Employment in Serbia

1. Hiring

1.1. Contracting

What are the rules on background checks? What kind of checks are allowed? Is a medical check mandatory before hiring an employee?

Pursuant to the provisions of the Labor Law (Official Gazette of the RS no. 24/2005, 61/2005, 54/2009, 32/2013, 75/2014, 13/2017 – decision of the CC, 113/2017 and 95/2018 - authentic interpretation), an employment relationship may be established with an individual who is at least 15 years old and who meets other conditions for working in certain jobs established by the law and the employer’s rulebook on internal organization and job classification.

This rulebook (on internal organization and job classification) – inter alia – stipulates the type and degree of the required professional qualification, i.e., education of the employee, as well as other conditions for working in a particular position (e.g., work experience, knowledge of languages, etc.).

When establishing the employment relationship, the candidate is obliged to provide the employer with documents and other proofs of the fulfillment of conditions for working in particular jobs (for which the employment relationship is being established) determined by the employer’s rulebook on internal organization and job classification.

However, the employer is not allowed to request from the candidate information about their family or marital status and family planning, i.e., to require submission of documents and other proofs which are not of immediate importance for the performance of work for which they are establishing the employment relationship. Additionally, the employer is not allowed to condition the establishment of an employment relationship with a pregnancy test, unless for the jobs with respect to which there is a significant risk to the health of the woman and the child determined by the competent health authority.

As for the minors (people under the age of 18), they can establish the employment relationship upon written consent of a parent, adoptive parent, or guardian provided that such work does not endanger their health, morals, and education, i.e., if such work is not prohibited by the law.

As regards the medical check, it is required in the event of establishing an employment relationship for performing jobs with an increased risk (which is possible solely on the basis of a health capacity to work in such jobs previously determined by the competent health authority in accordance with the law). In addition to the previous medical checks, the Law on Safety and Health at Work (Official Gazette of the RS no. 101/2005, 91/2015 and 113/2017 - other law) prescribes an obligation of the employer to conduct periodical medical checks of employees working in jobs with increased risk, as regulated by the bylaws passed thereunder. Also, the person under 18 years of age may establish the employment relationship only with a medical certificate establishing that they are capable to perform the activities of the specific position, provided that such activities do not harm their health.

The Labor Law stipulates that the provisions of this piece of regulation apply to the employees who work on the territory of the Republic of Serbia both with domestic or foreign employers (legal entities or natural persons), as well as to the employees who are assigned by the employer to work abroad unless otherwise specified by the law.

It is not necessary to register a legal entity in the Republic of Serbia to hire employees from the Republic of Serbia, however, such employees are in a special regime of mandatory social insurance, as established by the laws and bylaws governing the personal income tax and contributions for mandatory social insurance.

According to the Labor Law, the employment contract may be concluded for a definite or indefinite term, as well as for performing jobs with or outside the employer’s premises.

The Labor Law prescribes that an employment contract includes the following elements: (i) business name and seat of the employer, (ii) personal name and permanent or temporary residence of the employee, (iii) type and degree of professional qualification, i.e., education of the employee (which is a requirement for establishing the employment relationship), (iv) name and description of the jobs that the employee shall perform with the employer, (v) place of work, (vi) type of employment (for definite or indefinite term), (vii) duration of employment for definite term and basis for establishing such employment relationship, (viii) day of commencement of work, (ix) working hours (full-time, part-time or reduced working hours), (x) monetary amount of the base salary on the day of entering into the employment contract, (xi) elements for determining the base salary, work performance, salary compensation, increased salary, and other earnings of the employee, (xii) deadlines for payment of the salary and other earnings of the employee, and (xiii) duration of daily and weekly working hours.

Notwithstanding, the employment contract does not have to include elements mentioned under the items xi-xiii) above if the respective elements are established by the law, collective agreement, work rules, or other enactments of the employer in accordance with the law (in which case the enactment establishing these rights must be indicated in the employment contract at the time of its conclusion).

All general enactments of the employer with respect to the employment must be passed in a written form (e.g., work rules, the rulebook on internal organization, and job classification, etc.), as well as the employment contract, amendments to the employment contract (annex), notifications regarding the mobbing and whistleblowing (that need to be delivered to the employee when establishing the employment relationship), notification on the reasons for offering an annex to the employment contract, notification on the existence of reasons for termination of employment, the decision on employment termination and agreement on mutual employment termination.

Moreover, the Labor Law prescribes that any decision on exercising rights, obligations, and responsibilities (from employment) is delivered to the employee in written form, with an explanation and instruction on the legal remedy, unless otherwise stipulated by the law, which is the case with: (i) decision on using the annual leave, which can be delivered to the employee in electronic form, however, upon request of the employee the employer shall be obliged to deliver this decision to them in written form and (ii) salary slip (document containing the calculation of the salary and/or salary compensation), which can be delivered to the employee in electronic form.

The valid written form implies a paper/printed form with the wet-ink signatures of the party/parties involved.

There is no explicit legal requirement for employment contracts and other employment documents to exist in the official language of the Republic of Serbia. However, in case of proceeding with respect to some employment matter before the competent authority, any document provided to such authority would have to be submitted with an official translation into Serbian (made by the Serbian official court interpreter). Also, it would probably be assessed whether such a document was comprehensible to the employees, i.e., whether its content was communicated to them in an appropriate manner.

The employment contract may stipulate a probation period for performing one or more associated or related activities determined by the contract, for a maximum period of six months.

Prior to the expiration of the probation period, the employer or the employee may terminate the employment contract with a notice period that may not be shorter than five working days. The employer is obliged to provide a rationale for the termination of the employment contract during the probation period.

The employee who did not demonstrate appropriate work and professional skills during the probation period shall have their employment terminated on the day of expiry of the probation period specified in the employment contract.

As regards the executive and ordinary employees, there are no differences in terms of their employment relationships, except for (i) the provision pursuant to which a fixed-term employment relationship of director can last until the end of the term for which they were elected, or until their dismissal, and (ii) possibility stipulated by the Labor Law according to which it is possible to engage director outside employment, i.e., under the agreement on rights and obligations of the director.

1.2. Employees versus independent contractors

While the employees are engaged under the employment contract as a highly formal document and registered for the mandatory social insurance by their employers, who are liable for calculation and payment of the personal income tax and contributions for mandatory social insurance with respect to the salary and other earnings paid to the employee under the employment contract, independent contractors are natural persons engaged outside the employment relationship, i.e., on the basis of the service contract, and they are subject to a different tax regime, which depends on whether their income is paid by the domestic or foreign natural person or legal entity.

According to the Labor Law, the employer is allowed to engage a natural person under the service contract for an independent production or repair of a certain item and/or independent execution of a certain physical or intellectual work, provided that such activities are outside the employer’s business activity.

The Labor Law does not prescribe a particular consequence for miscategorizing someone as an independent contractor instead of an employee. However, in terms of the Law on Contracts and Torts (Official Gazette of the SFRY no. 29/78, 39/85, 45/89 - decision of the CCY and 57/89, Official Gazette of the FRY no. 31/93, Official Gazette of SM no. 1/2003 - Constitutional Charter and Official Gazette of the RS no. 18/2020), a service agreement concluded for the performance of jobs within the employer’s business activity would have an impermissible subject and would therefore be void.

1.3. Foreign employees

Pursuant to the provisions of the Law on Employment of Foreigners (Official Gazette of the RS no. 128/2014, 113/2017, 50/2018, and 31/2019), the employment of a foreigner is possible provided that they have a long stay visa based on employment (so-called D visa), temporary or permanent residence permit, and a work permit, unless otherwise determined by this law.

The conditions and procedures for obtaining a D visa, temporary and permanent residence permit are prescribed by this piece of regulation, as well as the conditions and procedure for obtaining the work permit. It is possible to apply for a D visa and temporary residence permit online. In addition, it is possible to obtain temporary residence and work permits in a unified procedure conducted simultaneously before the Administration for Foreigners and National Employment Service of the Republic of Serbia.

The Law on Employment of Foreigners provides for two different types of work permits: (i) personal work permit and (ii) work permit. The personal work permit enables a foreigner in the Republic of Serbia to freely employ, self-employ, and exercise unemployment rights in accordance with the law, and it can be issued to the foreigner who: (i) has a permanent residence permit, (ii) has a refugee status, or (iii) represents a special category of foreign citizens. As for the work permit, it can be issued as (i) a work permit for employment, (ii) a work permit for special cases of employment (for assigned persons, movement within a company, independent professionals, and education and improvement), and (iii) a work permit for self-employment.

As regards the neighboring countries, the Republic of Serbia is currently developing a single registration platform agreed upon within the Open Balkan initiative, i.e., between the governments of Serbia, North Macedonia, and Albania, with the purpose to simplify administrative procedures for traveling, residing and working of citizens of the other parties on their territories. Namely, pursuant to the provisions of the Agreement on Conditions for Free Access to the Labor Market in the Western Balkans, which was ratified by the National Assembly of the Republic of Serbia, citizens of the parties thereto (i.e., the aforementioned three countries) shall electronically register for exercising the right to free access to the labor market (i.e., by the appropriate electronic service established by each party, on the basis of the previously assigned unique ID number), without need to obtain the work permit. In this way, registered citizens shall be entitled to stay and work in Serbia for up to two years, with the possibility of re-registration. However, this platform is not operational yet.

Home office

The Labor Law prescribes that the employer and the employee may establish an employment relationship for performing activities outside the employer’s premises, i.e., remotely or from home.

This kind of employment contract, in addition to the mandatory elements of each employment contract, needs to include the following: (i) working hours according to the standards of work, (ii) a way of supervising the work and the quality of the employee’s performance, (iii) assets for work, i.e., for the performance of tasks that the employer is obliged to provide, install and maintain, (iv) using the employee’s assets for work and reimbursement of expenses for this use, (v) compensation of other work-related costs and manner of determining them, and (vi) other rights and obligations.

The base salary of the employee who works outside the employer’s business premises may not be established in a smaller amount than the base salary of the employee who performs the same work within the employer’s premises. Also, the provisions of the Labor Law on the working hours’ schedule and their rescheduling, overtime, and night-time work and leaves and absences shall also apply to the employment contract concluded for remote or work from home unless otherwise determined by the employer’s general enactment or employment contract. The volume of work and deadlines for completion of tasks performed under this kind of employment contract may not be determined in a manner that prevents the employee to use the rest period in course of a working day, daily rest, weekly rest, and annual leave in accordance with the law and general enactment.

2. Contract Modification

According to the legal framework and official standings of the competent authorities, any amendments to the employment contract need to be passed in a written/paper form and signed by wet-ink signatures of both parties thereto in order to be valid unless otherwise stipulated by the Labor Law. Therefore, it is not enough to exchange email correspondence or undertake some conclusive actions in that respect.

Provided that it is necessary to perform a particular job without delay, the employer may temporarily assign the employee to other appropriate jobs (which correspond to the type and degree of the employee’s education established in the employment contract), without offering them an annex to the employment contract as prescribed by the Labor Law, i.e., based solely on the employer’s written decision, but for a maximum of 45 working days in the period of 12 months.

In addition, changes to the employee’s personal information, employer’s data, or any other information that does not modify the work conditions of the employee may be acknowledged by the annex to the employment contract concluded without following the procedure prescribed by the Labor Law (i.e., without delivering to the employee an offer for the conclusion of the annex), i.e., solely on the basis of the appropriate documentation regarding the occurred changes.

Except for the cases specifically established by the Labor Law (as described above), any other changes to the work conditions of the employee, including their work tasks, need to be established by the annex to the employment contract.

As regards the modifications to the employer’s policies/internal regulations, the Labor Law prescribes that the employer’s general enactments, as well as the employment contracts executed with employees, may not include provisions that grant employees less rights or provide for less favorable work conditions than those prescribed by the Labor Law. However, there are no restrictions on the frequency of passing changes thereto.

3. Termination

3.1. Termination types

Pursuant to the Labor Law, an employment relationship shall be terminated: (i) by the expiry of the period for which it was concluded (in case of fixed-term employment), (ii) when the employee meets conditions for retirement (65 years of age and a minimum of 15 years of social insurance coverage, unless otherwise contracted between the employer and the employee), (iii) by mutual agreement of the employer and the employee, (iv) by the termination of employment contract by the employer or the employee, (v) at the request of a parent/guardian of the employee who is minor (under 18 years of age), (vi) in the event of death of the employee, and (vii) in other cases established by the law.

In relation to the above, the Labor Law provides for the following cases in which the employment relationship shall be terminated regardless of the will of the employer and the employee: (i) if it has been determined in accordance with the law that the employee lost their ability to work, (ii) if according to the provisions of the law or legally binding decision of a court or another authority, the employee is prohibited from performing certain tasks, while it is not possible to assign them to perform some other jobs, (iii) if the employee will be absent from work for more than six months due to serving a prison sentence, (iv) if the employee will be absent from work for more than six months due to security, educational or protective measure imposed on them, and (v) in case the employer terminates its business operations, as prescribed by the law.

As for mutual employment termination, i.e., by the agreement of the employer and the employee, it can be done anytime during the course of employment.

On the subject of the unilateral termination of the employment contract, while the employee is entitled to terminate it without any limitation, except for compliance with the notice period, the employer is allowed to terminate the employment agreement only in the events specified by the Labor Law, i.e., with cause, which shall be described in detail below.

As regards the termination of the employment contract by the employee, they are obliged to deliver a written termination notice to the employer, at least 15 days before the day indicated by the employee as the day of termination of the employment relationship. An employment contract or general enactment of the employer may provide for a longer notice period, but not longer than 30 days.

On the other hand, as previously mentioned, the employer may not terminate the employment contract for any reason, but solely for the reasons established by the Labor Law, i.e. for cause, which implies the following cases: (i) if there is a justified reason related to the employee’s ability to work and their behavior (if they did not achieve work results or does not have the necessary knowledge and skills to perform their duties, if they have been sentenced by a final judgment for a crime in the workplace or related to the workplace, and if they did not return to work for the employer within 15 days of the expiry of their inactive employment status), (ii) if the employee violates their work duty at their own fault (established by the Labor Law, employer’s general enactment or employment contract), (iii) if the employee disregards the work discipline at the employer (established by the Labor Law, employer’s general enactment or employment contract), (iv) if due to technological, economic or organizational changes the need to perform certain work ceases or there is a reduction in the scope of work, and (v) if the employee refuses to enter into an annex to the employment contract.

In addition to the requirement of the existence of appropriate grounds for employment termination, the employer is obliged to conduct the termination procedure prescribed by the Labor Law, i.e., to deliver to the employee a written decision thereof. Furthermore, if the employment contract is being terminated for the violation of work duty or discipline, prior to the issuance of the decision on termination, the employer is obliged to deliver to the employee a written warning on the existence of reasons for termination of employment, as well as to enable the employee to respond thereto within the established deadline (which cannot be shorter than eight days following the receipt of this warning). In case the employment contract is being terminated for a justified reason related to the employee’s ability to work and their behavior (as described above), the employer is obliged to previously provide the employee with a written notice regarding deficiencies in their work, including instructions and the appropriate deadline to enhance their work performance (following which the employee did not enhance work performance within the provided deadline).

Furthermore, the employee whose employment contract was terminated due to unsatisfactory work performance, i.e., lack of necessary knowledge and skills, is entitled to a notice period determined by the employer’s general enactment or employment contract, depending on the length of social insurance coverage (which cannot be shorter than eight, or longer than 30 days). In case the employment contract was terminated for technological, economic, or organizational changes due to which the need to perform certain work ceased or there was a reduction in the scope of work, such employee is entitled to the severance pay as set out by the Labor Law.

In the case of termination of the employment relationship, the employer is obliged to pay to the employee all unpaid salary, compensation of salary, and other earnings acquired by the employee until the day of employment termination, in accordance with the employer’s general enactment and employment contract, no later than 30 days following the employment termination. Should the employee be entitled to severance pay, it must be paid to them prior to the employment termination.

Regulations do not stipulate the mandatory elements of the mutual termination agreement. Commonly, it should include information regarding the parties thereto, information on the employment contract that is being terminated, and the date on which the employment relationship shall be terminated. However, the Labor Law prescribes that, before signing this agreement, the employer is obliged to notify the employee in writing regarding the consequences of exercising their rights based on unemployment.

According to the Labor Law, the employee may be temporarily suspended from work: (i) if criminal prosecution was initiated against them for a criminal offense committed at work or in relation to work, (ii) if by violating their work duties or non-compliance with work discipline at the employer the employee endangered property of significant value, and (iii) if nature of the violation of work duty or work discipline, or behavior of the employee, is such that they cannot continue working for the employer before expiry of the deadline for providing their response to the warning on the existence of reasons for employment termination.

Suspension may not exceed three months, following which period the employer is obliged either to return the employee to work or cancel their employment contract or impose another measure on them in accordance with the law. As an exception to the aforesaid, an employee placed under police custody shall be suspended from work for as long as this custody lasts.

Additionally, if the employer finds that violation of work duty or discipline done by the employee is not of such nature that their employment relationship should be terminated, instead of terminating the employment contract, the employer may impose on the employee one of the measures specified by the Labor Law, which include temporary suspension from work without compensation of salary, for the duration of one to 15 working days.

As per the non-compete considerations, according to the Labor Law, an employment contract may stipulate jobs that the employee cannot perform in their own name and on their own account, as well as on behalf of another natural person or legal entity, without consent of the employer. However, this kind of prohibition can be established only if there are conditions for the employee to acquire new, especially important technological knowledge, a wide circle of business partners or to learn important business information and secrets by working with the employer. Territorial validity of the non-compete clause is also established by the employment contract or employer’s general enactment.

In the case a non-compete clause is established solely for the duration of the employment contract, the employee is not entitled to special remuneration in that regard. However, if this clause is contracted to be valid following the termination of the employment relationship – whereby this period cannot exceed two years following the employment termination – it shall be valid solely provided that the employer undertakes to pay to the employee a monetary compensation (in the amount agreed in the employment contract).

3.2. Collective dismissal

The Labor Law stipulates that the employer is obliged to enact a so-called program of employees redundancy if it determines that due to technological, economic, or organizational changes, within a period of 30 days, the need for work of employees hired for an indefinite term shall cease with respect to at least: (i) 10 employees with the employer who employs more than 20, and less than 100 employees for an indefinite term, (ii) 10% of employees with the employer who engages a minimum of 100, and a maximum of 300 employees for an indefinite term, and (iii) 30 employees with the employer who has more than 300 employees engaged for an indefinite term. Additionally, this program needs to be passed by the employer who determines that, for the reasons mentioned above, the need for work of at least 20 employees shall cease within a 90-day period, regardless of the total number of the people it employs.

Content of the program of employees redundancy is prescribed by the Labor Law, which also stipulates that the respective document needs to be delivered to the representative trade union (if established with the employer) and National Employment Service, in order for the trade union to provide its opinion thereof, i.e., for the National Employment Service to deliver to the employer the proposal of measures aimed at preventing or reducing – as much as possible – the number of terminations of employment contracts, i.e., ensuring retraining, additional training, self-employment, and other measures for finding new employment for redundant employees.

3.3. Unlawful termination

If the court determines that the employee’s employment was terminated without legal ground, at the employee’s request, it will adjudge for the employee to be reinstated to work, as well as compensated for the damage and paid the corresponding contributions for mandatory social insurance (for the period in which the employee did not work). However, if the employee did not request to be reinstated, at their request the court will oblige the employer to pay the employee monetary compensation in the amount of a maximum of 18 salaries of the employee, depending on the duration of their employment relationship with the employer, employee’s age, and the number of dependent family members.

In the case the employer proves that there are circumstances that justifiably indicate that the continuation of the employment is not possible, considering all the circumstances and interests of both parties in dispute, the court will reject the employee’s request to be reinstated to work and will assign them compensation in a double amount of damages determined as described above.

Should the court determine that there was a reason for the termination of the employment relationship, but the employer failed to conduct the procedure for employment termination prescribed by the Labor Law, it will reject the employee’s request to be reinstated and will designate them the compensation in the amount of up to six salaries.

Compensation for damages is determined in the amount of lost salary, which includes the corresponding tax and contributions for mandatory social insurance in accordance with the law, but does not include food allowance, annual leave allowance, bonuses, awards, and other income based on the employee’s contribution to the business success of the employer.

Compensation for material damage due to an unlawful employment termination is paid to the employee in the amount of lost salary reduced by the amount of tax and contributions for mandatory social insurance, whereby tax and contributions for the period in which the employee did not work are calculated and paid according to the determined monthly amount of the lost salary.

Tax in terms of the abovesaid means the personal income tax on salary (at the rate of 10%), while the contributions for mandatory social insurance imply contributions for pension and disability insurance (at the rate of 25%), health insurance (at the rate of 10,3%) and unemployment insurance (at the rate of 0,75%).

As regards the compensation for non-material damage, it is not subject to taxation.

Revoking dismissals is not explicitly governed by the Labor Law; therefore, there is no prohibition according to which the employer could not do so.

During pregnancy, maternity leaves, and leaves from work for child care and special child care, the employer may not terminate the employee’s employment contract. In the case the employment contract is concluded for a definite term, it shall be extended until the expiration of the right to leave.

Also, the employer may not terminate the employment contract, nor put the employee in a disadvantageous position in any other way because of their status or activity as the employees’ representative, their membership in a trade union, or participation in activities of a trade union.

Employers cannot discipline an employee with a warning and a termination for the same conduct, as the respective measures are mutually exclusive. Namely, the Labor Law stipulates that should the employer consider that there are extenuating circumstances or that violation of work duty, i.e., non-compliance with work discipline is not of such nature that the employee’s employment relationship should be terminated, it may, rather than terminating their employment contract, impose to the employee one of the following measures: (i) temporary suspension from work without compensation of salary (for a period of one to 15 working days), (ii) fine of up to 20% of the base salary of the employee for the month in which the fine was imposed (for a period of up to three months), and (iii) warning with a threat of dismissal (stating that the employer shall terminate the employee’s employment contract without further warning if they commit the same violation of work duty, i.e., non-compliance with work discipline within the next six months). Therefore, the respective measures are prescribed alternatively, and cannot be imposed cumulatively.

4. Wage And Hour

4.1. Wage

According to the Labor Law, the employee is entitled to a minimum salary for standard work performance and time spent at work, which is determined pursuant to the minimum price of labor established in accordance with this law, time spent at work, and tax and contributions paid from salary.

The minimum price of labor is determined by a decision of the Social and Economic Council of the Republic of Serbia, per working hour, without tax and contributions and for a calendar year, not later than September 15 of the current year, to be applied from January 1 of the next year. In accordance thereto, for 2023, i.e., a month with a maximum number of working hours (184) it is established in the amount of RSD 42,320.00 net, i.e., RSD 57,273.60 gross (gross 1, which amount includes salary and tax and contributions paid from salary).

There are no industry-specific rules in this regard.

Salary needs to be paid in RSD, except for two cases set out by the Law on Foreign Exchange Operations (Off. Gazette of the RS no. 62/2006, 31/2011, 119/2012, 139/2014, and 30/2018), i.e.: (i) payment of the salary to residents – natural persons who are sent to temporary work abroad on the basis of the contract on the execution of investment works and (ii) payment of the salary to employees in diplomatic and consular missions, organizations within the UN and international financial organizations in the Republic of Serbia.

According to the Labor Law, there are four grounds for payment on an increased salary to the employee: (i) working on a holiday day which is a non-working day (a minimum of 110% of the base), (ii) night work (at least 26% of the base), (iii) overtime work (a minimum of 26% of the base), and (iv) for each full year spent as the employee of the employer (at least 0.4% of the base).

As per the wording of this piece of regulation, as well as an official opinion of the Serbian Ministry of Labor (011-00-368/2013-02 of May 27, 2013), both night work and shift work can be included in the base monthly salary, i.e., valued though this earning of the employee. More precisely, this opinion states that, if employees who work in shifts are valued for this kind of work through their base salary, it is also necessary to value their night work in the same way, given that shift work is performed continuously for 24 hours a day, which means that all employees who have the same base salary, as they perform the same jobs, should work in all shifts, including the night shift, and for the same base salary.

On the subject of other allowances, the Labor Law stipulates that the employee is entitled to compensation of expenses in accordance with the employer’s general enactment and employment contract, i.e.: (i) for commuting to and from work, in the amount of the price of public transportation ticket (if the employer did not provide its own transportation), (ii) for the time spent on a business trip, both in the country and abroad, (iii) for accommodation and food during fieldwork (if the employer did not provide to the employee accommodation and food without compensation), (iv) food allowance (i.e., remuneration for food during work, unless the employer provided this right to the employee in another way), and (v) annual leave allowance (i.e., for using the annual leave). These remunerations are not considered a salary, so they need to be individually expressed on the payment slip.

In addition, an employee is entitled to other earnings as set out by the Labor Law and general enactment, i.e.: (i) severance pay for retirement (in the minimum amount of two average salaries), (ii) compensation of funeral expenses in the event of death of a member of the immediate family of the employee, as well as to the members of immediate family in case of death of the employee, and (iii) compensation for damage sustained due to an injury at work or professional illness.

Moreover, a general enactment of the employer may stipulate a right to (i) a jubilee award, (ii) solidary aid, and (iii) other earnings of the employee.

4.2. Working time

Pursuant to the provisions of the Labor Law, full-time working hours mean 40 hours per week, whereby the working week usually lasts for five working days (from Monday to Friday), therefore full-time working hours usually imply eight hours per day. However, working hours within the working week are scheduled by the employer, who is entitled to, by its general enactment, stipulate full-time working hours shorter than 40 hours per week, but not shorter than 36 hours per week.

Working hours of the employee who works on jobs which imply an increased risk, i.e., which are specified by the law and the general enactment as particularly difficult, exhausting, and harmful to health, and where in spite of applying appropriate safety measures and protection of life and health at work, and means and equipment for individual protection, there is an increasingly harmful impact on the employee’s health, shall be reduced in proportion to this harmful impact of work conditions on the employee’s health and ability to work, for a maximum of 10 hours a week.

At the employer’s request, the employee is obliged to work beyond the full-time working hours, i.e., overtime, in the event of a force majeure, sudden increase of volume of work, and in other cases when it becomes indispensable to complete an unplanned work within a specific deadline. However, overtime work cannot last longer than eight hours a week, and an employee cannot work for more than 12 hours a day, including overtime. An employee who works on jobs with reduced working hours (as explained above) may not be assigned to work overtime unless otherwise specified by the law.

As per the Labor Law, the employee who works at least six hours per day is entitled to rest in the course of daily work for a duration of at least 30 minutes. However, the final duration of this rest depends on the working hours of the specific employee, i.e., the employee working longer than four and shorter than six hours a day is entitled to a minimum of 15 minutes of rest in the course of daily work, while the employee working more than 10 hours a day is entitled to this rest for a duration of at least 45 minutes. The rest in the course of daily work may not be used at the beginning or at the end of working hours, but it is included in the working hours. Additionally, employees are entitled to daily, weekly and annual leave, as set out by the Labor Law and employer’s general enactment.

Regarding the lunch allowance, as previously mentioned, the employee is entitled to the food allowance (i.e., remuneration for food during work), unless the employer provided this right in another way. This earning must be expressed in money.

As previously mentioned, overtime work is allowed solely in cases set out by the Labor Law, whereby it cannot last longer than eight hours a week and an employee cannot work for more than 12 hours per day, including overtime. However, the Labor Law does not include any restrictions with respect to the maximum yearly overtime work, which is confirmed by the official opinion of the Ministry of Labor no. 011-00-157/2012-02 of March 1, 2012.

The employer is entitled to reschedule the working hours when required by the nature of the activity, work organization, better use of work resources, more rational use of working hours, and execution of certain work within the established deadline.

Rescheduling of the working hours is done in the manner of ensuring that the total working hours of an employee in a period of six months during the calendar year do not exceed on average their contracted working hours. A collective agreement may determine that rescheduling the working hours is not associated with the calendar year, i.e., that it may last longer than six months, but not longer than nine months.

As a rule, rescheduled working hours are not considered overtime work. However, for the employee who agreed to work rescheduled working hours which on average, within the established period, are longer than their contracted working hours, working hours longer than the average shall be calculated and paid as overtime work.

In the event of a rescheduling of working hours, the working hours cannot be longer than 60 hours per week.

An employee is entitled to the annual leave in duration determined by the employer’s general enactment or employment contract, but no less than 20 working days per one calendar year. Duration of annual leave is determined by increasing the aforesaid legally prescribed minimum on the basis of the employee’s work performance, work conditions, work experience, professional qualification, and other criteria established by the general enactment or employment contract.

Annual leave is used in one or two or more parts, in accordance with the Labor Law, which in that regard prescribes that the employee is entitled to use the annual leave in two parts unless they agreed with the employer to use it in several parts. Furthermore, if the employee uses their annual leave in parts, the first part shall be used for a duration of at least two consecutive working weeks during the calendar year, while the remaining annual leave shall be used until June 30 of the following year at the latest.

In the event of termination of the employment relationship, the employer is obliged to pay to the employee who did not use their annual leave in whole or in part a pecuniary compensation in the amount of the employee’s average salary in the previous 12 months, in proportion to the number of days of unused annual leave. This compensation is considered damage compensation.

Pursuant to the Labor Law, the employee is entitled to the compensation of salary for the time of absence from work due to temporary incapacity to work lasting up to 30 days, as follows: (i) in the minimum amount of 65% of the average salary in 12 months preceding the month in which the temporary incapacity to work occurred, on condition that it cannot be lower than the minimum salary determined in conformity with the Labor Law, provided that this incapacity was caused by illness or injury sustained outside of work (unless otherwise established by the law), and (ii) in the amount of 100% of the average salary in 12 months preceding the month in which temporary incapacity to work occurred, on condition that it may not be lower than the minimum salary determined as set out by the Labor Law, in case the incapacity was caused by an injury sustained at work or by professional illness (unless otherwise stipulated by the law).

Compensation of salary during the temporary incapacity to work is paid by the employer for the first 30 days of incapacity. If the temporary incapacity lasts for more than 30 days, the salary compensation from the 31st day is paid at the expense of the health insurance fund.

5. Collective Labor Law

5.1. Trade unions

As per provisions of the Labor Law, a trade union is established in conformity with its general enactment, and it is subject to registration in accordance with the law and other regulations governing this matter.

A trade union is considered representative if: (i) it is established and operates according to the principles of freedom of trade union organizing and acting, (ii) it is independent of state agencies and employers, (iii) it is predominantly financed from membership fee and other own sources, (iv) it has a necessary number of members on the ground of membership application forms, as prescribed by the law, and (v) it is registered in conformity with the law and other applicable regulations.

In relation to the above, a representative trade union at the employer is considered the trade union which meets the above-listed requirements, and which has at least 15% of the total number of the employer’s employees for its members, as well as the trade union in a branch, group, subgroup, or business activity which holds as members at least 15% of that employer’s employees. As for the territory of the Republic of Serbia, i.e., territorial autonomy or local government unit, i.e., a branch, group, subgroup, or business activity, the representative trade union is considered the trade union which meets the subject requirements, and which holds as members at least 10% of the total number of employees in the respective branch, group, subgroup, or business activity, i.e., in the territory of a specific territorial unit.

A trade union whose representativeness has been determined in accordance with the Labor Law is entitled to (i) collective bargaining and entering into the collective agreement, (ii) take part in solving the collective labor dispute, (iii) take part in the work of tripartite and multipartite bodies, and (iv) other rights in conformity with the law.

As previously mentioned, a collective agreement may not grant employees fewer rights or provide for less favorable work conditions than those (rights and/or conditions) established by the Labor Law. Otherwise, the provisions of the Labor Law shall be applied.

Collective agreements are implemented directly, and all employment contracts (at the employer to whom the collective agreement is applied) need to be consistent therewith.

5.2. Works councils

As per the Labor Law, employees who work with an employer having over 50 employees may establish a work council, as prescribed by the law. Therefore, it is not mandatory, but a possibility.

Work councils provide opinions and participate in decision-making with respect to the economic and social rights of employees, as set out by the law and general enactment of the employer.

6. Transfer Of Undertakings

The Labor Law prescribes that, in the event of the status change, i.e., change of the employer pursuant to the law, the transferee employer takes over from the transferor employer its general enactment and all employment contracts which are valid on the day of this change.

The transferor employer is obliged to notify in writing all employees whose employment contracts are subject to transfer due to a status change, i.e., change of employer, of the respective circumstances.

A fine of RSD 600,000 to RSD 1,500,000 will be imposed on the employer that is a legal entity for a misdemeanor in case it declines employees’ rights with respect to the change of employer prescribed by the Labor Law. In case the employer is an entrepreneur, this fine shall amount to RSD 200,000 to RSD 400,000.

In addition, a fine in the amount of RSD 30,000 to RSD 150,000 shall be imposed on a legal representative of the employer.

Should an employee refuse the transfer of their employment contract or not declare it within five working days from the day of receipt of the notification of change of the employer, the transferor employer shall be entitled to cancel their employment contract.

7. Labor Investigation

Pursuant to the penalty provisions of the Labor Law, the highest misdemeanor fines (from RSD 800,000 to RSD 2,000,000 for the legal entity, i.e., from RSD 300,000 to RSD 500,000 for the entrepreneur, as well as from RSD 50,000 to RSD 150,000 for the legal representative of employer) are stipulated with respect to the following infringements: (i) if the employer did not conclude the employment contract or another contract in terms of this law with the person whom they engage, (ii) if the employer did not pay the salary, i.e., the minimum salary, (iii) if the employer did not pay the salary in money, except in the case set out by the law, (iv) if the employer did not provide the employee with salary calculation in accordance with the law, (v) if the employer did not enact a program for solving redundant employees, (vi) if the employer terminated the employment contract contrary to the law, (vii) if the employer prevented the labor inspector from performing control, i.e., otherwise hindered the activities of inspection, and (viii) if the employer did not act upon the decision of the labor inspector in accordance with the law.

However, there are other infringements of the Labor Law as set out therein, for which this piece of regulation also prescribes misdemeanor liability and fines.

As regards the Criminal Code (Off. Gazette of the RS no. br. 85/2005, 88/2005 - corr., 107/2005 - corr., 72/2009, 111/2009, 121/2012, 104/2013, 108/2014, 94/2016 and 35/2019), it prescribes several criminal offenses with regards to the labor rights, i.e.: (i) Violation of labor rights and social security rights, (ii) Violation of rights during employment and unemployment, (iii) Violation of management rights, (iv) Violation of the right to strike, (v) Abuse of the right to strike, (vi) Abuse of social security rights, and (vii) Failure to take safety measures at work, with respect to which this law prescribes either monetary penalty, i.e., fine or imprisonment.

Moreover, there are other regulations within the field of labor law (e.g., the Law on Safety and Health at Work), which establish additional misdemeanor offenses and fines that may be imposed on employers for non-compliance therewith.

As previously mentioned, the regulations that govern labor matters provide for different types and ranges of penalties, depending on the specific infringement.

As for the courts that have jurisdiction over labor disputes, including misdemeanors and criminal offenses with respect to labor, they are allowed to decide on a measure of prescribed penalty upon their own discretion, depending on the circumstances of the particular case, but within the legally established framework, i.e., boundaries.