Montenegro is a prime location for establishing a business in Southeastern Europe. It is a fast-developing nation with an aim for economic development. Montenegro welcomes driven individuals who can boost international business. The GDP of Montenegro is expected to grow steadily by 39.15% by 2027.
The beneficial tax rates put employees in a better financial position providing several employment opportunities. The social and educational development and economic benefits make Montenegro a potent area for foreign business conduction. While it is a lucrative opportunity for stakeholders, following all rules and sifting through numerous potential employees to choose the best may be overwhelming. A comprehensive guideline helps employers recruit and employ in Montenegro more efficiently.
Before you go ahead with your venture, knowing how to hire employees in Montenegro is essential. Read on to learn the key elements that make up the recruitment and selection process in Montenegro.
Things to Know Before Hiring in Montenegro
Consider the following facets before hiring staff in Montenegro.
Laws regarding foreign employment
The Official Gazette of Montenegro, no. 12/2018 and 3/2019, states the rules for hiring employees in Montenegro. This lays the ground rules for foreign citizens who wish to work in Montenegro by establishing a business or entering an employment contract.
The official Gazette states that the following permits and documents are to legally hire an employee.
- Work permit
- Temporary residence permit
- Foreigner labor contract
Additionally, the Government of Montenegro annually assigns quotas of work permits as per the migration policy and with consideration of the labor market.
Permit required for employment
Montenegro is not officially a part of the European Union, so any citizen from European nations and foreign nationals must apply for a permit and register at the Employment Service of Montenegro within 15 days from the first day of employment.
The government of Montenegro offers three kinds of permits which are as follows:
Personal work permit
1. For foreign citizens who reside in Montenegro
2. Valid for up to one year or an unrestricted period depending on the situation
3. This visa offers free access to the labor market as long as the permit is valid
Employment permit
1. For foreign citizens who enter a labor contract with an employer based in Montenegro
2. Issued at the request of the employer or legal establishment registered in Montenegro
Work permit
1. For foreign citizens who intend to spend a short time for work in Montenegro
2. This permit is issued for seasonal work, contractual jobs, or short training sessions
3. Foreigners who are daily migrants are exempted from receiving a work permit.
Minimum wage and remuneration
Before you hire employees in Montenegro, you must know the wage system and remuneration.
- The Montenegrin currency is Euros
- The minimum wage in Montenegro is 450.00 EUR as of 2023
- It is not mandatory to pay 13th or 14th-month wage in Montenegro
- Incentives are subject to discussion and mutual decision
Taxes
The taxes are based on the nature of residency.
- Individuals who spend more than 183 days in Montenegro become tax residents by default.
- Tax residents are taxed on their global income.
- Non-tax residents are taxed only on their income in Montenegro.
- Taxes are waived for salaries up to 700 EUR gross.
- Employment taxes are based on salary.
- Self-employment is taxed as per annual income.
Annual leave
- The minimum legal number of leaves is 20 annually.
- Employees with a six-day workweek are entitled to at least 24 annual leaves.
- Pregnant employees can take 98 days of paid maternity leaves at regular pay. They can take these leaves 28 days before the due date and 70 days after childbirth.
- Employees are entitled to 70% compensation for the first 60 days of sick leaves. They have to provide a valid medical certificate for the same.
Work hours
- Employees are required to work 40 hours a week.
- When the work time exceeds the standard working hours, employees are entitled to overtime compensation. Overtime work hours cannot be more than 10 hours a week and has a remuneration of 140% of the wage.
Termination and notice period
- Mutual termination must be produced in an agreement that mentions the mutually decided termination date.
- A legal authority must attest to the termination agreement.
- The employer must notify their employee about their termination and its grounds at least five days before they can respond.
- Employees are entitled to provide 30 days of notice period before the termination date.
- Employees may be eligible for three times their monthly wage for the last four months upon termination.
The Cost of Hiring an Employee in Montenegro
Look at some factors to calculate the total cost of hiring an employee in Montenegro.
Hiring cost
- Hiring is more than a one-man job for a mass hiring endeavor in a foreign country.
- It requires job adverts, building an HR team, shortlisting, and interviewing candidates.
- Companies must decide on the hiring process budget when establishing a business entity in Montenegro.
Background check
- Background checks are essential before hiring any employee, especially in a foreign country.
- It involves sorting through many records spanning the years of the applicant.
- However, background checks cost a company separate costs that must be paid to authorities when conducting manual checks.
Training cost
- After selecting employees, employers have to take control of the training sessions and related costs.
- It helps employers and employees settle into their new job profiles more swiftly.
Remuneration and compensation
- This includes the regular wage and the cost of benefits.
- In this case, the first 60 days of inability to work, paid leave of absence is taken from the employer’s funds. Other instances like savings, insurance, and termination can add to the costs.
What Does a Company Need to Hire Employees in Montenegro?
Employers in Montenegro are free to hire temporary or permanent employees in their companies. However, to hire employees in Montenegro, global employers must first register a legal business entity with the Central Register of Companies in Montenegro.
In addition, they also need to fulfill the following requirements:
Draft an employee agreement
- An employee agreement is essential before hiring in Montenegro
- Mention the date and nature of employment.
- State the identity of the employer and employee, job role, wage, and other relevant details without fail
- State the terms of termination and mutual conditions.
- Write the contract in the Montenegrin language.
Employee’s valid passport
- Passports are the most important identity proof that comes in handy during recruitment.
- It contains citizenship proof, address proof, and photo identification and helps in background verification.
- This becomes mandatory when hiring ex-pats.
Criminal record verification
- Criminal history verification helps employers make conscious and responsible choices for the company’s welfare. Employers prefer hiring applicants with a clean record.
- Police background checks help assess the risks of hiring a potential employee.
- Since the applicant’s country of origin issues the record, it helps Montenegrin police verify the contents.
Various Options for Hiring Employees in Montenegro
Recruitment and selection in Montenegro can be conducted in multiple ways. Take a look at how you can hire employees in Montenegro.
Manual recruitment
- Involves hiring employees after creating a physical presence in the country.
- An internal committee is set up which conducts the hiring process
- Involves complying with the country’s laws
EOR recruitment
An EOR is a third-party platform that outsources employees for your company without the inconvenience and at affordable rates.
- A one-stop solution for all recruiting needs
- Affordable and time-saving
- Plans and effectively manages recruitment, payroll, and other processes
- Has extensive knowledge about the legalities of hiring in any country across the globe
The ideal EOR partner will know how to hire employees in Montenegro without the hiccups you might face. It financially rewards and frees you to expand your business in the right direction.
The Steps to Hiring in Montenegro
Hiring employees in Montenegro consists of several steps. You must ensure you cooperate with local laws and legalities while hiring. To know how to hire employees in Montenegro, you can take note of the pointers below.
Make a public announcement for a job position
- Release an advertisement stating an opening in your organization
- This invites applications from eligible and suitable candidates.
- For this, you can utilize famous job portals like Zaposli.me, LinkedIn, Employment Service of Montenegro and others.
List your preferred candidates
- Go through the submitted applications and shortlist candidates that suit the job profile more.
- Consider the job experience (if any) and set up an interview.
Interview
- The interview can be conducted remotely or in person.
- Prepare a list of questions to test the candidate’s ability to perform well in the job post.
- If necessary, you can conduct further rounds of interviews or skill tests.
- Based on the interview results, you can shortlist the candidates for the next stage.
Run a background check
- Verify the information provided by the applicant on the resumes.
- To hire employees in Montenegro, a background check should comply with local rules.
- Ask for the candidate’s consent beforehand.
Hire
- When both parties have agreed and a legal establishment in Montenegro verifies the agreement, the applicant then becomes your employee.
Create an employment agreement
- Draw up an employment agreement in the native language of Montenegro
- Clearly state the identity of both parties, job role, nature of work, wages, etc.
Let Multiplier be Your EOR Platform in Montenegro
An efficient EOR platform like Multiplier can greatly improve the hiring experience globally. We offer SaaS-based EOR solutions to help you hire talented and skilled employees on a global level. You can skip the need to establish a legal business entity in the country and test new markets. You can easily set up teams in new countries and attract top talent at cheaper costs.