Montenegro PEO & Employer of Record

WeHG provides an International PEO and global Employer of Record service in Montenegro to companies willing to enter the Montenegro market or hire local/expat employees in this country.

Traditional approach requires establishing a subsidiary in Montenegro.  However our solution allows you to start the operations in Montenegro within days hence save time and money.  WeHG would hire candidates on your behalf while you maintain full operational control of their work. So legally they would be our employees, on our local payroll, 100% compliant but will work on your behalf. 

Montenegro fast facts

Population, million: 0,62

Land area, sq. km: 13,812 km2

Capital: Podgorica

Local currency: EUR

Hiring, Negotiating and Doing Business in Montenegro

Necessity of written employment contract

Employment must be based on an employment contract agreed between the employee and the employer. An employment contract must be made in writing before the employee starts working and should include the following:

1. name and registered office of the employer; 
2. employee’s personal name and his/her permanent or temporary residence; 
3. employee’s unique identification number or number of identification document (if a foreign citizen),
4. type and level of qualification, or education of the employee necessary for carrying out the job in question; 
5. job title and job description; 
6. place of work; 
7. type of employment (indefinite or definite period); 
8. duration of the employment contract for a definite period and the reasons why such employment was concluded; 
9. date of commencement of work; 
10. working hours (full-time, part-time or reduced); 
11. amount of basic salary, coefficient level and elements for determining work performance, salary compensation, increased salary and other employee income; 
12. deadlines for payment of salary and other income to which the employee is entitled; and
13. the manner of using vacations during work, daily and weekly leave, annual leave, holidays and other absences from work, in accordance with the Labour Law and the collective contract.  
14. The employment contract may also stipulate other rights and duties in accordance with the Labour Law and the collective contract. All matters not stipulated by the employment contract will be governed by the Labour Law and by the provisions of the collective contract.
15. When starting work the employee must present the employer with the documents that confirm that the requirements for employment determined in the act of systematization are fulfilled.
16. The employer is not allowed to demand data regarding the employee’s family/marital status or intentions with regard to family planning, nor the submission of documents and other evidence that are not directly relevant to the performance of the work in question, nor the submission of a statement of termination of the employment contract by that person.

Montenegro Employment Contract

Types of employment contract

Fixed term contracts are permitted for up to 2 years.

It is legally required to put a written employment contract in place in Montenegro, in the local language, which spells out the terms of the employee’s compensation, benefits, and termination requirements. An offer letter and employment contract in Montenegro should always state the salary and any compensation amounts in Euro rather than a foreign currency.

Collective agreements

Collective agreements are regulated within the Law on Labour. In accordance with the law, a collective agreement ( kolektivni ugovor) shall define the rights, obligations and responsibilities arising from and based on employment; the procedure of amending the collective agreement; mutual relations between participants of the collective agreement; and other matters of importance for an employee and an employer.

Agreements should not define lesser rights or less favourable working conditions than those set by the law. The collective agreement can add to existing rights or expand the scope of rights, or define more favourable working conditions than those defined by the Law on Labour.

Montenegro working hours

The competent authority of the employer makes the decision on the scheduling of work hours, the redistribution of working hours, part-time work and the introduction of work longer than full-time.

The competent state body or local self-government body decides the schedule, start and end of working time in certain activities and in certain jobs.

The employer is obliged to make a written decision on the work hours of employees and their schedule by shifts, if work is organized by shifts with that employer.

Vacation leave in Montenegro 

In general, employees are entitled to 21 days of paid annual leave.

Additionally, employees are eligible for up to 7 days of paid leave for:

• matrimony
• birth
• professional examinations
• death of an immediate family member

Sick leave: 

An employee has the right to be absent from work in cases of temporary disability due to illness, injury at work or in other cases in accordance with health insurance regulations.

The employee is obliged to inform the employer within three days at the latest and to submit the report on temporary disability to the employer within five days from the day of issuing the report.

The employee has the right to be absent from work because of voluntary donation of blood, tissues and organs, in accordance with the law and the collective contract.

If an employee suffers an injury or damage at work or in connection with work, the employer is obliged to compensate him/her for the damage.

Montenegro Maternity Leave

The right to parental leave is shared between both parents at their own discretion. The total duration of parental leave is 365 days, and excludes a period of 73 days that mothers’ are obliged to take before and after birth (minimum 28 days before and 45 days after birth). Parents are entitled to their full salary that they would be earning during leave. After the expiry of parental leave, the employer is obliged to return the employee to the same position, or another position with equivalent salary.

Montenegro Severance Laws

An employer may terminate an employee’s employment contract if there is a justified reason for doing so, namely:

1. for failure to achieve the results of work determined by a collective contract, an act of the employer or a contract of employment, for a period of not less than 30 days, if the employee has previously been given instructions for work;
2. for non-compliance with the obligations stipulated by law, collective contract and employment contract, which must be harmonized with the law and collective contract;
3. if his/her behavior is such that he cannot continue working with the employer in the cases prescribed by law and collective contract or by the act of the employer, which must be harmonized with the law and collective contract;
4. if he refuses to conclude the annex to the employment contract (in situations prescribed by the law)
5. if he/she abuses the right to absence due to temporary disability to work;
6. due to economic problems in the business;
7. in the case of technical, technological or restructuring changes which have led to the elimination of the need for the employee’s work

Montenegro Tax

Personal income tax (PIT) of 9% is levied on salaries, property-related income, and investment income (interest income earned by non-residents is subject to a 5% PIT).

In January 2016, the Montenegrin government increased the PIT rate from 9% to 11% for gross salaries exceeding average monthly salary (where the higher rate applies only on part of the salary exceeding the amount of average salary).

Although the increase of the tax rate was announced as a temporary measure, it is still applicable.

Social security contributions for pension and disability insurance, health insurance, and unemployment insurance are calculated and withheld by an employer from the salary paid to an employee. Unlike the other two types of social security contributions, pension and disability insurance contributions are subject to a specific annual cap (53,371 euros [EUR] for 2019).

Social security contributions are payable by the employer and employee at different rates. The amount borne by the employer is treated as an operating cost while the portion payable by the employee is taken from the gross salary.

The rates paid by the employer are as follows:

• Pension and disability insurance 5.5%.
• Health insurance 2.3%.
• Unemployment insurance 0.5%.

The rates paid by the employee are as follows:

• Pension and disability insurance 15%.
• Health insurance 8.5%.
• Unemployment insurance 0.5%.

Additional Benefits in Montenegro

Common benefits include supplementary health insurance, meal allowance, transportation allowance.

Montenegro Holidays

• New Year’s Day
• Orthodox Christmas Eve
• Orthodox Christmas
• Orthodox Good Friday
• May Day
• Orthodox Easter Monday
• Independence Day
• Statehood Day

Why Choose WeHireGlobally

WeHG takes care of all the onboarding hurdles, payroll, compensation and benefits, tax filing, and termination of employment. Our Employer of Record solution allows you to manage your overseas teams efficiently while minimizing cost and risk.