08 February 2018

Will amendments to the Serbian Labour Act prevent illegal work?

A recent series of amendments to the Labour Act adopted by the National Assembly of the Republic of Serbia entered into force on 25 December 2017.


While the amendments may not be as numerous as in 2014, they are still very important for employers, as the new rules constitute specific obligations for them. 

The amendments aim to ensure that employers pay taxes and social contributions for their employees. Namely, the Act on Central Register of Mandatory Social Insurance prescribes that employers must register their employees in the social security system within three business days from the first day of their employment.

In practice, employers got around these rules by backdating the employment agreements in the event of an inspection, claiming that the employees had just started working with them. This gave employers an additional three days to register employees in the social security system, and allowed them to use the work of these illegal employees without paying any taxes or social contributions until the inspection takes place. Under these rules, it was difficult for the Inspectorate to discover the illegally engaged workers.
What amendments do employers need to take into account?
The most important amendments are:

  • Employers are obliged to register employees for mandatory social insurance on the basis of the employment agreement or other agreement concluded in accordance with the Labour Act at the latest before the employees commence work. In case of a breach of this obligation, employers can be fined RSD 300,000 – 1,500,000 (approx. EUR 2,500 – 12,500). The responsible person within a legal entity can be fined RSD 30,000 – 80,000 (approx. EUR 250 – 700)
  • Employers are obliged to keep a daily record of employees' overtime work. In case of a breach of this provision, employers can be fined RSD 150,000 – 300,000 (approx. EUR  1,250 – 2,500) and the responsible person within the legal entity can be fined RSD 10,000 – 20,000 (approx. EUR 85 – 170)
  • Notice of termination of employment shall be delivered to employees under the same rules applicable to the delivery of the decision on termination of employment, i.e. personally at the employer's premises or to the employee's address. In event of unsuccessful delivery, the employer shall make a written note thereof and publish it on its notice board. Notice shall be deemed delivered eight days after the date of publication.

What to expect?

The most important reason for introducing these amendments is to eliminate illegal work by employees (i.e. work without an employment agreement) and unlawful overtime work. As employers frequently take advantage of loopholes in the mandatory registration procedure for social insurance and heavily abuse overtime work (by including it in regular working hours rather than on an exceptional basis), this clearly can only be avoided by introducing new and stricter rules.

It is hoped that the amendments will soon benefit all employees.

We're on top of legal developments in Austria and CEE. Are you? Subscribe to our weekly updates!

Vlajković (Zdravković)

Local Partner