Hire employees in Serbia

Serbia’s information and communications technology sector has grown considerably in the last few years and is now among the country’s most important industries. Belgrade is considered as the nation’s major IT hub and international interest in Serbia’s IT talent is on the rise– especially as Serbia is known for its population’s high English proficiency levels.

The Ease of Doing Business Index ranks Serbia among the countries which provide a very business-friendly environment. The tax system is relatively easy to navigate for both employees and employers and international treaties facilitate cross-border trading.

Employment contracts in Serbia need to be concluded in writing. The required language is Serbian although it is allowed to draft the agreement in several languages. Every contract should include at least the following information:

• Identification of both parties

• Date of commencement (and employment duration for temporary contracts)

• Job description, duties and responsibilities

• Gross salary

• Working hours

• Total number of holidays

• Notice periods for employment termination

• Other information on meal allowances, additional leave etc.

Serbian law distinguishes between two different types of employment agreements: fixed-term contracts (maximum length: 24 months) and indefinite employment contracts.

Probation Period

New employees can be put under a probationary period of up to 6 months. During this time, the notice period is reduced to 5 working days.

Working Hours

A typical working week in Serbia is 40 hours, i.e. eight hours per day with a 30-minute rest break. Employees usually work Monday to Friday. Workers should have at least 12 hours of rest between two workdays and one proper rest day per week.

Overtime

Overtime is permitted but not very common. If requested, overtime shouldn’t exceed 4 hours per day – or 8 hours per week. Every hour worked in addition to normal working hours must be remunerated at a rate of at least 126 percent of the employee’s usual wages.

Payroll in Serbia is typically run once per month.

Minimum Wage

In Serbia, minimum wage rates depend on the employee’s agreed monthly working hours. Compensation rates are currently set as follows (February 2023):

• 160 working hours: RSD 49,399.15

• 168 working hours: RSD 52,023.98

• 176 working hours: RSD 54,648.79

• 184 working hours: RSD 57,273.60

The hourly rate is currently set at RSD 230.

Sick Pay

For the first 30 days, sick pay is provided by the employer at rates of either 65 percent (in case of non-work-related injury or illness) or 100 percent (in case of work-related injury or illness). Employees are obliged to present a medical certificate no later than 3 days after the beginning of their sick leave. Sick leave exceeding 30 days is covered by the National Health Insurance Fund.

Bonuses

There is no legal requirement for bonus payments but most employees will expect to receive a yearly bonus or reward. What’s more, Serbian employees are entitled to a 0.4 percent pay rise for every year they work for the company.

Employees and employers in Serbia are subject to the following tax and social security contribution rates (last review February 2023):

Taxes

Employers

15%

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• 15% corporate tax rate

• 20% VAT (standard rate)

Employees

10%

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Individual income tax:

10% flat rate *

Social security

Employers

15.15%

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• 10% pension and disability insurance

• 5.15% health insurance

Employees

19.9%

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• 14% pension and disability insurance

• 5.15% health insurance

• 0.75% unemployment insurance

* Additional rates apply to income exceeding certain thresholds.

Please note that the social security contributions indicated above do not necessarily reflect the actual employment costs. These may differ depending on the employment contract and due to other factors (e.g. 13th and 14th salary, health insurance allowances, accrual for severance pay, etc.).

Annual Leave

Every employee is entitled to at least 20 paid vacation days each year, plus an annual vacation allowance which is to be defined by the employer. The leave entitlement is earned after one month of continuous employment. Normally, employees have to use their annual leave by June 30 of the following year.

Public holidays are not included in an employee’s annual leave entitlement. Their number varies from year to year. In 2021, there were 11 additional non-working days. For national holidays falling on a Sunday, employees receive an extra day off on the following working day.

Maternity Leave and Paternity Leave

Female employees are allowed to take one year of fully paid maternity leave. The leave can begin between 28 and 45 days before the expected delivery date and includes time off for pregnancy, childbirth and childcare. Starting with the third child, maternity leave is extended to two years.

Paternity leave is limited to seven days.

Parental Leave

There are no provisions for further parental leave.

Additional Leaves and Benefits

In addition to the leave entitlements stated above, employees in Serbia are allowed to take 5 days off within one year on occasions such as marriage, birth, serious illness or death of a family member. Other common employee benefits in Serbia include meal allowances and supplementary private health insurance.

In addition to employment termination by default – i.e. in case of a fixed-term contract – resignation and mutual agreement, the employment may be terminated due to one of the following reasons (non-exhaustive list):

• Employee’s incompetence or underperformance

• Redundancy

• Summary dismissal due to gross misconduct, e.g. criminal offence, breach of contract or other

• Non-permissive absence from work

The notice period for employees must be between 15 and 30 days. Employers have to give at least 8 days’ (but no more than 30 days) notice to dismissed employees.

Severance pay is only mandatory for employees who are made redundant. However, the law doesn’t stipulate a minimum amount. Pregnant women and those on maternity or childcare leave are protected from dismissal by law.