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North Macedonia: Adapting to Economic Challenges – Exploring Remote Work and Cost-Cutting Strategies

North Macedonia: Adapting to Economic Challenges – Exploring Remote Work and Cost-Cutting Strategies

Issue 10.9
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In recent times, the global economic landscape has raised concerns about the potential onset of a recession. Consequently, businesses operating in North Macedonia are proactively seeking strategies for cost reduction and organizational restructuring.

Additionally, the repercussions of the global energy crisis and the recession have begun to manifest locally, resulting in notable job losses in specific sectors. Concurrently, North Macedonia has felt the effects of the so-called “Great Resignation” and “Brain Drain” phenomena, witnessing a surge in voluntary departures from employment positions. These developments, coupled with industry-specific redundancies, have dynamically altered the employment landscape in the country.

Despite these challenges, North Macedonia tries to demonstrate pockets of growth and resilience. In any case, businesses must remain agile and responsive to the ever-changing economic environment. When confronted with economic adversity, businesses frequently turn to an array of strategies designed to economize while simultaneously safeguarding the well-being of their workforce. In practice, we see different approaches depending on the goals and size of companies, such as restructuring, mass dismissals, part-time employment, remote work, etc.

Organizational restructuring encompasses the realignment of a company’s operations, potentially involving departmental mergers, or the elimination of redundant positions. While restructuring can be a potent cost-saving tool, it necessitates careful consideration of its impact on employees and their morale. In certain circumstances, mass dismissals may become a necessary but drastic measure. It is essential to adhere rigorously to legal regulations and ensure that affected employees receive fair compensation when implementing such measures.

The adoption of part-time employment arrangements can effectively reduce expenditures while retaining valuable talent. Such arrangements offer flexibility and mutual benefits for both employers and employees. It is imperative to uphold workers’ rights and ensure equitable compensation when implementing part-time work arrangements. These practices offer several advantages, including enhanced flexibility and the potential for cost savings related to office space and overhead expenses.

The existing Macedonian labor legislation does not explicitly regulate “remote work” but rather “work from home,” which creates legal ambiguity when applying global-standard remote work practices and often generates legal uncertainty for both employers and employees. Namely, the Macedonian labor framework defines work from home as tasks performed at the employee’s residence or other chosen premises, with legislation governing employment contracts for such arrangements and determining the legal status of home-based workers. Regrettably, the applicable General Collective Agreements do not address work-from-home matters, similarly echoed in branch collective agreements.

Analyzing the provisions within the Law on Labor Relations, it appears evident that the legislator’s intent was to regulate employment contracts for work from home in the form of “initial” contracts that establish employment relations. The contracts cover tasks that fall in the description of the employer’s registered business activities or are necessary for their performance. This situation necessitates employers to submit employment contracts for work from home to the Macedonian labor inspector within three days of their conclusion. However, given that the Law on Labor Relations does not prohibit the subsequent alteration of the place of work, regardless of whether it initially designated work in the employer’s premises or another location chosen by the employee, it implies contractual flexibility. In essence, the current Macedonian labor legislation imposes no limitations on organizing or altering work locations. Transitioning from the employer’s premises to an alternative location represents a fundamental change in the employment contract’s elements, necessitating a mutual agreement between the employer and the employee. According to the existing legal framework, amending employment contracts for remote work – regardless of the model chosen – can be achieved through an amendment.

It is anticipated that Macedonian legislative authorities will soon introduce remote work provisions into relevant legislative acts governing employment contracts in remote work contexts. Such remote work-related amendments should include provisions on amendment agreements that address various aspects, including remote work application, working conditions, duration of working hours, breaks and rest periods, occupational safety and health regulations, data protection, and employee privacy, as well as regulations concerning the use of work equipment.

To successfully integrate remote work practices, businesses in North Macedonia must carefully assess the unique challenges and opportunities these arrangements present. By aligning global trends, such as remote work, with the specific needs and attributes of the local workforce, companies can navigate economic adversity effectively, ensuring their resilience and sustainability in uncertain times.

By Marija Filipovska Jelcic, Partner, and Martin Ivanov, Attorney-at-Law, CMS

This article was originally published in Issue 10.9 of the CEE Legal Matters Magazine. If you would like to receive a hard copy of the magazine, you can subscribe here.