Serbia

Serbia PEO & Employer of Record

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

Traditional approach requires establishing a subsidiary in Serbia.  However our solution allows you to start the operations in Serbia 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. .

Serbia fast facts

Population, million: 7
Land area: 88,361 km² 
Capital: Belgrade
Local currency: Serbian dinar (RSD)

Hiring, Negotiating and Doing Business in Serbia

Necessity of written employment contract

A written employment contract is a must 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 post and job description.
  • Place of work.
  • Type of employment.
  • Basic salary on the date of conclusion of the employment agreement.

The language of an employment agreement is Serbian. However, versions in other languages can also be concluded (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 usual way of hiring personnel in Serbia. There are two types of employment relationships, depending on their duration. As a rule, an employment relationship is concluded for an unlimited period of time. Exceptionally, employment agreements can be entered into for a limited period of up to 24 months, or longer in certain specific cases.

Independent contractor/self-employed. The law explicitly states that the term “other income” means, among other things, 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 extended to 36 months, the entire length of a project, or for people within five years of retirement, the entire length of their remaining service.

Serbia working hours

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.

Vacation leave in Serbia

Annual vacation is fully paid by the employer. In addition, employees are entitled to 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 determined by the Labour Law.

Serbia Maternity Leave

Maternity leave includes:

  • Pregnancy leave, which starts between 45 and 28 days before the due date and lasts for three months after the birth.
  • Childcare leave, which starts on the expiry of pregnancy leave.

Pregnancy leave and childcare leave jointly last 365 days and are fully compensated by the state. Employees are protected from termination during maternity leave.

Serbian Severance Laws

Notice periods

The notice period in the case of unilateral termination by an employee cannot be shorter than 15 days, and not longer than 30 days. There is one exception regarding termination during probationary work. Prior to expiry of the time for which the probation work was contracted, the employer or the employee may terminate the employment agreement with a notice period which cannot be shorter than five working days.

In the case of unilateral termination by the employer, the notice period will depend on the particular ground for termination. Namely, if the employer decides to terminate the employee for failing to achieve work results (that is, where the employee does not have the required knowledge and competence for performing his/her tasks), the employee is entitled to a notice period of at least eight days and up to 30 days. This is the only termination ground that requires a notice period. There are no mandatory notice periods for other legal grounds of termination (that is, the employment relationship is terminated on the day when the decision on termination is duly delivered to the employee).

Severance payments

In the event of termination of employment due to redundancy, a severance payment is a prerequisite for the termination of employment and a mandatory condition for the validity of the decision on termination. There are no mandatory severance payments in other cases of termination.

On retirement, employees have the right to a severance payment equivalent to two average salaries in Serbia.

Serbia Tax

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%

As an employer, you have to withhold all employees’ income tax as part of your Serbia payroll. Residents of Serbia should get taxed on worldwide income, while non-residents 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 threshold get charged an additional 15%.

Employer`s Burden 

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, in the case of non-work related sickness or injury.
  • 100% of his/her average salary in the preceding 12 months, in the case of work-related sickness or injury.

The employer pays compensation during the first 30 days. After then, 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 time off.

Additional Benefits in Serbia

Employees highly value a private health care supplement.

Serbia Holidays

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). If a public holiday occurs on Sunday, the next working day is a non-working day. During public holidays, employees are entitled to compensation based on their average salary in the preceding 12 months

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.

 

FAQ Serbia

  • Serbia working hours

    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.

  • Serbia Holidays

    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).

  • Serbia Tax

    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%
  • Hannah Kohl
    Author:
    Hannah Kohl. Head of Customer Success. Has extensive experience in the HR and IT industries. Helped 100+ international clients to achieve their global goals.

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