Comprehensive Guide to Employee Benefits and Compensation in Serbia

What are Employee Benefits?

Employee benefits are any additional perks or add-ons an employer provides to its employees. These benefits can be monetary or non-monetary, according to company policy. Employers calculate the perceived value of these benefits before adding them to the employee’s gross pay.

In Serbia, hundreds of companies operate in various sectors like energy, automotive, mining, etc., onboarding the best talent to work for their company. To attract and retain talent, Serbia, like other major countries, offers its employees benefits like paid time off, maternity leaves, travel allowance, etc.

The benefits and compensation structure in Serbia are important for both the employee and the employer. If the company provides great tangible benefits, fewer employees will leave in the long run. Every company tries to keep its employees happy with an effective benefits plan. Similarly, it reduces the employer’s efforts as they will not have to search for talent continuously. 

As an employer looking to establish a business in Serbia, you must understand the kind of employee benefits listed in the country’s labor laws. These benefits will help you draft a comprehensive compensation and benefits plan for your company’s employees. 

Compensation Laws in Serbia

Like every other country, several compensation laws govern the benefits and compensation in Serbia. Let’s look at some of these laws impacting the benefits policy in Serbia:

• According to the Labor Law 2005, all employees must be at least 15 years old and  fulfill the job requirements mentioned in the Labor Law and the employer’s rulebook.
• Article 111 of the Labor Law of Serbia defines a minimum wage that employers must give to all the employees working in the organization. This minimum wage must be published in the Official Gazette of the Republic of Serbia. Currently, the minimum wage in Serbia is RSD 43,174.32.
• Article 114 of the Serbia Labor Code states that all employees working in Serbia are entitled to a salary. It must be equivalent to the average salary of the last three months and should be stated in the employment contract.
• According to  Article 114 of the Labor Code, if an employee is absent from work due to a military drill or a summon by a public body, the employer will provide them regular remuneration for that day.
• Article 118 of the Labor Code defines the kind of reimbursements employers should give to employees in Serbia. Some of these reimbursements include travel expenses, business trip expenses, field expenses, etc.
• According to Article 115 of the Serbia Labor Code, every employee will receive at least 65% of their average salary if they cannot work for up to 30 days. The amount can go up to 100% if they are absent from work due to an occupational injury.

How to Design an Employee Benefits Program for Employees in Serbia?

If you are new to the country, you might find it challenging to draft an employee benefits program complying with the employment act. It is suggested to curate a working benefits program for the employees in your company before working on employee benefits.

Ensure that the benefits program is in line with the employees’ needs and general challenges at work. However, you cannot provide these benefits by overutilizing the resources of the company. You must decide on a budget before you curate an employee benefits policy in Serbia.

You can follow the steps below and create a compensation package in Serbia:

Step 1: Decide your goals

The best way to start the process is to list all the objectives you want to achieve through the benefits program. The objectives must align with the company’s goals and the employees’ present needs. However, you must also consider other aspects, like the industry standards, collective bargaining agreements, etc., before adding the benefits to the program.

As a company, you need to decide if the benefits policy should consider the company’s common goals or a set of niche goals. Some goals that you must consider are:

• Attracting new talent and retaining the existing ones
• Cutting expenses and removing the benefits that are of no use to the employees
• Sticking to the Labor Code while designing the benefits program
• Curating benefits that solve the employees’ problems

Step 2: Conduct research on the existing industry standards and the needs of the employees

Before finalizing the employee benefit plan, you must consider the benefits other companies in the industry offer. You must conduct in-depth research to understand current industry standards and expectations.

You must also hold an internal survey to have an overarching idea of what your employees expect from a benefits program. However, if you already have a benefits program for your employees, these surveys will act as a tool to improve the plan. You can also save money by eliminating the benefits that no employee uses.

You can create an employee compensation and benefits policy in Serbia with all the data that you collect using these surveys. The results of the survey will help you in closing gaps and serving the needs of the employees.

Step 3: Come up with a flexible package

Businesses work in a dynamic environment. Hence, you might have to change your benefits program with a simple change in the business environment or the Labor Code. Companies and employers should design a flexible program that is open to changes. You can use your research to determine worker’s compensation in Serbia.

You should eliminate the benefits that provide no tangible use to the employees. This way, you can reduce the company’s cost of the benefits program.

Step 4: Communicate the plan

Once you have an initial draft of the plan, you must communicate the highlights to the company’s employees. Make sure you keep all the lines of communication open so the employees can let you know their thoughts on the benefits plan. 

You must ask all the employees to review the plan before implementing it to show that their opinions are included.

Step 5: Review and cross-verify

Before introducing and implementing the plan throughout the organization, you must assess it and cross-check it to avoid errors. There is a high possibility of changes in the existing laws while drafting the policy. Check for these changes and incorporate them into the benefits plan.

Before you launch the plan, develop metrics that will help you study its effectiveness. Accordingly, you can make necessary changes in the compensation and benefits policy in Serbia post-implementation.

Types of Guaranteed Benefits in Serbia

There are some mandatory employee benefits in Serbia. These benefits remain constant across companies and industries. Some of these benefits include:

Minimum wage

• In Serbia, there is a minimum wage range that is implemented, based on the total number of regular working hours per month.  
• For an employee who works for 160 hours in a month, the minimum wage is RSD 43,174.32.
• For an employee who works for 168 hours in a month, the minimum wage should be  RSD 45,470.70. This increases to RSD 47,767.08 if the employee works for 176 hours monthly.
• For an employee working 184 hours monthly, the minimum wage should be  RSD 50,063.45. 

Working Hours

• The employee and the employer mutually discuss the working hours before stating it on the employment contract. Once the duration is decided, the employee must adhere to the same.
• In Serbia, employees must work at least 40 hours a week. The companies in Serbia have five working days. However, employees under the age of 18 cannot work beyond 35 hours a week.
• If an employee is working a night shift, they are entitled to a 26% premium calculated on the base salary.

Overtime payment

• Employees are entitled to overtime pay if they work beyond their regular hours.
• An employee cannot work more than 4 hours overtime, i.e.,  beyond 12 hours a day.
• The employees receive compensation that includes their regular pay and a 26% premium as overtime payment. 

Paid time off

• In Serbia, employees can take paid time off for five days a year. 
• These leaves can be taken for supporting a family member, marriage ceremonies, and other conditions stated in the employment contract.

Sick leaves

• If an employee cannot come to work due to illness, they can avail of sick leave for up to 30 days. 
• The employer must pay 65% of the average salary over the last 12 months if an employee is on sick leave.
• However, the pay increases to 100% if the employee is absent from work due to an occupational injury.
• The employees need to furnish a piece of documentary evidence to support their illness.
• If the sick leaves exceed 30 days, the employees must reach out to the State Agency for their salary payments.

Maternity leaves

• Maternity benefits in Serbia are available for all women employees. They can take maternity leave for 365 days. The leave includes the pregnancy and the post-pregnancy phase.
• The maternity leave begins 45 days before the due date. However, the employee can choose to take these leaves 28 days before the delivery date.
• Even after maternity leave ends, the employee can extend the leave for childcare.

Paternity leave

• In Serbia, paternity leaves are given in exceptional circumstances. A father can take 3-months’ paternity leave from the day of childbirth if the mother dies or abandons the child. The leave is applicable even in cases where the law prevents the mother from being with the child.
• Employees will receive their regular salary during paternity leave.

Annual leave

• All employers must provide their employees with at least 20 days of annual leave. These leaves do not include public holidays and sick leaves.
• Once employees have worked for a month, they get leave benefits in Serbia.

Public holidays

• Employees are entitled to 8 public holidays and five working holidays. The employees must come to work on the working holidays.

Bonus or 13th-month salary

• No laws mandate the bonus payment to employees working in Serbia.
• However, if the employer and the employee decide on a bonus payment, it must be duly paid to the employee.
• Also, every employee is entitled to a minimum pay raise of 0.4% after the end of the financial year.

Employee Benefits for Expatriates

All the expats working in Serbia are included in the benefits program. They can take leaves and avail all the benefits given to regular employees in Serbia. They can also apply for different allowances like business travel allowance, etc. Some typical employee compensation and benefits in Serbia given to expats are:

• Accommodation expenses
• Relocation benefits
• Transport charges
• Language training
• Reimbursement for meals

How are Employee Benefits Taxed in Serbia?

The employee benefits are subject to regular income tax rates in Serbia. Therefore, to compute the taxes, the company must ascertain the value of the benefits. Once the compensation structure in Serbia is computed, they are added to the basic pay to calculate the tax. Currently, the income tax rate in Serbia is as follows:

However, some benefits are tax-exempt and not included in the calculation of taxes in Serbia. These benefits include

• Reimbursements for the accommodation taken during a business trip
• The cost incurred to travel from office to home and vice versa on public transport
• Private car allowance
• Compensation for death and funeral expenses
• Damages paid for to recover from a natural disaster

Restrictions for Serbia Benefits and Compensation

In Serbia, most employee benefits are subject to income tax. Therefore, the company needs to calculate the value of employee benefits in Serbia to estimate the amount to deduct as taxes. 

All companies must pay taxes to the authorities on or before the end of every month. Employers need to pay minimum wages and adhere to labor laws. Also, employers should let their employees avail of their leaves without restrictions.

Supplemental Benefits for Employees in Serbia

Employees in Serbia enjoy a few supplemental benefits, too, some of which are:

• Group life benefits: The employers provide life insurance policies to the employees. The practice was not common as banks needed much paperwork to process the insurance. However, the workflow has become seamless now. Hence, companies are providing group life benefits to all their employees.
• Private medical insurance: Healthcare is a crucial aspect in Serbia. Hence, to help the employees, companies provide private medical benefits for employees in Serbia. Serbia has two types of PMIs – Reimbursement PMI and Critical Illness and Surgical Cash Benefit Insurance. The type of insurance will depend on the company policy.

How Can Multiplier Help with Benefits Management in Serbia?

Launching a new company in Serbia can be difficult because you must follow the country’s labor rules while creating a compensation package in Serbia. Additionally, the employment contract provided to the employees must adhere to the labor code. As a result, you must create the agreements with extraordinary care. You can eliminate all these by using a global PEO like Multiplier for outsourcing.

Multiplier can assist your business in comprehending Serbian labor regulations and creating benefits plans that meet the requirements of employees and employers. Our specialists can help you create a compensation package for your business and guide you through the procedure.