Employee Redundancy Process: A Guide for Employers in Serbia
Introduction: What is Employee Redundancy?
Sometimes, companies need to reduce their workforce due to downsizing, financial struggles, or operational changes. Employee redundancy occurs when a business eliminates positions because they are no longer needed. In Serbia, the redundancy process requires careful planning to ensure compliance with the law and fairness to employees.
This blog will explain the employee redundancy procedure, how long it takes, and the key legal steps that employers should follow.
Step 1: Making the Redundancy Decision
The redundancy procedure starts with the Decision made by the employer. This decision must include:
- Reasons for Redundancy: The company should explain why it needs to eliminate positions, showing a clear link between business challenges and the need to reduce staff.
- Employee Information: The employer must list the total number of employees, the positions affected, and the qualifications and experience of the workers being laid off.
- Criteria for Redundancy: If positions are not being abolished but the number of staff is reduced, the employer must outline the criteria for choosing which employees will be made redundant.
- Employment Measures: The employer should consider options like transferring employees, retraining, offering part-time roles, or finding employment with other companies. If these measures are not possible, the employer must explain why.
- Notice Period: The employer must state the length of the notice period before the employment ends, according to the contract.
The employer must post the decision on the company’s notice board for eight days before it becomes official.
Tip: Make sure the decision aligns with labor laws and company policies, including the Rulebook on job organization and systematization.
Step 2: Issuing the Termination Notice
Once the redundancy decision is official, the employer must issue a Termination Notice to each affected employee. The notice must include:
- Reasons for Termination: The employer should reference the redundancy decision and explain why the position is being removed.
- Severance Pay: The notice must detail the severance amount based on the employee’s contract and Serbian labor laws.
- Notice Period: The termination notice should specify how long the employee will continue working before the contract ends.
The employer cannot hire a new person for the same role within three months of the employee’s termination. If the company needs the same job performed, the employee has the right to be rehired first.
Step 3: Severance Payment and Employee Rights
Before terminating the employee’s contract, the employer must pay severance. The severance amount depends on the length of the employee’s service, the terms in the contract, and company policies.
Additionally, any unpaid salary or other earnings owed to the employee up until the termination date must be paid within the deadline specified in the employment contract or no later than 30 days after termination.
How Long Does the Redundancy Procedure Take?
The duration of the redundancy procedure depends on the notice period in the employment contracts. It typically takes from two weeks to two months to complete the process. Employers must allow enough time to follow all necessary steps and meet legal requirements.
Risks of the Redundancy Process
Redundancy can involve legal risks, especially if employees challenge their termination. If an employee disputes their redundancy, a court may order their reinstatement and compensation for lost wages.
Given the potential for legal challenges, it is crucial for employers to handle the redundancy process with care and seek legal advice to ensure compliance.
Conclusion: Handle Redundancy Carefully
Redundancy is a sensitive process that requires careful planning and adherence to the law. By following the correct steps—starting with a clear decision, issuing the termination notice, and paying severance—employers can manage the process smoothly and fairly.
If you’re considering workforce reductions, consult with legal professionals to ensure compliance with Serbian labor laws and protect your business from potential legal risks. Additionally, you can get your free template for Unilateral Termination of Employment by Employer here.
Are you facing the need to reduce your workforce? Contact STATT today for expert advice on managing redundancy procedures in compliance with Serbian labor laws.