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Employment of Foreign Nationals – Current Conflict of Regulations

Employment of Foreign Nationals – Current Conflict of Regulations

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Since the beginning of the war in Ukraine, 219,153 Russian citizens have immigrated to Serbia. In contrast, over the past year, more than four thousand Russian entrepreneurs and companies have been established in Serbia.

In response to the newly emerging market circumstances, the Government of Serbia adopted the Decree on the criteria for awarding incentives to employers who employ foreign nationals in mid-June of last year. Under the conditions defined by the Regulation, for each employed foreigner, employers can obtain subsidies of 70% of the paid salary tax and 100% of the paid contributions for the Republic Fund for Pension and Disability Insurance.

One of the primary criteria for awarding incentives is that the employer and the foreign citizen conclude an employment contract for an indefinite period, with a monthly salary of at least 300,000 dinars. However, this type of engagement is not following the Labor Law, which stipulates that an employer with a foreign citizen can only establish an employment relationship for a certain period for the validity of the work permit issued to the foreigner.

Since the provisions of the Labor Law have a more vital legal force than the Regulation, the question of the practical scope of the Regulation itself is justified. The creator of the Regulation did not think to read the provisions of the Labor Law beforehand or at least consult with the relevant Ministry before the Regulation was adopted.

In light of such circumstances, the Ministry of Labor issued an official opinion on this topic at the request of an employer who hired Russian citizens in February of this year. In its opinion, the Ministry notes that a foreigner can establish a working relationship for a fixed period but that a public discussion is underway on the amendments to the Law on the Employment of Foreigners, which will stipulate that the employer can conclude an employment contract with a foreigner for an indefinite period.

Only after the entry into force of the changes mentioned above will employers be able to legally employ foreigners indefinitely and apply for the award of incentives provided for in the Regulation. In the meantime, may the creator of the Regulation think of passing a new regulation?

By Kristina Pavlovic, Senior Associate, SOG Law Firm

Serbia Knowledge Partner

SOG in cooperation with Kinstellar is a full-service business law firm in Serbia that provides foreign and domestic clients with premium-quality legal advice and assistance across a wide range of key areas of corporate law. The firm was founded in 2015 by a group of seasoned, internationally-trained lawyers. SOG has developed a distinctively dynamic culture, bringing together top talent, fostering entrepreneurship, and maintaining exceptional relationships with its clients.

SOG has achieved consistent growth in the volume of its business, accompanied by an exponential increase in the number of hired associate lawyers and the firm’s network of business contacts. SOG has a robust client base of multinationals, investment and private equity firms, and financial institutions. Clients praise SOG for being commercially minded, very responsive and knowledgeable.

Establishing permanent cooperation with Kinstellar is part of realising SOG's long-term development strategy to be the leading provider of legal services in the Western Balkans market.

Firm's website: https://www.kinstellar.com/


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