Serbia

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KEY DEVELOPMENTS FOR 2025

Termination Before End of Probation Period: Case Law Update

In a recent judgement of the Supreme Court of Cassation, it was held that prior to termination the employer must notify the employee in writing of the deficiencies in their performance and provide the employee with both guidance and an appropriate deadline by which to improve their performance. This acts to contradict the approach of the Labour Law. which provides no requirement to carry out a formal procedure prior to termination. While the effect of this judgement remains to be seen in practice, employers should be aware of the judgement and in any terminations within the probation period moving forward.

Health and Safety in the Workplace

The Rulebook on the Manner and Procedure of Risk Assessment at the Workplace and in Working Conditions came into force in September 2024 to supplement the Law on Safety and Health at Work introduced in May 2023, both aiming to align national law with EU and ILO standards. Under this legislation, employers are obliged to adopt an internal risk assessment act that complies with the provisions of the rulebook no later than 28 April 2025 and must implement all legislative requirements by 7 May 2025.

Amendments to Immigration Laws

The amendments to the Law on Foreigners and the Law on Employment of Foreigners, which came into effect early in 2024 along with corresponding bylaws, have resulted in reduced costs for employers in obtaining permits for foreign employees and provides employers with greater flexibility in engaging those workers. The amendments will be further supplemented by a list of shortage occupations which is anticipated to be published by the Serbian government in 2025, which will further simplify the process of hiring foreign workers by enabling those foreign employees in specific professions or roles to work without undergoing a labour market test and will enable the foreign employees to change employers within Serbia more easily.

KEY DEVELOPMENTS FOR 2024

New Law on Health and Safety at Work

The new Law on Safety and Health at Work (Zakon o bezbednosti i zdravlju na radu, no. 35/23) came into force on 7 May 2023. This piece of legislation has introduced several key changes in the field of safety and health at work, such as working from home and remote work, as well as the introduction of the electronic Register of Injuries at Work. Bearing in mind that the previous law was in force for more than 17 years without significant changes, and also economic and social changes which occurred during the previous period, the aim of the new Law on Safety and Health at Work is to align with EU standards, special conventions of the ILO ratified by Serbia, as well as creating legal certainty and transparency. Employers are obliged to organise their operations in accordance with the new law within two years from the date of its entry into force (i.e., by 7 May 2025). This should be performed in a timely manner, especially given that the penal policy is stricter under the new law.

New Immigration Rules

On 26 July 2023 the Law on Amendments to the Law on Foreigners and the Law on Amendments to the Law on Employment of Foreigners were adopted. Certain amendments of the law came into effect on 4 August 2023, while the most significant provisions that facilitate the procedure will come into force on 1 February 2024. The purpose of these amendments is to shorten and simplify administrative procedures related to the regulation of the status of foreigners, as well as to facilitate conditions for employing foreigners in Serbia. The introduction of a single unified permit, in the form of a biometric document, which will be valid for a period of up to three years, will contribute to further develop a more favourable business environment and the attraction of new foreign investments and qualified foreign employees. The new procedure is expected to greatly contribute to reducing costs associated with the issuance of permits, to enable employers to submit the application for the unified permit electronically, obtain necessary permits in a quicker and simpler manner and allow foreigners to simultaneously exercise the right to temporary residence and work in Serbia. It will also be possible to initiate the entire procedure while the foreigner is still abroad.

Digitalisation of Labour Documents

The Labour Law (Zakon o radu) was significantly amended in 2014, but the labour market has changed significantly since then. In order to leverage digitalization, it is anticipated that the Labour Law will introduce an alternative way of regulating employment rights and obligations using electronic documents and electronic signatures. Although there were announcements that the Labour Law would be amended during previous years, the COVID-19 pandemic and elections delayed this process. The amendments of the Labour Law are now expected to be adopted during 2024. If the amendments to the Labour Law are implemented, digitalization of labour documents would remove burdensome administrative and financial technicalities in the employment relationship and subsequently labour documents would be administered more efficiently and flexibly. All employers should be aware of these potential upcoming changes, particularly employers with a large workforce, as it should result in financial savings and decrease the time spent on administrative work.

KEY DEVELOPMENTS FOR 2023

Draft Law on Safety and Health at Work Has Been Submitted for Review

The existing legal framework in the field of safety and health at work does not contain any provisions on remote work. However, a draft Law on Safety and Health at Work has been submitted for review and will introduce provisions regulating remote work or work from home. It is expected that the draft Law will be adopted during 2023.

It is expected that the new Law on Safety and Health at Work will include clear and precise provisions on remote work from the perspective of safety and health at work, in order to avoid legal insecurity and uncertainty regarding this matter.

Employers should monitor developments in this area of law. Once the new Law on Safety and Health at Work comes into force, employers should update their existing documents in the field of safety and health at work, especially in respect of employees who are working remotely.

Tax Incentive for Newly Inhabited Persons in the Republic of Serbia

The Government of the Republic of Serbia adopted the Regulation on Criteria for Granting Incentives to the Employers who Employ Newly Inhabited Persons in the Republic of Serbia (Uredba o kriterijumima za dodelu podsticaja poslodavcima koji zapošljavaju novonastanjena lica u Republici Srbiji, “Official Gazette of the RS”, no. 67/2022), which entered into force on 18 June 2022.

In brief, the employer who employs a certain category of employees is entitled to refund 70% of paid tax as well as refund 100% of the paid contributions for mandatory pension and disability security. To be eligible for this incentive, the employer must execute a full-time employment agreement for an indefinite period with a person who, in the last 24 months before the execution of the employment agreement, has not resided in the Republic of Serbia for more than 180 days. Furthermore, the incentive may be applied only if the employee has a salary of RSD 300.000,00 (approx. EUR 2,550.00) or more.

The Regulation provides incentives to employers, while maintaining an equal fiscal burden, so that salaries paid to foreign nationals or domestic returnees, as well as persons educated abroad, are competitive with the salaries of foreign employers.

Employers should be aware of this Regulation, as it should make financial savings related to the payment of tax and contributions for mandatory pension and disability insurance, provided that the stipulated conditions are met.

Amendments to be Made to the Labour Law Regarding the Usage of Electronic Signatures and Electronic Documents

The Labour Law (Zakon o radu, (“Official Gazette of the RS”), no. 24/2005, 61/2005, 54/2009, 32/2013, 75/2014, 13/2017 – decision of CC, 113/2017 and 95/2018 - authentic interpretation) was significantly amended in 2014, but the labour market has changed a lot since then. In order to harmonize the possibilities brought by the digitalization process, it is anticipated that the Labour Law will introduce an alternative way of regulating employment rights and obligations using electronic documents and electronic signatures.

Although there were announcements that the Labour Law would be amended during 2021 and 2022, the COVID-19 pandemic and elections delayed this process. The amendments of the Labour Law are now expected to be adopted during 2023.

If the amendments to the Labour Law are implemented, digitalization of labour documents would remove burdensome administrative and financial technicalities in the employment relationship and subsequently labour documents would be administered more efficiently and flexibly.

Employers should be aware of these potential upcoming changes, particularly employers with a large workforce, as it should make financial savings, but also decrease the time spent on administrative work.

KEY DEVELOPMENTS FOR 2022

Draft Law on Safety and Health at Work Has Been Submitted for Review

The existing legal framework in the field of safety and health at work does not contain any provisions on remote work, which is particularly important in the context of the COVID-19 pandemic. However, a draft Law on Safety and Health at Work has been submitted for review and will introduce provisions regulating remote work or work from home. It is expected that the draft Law will be adopted during 2022.

It is expected that the new Law on Safety and Health at Work will include clear and precise provisions on remote work from the perspective of safety and health at work, in order to avoid legal insecurity and uncertainty regarding this matter. Employers should monitor developments in this area of law. Once the new Law on Safety and Health at Work comes into force, employers should update their existing documents in the field of safety and health at work, especially in respect of employees who are working remotely.

Introduction of Law on Flexible Forms of Work is Expected

The COVID-19 pandemic has changed the way in which people all over the world work, including online workers (freelancers). The Republic of Serbia is first in the world in terms of the number of freelancers per capita. However, freelancers, who are by nature closer to being self-employed than traditional employees, are not officially recognized by law, and therefore have fewer employment rights and the tax treatment of their income is uncertain.

The Law on Flexible Forms of Work is expected to be adopted during 2022. The provisions of the Law on Flexible Forms of Work will regulate the status of freelancers for the first time. Freelancers will be legally recognized, which implies their registration, but also maintaining that status only up to a certain amount of income. The tax aspect would also be covered by this law which is important, given that most freelancers in Serbia earn about EUR 1,000 per month. Freelancers usually earn income from abroad given that their clients are mostly foreign entities, so it is necessary for freelancers to be legally recognized and for each party in this relationship to know their rights and duties.

Amendments to be Made to the Labour Law Regarding the Usage of Electronic Signatures and Electronic Documents

The Labour Law (Zakon o radu, "Official Gazette of the RS", no. 24/2005, 61/2005, 54/2009, 32/2013, 75/2014, 13/2017 – decision of CC, 113/2017 and 95/2018 - authentic interpretation) was significantly amended in 2014 but the labour market has changed a lot since then. In order to harmonize with the possibilities brought by the digitalization process, it is anticipated that the Labour Law will introduce an alternative way of regulating employment rights and obligations using electronic documents and electronic signatures. Although there were announcements that the Labour Law would be amended during 2021, the COVID-19 pandemic delayed this process. The amendments of the Labour Law are now expected to be adopted during 2022.

If the amendments to the Labour Law are implemented, digitalization of labour documents would remove burdensome administrative and financial technicalities in the employment relationship and subsequently labour documents would be administered more efficiently and flexibly. Employers should be aware of these potential upcoming changes, particularly employers with a large workforce, as it should make financial savings, but also decrease the time spent on administrative work.

KEY DEVELOPMENTS FOR 2021

Legislative Changes to be Delayed

Although it has been announced that the Labour Law will soon be amended, the COVID‑19 pandemic has delayed this process. Given that employment‑related legislation is a sensitive topic, it is now anticipated that the announced changes will occur after the elections to be held in 2022, mainly as part of the process of harmonization of domestic legislation with EU legislation.

Remote Working Likely to be Further Regulated in the Near Future

Due to the COVID‑19 pandemic, work from home has become a rather popular manner of engagement for employees. In general, the Labour Law stipulates that an employee and an employer can agree that the employee will work part of their contracted working hours from home. In addition, the Labour Law generally recognises work outside of the employer's premises. Given its volume, it is expected that this area will be further regulated in detail in the near future.

Digitalization

Digitalization is one of the top priorities of the Serbian Government. In that respect, certain employment‑related processes are already performed electronically, such as registration and deregistration of employees. It is expected that the area of employment will be further affected by the overall process of digitalization, which will facilitate the companies' day to day operations.