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Serbian Labor Law - 8 Crucial Elements

If you are considering establishing a company in Serbia, one of the important aspects to familiarize yourself with is the labor law legislation in Serbia, as well as some of the basic characteristics of Serbian labor law. For this reason, in this blog post, we will analyze the 8 most significant aspects of labor law in Serbia that every foreigner should keep in mind before deciding to start a business and employ in our country.

1. The Labor Law is not the sole source of labor rights in Serbia

All individuals interested in conducting business activities in Serbia should be aware that Serbian labor law is not regulated unilaterally. On the contrary, all rights, obligations, and responsibilities arising from employment relationships are regulated bilaterally: by state regulations and acts arising from the agreement of employers and employees.

State regulations include the Labor Law as the general law that regulates this branch of law in its entirety, as well as numerous special laws that detail specific aspects of labor law (e.g., the Whistleblower Protection Law, the Law on Prevention of Harassment at Work, the Occupational Health and Safety Law, the Law on Gender Equality). When establishing an employment relationship, it is not enough to comply with the provisions of the Labor Law; both the employee and the employer must also adhere to the rules set by special laws. For example, at the commencement of the employment relationship, the employee must sign a statement confirming that they have been informed by the employer about the protection provided regarding whistleblowing and protection against harassment at work, as required by special laws.

Additionally, it is important to inform the (future) employee about the processing of their personal data, which occurs during the candidate selection phase or inevitably during the duration of the employment relationship, as required by the Data Protection Law. Moreover, if you conduct monitoring of your employees, this law prescribes additional obligations that must be observed to avoid high penalties.

Acts arising from the agreement of employers and employees include the collective agreement and the employment contract, which must be in accordance with state regulations.

Through the collective agreement and the employment contract, a broader scope of rights and more favorable working conditions than those specified by the Labor Law and other state regulations can be envisaged. On the other hand, these regulations, under no circumstances, can contain provisions that provide employees with fewer rights or establish less favorable working conditions than those determined by state law, and if such a "less favorable" provision exists, the provisions of state law will be applied instead.

Nevertheless, the establishment of a collective agreement is contingent on the presence of a recognized trade union within the employing entity. If this is not the case, the mutual rights and obligations of the employee and the employer are regulated by the employment contract. In this case, the employer has the option to adopt a unilateral act - the Work Rules - regarding these issues. Work Rules and the collective agreement are general acts regulating working conditions at the employer. However, even in the presence of Work Rules, the employment contract can stipulate different rights and obligations, but only if they are more favorable to the employee.

2. Different types of engagements

It is important to note that in Serbia, work can be performed both within and outside an employment relationship.

When it comes to performing work within an employment relationship, the most significant forms are fixed-term employment and permanent employment. An employment contract can only be concluded for a fixed term if there are objective reasons justified by the term or completion of a specific job or the occurrence of a specific event. Such an employment relationship lasts only as long as these reasons exist, and for a maximum of two years from the moment of concluding the employment relationship. There are exceptions to this rule, and in specific cases prescribed by the Law, a fixed-term employment relationship can last longer than two years. If the duration is not specified in the employment contract, it is considered an indefinite-term employment contract.

Regarding work outside an employment relationship, the most common forms are temporary and occasional jobs, engagement through a contract for services, and supplementary work. Although these forms have their specific characteristics that distinguish them, all of them involve a written contract regulating their relationship.

Choosing the type of relationship to establish with an employee is crucial, as it determines the scope of mutual rights and obligations, tax treatment, duration, and the possibility of terminating the contract, as well as other important circumstances. Therefore, we recommend carefully assessing your needs before entering into any relationship and making a decision based on this analysis.

3. Rest, Leave, and Working Hours

The previously mentioned work arrangements can be conducted within the framework of full-time employment (40 hours per week), part-time employment (fewer than 40 hours per week), and reduced working hours. Typically, a workday spans eight hours, and the workweek encompasses five days, constituting full-time employment.

For individuals engaged in particularly arduous and health-hazardous activities, working hours are reduced proportionally to the detrimental impact of working conditions, not exceeding 10 hours per week (referred to as high-risk jobs).

In instances of sudden workload surges, force majeure, or other situations necessitating the completion of unplanned tasks within a specific timeframe, employees are obligated to work overtime at the employer's request. Overtime should not exceed 8 hours per week and 12 hours per day. The Labor Law outlines specific rules for overtime, including maximum duration, increased pay, and other considerations, which must be strictly followed.

Every employee working more than 4 hours per day is entitled to a break during working hours, lasting a minimum of 15 minutes. Those working 6, 10 (or more) hours per day are entitled to breaks of at least 30 or 45 minutes, respectively. In addition to breaks during the working day, employees have the right to daily and weekly rest, lasting at least 12 hours continuously within 24 hours or at least 24 hours continuously, typically taken on Sundays.

After one month of continuous employment with an employer, employees gain the right to annual leave, as determined by the employment contract or general regulations, with a minimum of 20 working days per calendar year. Importantly, employees cannot waive or be deprived of their right to annual leave, nor can it be replaced with monetary compensation, except in cases of employment termination. Upon termination of employment, employees have the right to receive compensation for unused annual leave days.


Mark has held a position in his company for an extended period. Mark's employment ends on July 1, 2023. The full annual leave entitlement in Mark's company is 20 working days, and Mark utilized his entire annual leave for 2022. This means that Mark will accrue 10 days of proportional annual leave for 2023 until the termination of employment. Mark can use the leave until the termination date, and if he doesn't use a certain number of days, the employer is obligated to pay him compensation for the unused days.

4. Complex Earning System in Serbia

The earnings system can be considered one of the most intricate facets of Serbian labor law, primarily due to the lack of a unified meaning and capacity for the concept of earnings in Serbian law.


Firstly, it's important to emphasize that the total earnings of an employee in Serbia consist of remuneration for performed work and time spent working, other income based on employment, and Compensation determined by the employee's impact on the success of the employer's business (awards, bonuses, etc.).

Remuneration for performed work and time spent working consists of basic earnings (determined by the employment contract), part of the earnings for work performance (based on the quality of work performed by the employee), and increased earnings (in cases of working on holidays, night shifts, and overtime).

Other payments that the employer is obligated to make to the employee based on the employment relationship include severance pay given to the employee upon retirement, funeral expenses compensation in the event of the employee's death or the death of a close family member, and compensation for damages due to work-related injuries or professional illnesses.

It's crucial to note that the concept of earnings in terms of current labor law implies gross income, not net income. In Serbia, earnings include contributions and income tax paid from the earnings.

There are three types of contributions: contributions for health insurance, contributions for pension and disability insurance, and contributions for unemployment insurance.

Both the employer and the employee are contributors to these contributions, considering that a portion of the contributions is paid "at the expense" of the employee (contributions payable "from earnings"), and the other part is "at the expense" of the employer (contributions that represent the employer's expense, i.e., contributions paid "on earnings"). However, unlike many other countries, in Serbia, both types of contributions are calculated and paid exclusively by the employer at the time of paying the employee's earnings.

The current rates for contributions and taxes are as follows:

Contributions for health insurance, paid by both the employee and the employer, are 5.15% of gross earnings.

Contributions for pension and disability insurance, paid by the employee, are 14% of gross earnings, while those paid by the employer are 10% of gross earnings.

Contributions for unemployment insurance, paid by the employee, are 0.75% of gross earnings.

Income tax is 10% of gross earnings and is paid by the employee.

5. Termination of Employment

The Labor Law defines several ways in which employment can be terminated.

Firstly, under certain circumstances on the part of the employee or employer, the employment relationship terminates independently of the will of the employer and employee, i.e., by operation of law. Concerning the employee, these circumstances may be related to the loss of work capacity, reaching 65 years of age with at least 15 years of insurance history, serving a prison sentence, or death. On the employer's side, such circumstances are linked to the cessation of the employer's business operations.

Secondly, employment can terminate due to the termination of the employment contract by either the employer or the employee. An employee intending to terminate the employment contract must provide written notice to the employer at least fifteen days before the intended termination date, without the obligation to state the reasons for the termination. It's important to note that the employment contract may stipulate a longer notice period, but not exceeding 30 days. On the other hand, the employer can terminate the employment contract only if there is a justifiable reason, which may be related to the employee's incapacity for work, violation of work obligations, or breach of work discipline, or in situations where, due to technological, economic, or organizational changes in the employer's operations, the need for the employee's work has ceased.

For example, a reason for terminating the employment contract due to a violation of work discipline would be a situation where the employee frequently arrives late to work or does not comply with other behavioral rules. To base the termination of the employment contract on such behavior, it's important to detail and specify these cases through general regulations (collective agreement or work rules) or through the employment contract.

In the case of surplus employees, especially considering market disruptions in recent times, it's crucial to follow the procedure for technological surplus in accordance with the law to avoid costly mistakes that can harm both employees and the company.

Also, the refusal of an annex to the employment contract by the employee constitutes a reason for terminating the employment contract, but only regarding certain essential elements of the employment relationship.

It's important to know that the refusal of any annex to the employment contract is not a reason for termination; this is the case only with an annex offered for changes explicitly stated in the Labor Law, such as offering relocation to another appropriate job when it requires a process and organization of work.


Finally, there is the possibility of mutual agreement to terminate the employment relationship based on a written agreement signed between the employer and the employee.

Adhering strictly to the termination procedure outlined in the Labor Law is crucial, given the multiple risks employers may encounter in the event of an unlawful dismissal.

6. Protection of Employees: General and Special Provisions

The Serbian Labor Law establishes a robust level of protection for various employee categories. Every worker in Serbia is entitled to fair compensation, personal integrity, and dignity protection, workplace safety and health, and rights safeguarding in cases of illness, reduced work capacity, or old age. Additionally, employees may enjoy extra protection if specified by employer regulations or employment contracts.

In conjunction with this general protection, specific employee categories receive special considerations based on their permanent or temporary characteristics.

Primarily, female employees are entitled to specific protection during pregnancy and childbirth and for childcare purposes. Pregnant employees are exempt from tasks that might jeopardize their health or that of the child. They are not allowed to work overtime or at night if it poses a risk to their well-being or the child's. Furthermore, they have the right to paid leave for pregnancy-related medical check-ups. During pregnancy, maternity leave, childcare leave, and leave for special childcare, employers cannot terminate the female employee's contract.

Employees with disabilities are granted legal and constitutional protection in Serbia. Crucially, employers must ensure that employees with disabilities or serious health issues only perform tasks within their existing work capacity.

Concerning the protection of young workers, Serbian employment regulations permit individuals as young as 15 to work. However, those under 18 cannot engage in tasks that may jeopardize their health or life, and those aged 15 to 18 are prohibited from working overtime.

7. Notification on Protection Against Workplace Harassment and Whistleblower Safeguards

Key legislative acts in Serbia related to labor law include the Law on the Prevention of Harassment at Work, the Law on Whistleblower Protection, and the Law on Gender Equality.


Serbia, as one of the early adopters, has enacted the Law on Whistleblower Protection, acknowledging whistleblowing as disclosing information about regulatory violations, human rights breaches, public health risks, life-threatening situations, safety concerns, environmental damage, and granting special protection to whistleblowers. Employers must inform employees about prescribed whistleblower protection, shielding whistleblowers from potential third-party harm.

The Law on the Prevention of Harassment at Work prohibits repetitive active or passive behavior towards an employee that violates dignity, personal integrity, reputation, health, or position, creating a hostile or offensive environment. Employers must inform employees in writing about the prohibition of workplace harassment and the rights and obligations of both parties.

The more recent Law on Gender Equality, adopted in 2021, expects employers to adopt a set of documents and align policies and behaviors to achieve complete gender equality among employees.

8. Labor Inspection, Misdemeanor Procedures, and Labor Disputes

Labor inspection oversees the implementation of regulations governing employee rights, obligations, and responsibilities. Employers and employees must cooperate with labor inspectors, allowing them to supervise, inspect documentation, and gather information.

If labor inspectors find that employers violate labor regulations, they are required to initiate misdemeanor procedures against them. Common employer violations include failure to formalize employment contracts ("under-the-table" work), non-payment of wages, failure to comply with annual leave provisions, wrongful termination, and failure to provide special protection for certain employee categories. Prescribed fines range from 150,000.00 to 2,000,000.00 dinars.

Apart from sanctions for law violations, employees and employers have legal protection through labor disputes, resolved urgently, leading to shorter procedures. Courts can issue interim measures to prevent violence or irreparable damage before a final judgment.

In practice, courts tend to protect the weaker party in the employment relationship, often appearing more favorable to employees. Therefore, employers should align their actions with the law and internal regulations from the outset, especially during termination procedures, where disputes are most common and the consequences are most serious.


In summary, while starting a business in Serbia may seem straightforward initially, Serbian labor law is intricately regulated, demanding attention to all nuances. For those interested in issues related to employing foreign nationals in Serbia, further information is available in our articles covering procedures for obtaining temporary residence permits, work permits, and employing foreigners as directors of Serbian companies.


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