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Serbia PEO & Employer of Record
WeHG provides an International PEO and global Employer of Record service in Serbia to companies ready to enter the Serbian market or hire local/expat employees in this country.
Traditional approach requires establishing a subsidiary in Serbia. However, our solution permits you to start the operations in Serbia within days therefore saving your time and money. WeHG would hire candidates on your behalf with your having the full right to maintain all the operational control of their work. So legally they would be our hired employees, on our local payroll, 100% compliant but still working on your behalf.
Serbia fast facts
Population, millions: 7
Land area: 88,361 km²
Local currency: Serbian dinar (RSD)
Hiring, Negotiating and Doing Business in Serbia
Necessity of written employment contract
Signing a written employment contract is necessary for every employee. There are 13 mandatory elements that must be included in employment agreements, including the (Labour Law):
- Name and registered seat of the employer.
- Name and place of residence of the employee.
- Work positiont and job description.
- Place of work.
- Type of employment.
- Basic wage on the date of conclusion of the employment contracted.
The language of an employment agreement is Serbian. However, versions in other languages can also be considered (optional).
Different forms of engagement: employment, contracting, work with private entrepreneur
Employee/worker. The Labour Law does not formally distinguish between different categories of workers. A traditional employment relationship is the most common way of hiring personnel in Serbia. There are two types of employment relationships, depending on their duration. Predominantly, an employment relationship is concluded for an unlimited time period. Exceptionally, labour agreements can be entered into for a limited period of up to 24 months, or longer due to certain specific cases.
Independent contractor/self-employed. The law directly states that, without taking into account other things, the term “other income” means remuneration received by an entrepreneur on the basis of carrying out activities for the same principal (a domestic or a foreign legal entity) provided that the entrepreneur fulfils at least five of nine criteria in the test of independence introduced by Article 85 of the law.
Serbia Employment Contract
Types of employment agreements
New labor laws allow fixed-term contracts for up to 24 months. In some cases, these can be prolonged to 36 months which is the entire length of a project. For people within five years of retirement the extension period may be up to the entire length of their remaining service.
Serbia working hours
The quantity of full-time working hours per week is 40 hours. Any extension of working hours is considered as overtime work, which must be additionally compensated by the employer. The working hours limit per day and per week is set out in the Labour Law. An employee cannot withdraw from the mandatory legal regime regulating overtime work.
Vacation leave in Serbia
Annual vacation period is fully paid by the employer. What is more, employees are eligible for an annual vacation allowance. The amount of the annual vacation allowance must be determined at the level of the employer in the applicable individual collective agreement, the work rules or the employment agreements (as the case may be). The minimum amount of the respective allowance is not established by the Labour Law.
Serbia Maternity Leave
Maternity leave includes:
- Pregnancy leave, starting between 45 and 28 days before the due date and lasting for three months after the delivery.
- Childcare leave, starting on the expiration of pregnancy leave.
Pregnancy leave and childcare leave together last 365 days and are fully compensated by the state. Employees are protected from dismissal during the maternity leave.
Serbian Severance Laws
In the case one-sided termination by an employee the notice period cannot be shorter than 15 days but not longer than 30 days. There is one exception regarding dismissal during probationary work. Before the expiry of the probation period either employer or the employee may terminate the employment agreement with a notice period of at least 5 working days.
If an employer decides unilaterally terminate the employment agreement, the notice period will depend on the particular termination cause. Specifically, if the employer decides to dismiss the employee who fails to achieve work results (that is, where the employee performs his/her duties without the required knowledge and competence for it), the employee is entitled to a notice period of at least 8 days and up to 30 days. This is the only reason for termination requiring a notice period. There are no obligatory notice periods for other legal bases of termination (that is, the employment relationship is terminated on the day when the decision on termination is properly conveyed to the employee).
If the employment termination is caused by redundancy, a severance payment is a premise for the termination of employment and an obligatory condition for the legitimacy of the decision on termination. There are no mandatory severance payments in other cases of termination.
When retiring employees are entitled to receive a severance payment consisting of two average salaries in Serbia.
The total rate for obligatory social contributions amounts to 36.55% (as of 1 January 2020), charged by both the employer and the employee.
Serbia’s social security program includes health insurance, pension and disability and unemployment insurance. Employees and employers contribute to all three areas at varying rates: the employer and the employee.
- Pension and disability: Employees contribution consists of 19.9%, and employers contribution consists 17.9%
- Health insurance: Employers and employees contribution consists of 6.15%
- Unemployment insurance: Employers and employees contribution consists of 0.75%
As an employer, you have to withhold all employees’ income tax as part of your Serbia payroll. Citizens of Serbia should get taxed on worldwide income, while non-citizens only get taxed on income earned in Serbia. Serbia’s personal income tax rate starts at 10% for individuals making up to RSD 457,012,800. Employees making above that limit get charged an additional 15%.
The rate of tax on employment income is 10% of the income. The basis of taxation is the gross income.
Health Insurance Benefits in Serbia
Entitlement to paid time off
An employee is generally entitled to sick leave any time he/she is sick or injured, without limitation. During the first 30 days of sick leave, the employee receives compensation amounting to either:
- 65% of his/her average salary in the preceding 12 months, if the sickness or injury is non-work related.
- 100% of his/her average salary in the preceding 12 months,if the sickness or injury is work related.
The employer pays compensation during the first 30 days. After this period, sick leave is compensated by the state. There are no limitations on the total duration of sick leave or number of sick leaves.
Entitlement to unpaid time off
Any sick leave triggers a right to paid vacation.
Additional Benefits in Serbia
Employees highly value a private health care supplement.
According to official sources, there are 12 days of public holidays in Serbia in 2020. The number of public holidays varies, depending on any concurrence between holidays and weekends or, as the case may be, between two holidays (for example, Easter holidays and May Day). If a public holiday occurs on Sunday, the next working day is non-working day. During public holidays, employees have the right to receive the compensation based on their average salary in the preceding 12 months.
Why Choose WeHireGlobally
WeHG takes care of all the hurdles concerning onboarding, payroll, compensation and benefits, termination of employment and tax filing. Our Employer of Record solution gives you an opportunity to manage your overseas staff efficiently while minimizing cost and risk.
The full-time working hours are 40 hours per week. Any extension of the full-time working hours is considered as overtime work, which must be additionally compensated by the employer. The maximum working hours per day and per week is set out in the Labour Law. An employee cannot opt out from the mandatory legal regime regulating overtime work.
In 2020, there are 12 days of public holidays in Serbia. The number of public holidays varies, depending on any overlap between holidays and weekends or, as the case may be, between two holidays (for example, Easter holidays and May Day).
The total rate for mandatory social contributions is 36.55% (as of 1 January 2020), levied on both the employer and the employee.
Serbia’s social security program includes pension and disability, health insurance, and unemployment insurance. Employees and employers contribute to all three areas at varying rates:
- Pension and disability: Employees contribute 19.9%, and employers contribute 17.9%
- Health insurance: Employers and employees contribute 6.15%
- Unemployment insurance: Employers and employees contribute 0.75%