Serbian Employee Benefits
What are the Employee Benefits in Serbia?
Happy and satisfied employees make your business thrive and lead to even better profits. However, the specific benefits for employees in Serbia might not all be familiar to you yet. By using our PEO and EOR service we can provide compliant labour contracts for employees in Serbia including local benefits.
When expanding your company’s presence in a new country, you need to ensure compliance both in your employment contracts and benefit guarantees. These involve social security contributions, sick leave, health insurance, and unemployment, to name a few.
Employee Benefits in Serbia
Benefits and guaranteed minimum entitlements for employees in Serbia are based on the Labor Law and Employment Act, together with specific legislation regarding such as the Act on Pension and Disability Insurance, the Health Insurance Act, the Employment Insurance Act, the Law on Personal Data Protection, the Law on Protection against Discrimination, and the Law on Mandatory Social Contributions.
Foreign companies hiring employees in Serbia must operate within this fluid arrangement of legislation that provides safeguards and guarantees for the workforce. Minimum guarantees include:
- Minimum wages
- Paid vacations
- Working hours
- Termination, severance, and notice periods
- Sick leave
- Maternity allowances and benefits
The responsibilities of foreign companies reach further than simply complying with tax, social security, and payroll regulations. Failure to comply with specific regulations applying to benefits and entitlements runs the risk of fines and sanctions. It is vital that employers have a firm grasp of what is guaranteed for their employees, as this will affect the employer-employee relationship. It is a complex picture.
What Compensation Laws exist in Serbia?
The bulk of legislation concerning employers’ obligations and employees’ rights is covered by Serbia’s Labor Law and the Employment Act.
The Labor Law and Employment Act: Serbian residents and non-residents and Serbian companies and foreign-owned legal entities come under the legislation. The law governs the obligations of employers and rights of employees. The Labor Law also stipulates where contracts and collective and workplace agreements must comply with the law.
The requirement for employers to respect employees’ rights stretches further than simply complying with tax and payroll procedures. Legislation and binding collective agreements apply to such as maternity allowances and benefits, holidays, sick pay and severance payments, minimum wages and working hours.
Drawing up contracts is tricky enough, but in Serbia it is vital for employers to be up to speed with responsibilities to their staff over benefits, compensation, and minimum requirements. Employees must be given a written contract before the first day of employment. Do not take the risk of paying penalties for ignoring these responsibilities, or being late!
Compensation, entitlements, and benefits include the following, all of which can be improved by collective agreements, but not diminished. They include:
- National Minimum Wage: The 2022 minimum wage for working 160 hours in a month is RSD 43,174 (€367, US$417), as set by the Ministry of Finance and a 9.4% increase over 2021. Serbian employees automatically receive a 0.4% increase in salary for each year they work with the same employer.
- Sick Leave and Benefit: Employees can have up to 30 days paid sick leave from their employer at 65% of the average salary over the previous 12 months if not related to work. Benefit is 100% for injury or illness suffered due to work. The employee must supply a medical certificate within three days of start of incapacity. Legislation allows the employer to claim reimbursement from the relevant fund if employee’s incapacity lasts longer than 30 days.
- Working Hours and Breaks: Regular working weeks comprise 40 hours at eight per day over a five-day week, excluding overtime. Employees cannot be asked to work more than one week of consecutive night shifts unless there is a written agreement to the contrary. Employees have a 30-minute break after six hours during a normal working day, a minimum rest of 12 hours between working days and one rest period of at least 24 hours during the week.
- Overtime: The Labor Law permits overtime to a weekly maximum of eight hours and employees cannot work more than 12 hours a day including overtime. The minimum for overtime pay is 26% above the normal hourly rate, although workplace and collective agreements or contracts can allow for more. Employers must maintain daily records of overtime and hours worked.
- Termination and Severance: Employers unilaterally terminating a contract must provide written reasons for the employee, who has eight days to reply and 60 days from the date of the ‘termination letter’ to initiate court proceedings. Ordinarily, termination can be agreed mutually, at the conclusion of a contract or by other means following the processes of employment law and regulations.
- Notice Periods: Employers must give a minimum of eight days’ notice up to 30 days, although contracts, collective or workplace agreements may allow for more. An employee unilaterally terminating employment must give a minimum 15 days’ notice to a maximum of 30 days. During probation, the employer or employee can terminate by giving five days’ notice.
Social Security in Serbia
Social security, or social insurance, in Serbia is mandated by several pieces of legislation. These include the Act on Pension and Disability Insurance, the Health Insurance Act, the Employment Insurance Act, and the Law on Mandatory Social Contributions. Employers and employees must be registered with the Social Insurance Institute (Zavod za Socijalno Osiguranje, ZSO).
Employers contribute to the social insurance fund through a percentage of their employees’ gross salaries. This comprises 11.0% to pension and disability insurance (reduced from 11.5% from January 2022) and 5.15% to health insurance. Employee contributions are 14.0% to pension and disability insurance, 5.15% to health insurance and 0.75% towards unemployment insurance.
This provides access to universal health care at the primary level in the area where individuals reside and where they will be assigned to a doctor. Persons who not covered either by state or private insurance must meet all medical costs themselves
Statutory Employer Costs in Serbia
- Social Insurance: Employers in Serbia must comply with mandatory contributions to social insurance funds as a percentage of their employees’ gross incomes. Employers contribute 11.0% to pension and disability insurance (reduced from 11.5% from January 2022) and 5.15% to health insurance.
- The National Minimum Wage (NMW): Employers must comply with paying the government-mandated minimum wage, which was set for 2022 at RSD 43,174 (€367, US$417) for working 160 hours in a month. This is a 9.4% increase over 2021. Employers must also comply with increasing employees’ salaries by 0.4% for each completed year of employment.
- Corporation Tax (CIT): Worldwide profits of resident companies are taxed at 15%. Non-resident companies are taxed only on profits from income sourced in Serbia.