The southeast European country of Montenegro, with an open economy, is situated along the Adriatic Sea. Since declaring its freedom in 2006, Montenegro has conducted extensive economic reforms to foster growth and draw capital. The service industry, especially tourism, dominates the nation’s economy and contributes much of its GDP.
Apart from tourism, Montenegro has also established a modest but expanding industrial sector, focusing on manufacturing cement, steel, and aluminum. Furthermore, Montenegro is exploring the development of projects to produce electricity using renewable sources such as solar and wind energy.
Hence, it is a great time to set up a business in this country to maximize profits. Retain the top talents in the country by focusing on compensation and benefits policy in Montenegro and boost employee satisfaction.
What are Employee Benefits?
A business’ non-wage remuneration to its employees is known as employee benefits. These perks offer employees extra rewards and assistance beyond their usual pay or earnings.
Companies offering employee benefits in Montenegro will benefit from a more satisfied and devoted workforce. Employees who feel valued will be more productive and driven to contribute to the company.
Some common employee benefits are:
- Health insurance: The most popular medical benefit for employees in Montenegro provided by employers is the benefit of a comprehensive health insurance plan. Access to medical care and prescription medication coverage is made available to employees via health insurance.
- Dental insurance: This allows staff members to receive dental treatment and covers common cleanings, exams, and other dental benefits procedures.
- Retirement plans: To assist employees in saving for their retirement, employers provide retirement plans like 401(k) plans.
- Disability insurance: Disability insurance replaces lost wages for employees in the case of illness or accident that keeps them from working as part of their compensation package in Montenegro.
Compensation Laws in Montenegro
Below are some of the compensation laws in Montenegro that regulate employee benefits in the country:
General law
Employment contracts, collective agreements, and labor laws impact salaries and how they are computed and form the basis of the compensation package in Montenegro. The minimum wage, which is presently set at EUR 450 per month by the Government of Montenegro, will be decided upon by the Social Council of Montenegro every other year.
Normal working hours per week
According to the compensation structure in Montenegro, the work week for an employee is forty hours. A collective bargaining agreement may stipulate that employees work fewer than 40 hours per week. Underage employees are only permitted to work a maximum of 35 hours per week.
Overtime
Per the compensation and benefits policy in Montenegro, overtime hours cannot exceed 10 hours per week for employees. Overtime shifts cannot be given to employees under the age of 18.
Women who are pregnant or have children under the age of three are prohibited from working overtime, as per regulations.
Working on weekends and public holidays
Employee benefits in Montenegro state that each employee is entitled to a minimum rest time of at least 24 hours, often on Sundays. If the employee is required to work during this period, they are still entitled to a mandatory rest period of 24 hours the following week.
In line with the legislation, the employee is entitled to a paid holiday from work for legal nations and religious occasions.
Employees required to work nights or on holidays as part of their job duties is entitled to pay increases in line with the terms of their employment contract and the collective bargaining agreement following the compensation package in Montenegro.
How to Design Your Employee Benefits Program
Designing a strong employee benefit in Montenegro as an employer is crucial for luring and keeping top employees.
Developing an employee benefits program can be facilitated by following these crucial stages:
- As the first stage in establishing employee benefits in the Montenegro program, provide a clear definition of company aims and objectives. This will enable one to choose the perks one should provide.
- Do a needs assessment: Conducting a needs assessment is crucial in determining the needs and desires of employees before deciding which benefits to provide. This can be achieved through employee surveys, feedback forms, and interviews. By understanding the preferences and needs of employees, one can customize their benefits package to meet their unique demands.
- Determining budget: Establish a budget before finishing the benefits package since employee benefits may be expensive. An employer should consider the price of each benefit and any overhead or administrative costs related to running the program.
- Share benefits program with employees: After designing the employee compensation and benefits Montenegro program, it’s critical to share it with staff. Employee handbooks, gatherings, or internet resources can all be used for this.
- Evaluate and adjust: Finally, it’s crucial to routinely assess the benefits program to ensure it’s fulfilling its objectives and the requirements of employees. As employee requirements and preferences change over time, one might need to make modifications or introduce new perks.
Employee benefits in Montenegro need to be carefully planned, budgeted for, and communicated. You can develop a complete benefits package that recruits and keeps top talent, encourages employee wellness, and raises employee happiness and engagement by adhering to five essential principles or taking help from an external source such as Multiplier.
Types of Guaranteed Benefits in Montenegro
There are several types of employee benefits in Montenegro that employers must provide to their employees. These include:
- Minimum wage: Employers are required to pay their employees at least the minimum wage as set by law.
- Overtime pay: Employees who work beyond their regular hours are entitled to receive overtime pay at a higher rate.
- Annual leave: Employees are entitled to a minimum number of days of paid annual leave, which is determined by the length of their employment.
- Sick leave: If employees cannot work due to illness or injury, they have the right to receive paid sick leave.
- Maternity leave: Maternity benefits in Montenegro states that female employees are entitled to 365 days of paid maternity leave, which they can use up to 45 days.
- Social Security contributions: Employers must contribute to the social security system on behalf of their employees, which provides benefits such as retirement, disability, and health insurance.
- Severance pay: Employees terminated without just cause are entitled to severance pay based on their length of service.
Employee Benefits for Expatriates
Only foreign employees who have secured temporary residence, work, and registration permits can sign a job offer and hold legitimate employment.
In Montenegro, foreigners holding temporary residence and work visas are restricted to performing only the tasks specified on their visa and working for the employer listed. Engaging in activities outside these limitations without obtaining additional authorization or visas may result in legal complications. Therefore, foreign workers must comply with their visa terms to avoid issues and ensure their eligibility to work and reside in Montenegro.
The employer must maintain a copy of foreign employees’ work registration certificate or work permit while working at the company’s facilities or their place of employment. This requirement ensures that the employer complies with the legal regulations regarding the employment of foreign workers and also serves as proof of their authorization to work in the country.
How Are Employee Benefits Taxed in Montenegro
Employees are taxed according to their salaries:
- The tax-free threshold for salaries is €700 (gross).
- 9% tax is applied on salaries between €701 and €1,000 (gross).
- 15% tax is applied on salaries starting at €1001 (gross).
The tax treatment of self-employment income has changed as well. This includes revenue from registered enterprises and income from designers, auditors, attorneys, and other free professions.
Business owners’ earnings include:
- Up to €8,400 in income is not subject to tax.
- Earnings of €8,400 to €12,000 are taxed at 9%.
- Income from €12,000 is taxed at 15%.
Contribution to the payroll include:
For employer
1. Pension and Disability insurance – 5.50%
2. Health Insurance – 2.30%
3. Unemployment Insurance – 0.50%
For employees
1. Pension and Disability insurance – 15%
2. Health Insurance – 8.50%
3. Unemployment Insurance – 0.5%
Restrictions for Montenegro Benefits and Compensation
- Businesses looking to expand to Montenegro often want to go to work as soon as possible. One must have a registered subsidiary to hire staff, give them a compensation package in Montenegro, and allow them to work legally. The duration of the incorporation procedure might range from a few weeks to many months, depending on location and the type of business selected.
- As per the employee compensation policy Montenegro, the employment termination order is invalid if, at the time it was passed, the employer knew that the employee qualified for maternity, paternity, or leave for special child care or if the employee notifies the employer of these facts within 30 days of dismissal and provides the necessary certification from a licensed doctor or another authorized person.
Supplemental Benefits for Employees in Montenegro
The statutory minimum employee benefits in Montenegro are not the only perks that employees may anticipate. A few employee perks provided by the compensation package in Montenegro are maternity leave, disability leave, sick leave, and retirement insurance.
Healthcare
In employee benefits insurance in Montenegro, there are two varieties of private medical insurance (PMI). The two options are reimbursement PMI, sometimes called voluntary health insurance, and critical illness and surgical cash benefit insurance.
Prescription medication coverage, hospital, additional healthcare, dentistry, and vision are all included in extended healthcare. The finest benefit now available on the market offers care to all employees.
Travel and meal allowance
Even though employee perks are uncommon in Montenegro, some private companies provide a calculated pre-determined allowance for travel and meal expenses.
How Multiplier Can Help with Benefits Management in Montenegro
Employee benefits in Montenegro play a significant role in the employment relationship since they aid in luring in and keeping talent while enhancing overall job satisfaction. The compensation and Benefits policy in Montenegro will probably play a bigger role in luring and keeping talent in Montenegro as the economy develops and becomes more competitive.
Employers must adhere to the local laws and regulations when creating employment contracts and determining employee benefits in Montenegro. To simplify this process, you can consider contacting an international PEO platform such as Multiplier.
By partnering with Multiplier, you can ensure compliance with Romania’s labor laws and regulations; while gaining access to a pool of talented employees. Our team of professionals can help you effectively manage your workforce without establishing a subsidiary in the country. This can help you reduce your employment costs and explore new markets.