Employment in Serbia: A Comprehensive Guide

In recent years, Serbia has become an increasingly attractive destination for businesses seeking to expand their operations into Eastern Europe and, more broadly, into Europe, especially for companies headquartered in the US. With its strategic location, skilled workforce, and developing regulatory environment, Serbia offers a promising opportunity for companies looking to tap into new markets or access experienced professionals who are globally scarce. However, like any foreign jurisdiction, understanding the specifics of employment laws and regulations is crucial for smooth business operations. In this comprehensive guide, Jaka Lounge explores the critical aspects of employment in Serbia, providing essential insights for both employers and employees.

Employment Regulations and Compliance

Employment in Serbia is regulated by the Law on Labor of the Republic of Serbia published in the “Official Gazette of the Republic of Serbia” No. 24 from 2005, which has been amended and supplemented on several occasions (61/05, 54/09, 32/13, 75/ 14, 13/17-decision. CC, 113/17 and 95/18- authentic interpretation), This Law establishes provisions on the protection of the rights of employees and ensures fair treatment in the workplace. With a workforce of around 2.9 million, Serbia adheres to strict regulations to protect employees and job seekers from discrimination based on gender, birth, language, race, color, age, pregnancy, health status, etc. disability, nationality, religion, marital status, family obligations, sexual orientation, political or other belief, social origin, property status, membership in political organizations, trade unions or some other personal characteristic. Employers must comply with these regulations to foster an inclusive and fair work environment.

Minimum Wage and Average Salary

The Serbian minimum wage by Decision of the Government of the Republic of Serbia from this year (2024):

Minimum wage	Per hour	Per month
RSD	271 RSD	47,154 RSD
EUR (exchange rate 117.5)	2.31 EUR	401.31 EUR

According to records from November 2023, the average salary in Serbia was:

Average Salary	Net	Gross I
RSD	89,956 RSD	123,971 RSD
EUR (exchange rate 117.5)	765.6 EUR	1,055 EUR

The growth of earnings in the period January-November 2023, compared to the same period last year, amounted to 15.0% in nominal terms, i.e. 2.0% in real terms.

Hiring Practices and Contractual Arrangements

When hiring in Serbia, it is important to understand the different types of employment contracts that exist:

– Working in an employment relationship

Fixed-term Contracts

An employment contract can be concluded for a certain period of time, to establish an employment relationship, the duration of which is determined in advance by objective reasons that are justified by the deadline or the execution of a certain job or the occurrence of a certain event, for the duration of those needs.

The employer may conclude employment contracts based on which the employment relationship with the same employee is based for a period that, with or without breaks, cannot exceed 24 months (a break of less than 30 days is not considered a break). Therefore, in the event that there is a break between two engagements lasting less than 30 days, the break itself is included in the total period of 24 months.

Regardless of how many fixed-term employment contracts are signed with the same employee, the maximum duration of a fixed-term employment relationship with that employee is 24 months (either through one or several fixed-term employment contracts).

A fixed-term employment contract can be concluded:

1) if it is necessary to replace a temporarily absent employee, until his return;

2) for work on a project whose time is determined in advance, the longest until the end of the project;

3) with a foreign citizen, based on a work permit in accordance with the law, at the latest until the expiration of the term for which the permit was issued;

4) for work at a newly established employer whose entry in the register with the competent authority at the time of concluding the employment contract is not older than one year, for a period whose total duration is not longer than 36 months;

5) with an unemployed person who is up to five years away from fulfilling one of the conditions for exercising the right to an old-age pension, the longest until the conditions are fulfilled, in accordance with the regulations on pension and disability insurance.

If a fixed-term employment contract is concluded contrary to the provisions of the Labor Law or if the employee remains working for the employer for at least five working days after the end of the period for which the contract was concluded, the employment relationship is considered to be based on an indefinite period.

Indefinite Contracts

An employment contract in which the time to which it is concluded is not determined is considered an employment contract for an indefinite period.

– Work outside the employment relationship

Temporary and occasional jobs

A contract on temporary and occasional jobs is a contract where an employment relationship is not established with the employee, and this type of contract is time-limited and the longest period it lasts is 120 working days in one calendar year.

In this situation, people do not have the same rights as when an employment relationship is established, such as paid sick leave, paid overtime, paid leave, the right to vacation, and the like.

The company can conclude a contract on temporary and occasional jobs with:

1) unemployed persons;

2) employed persons who work for another employer part-time (up to full-time);

3) beneficiaries of old-age pension.

Service contract

With a part-time contract, the employer can conclude a contract with a specific person to perform tasks that are outside the employer’s activities, and which have as their subject the independent production or repair of a certain thing, the independent performance of a certain physical or intellectual work. For example, if your company provides software development services, you won’t be able to hire a developer through a work contract, but you can pay someone to prepare a social media marketing plan through this contract (provided, of course, that you already have you have not employed someone in the marketing sector in such jobs).

You can conclude a work contract with an unemployed person, as well as an employed person (with another employer or with the work orderer himself), a person who performs an activity independently, an insured farmer, a student, a beneficiary of an old-age pension, a person who performs an artistic or other activity in the field of culture.

Agreement on professional training and development

A contract on professional training can be concluded to perform an internship, i.e. taking a professional exam, when it is required by law, i.e. by regulation provided as a special condition for independent work in the profession.

A contract on professional development can be concluded for professional development and acquisition of special knowledge and abilities to work in the profession, i.e. performing specialization, for the time being determined by the training program, i.e. specialization, under the special regulation.

The employer money to a person undergoing professional training or improvement remuneration and other rights, by the law, general act, or professional contract training and improvement.

Additional work

An employee who works full-time for an employer can conclude a contract on additional work with another employer, up to one-third of full-time work times.

Probation period

In the case of a fixed-term or indefinite-term employment contract, trial work can be contracted to perform the work for which the person was hired.

The employer himself determines the period of trial work, which must not last longer than 6 months.

This allows employers to cancel the employment contract if the employee has not demonstrated the appropriate work and professional ability or does not have the appropriate qualifications to perform the assigned work.

In this case, the employment relationship ends with the expiration date of the trial period specified in the employment contract.

The probationary period can be terminated even before its expiration by the employer and the employee.

The employer or the employee can cancel the employment contract with a notice period that cannot be shorter than five working days. In case of cancellation of the employment contract by the employer, the employee is provided with a written notice of the reasons for the termination of the employment contract.

Working hours in Serbia

The normal working week in Serbia is 40 hours. Anything beyond this is generally considered overtime, which cannot exceed four hours in a day. Employees are also entitled to at least one one-day break per week.

An employee who works at least six hours a day has the right to rest during the day’s work for at least 30 minutes.

An employee who works longer than four and shorter than six hours a day has the right to rest during work for at least 15 minutes.

An employee who works longer than 10 hours a day has the right to rest during work for at least 45 minutes.

Rest during daily work cannot be used at the beginning and end of working hours.

Taxation and Statutory Contributions in Serbia

Understanding tax obligations is paramount for employers operating in Serbia. Employers are responsible for paying taxes and contributions for pensions, disability, health insurance, and unemployment insurance. Compliance with tax regulations is essential to avoid penalties and maintain good standing with regulatory authorities.

Taxes and contributions payable

Income tax:

The Tax Law determines this tax on the income of citizens and defines:

method of taxation of citizens’ income
benefits and tax exemptions

Contribution to earnings

Contributions are determined by the Law on Contributions for Mandatory Social Insurance and determine 3 types of contributions:

PIO contributions (contributions for mandatory pension and disability insurance) including contributions for insurance tenure as well as case contributions for disability or occupational disease.
Contributions for compulsory health insurance -contributions for injuries at work are also included in occupational diseases established by law.
Contributions for compulsory insurance in case unemployment.

We will show how much taxes and contributions are borne by the employer and employees:

EMPLOYER:

11.5% – Pensions and disability contribution

5.15% – Health insurance

0.75% – Unemployment insurance

10% – Current salary tax rate

EMPLOYEE:

14% – Pension and disability contribution

5.15% – Health insurance

0.75% – Unemployment insurance

Types of leave

Paid vacation time:

Employees are entitled to at least 20 days of paid vacation annually.

Public holidays:

In addition to regular annual leave, employees in Serbia have an additional 10-12 days off each year due to public holidays.

Sick leave:

The compensation for wages during temporary incapacity for work amounts to 65% of the average salary that the insured earned in the previous three months before the month in which the temporary incapacity for work occurred.

The insured person is entitled to salary compensation in the amount of 100% of the basis for compensation in the case of voluntary tissue and organ donation, as well as in the case of temporary disability caused by an injury at work and occupational disease.

Wage compensation during temporary incapacity for work is paid by the employer for the first 30 days of that incapacity. If the temporary disability lasts longer than 30 days, the salary compensation from the 31st day is paid at the expense of health insurance funds of the Republic of Serbia.

Maternity leave:

An employed woman has the right to leave from work due to pregnancy and childbirth, as well as leave from work to care for a child, for a total duration of 365 days, with their full wages paid for the duration of the leave. The costs of maternity leave compensation up to 30 days are borne by the employer, and everything beyond that is borne by the RFZO (Republican Health Insurance Fund).

The amount of the maternity leave allowance is calculated based on the monthly basis for the last 18 months before the termination of employment due to pregnancy. The maximum amount of compensation cannot be higher than 3 average monthly wages in the Republic of Serbia, that is, 5 average monthly wages for rights realized from January 1, 2022. In the event that the employee receives salary compensation that exceeds the specified amounts, the salary compensation is paid first. The state pays the compensation to the employee’s current account, around the 21st of the month.

An employed woman has the right to start maternity leave based on the findings of the competent health authority at the earliest 45 days, and necessarily 28 days before the time set for childbirth (maternity leave).

Maternity leave lasts up to three months from the day of childbirth.

An employed woman, after the expiration of her maternity leave, has the right to leave from work to take care of the child up to the expiration of 365 days from the day the maternity leave began.

An employed woman has the right to maternity leave and the right to leave from work to take care of a child for the third and each subsequent newborn child for a total duration of two years.

Parental leave:

An employee has the right to leave from work with salary compensation (paid leave) for a total duration of up to 5 working days during the calendar year, in case of the birth of the wife.

The child’s father can use maternity leave (Article 94, paragraph 5, Labor Law) if the mother abandons the child if she passes away or is prevented from using that right for other justified reasons, and the law states serving a sentence, serious illness, and the like as justified reasons.

According to the provisions of Article 94, paragraph 6, and Article 94a, paragraph 4 of the Labor Law, the child’s father can use the right to leave work to care for the child. Therefore, on every occasion when the mother and the father of the child agree, the father of the child can be the beneficiary of leave from work for up to two years from the date of opening the maternity leave, without any additional conditions, of course, he must be employed to be able to be absent, i.e. to achieve the right to remuneration.

Therefore, the child’s father can use the right to maternity leave in exceptional circumstances, but leave from work to take care of the child is a possibility for the father, who can use the same only based on a (written) agreement with the child’s mother.

However, the company can give greater rights to employed fathers through its Rulebook of Work.

Other leave:

Bereavement leave: employees are entitled to five days of paid leave in case of the death of a close family member.

Health Purposes: Employees may take two paid days off for voluntary blood donation.

Adoption: Foster parents and adoptive parents are entitled to at least eight months of leave, starting from the end of the adoption process until the child is 11 months old.

The employment relationship may be terminated:

Upon expiry of the term for which it was established
When the employee turns 65 and has at least 15 years of insurance experience. Unless the employer and employee agree otherwise.
An agreement between the employee and the employer. The employer is obliged to inform the employee in writing about the consequences arising from the exercise of unemployment rights before signing the contract termination. If an employee signs a mutual termination, he has no right to monetary compensation, and this must be clearly communicated to him in the notice attached to the Termination of the Employment Contract by Agreement.
Termination of the employment contract by the employer or employee (In case of termination by the employer, the reasons and methods of termination are quite specific and must be followed by the Labor Law)
At the request of the employee’s parent or guardian younger than 18 years of age
Death of the employee
In other cases established by law

Notice period

Termination of the employment contract by the employee

The condition for the termination of the employment relationship based on the employee’s resignation is that the employer receives the employee’s statement of the stated intention, which is given in writing, which is clear, categorical, unambiguous and does not require any additional interpretation. Only such a statement of the employee, made freely and independently, without the influence of threat, coercion or delusion (without the influence of lack of will), constitutes a valid basis for the termination of the employment contract and produces legal effect from the moment of delivery to the authorized person of the employer.

When terminating the employment contract, the employee must state the date when the employment relationship ends, with that day having to be within the notice period. The employee submits the termination of the employment contract to the employer in writing, at least 15 days before the day the employee indicated as the day of termination of the employment relationship. This period is called the notice period by the Labor Law. The employer’s general act or employment contract may establish a longer notice period, but not longer than 30 days. This practically means the following: if the employment contract or some general act of the employer stipulates that the notice period lasts longer than 15 days, that rule applies, with the provision that no longer than 30 days must be prescribed. If the length of the notice period is not prescribed at all in the employment contract or in the general act of the employer, or if a notice period of more than 30 days is prescribed (which is not allowed), the legal rule of 15 days notice period is applied. Therefore, in terms of duration, the notice period can last between 15 and 30 days.

The notice period includes working days, as well as weekends and holidays, but also all other days on which the employee would not work (use of days off, etc.). The possible use of sick leave is also counted. Therefore, it is not about 15 working days, but about 15 calendar days. Therefore, the notice period lasts between 15 and 30 calendar days, not working days.

Notice period when the employer gives notice

In the case when the employer terminates the employee’s employment contract, no notice period is provided, except in one case. An employee whose employment contract has been terminated because he does not achieve the required work results, i.e. he does not have the necessary knowledge and abilities to perform the tasks he is working on, has the right to a notice period determined by a general act or employment contract, depending on the length of insurance, and which cannot be shorter than eight nor longer than 30 days. Therefore, only when the employer cancels the employment contract because it has established in the legal procedure that the employee does not achieve the required work results, i.e. does not have the necessary knowledge and abilities to perform the tasks he is working on, the employee has the right to a notice period and that is for the length that he determines or a general act of the employer or an employment contract, provided that it is determined in the range of a minimum of 8 and a maximum of 30 calendar (non-working) days. This notice period also includes any sick leave, vacation, or holidays, every calendar day. In the case of this notice period, it begins to run on the following day from the day of delivery of the decision on the termination of the employment contract.

The employee can, in agreement with the competent authority at the employer, stop working even before the notice period expires, with the fact that during that time he is provided with salary compensation in the amount determined by the general act and the employment contract. Therefore, even if the employer and employee agree not to serve the notice period, wage compensation must be paid.

Severance pay

Severance pay becomes mandatory if the employee is fired due to technological redundancy.

Namely, becoming redundant means that the need for your workplace has ceased due to technological, economic or organizational changes in the company. To clarify:

the term “technological changes” means that the workplace has become unsustainable, that is, unnecessary, due to, for example, technological innovations that have been introduced in the company;
“economic changes” mean financial difficulties, that is, the employer’s assessment that it is financially impossible for him to maintain the current number of employees and therefore reorganize the workplaces, closing those he considers redundant for the successful operation of the company;
the term “organizational changes” means any reorganization of the company, for example, the merger of companies, departments or the workplaces themselves with the aim of business prosperity.

These payments are determined by multiplying one third of the employee’s annual salary by the length of employment with the employer. Alternatively, severance pay can be agreed differently as stipulated in the employment contract or the Labor Regulations.

Damage compensation for unused vacation

Upon termination of the employment relationship, if an employee has not utilized their annual vacation entirely or partially, the employer is required to provide monetary compensation instead of the unused annual leave. This compensation is calculated based on the average salary earned by the employee in the preceding 12 months, proportional to the number of unused vacation days.

Labor law and HR administration

Our experts at Jaka Lounge provide support to labor companies in the human resources sector.

Our commitment to excellence is reflected in our diverse range of HR services, designed to streamline processes, enhance productivity, and drive organizational growth. From talent acquisition to learning and development, we provide strategic guidance and support at every stage of the employee lifecycle.

In HR Consultancy, we offer tailored solutions to address the unique challenges faced by businesses in Serbia. From streamlining core HR processes to providing salary reports, employee assistance programs, career guidance, and counseling, our consultancy services are designed to optimize organizational effectiveness and foster a positive work environment.

Learning & Development are at the heart of our approach, and we are particularly proud of the Academy for HR Operations, which has been attended by a large number of both experienced professionals and beginners who are just entering the world of human resources. Whether you are a large organization or an individual looking to improve your skills, we provide the tools and resources needed to accelerate your development journey in the field of human resource administration.

At Jaka Lounge, we are more than just a service provider— we are your strategic partner in human resources, i.e. human potential and company strengths. Our team of experienced professionals is dedicated to providing innovative solutions that will deliver tangible results and propel your organization towards sustainable success.

Ready to transform your HR operations and unlock your full potential? Contact us today to schedule a consultation and discover how our comprehensive HR solutions can empower your business to thrive in today’s competitive landscape.

Milica Berić