Serbia Makes Amendments to Labor Law
by Marjan Poljak, Mirko Kovac, Jelena Danilovic
The Parliament of the Republic of Serbia adopted Amendments to the Labour Law (the “Law”) on 18 July 2014. These amendments are long awaited and have been avidly discussed for some time due to divided public opinion. The Law will come into force 8 days after it is published in the “Official Gazette of the Republic of Serbia”.
Main novelties introduced by the Law are:
Definite term employment
The maximum duration of definite term employment has been extended to 24 months. The Law also prescribes specific circumstances by which definite term employment may exceed 24 months, as follows:
Work on a specific project (until completion of such project);
Work at a newly established employer (up to 36 months);
With unemployed individuals who have up to 5 years of service until retirement (until fulfilment of retirement conditions).
Increased salary for years of service and shift work
An employer is obliged to pay to an employee an increased salary only for the years of service at the current employer.
The obligation to pay increased salary for shift work is abolished.
Salary compensation calculation basis
The basis for the calculation of salary compensation due in case of an employee’s absence from work (holidays, sick leave, annual leave, paid leave etc.) has been changed, so that the employee in the above mentioned cases is entitled to salary compensation in the amount of the average salary over the previous 12 months.
Retirement payment
The minimum amount of severance pay for employee going to retirement has been decreased to 2 average salaries in the Republic of Serbia.
Redundancy pay
In cases where employees are made redundant, an employer is obliged to pay severance only for the years of service at the current employer (and related parties) – in the amount of one third of an employee’s salary for each completed year of service.
Disciplinary measures
The Law introduced new options for employers to issue disciplinary measures to an employee that has breached workplace disciplines or work duties, i.e.:
suspension (without salary) for a duration of 1 to 15 working days;
monetary fine in the amount of up to 20% of the basic salary, and in duration of 1 to 3 months;
warning letter, where the possibility of employment termination is notified in case of a repeated breach of the same working duty/working discipline over the next 6 months.
Termination of employment in case of breach of working duties / discipline
The Law enlists specific examples of breaches of working duties / discipline by which an employer may terminate the employment contract.
Moreover, periods of the statute of limitations for the termination of employment on these grounds, have been extended to 6 months as of the establishment of the facts which represent a basis for termination, and one year as of the occurrence of such events.
Termination based on underperformance
The obligation of issuing instructions to the employee, with an adequate deadline for improvement has been introduced. The duration of the notice period in case of termination on this basis has been decreased – the notice period now cannot be shorter than 8 days, nor may it exceed 30 days.
Consequences of unlawful dismissal
If it is determined before the court that there were justified grounds for employment termination, but that the employer breached provisions of the Law related to the termination procedure, the court will reject an employee’ claim to be returned to work, and will award compensation of damages amounting up to 6 salaries.
Shorter deadline for filing court claim
The employee may now file a court claim against a resolution that breaches an employment related right within a 60 day deadline.
Extended application of the collective bargaining agreements
A decision on extending the application of a branch collective bargaining agreement may be reached by the Government upon suggestion of the competent ministry. The decision will be made only if the respective branch collective bargaining agreement applies to employers which employ more than 50% of employees in a specific industry branch.
Misdemeanour fines
Misdemeanour fines have been increased, so that their maximum amount is now set to RSD 2 million (app. EUR 17,250).
Harmonisation deadlines
Employers are obliged to harmonize their internal enactments and employment contracts, with the Law, within a specific deadline following the date the Law becomes applicable, i.e.:
Systematisation Rulebook – 60 days
Employment contracts – 60 days
Collective Bargaining Agreement and Employment Rulebook – 6 months.