Ultimate Guide to Serbian Labour Law

Welcome to the Ultimate Guide to Serbian Labour Law by Stojković Attorneys

Navigating Serbian labour law is essential for both employers and employees to maintain fair, compliant, and productive workplaces. Whether you’re a business owner looking to expand in Serbia, an HR professional seeking clarity on local laws, or an employee wanting to understand your rights, this comprehensive guide is tailored for you.

Understanding Serbian Labour Law

At Stojković Attorneys, we understand the intricacies of Serbian Labour Law and its impact on all aspects of employment, including hiring practices, working hours, benefits, and dispute resolution. This guide covers every critical aspect of employment law in Serbia, offering clear explanations, actionable insights, and the latest legal updates.

Explore the sections below to find everything you need to establish and sustain a legally sound, thriving workplace in Serbia. Let’s take the first step together toward a deeper understanding of Serbian Labour Law, protecting your rights and business interests in an increasingly complex legal landscape.

Table of Contents

1. Hiring Employees
   • 1.1 Employment Contracts: Legal Essentials
   • 1.2 Contracts Not Constituting Employment
   • 1.3 Employment of Foreign Nationals
   • 1.4 Special Rules for Executives and Directors
2. Working Time Regulations
   • 2.1 Standard Working Hours and Breaks
   • 2.2 Minimum Rest Periods
   • 2.3 Maximum Working Hours
   • 2.4 Overtime Work
   • 2.5 Working During Weekends
   • 2.6 Premiums for Night Work and Public Holidays
   • 2.7 Sanctions for Non-Compliance with Working Time Laws
3. Remuneration
   • 3.1 Minimum Wage Standards
4. Termination of Employment
   • 4.1 Grounds for Termination of Employment
   • 4.2 Termination by Mutual Agreement
   • 4.3 Employee-Initiated Termination
   • 4.4 Employer-Initiated Termination
   • 4.5 Termination Procedure for Employers
   • 4.6 Legal Protections Against Unfair Termination
   • 4.7 Special Protection Against Termination
5. Paid Annual Leave and Sick Pay
   • 5.1 Annual Leave Entitlement
   • 5.2 Sick Pay Provisions
6. Change of Employer
   • 6.1 Successor Employer Obligations
   • 6.2 Notification Requirements
   • 6.3 Cooperative Planning for Employee Impact
7. Employment Disputes
   • 7.1 Court Actions and Time Limits
   • 7.2 Peaceful Settlement of Labour Disputes
   • 7.3 Role of the Republic Agency for the Peaceful Settlement of Labour Disputes
8. Industrial Relations
   • 8.1 Trade Unions, Staff Representation, and Employer Associations
   • 8.2 Collective Agreements
9. State Benefits
   • 9.1 Social Insurance Contributions
   • 9.2 State Pension
   • 9.3 Unemployment Benefits

1. Hiring Employees in Serbia

1.1 Employment Contracts: Legal Essentials

General Conditions:
The Labour Law of Serbia (Official Gazette of the Republic of Serbia, Nos. 24/2005, 61/2005, 54/2009, 32/2013, 75/2014, 13/2017, 113/2017, 95/2018) mandates that employees must:

• Be at least 15 years old.
• Meet specific job-related requirements, as defined by the Labour Law and the employer’s internal rulebook.

Underage Employment (Below 18):
Employing persons under 18 requires written consent from their parents or guardians, along with confirmation from health authorities that the job is safe. Importantly, employment must not endanger the health, morals, or education of the minor.

Written Contract Requirement:
On the other hand, an employment contract must be in writing before the employee begins work. It should cover the following elements:

• Employer’s details and employee’s personal information.
• Job title, location, employment type (definite or indefinite), start date, working hours, salary details, payment terms, and work conditions.

Employment Type (Definite vs. Indefinite):
If unspecified, contracts are assumed to be for an indefinite term. Furthermore, employment of a definite period automatically converts to indefinite if the employee works at least five days beyond the contract’s expiration.

Employment Contract Amendments:
Yet, employers may amend terms by annexing the employment contract for role reassignment, relocation, salary adjustment, or as allowed by the Labour Law. Notably, rejection of these changes may result in termination.

Choice of Law and Jurisdiction Clause:
Finally, Serbian jurisdiction generally applies, and alternative jurisdictions are typically unenforceable.

Remote Work Provisions:
The Labour Law allows remote work, which must be specified in the employment contract. Additionally, employers must provide necessary equipment and cover expenses for remote work setups, ensuring a safe and healthy working environment.

1.2 Contracts Not Constituting Employment

Serbian Labour Law, however, also recognizes alternative service contracts, which include:

• Temporary and Occasional Work Contracts: These apply to tasks lasting up to 120 days per year and are available to unemployed individuals or part-time employees.
• Service Contracts: These are for work outside an employer’s regular operations, such as independent projects, with contributions to pension and health insurance covered by the employer.
• Professional Training Contracts: These cover internships or certifications needed for independent work in certain professions.
• Supplementary Employment Contracts: These allow employees to work for another employer for up to one-third of full-time hours.

1.3 Employment of Foreign Nationals

Work and Residence Permit:
Foreign nationals need a work permit and residence permit to be employed legally in Serbia. From February 1, 2024, these permits are combined into a single online-processed permit.

Exceptions:
Foreign nationals may enter Serbia for business purposes without a work permit under specific conditions. These include attending meetings or conferences, scientific and cultural events, and exhibiting at trade fairs.

1.4 Special Rules for Executives and Directors

Management Contracts:
Executives may enter employment contracts or management contracts, the latter being exempt from some Labour Law provisions. Such management contracts allow greater flexibility in determining terms, including remuneration and responsibilities, linked either to an indefinite or term-based employment arrangement.

2. Working Time Regulations

2.1 Standard Working Hours and Breaks

Weekly Standard Working Hours:
Employees are required to work a standard 40-hour workweek, while those under 18 are limited to 35 hours per week.

Daily Standard Working Hours:
Typically, employees work five days per week, with a standard eight-hour workday. The employer is responsible for determining the distribution of work hours across the week.

Breaks and Rest Periods:
Employees are entitled to breaks during their working day. Break durations vary by shift length:

• 6+ hours daily: Minimum 30-minute break.
• 4-6 hours daily: Minimum 15-minute break.
• 10+ hours daily: Minimum 45-minute break.

Crucially, breaks are paid and must be scheduled within the workday, not at the start or end of the shift.

2.2 Minimum Rest Periods

Daily Rest:
Employees must receive at least 12 hours of rest within each 24-hour period.

Weekly Rest:
The standard weekly rest period is a minimum of 24 consecutive hours, often combined with a daily rest period. If employees must work during their weekly rest, an additional 24-hour break is required the following week.

Shift Work Exceptions:
For employees on rotating shifts or with redistributed working hours, the minimum weekly rest remains 24 uninterrupted hours.

2.3 Maximum Working Hours

Redistribution of Working Time:
Employers can adjust working hours for operational needs, provided the average does not exceed 40 hours per week over six months. Moreover, weekly working time must never exceed 60 hours, with extra hours balanced by time off in subsequent periods.

Extended Redistribution Periods:
Collective agreements may extend redistribution periods to up to nine months. Hours exceeding an average of 40 per week over six months qualify as overtime.

2.4 Overtime Work

Overtime Conditions:
Employees may be required to work overtime in cases of force majeure, sudden workload increases, or other urgent needs.

Limits on Overtime:
Overtime work is capped at eight hours per week, and total daily work (including overtime) cannot exceed 12 hours. Special protections apply for vulnerable groups, including underage employees, female employees, and single parents.

Overtime Compensation:
Overtime is compensated at a minimum of 26% above the regular hourly rate.

2.5 Working During Weekends

While the weekly rest period typically falls on weekends, weekend work does not automatically warrant additional pay beyond the base salary. However, if weekend rest is disrupted, employees are entitled to a compensatory 24-hour break in the subsequent week.

2.6 Premiums for Night Work and Public Holidays

Employees required to work at night or on public holidays are eligible for additional compensation as stipulated in the Labour Law.

2.7 Non-Compliance with Working Time Laws

Sanctions:
Non-compliance with working time regulations may lead to penalties. The Labour Law authorizes labour inspectors to initiate offense proceedings against employers who violate working time rules.

Fines for Violations:
Fines range from:

• Legal entities: RSD 600,000 to 2 million (approx. EUR 5,300 to EUR 17,050) per offense.
• Entrepreneurs: RSD 300,000 to 500,000 (approx. EUR 2,560 to EUR 4,260) per offense.

Court Proceedings:
Employees, labour inspectors, or other competent authorities may initiate court actions to enforce compliance.

This guide provides a foundational overview of working time regulations in Serbia, helping employers and employees understand their rights and responsibilities. Proper adherence to these standards fosters a fair, safe, and lawful work environment.

3. Remuneration Guidelines Under Serbian Labour Law

3.1 Minimum Wage Standards

Determining Wages:
Under Serbian Labour Law, employee wages and the calculation method must be specified in either the employer’s labour rulebook, a collective agreement, or the employment contract. Wages must meet or exceed the legal minimum wage, which acts as a baseline to ensure fair compensation.

Setting the Minimum Wage:
The minimum wage in Serbia is set on an hourly basis and is established by the Social-Economic Council. Annually, by September 15, the Council reviews and decides on the minimum wage rate for the upcoming year, with the updated rate becoming effective on January 1.

For example:

• The minimum wage for 2023 was RSD 230.00 (net) per hour (Official Gazette of the Republic of Serbia, No. 88/2017).
• For 2024, the minimum wage has been set at RSD 271.00 (net) per hour.

Adjusting Wages to the Minimum Level:
If an employer decides to pay an employee the minimum wage, this decision must be clearly outlined in the labour rulebook, collective agreement, or employment contract. Additionally, employers are required to justify paying the minimum wage to the trade union representative if the practice continues for more than six months.

This section ensures compliance with wage regulations and guarantees that employees in Serbia receive at least the legally defined minimum compensation for their work.

4. Termination of Employment in Serbia

4.1 Grounds for Termination of Employment

Employment in Serbia may end under routine conditions such as contract expiration or retirement. Other possible grounds for termination include:

1. Mutual agreement between employee and employer.
2. Voluntary resignation by the employee.
3. Employer-initiated termination based on specific legal grounds.

4.2 Termination by Mutual Agreement

Employment can be ended through a written mutual agreement. Employers must inform employees in writing of any impact this may have on their eligibility for unemployment benefits.

4.3 Employee-Initiated Termination

Employees can resign by providing a minimum of 15 days’ written notice. Employment contracts may specify a longer notice period, but it cannot exceed 30 days.

4.4 Employer-Initiated Termination

Employers may terminate an employee in accordance with Serbian Labour Law, provided they follow due procedures based on specific reasons.

Grounds for Termination by the Employer:

1. Performance or Conduct-Related Grounds:
   • Inadequate work results or lack of necessary skills.
   • Criminal conviction related to work.
   • Failure to return to work after a leave for personal or family care responsibilities.
2. Breach of Work Duties:
   • Negligence, abuse of position, or misuse of resources.
   • Failure to follow safety protocols or misuse of protective equipment.
   • Other infractions as defined in collective agreements or employment contracts.
3. Non-Compliance with Work Discipline:
   • Refusal to follow lawful orders.
   • Absence without required medical certification.
   • Being under the influence of intoxicants during work hours.
   • Providing false information that impacted employment.
4. Employer’s Operational Needs:
   • Changes in technology, economics, or organization leading to redundancy.
   • Refusal to accept contract amendments.

4.5 Termination Procedure for Employers

The termination process depends on the grounds for dismissal and must include:

• A written termination notice, delivered to the employee personally or, if undeliverable, posted on the employer’s bulletin board (effective after eight days).
• The termination notice must include reasons and legal recourse information.

Notice Period for Performance Issues:
When termination is due to inadequate performance, employers must:

1. Provide written notice of the issue.
2. Offer support and time for improvement.
3. Observe a notice period of 8 to 30 days, depending on the employee’s service period.

Process for Breach of Duties and Discipline:
In cases of duty breaches, the employer must:

1. Issue a written warning detailing the grounds for termination.
2. Allow at least eight days for employee response.
3. Consider union feedback if the employee is a union member.
4. Complete termination within six months of the incident or one year from occurrence.

Alternative Measures Instead of Termination

If termination is not deemed necessary, employers may impose:

• Temporary unpaid suspension (1-15 working days).
• A fine up to 20% of the base monthly salary for up to three months.
• A formal warning with a conditional termination notice for future infractions.

Termination for Redundancy

In cases of redundancy, the employer must:

1. Draft a redundancy program when 10 or more employees face layoffs within 30 days, depending on company size.
2. Submit the program to the trade union and National Employment Office for feedback within 8 days.
3. Respond to proposals within 8 days and execute the program, including severance pay equal to one-third of the average gross monthly salary per year of service.

Notably, for three months following a redundancy, employers cannot rehire for the same role without first offering it to the redundant employee.

4.6 Legal Protections Against Unfair Termination

Employees may file a complaint within 60 days of termination if they believe their rights were infringed. Financial claims due to rights violations expire after three years.

4.7 Special Protection Against Termination

Protected Groups:
Termination is invalid if the employee is on or qualifies for family leave or if discriminatory motives, such as union activity or representative status, are involved.

Disabled Employees:
Employers must accommodate disabled employees by offering suitable roles according to their abilities. If no appropriate role is available, the employee may be considered redundant.

This comprehensive overview of employment termination in Serbia highlights the legal grounds, processes, and protections for both employers and employees, ensuring compliance and fair treatment across all employment scenarios.

5. Paid Annual Leave and Sick Pay in Serbia

5.1 Annual Leave Entitlement

Minimum Holiday Entitlement:
Every employee is entitled to annual leave, with a minimum of 20 working days as stipulated by the Labour Law. Additional days may be granted based on factors such as:

• Contribution to work.
• Working conditions.
• Years of experience.
• Professional qualifications.
• Other criteria specified in the employment contract or company policies.

Employees qualify for annual leave after one month of continuous employment, which includes periods of health-related leave and paid absences. For new or ending employment within a calendar year, employees receive 1/12 of the annual leave per month of employment.

Compensation for Unused Leave upon Termination

If employment ends before annual leave is fully utilized, the employer must compensate the employee based on their average salary over the past 12 months, proportional to any remaining days of unused leave.

Scheduling and Division of Annual Leave

Employers organize annual leave schedules in line with business needs and consult employees when planning. If operational changes require rescheduling, employers must notify employees at least five working days in advance. Leave may be taken in parts if agreed upon, with the first part consisting of at least two consecutive weeks. The remainder of unused leave must be taken by June 30 of the following year.

Carryover Due to Maternity or Childcare Leave

Employees on maternity or childcare leave can defer unused annual leave, which must be used by June 30 of the next calendar year.

Leave Compensation

While on annual leave, employees are entitled to their regular wage compensation.

Non-Waivable Right

Annual leave is a non-negotiable right; it cannot be waived or replaced by financial compensation, except upon employment termination.

5.2 Sick Pay Provisions

Classification and Compensation:
The Labour Law classifies sick leave as paid leave, entitling employees to compensation as follows:

• Illness or Injury Outside Work: 65% of the average salary from the past 12 months, with a minimum of the legal minimum wage.
• Work-Related Injury or Illness: 100% of the average salary over the past 12 months, with a minimum of the legal minimum wage.

Medical Certification Requirement

Employees must provide a medical certificate within three days of the start of incapacity for work. If unable to deliver it personally due to severe illness, immediate family members or household members may submit it. If the employee lives alone, they should submit the certificate within three days after recovery.

Verification of Health Status

If the employer doubts the legitimacy of an employee’s absence due to illness, it may request a health assessment from the public health authority.

These guidelines clarify employee rights to annual leave and sick pay under Serbian Labour Law, ensuring fair treatment for employees while maintaining compliance with national standards.

6. Change of Employer: Impact on Employment Relationships

General Principle

Under Serbian Labour Law, a change of employer does not affect existing employment relationships unless specified by a special agreement. Both individual and collective agreements may provide additional terms when there is a transition to a new employer.

Successor Employer Obligations

In the event of a status change or transfer of ownership, the successor employer must:

• Assume all employment contracts and abide by the existing labour rulebook or collective agreement that was effective with the previous employer.
• Continue to apply these terms for at least one year unless a new collective agreement with the successor employer is established or the existing agreement expires sooner.

Notification Requirements

The former and successor employers are required to inform the representative trade union of the impending change in employer at least 15 days before the transfer. Hence, notification must include:

• The date or proposed date of the transition.
• Reasons for the change in employer.
• Legal, economic, and social implications for employees.
• Measures to mitigate any adverse effects on employees.

Cooperative Planning for Employee Impact

Within 15 days prior to the employer change, both employers and the trade union must work together to prepare for any social and economic impacts on employees. But, if no trade union is present, employees must be directly informed of the change and its anticipated consequences.

This guide provides a clear framework for employer transitions, outlining the responsibilities of successor employers to protect employee rights and maintain continuity in employment terms during organizational changes.

7. Employment Disputes in Serbia

7.1 Court Actions and Time Limits

Right to Court Action:
Employees have the right to file a court action if they believe their rights have been infringed. The action must be filed within 60 days from the date the alleged infringement occurred or became known.

Time Limit for Monetary Claims:
Any financial claims related to employment become unenforceable after three years from the due date.

Jurisdiction for Employment Disputes:
Employees may file a claim in a court with jurisdiction over the employer’s registered office location or the area where the employer conducts business.

7.2 Peaceful Settlement of Labour Disputes

The Law on Peaceful Settlement of Labour Disputes (Official Gazette of the Republic of Serbia Nos. 125/2004, 104/2009, 20/2018) provides the framework for resolving labour disputes amicably.

Mediation and Arbitration:
Labour rulebooks, collective agreements, or employment contracts may establish a mediation process for resolving disputes. Additionally, both parties may agree to arbitration, appointing an arbitrator with expertise in the relevant field.

Role of the Republic Agency for the Peaceful Settlement of Labour Disputes:
Founded in 2004, this agency plays an active role in mediating individual and collective labour disputes, supporting both employers and employees in reaching amicable solutions.

These guidelines ensure employees are informed of their rights to address employment grievances, whether through court actions, mediation, or agency intervention, promoting fair and constructive resolution of workplace disputes.

8. Industrial Relations in Serbia

8.1 Trade Unions, Staff Representation, and Employer Associations

Employee Councils:
In companies with over 50 employees, workers have the right to form an employee council. The council’s role includes providing opinions and participating in decisions on employee economic and social rights, per the Labour Law and any applicable collective agreements.

Trade Unions:
So, employees are guaranteed the freedom to form trade unions and engage in union activities. For a trade union to be recognized as representative, it must:

1. Operate independently from the government and employer.
2. Be financed primarily through membership fees.
3. Have at least 15% of the company’s workforce as members.
4. Be registered on the official Trade Union Register.

Association of Employers:
Employers can, nevertheless, form associations if they employ at least 5% of the total workforce in a given sector or region. A representative employer association must be registered and consist of at least 10% of the employers within a specific industry or area, employing at least 15% of workers in that sector.

Paid Leave for Union Representatives:
Union representatives may receive paid leave for union activities. But, this entitlement varies:

• With a Collective Agreement: Representatives may receive 40 paid hours monthly if the union has at least 200 members, with additional hours for larger unions.
• Without a Collective Agreement: The union president may be entitled to 50% of the paid working hours outlined above.

8.2 Collective Agreements

Scope of Collective Agreements:
Collective agreements govern employment rights, duties, and responsibilities. They may take the form of general agreements, special agreements for specific industries or regions, or individual company-level agreements.

Parties to Collective Agreements:

• General Agreements: Signed by national employer associations and trade unions.
• Special Agreements: For specific industries or local territories, signed by relevant trade unions and employer associations.
• Company-Level Agreements: Signed between a company’s internal union and the employer.

Implementation and Binding Effect:
Collective agreements bind all member employers of the participating association and any who join the association afterward. Withdrawal from the association does not release the employer from the agreement for six months post-withdrawal.

Duration and Termination:
Collective agreements last up to three years, after which they automatically expire unless renewed. Agreements may be terminated early by mutual consent or by giving notice, with a maximum extension of six months following a cancellation notice.

These industrial relations guidelines ensure structured representation for both employees and employers, promoting fair practices through union participation, collective bargaining, and adherence to binding agreements.

9. State Benefits in Serbia

9.1 Social Insurance Contributions

The Serbian social security and insurance system covers three main areas: pension and disability insurance, health insurance, and unemployment insurance. Hence, contributions are shared between employees and employers as follows:

• Pension Insurance: Employee contributes 14%, and employer contributes 10%.
• Health Insurance: Both employee and employer contribute 5.15%.
• Unemployment Insurance: Only employees contribute, at a rate of 0.75%.

9.2 State Pension

General Retirement Age:
The standard retirement age is 65 with a minimum of 15 years of contributions to pension and disability insurance.

Retirement Age for Men:

• Age 65 with at least 15 years of insurance, or
• Age 60 (subject to gradual increase) with 40 years of insurance, or
• 45 years of insurance regardless of age.

Retirement Age for Women:

• Age 63 (subject to gradual increase) with at least 15 years of insurance, or
• Age 59 (subject to gradual increase) with 40 years of insurance, or
• 45 years of insurance regardless of age.

Private Pension Systems:
In addition to the state pension, private pension options are available under the 2005 Optional Pension Fund and Pension Scheme Law, supplementing retirement income.

9.3 Unemployment Benefits

Entitlement and Duration:
Unemployment benefits are available to eligible individuals, with monthly allowances ranging from RSD 22,390 (approx. EUR 185) to RSD 51,905 (approx. EUR 430). Benefits are granted for up to 12 months or, in special cases, up to 24 months if retirement is within two years.

Benefit Range:
The allowance must fall between 80% and 160% of the minimum wage set for the month in which the allowance is paid. Recipients also receive statutory health insurance during the allowance period.

This overview outlines the contributions, retirement age requirements, and benefits available under Serbia’s social security system, providing essential information for employers and employees to understand and plan for long-term social benefits.