benefits

Pensions

The social protection system in the Republic of Serbia is regulated by the Pension and Disability Insurance Act, Health Insurance Act, Health Care Act and Mandatory Social Insurance Contributions Act.

In line with legislation, pension insurance in Serbia is compulsory and is funded by contributions paid to the National Pension and Disability Insurance Fund by employers and employees, as well as budgetary subventions. Also available is additional private pension scheme, which is optional and entails voluntary contributions to private pension funds.

In principal, insured individuals may qualify for an old-age pension or for an early retirement pension. An insured individual is entitled to old-age pension when they reach 65 years of age with at least 15 years of contributory service or when they reach a total of 45 years of contributory service. The Pension and Disability Insurance Act provides that women turning 63 years of age in 2020 are entitled to an old-age pension, provided they have 15 years of contributory service, whereas this Act provides for gradual equalization between men and women by 2031.

Insured individuals are generally entitled to early retirement if they are at least 60 years-old and have acquired at least 40 years of contributory service. The Pension and Disability Insurance Act provides for a number of exceptions until 2023, meaning that in 2020, insured individuals of male gender who have acquired 40 years of contributory service are entitled to early retirement if they have turned 58 years and 4 months of age. For women, the threshold is 39 years of contributory service and 57 years and 8 months of age.

The Pension and Disability Insurance Act provides for a different regime for calculating seniority for insured persons who have worked in particularly dangerous workplaces and jobs that are harmful to health (so-called “beneficial retirement”).

Benefits

Employees in the Republic of Serbia are entitled to a number of benefits stemming from different pieces of employment- and insurance-related legislations, such as benefits stemming from illness, disability, occupational diseases, unemployment, maternity protection, redundancy, etc.

 
Worker representation

Trade unions

Employees in the Republic of Serbia have the right to form trade unions on various levels of collective bargaining, having in mind that collective agreements may be general, special or concluded with a single employer.

The establishment of a trade union and employee membership in a trade union is voluntary.

For a trade union to be able to participate in collective bargaining, it must be representative, which means that the trade union has a mandate to represent the interests of employees. Trade unions are established at the level of the employer, branch, group, subgroup and activity, and in order to obtain representativeness, the Labor Act prescribes different percentages of necessary employee membership.

Trade unions freely and independently make decisions about participating in negotiations. Trade unions freely regulate their own activities and are financed from their own resources.

Trade unions are registered in special registers kept by the Ministry.

Employee councils

If the employer employs more than 50 people, employees may establish an employee council, which opines and participates in deciding on employee economic and social rights, in line with the law and bylaws.

 
Working time and holidays

Working time

In line with the Labor Act, full-time work week is principally organized in 5 working days amounting to 40 working hours per week, i.e. 8 working hours per day. With a few exceptions, overtime work is allowed by the Labor Act in cases of force majeure, sudden increase of workload or when otherwise necessary to finish unplanned work within a certain deadline. Overtime work may add up to 8 working hours to a work week, meaning that employees working overtime may work up to 48 hours per week, but in any event they may not work more than 12 hours per day. Overtime work is compensated by a salary increase of at least 26% as calculated against their basic salary.

Employees who work at least 6 hours per day are entitled to a rest period of 30 minutes, which is included in the working hours, but may not be used at the beginning or at the end of the business day. Employees working 4 to 6 hours per day are entitled to a rest period of at least 15 minutes, while employees working longer than 10 hours per day are entitled to a rest period of at least 45 minutes.

Employees are also entitled to a daily rest period of at least 12 hours a day, as well as to a weekly rest period of at least 24 hours, which is generally used on Sundays.

Annual leave and holidays

In line with the Labor Act, employees are entitled to annual leave of at least 20 working days per annum. A proportionate part of annual leave may be used after one month of continuous work at the employer. In any event, the employer decides, in consultation with the employee, when and for how long annual leave may be used. Employees must use the annual leave to which they are entitled in one calendar year no later than end of June of the following calendar year.

Apart from annual leave, employees are also entitled to days off on national and religious holidays listed in the National and Other Holidays Act. Non-working holidays for all employees include New Year’s Day (1-2 January), Statehood Day (15-16 February), Labor Day (1-2 May), Orthodox Christmas (7 January) and Orthodox Easter, while employees of other religious beliefs are granted additional days off depending of the religious holiday and religion of an employee in question. Employees who work on non-working holidays are entitled to a salary increase of at least 110% as calculated against their basic salary.

 
Protection against dismissal

While employees may unilaterally terminate employment without restrictions except for the notice period, which may not be shorter than 15 nor longer than 30 days, employers are allowed to terminate employment agreements only on grounds stated in the Labor Act. Broadly speaking, these grounds may refer either to an employee’s work capacity and conduct, willful breach of work obligations and the code of conduct, refusal to sign an annex to the employment agreement, or on grounds of restructuring and redundancies.

The Labor Act provides examples of breaches of work obligations and the code of conduct which justify termination of employment by employers, but employers are free to specify additional work obligations and conduct the breach of which is grounds for termination of employment in bylaws or employment agreements.

The Labor Act protects certain categories of employees from dismissal. To that effect, expectant mothers, parents on maternity leave, childcare leave and special childcare leave may not be laid off. Likewise, employees who are engaged in trade union activities or otherwise represent employee requests cannot have their employment terminated due to such activities.

 
Redundancy and restructuring

The Labor Act expressly prescribes that employment may be terminated if termination is justified by reasons relating to employer’s business needs, i.e. if due to technological, economic or organizational changes workload decreases or certain jobs become redundant.

An employer intending to lawfully lay off staff as redundant must abide by the procedure stipulated in the Labor Act. In particular, if it determines that a certain number of employees will become redundant due to economic, technological or organizational changes within 30 days, the employer must adopt a redundancy plan. This plan must be adopted in the following situations:

  • if at least 10 employees will become redundant at an employer who employs more than 20 but fewer than 100 indefinitely engaged employees;
  • if at least 10% of employees will become redundant at an employer employing between 100 and 300 indefinitely engaged employees;
  • if at least 30 employees will become redundant at an employer employing more than 300 indefinitely engaged employees.

If the employer determines that at least 20 employees will become redundant within 90 days due to economic, technological or organizational changes, the employer must adopt a redundancy plan irrespective of the total number of staff.

Before adopting the plan, the employer must submit a draft of the plan to the representative trade union and the National Employment Agency and must coordinate with them appropriate steps for finding alternative employment for redundant employees.

Employees being laid off as redundant are entitled to special severance pay, which may not be lower than the sum of thirds of employee’s salaries for each year of service with that employer.

 
Buying or selling a business

In case of status changes to an employer, such as sale of business, the business buyer, as employer successor, assumes from the previous business owner the bylaws and all employment agreements in force on the date of the status changes. The new employer is required to apply the previous employer’s bylaws for at least one year as of the date of the status change, unless the term of the previous employer’s collective agreement expires or a new collective agreement is concluded at the new employer.

 
Resolution of employment disputes

Labor disputes are settled before courts of general jurisdiction in line with the procedure from the Civil Procedure Code. Depending on the issue at dispute, labor disputes fall either within the competence and jurisdiction of local courts (e.g. unlawful dismissal) or superior courts (e.g. workplace discrimination or strikes).

Additionally, the Labor Act prescribes the general possibility for labor disputes to be settled amicable out-of-court through arbitration.

Amicable resolution of labor disputes is also regulated in detail by the Peaceful Resolution of Labor Disputes Act, which stipulates that both collective labor disputes (e.g. disputes pertaining to conclusion, amendments or application of collective agreements, or disputes pertaining to strikes) and individual labor disputes (e.g. disputes pertaining to salaries, dismissal, annual leave, discrimination) may be settled amicably, with the distinction that collective labor disputes are settled by mediation, whereas individual labor disputes are settled by arbitration. In line with the Peaceful Resolution of Labor Disputes Act, off-court dispute resolution is voluntary (very few exceptions are provided in the act itself). The Act also set up the national Agency for Peaceful Resolution of Labor Disputes which administers these disputes and maintains lists of moderators and arbitrators and their qualifications.

 
Other statutory rights

Additional Leave from Work

In addition to annual leave and non-working holidays, employees are also entitled to paid leave in the duration of up to 5 working days per year in case of marriage, birth of a child, and serious illness of a close family member. Also, employees are entitled to 5 working days of paid leave in the event of the death of a close family member and 2 working days in the case of voluntary blood donations.

Sick leave

Employees are entitled to compensation where temporarily unfit to work for up to 30 days, in the amount of at least 65% of their average salary in the previous 12 months, but not lower than the national minimum wage, if their unfitness to work is not caused by a work-related injury or disease, in which case they are entitled to 100% compensation.

Employer-mandated leave

In case of temporary reduction of employer’s volume of business, the employer may mandate the employee to a leave of absence for a maximum of 45 days per year with salary compensation of at least 60% of employee’s average salary in the previous 12 months, but not lower than the national minimum wage.

Maternity and childcare leave

Employed pregnant women are entitled to maternity leave which commences 45 days at the earliest, but no later than 28 days prior to the expected due date, and lasts for 3 months as of the date of birth. Once these three months have lapsed, mothers are entitled to childcare leave totaling 365 days as of the maternity leave start date. Mothers with 3 or more children are entitled to 2 years of maternity and childcare leave per child. While on maternity and childcare leave, mothers are entitled to a monthly benefit calculated on the basis of 18 previous salaries, which is paid to employees directly from the national budget, in line with the Act on Financial Assistance to Families with Children.

Right to strike

In order to facilitate protection of their professional and financial interests and rights, employees are entitled to organize strikes in line with the Strike Act. The decision to go on strike is made by the trade union’s strike board or employee representatives and must be communicated to the employer no later than 5 days before the planned start of the strike, or no later than 24 hours, in case of wildcat strikes. Strikes must be organized in such a manner so as not to put the safety of persons or property at risk, whereas in certain essential industries strikes may be organized only if they do not jeopardize minimum essential work processes. Employee participation in strikes is voluntary, and employers may not exert any sanctions against the strikers.

 
Discrimination

The Labor Act prohibits direct and indirect discrimination on any grounds, especially with regards to gender, birth, language, race, age, pregnancy, disability, nationality, religion, marital status, family status, sexual orientation, political or similar belief, social status, financial status, membership in political organizations or trade unions, as well as on other personal characteristics.

Discrimination is prohibited both with regards to persons seeking employment, as well as persons already employed, which means that discrimination is prohibited especially pertaining to job requirements and establishing employment, professional education, promotion, and dismissal.

Harassment and sexual harassment is prohibited by the Labor Act and regulated in detail in the Act on Prevention of Harassment at Work.

The so-called “positive” discrimination is allowed by the Labor Act for certain categories of persons, such as disabled persons and mothers on maternity and childcare leave.

In discrimination-related labor disputes, the burden of proof that there was no discrimination rests on the respondent employer if the claimant employee demonstrates the plausibility of discriminative conduct.

 
Employment of children and young persons

The minimum age for employment in Serbia is 15 if the work in question does not put the minor’s health, morals and education at risk. Permission from the minor’s legal guardian is required as is a certificate issued by the competent healthcare authority confirming that employment would not be detrimental to the underage employee.

Working hours of employees aged under 18 must not exceed 8 hours per day and 35 hours per week. Underage employees may not work overtime or in night shifts, unless for cultural, artistic or sports activities, or when it is necessary to continue work which had been interrupted by force majeure, provided that the employer does not have available sufficient number of adult employees.

Additionally, employees younger than 18 cannot be employed for such jobs which either demand particularly arduous physical work or underground, underwater or work at height, or which include exposure to harmful radiation, hazardous substances and extreme cold, heat, noise or vibration, as well as for such jobs which could have adverse health effects on the employee per the opinion of the competent healthcare authority. Employees aged between 18 and 21 may perform those jobs only if in possession of a medical certificate from the healthcare institution confirming that such work would not be detrimental to their health.

 
Outsourcing and personnel supply

The Labor Act is familiar with the notion of work outside of conventional employment, i.e. without employment agreement.

For instance, it prescribes that an employer may hire staff for temporary and casual work which does not, by its nature, exceed 120 work days per year. For these jobs, employers may either hire unemployed persons, senior citizens, young persons, or employees working part-time.

Another potential outsourcing option is a service contract, whereby an employer may hire a person to perform certain tasks which fall outside the scope of the employer’s business activities

and which pertain to construction or repair of a certain item or completion of a job which requires physical or intellectual labor.

The Labor Act also allows for an employee working full-time with one employer to be hired for work by another employer, but only up to 1/3 of full-time working hours.

In addition to these flexible employment schemes under the Labor Act, the Agency Employment Act, whose application began on March 1, 2020, introduced certain changes to the Serbian labor market. The Agency Employment Act introduced employment agencies as businesses specifically created, registered and licensed for employing employees and “leasing” them to other businesses in need of temporary staff. The “leased” employees are entitled to the same employment-related rights as employees regularly employed by the “lessee” employer, in line with the Agency Employment Act and the Labor Act.

 
Employee rights protections

In line with the Labor Act, employees are entitled to appropriate salary, safe and healthy work conditions, healthcare, protection of personal integrity, dignity and other rights in case of illness, decrease or loss of ability to work, old age and social security during temporary unemployment. As the Labor Act is the cornerstone of labor-related legislation, detailed employee rights are spread across a wide array of other legislation, such as the Occupational Safety and Health Act, Personal Data Protection Act, Whistleblower Protection Act, etc.

An employer’s competent authority, e.g. the CEO, is tasked with ensuring the protection of employee rights. In the event of a disagreement between an employee and employer regarding the protection of the employee’s individual rights, the employer’s bylaws or employment agreement may contain an amicable resolution mechanism, which will be resolved finally by an arbitrator. In case no arbitration agreement exists, an employee whose rights were breached is entitled to initiate court proceedings, or, alternatively, to authorize the representative of the trade union to initiate proceedings on the employee’s behalf.

 

This guide contains summaries of general principles of law. It is not a substitute for specific legal advice and should not be relied upon in relation to the application of the law or subject matter covered.

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