Step-by-Step Guide to Hiring Employees in Serbia

Serbia is a fast-growing economy that offers a safe business environment to businesses. The country has seen ample foreign direct investment because of various favorable factors, such as the fact that the nation is seeing several economic reforms as a part of its European Union accession. Mention needs to be made of its agreement with the International Monetary Fund too.

Serbia’s business attractiveness is further enhanced by its strategic location, relatively inexpensive, plus skilled workforce. Moreover, the free trade agreements with Turkey, Russia, and other Central European Free Trade Agreement states other than with the EU make FDI a favorable option for Serbia.

The Foreign Direct Investment in the country averaged around 243.65 EUR million from 1997 until 2022. Investors tend to view Serbia as a platform for export instead of a market of its own.

The free economic zones in the country are seeing an influx of new tools for preserving their attractiveness. Such means include health protection-related measures, lower rent, and reliance on online transactions and working. The economy of Serbia is primarily service-based, with the tertiary sector dominating the economy. The most popular Serbian industries are-

• Trade
• Automotive industry
• Energy industry
• Machinery
• Agriculture
• Mining

Serbia’s multicultural nature and welcoming society favor the young and professionals looking for opportunities in the country. The nation ranks 44th on the World Bank’s Ease of Doing Business report. Recruitment and selection in Serbia can be a challenge. Companies that hire in the country must comply with the laws and related regimes. Read up on how to recruit employees in Serbia from this article. 

Things to Know Before Hiring in Serbia

Before beginning the recruitment and selection in Serbia, you will need to be aware of a few vital things. Firstly, any non-compete agreement in Serbia has to be limited scope-wise. These might last for a maximum of two years post-termination of any employment relationship. Drafting a written employment contract with all terms is also mandatory.

Consider the following factors when hiring employees in Serbia:

• Discrimination laws- Serbia has an Act on the Prohibition of Discrimination that ensures equal opportunity provision for all, irrespective of nationality, color, gender, ethnicity, language, religion, political views, disability, and/or sexual orientation and marital status.
• The Act has been in force since 2009 and has provisions for exceptional circumstances for discrimination and penal provisions in the event of the same.

Employment contract

• The New Labor Law in Serbia allows fixed-term contracts for up to 2 years. Employers can extend the service period to 3 years, the length of the project or employees who have less than five years of retirement. 
• Employers must set up fixed and indefinite contracts each time they hire a resource.
• The contract needs to be written in Serbia’s local language.
• The contract will include all of the employee terms. This includes-

1. 1.   Compensation
   2.   Termination requisites
   3.   Benefits

• Other specifications that must be a part of the employment contract are-

1. 1.   Name of employer
   2.   Registered office address of employer
   3.   Name of employee
   4.   Address of employee
   5.   Employee details of education and qualification
   6.   Job title
   7.   Job description
   8.   Place of work
   9.   Employment type
   10. Date of work commencement
   11. Working hours
   12. Salary
   13. Elements to determine basic salary, performance, compensation, increments in salary and related income of an employee
   14. Payment deadlines
   15. Duration of working hours.

All figures must be mentioned in Serbian Dinar and not in any other currency.

An employment contract can expressly stipulate other rights or duties. All matters that do not stand stipulated by an employment contract are under the purview of the Labor Law, collective agreement in case the latter is not contrary to Labor Law.

The Labor Law states that any employer having higher than ten employees must issue a rulebook for the organization to systemize jobs. 

Contract types

• The employment contract must be for a definitive or indefinite period.
• Article 37 of the Employment Act states the usual term for definitive contracts as two years. It can go on for a longer term.
• Newly established companies can have contracts for three years.
• A fixed-term contract might successively be concluded every 3 to 6 months.
• If an employee keeps working after the employment contract expires, then there must be five working days for an employment relationship to be considered indefinitely.

An employment contract of an indefinite period is not terminable by the end of the employment span. Still, it can be interrupted as per Article 175 of Labor Law:

1. Post expiry of the period it was concluded
2. When an employee attains age 65 and 15 social insurance years until there has been some formal agreement between employer-employee.
3. Via notice for cancellation of the contract by an employer or employee.
4. As requested by a guardian of a minor under 18 years.
5. Due to the death of an employee

Probation period

• For all employment contracts, the probation period will stand as per Article 36 of the Labor Law.
• The probation period can last for up to six months. However, the employer decides the exact trial period.

Termination

An employer may cancel any contract for employment if there is proof that the employee hasn’t performed appropriate work in a professional capacity.

• Termination is also possible if the employer deems an employee does not have appropriate qualifications for a job.
• Probationary work will be interrupted before the expiry of test work by an employer or employee.
• In unilateral employment dismissal, the notice period is 15 to 30 days. 
• A written notice must be sent to an employee stating all the reasons for the same.
• Severance payment is mandatory when any employee gets laid off for redundancy. To arrive at the amount, multiply a third of the employee’s annual salary by the employment period in years.

Working hours and breaks

The weekly working hours for an employee is 40 hours. Employees below 18 years old may not work more than 35 hours per week.

• A standard workweek has five days of work.
• An employer needs to decide on the distribution of working time during the week. A typical workday is 8 hours long.
• All employees can take a break during a working day of not more than 30 minutes for employees working at least 6 hours a day.
• An employer can frame a schedule for breaks in a working day. No breaks are allowed at the beginning and the end of the working day.
• Employees who work upwards of four but less than six hours can take a 15-minute break in a work day.
• Those working for over 10 hours are entitled to at least 45 minutes break on a work day.

Payroll

When hiring staff in Serbia, you can typically pay employees monthly.

Minimum wage

As per the Labor Law, employers must pay minimum wage to employees. 

• Currently, the minimum wage is RSD 175 (gross) for each working hour.
• If an employer wants to pay minimum wage, they need to find mentioned in the labor rulebook or collective agreement with proper reasons for doing so.
• Post six months, an employer needs to inform the trade union representative of the reasons for continuing payment of minimum wage.

Leaves

• Employees are entitled to  sick pay when they fall sick or get injured, sans any limitation. A medical certificate is required to avail of sick leaves.
• For the first 30 days, employees receive 65% of the salary in the preceding year when the illness or injury is non-work related. This figure becomes 100% when the condition stems from work.
• The same rules apply for COVID-19-related sickness, with no special provisions in such a context.
• Employers can request a salary refund from the State Agency if sick leave extends for more than 30 days.

Holidays for employees        

There is a holiday on each of these public occasions in Serbia-

• New Year’s Day on 1-2 January
• Christmas on 7 January
• Sretenje on 15-16 February 
• Easter
• Good Friday
• Easter Monday
• Labor Day on 1-2  May
• Armistice Day on 11 November

Employees stand entitled to a minimum 20 days of vacation annually. Employees can avail the same for at least two weeks together.

Employees working in Serbia are allowed up to 5 days of leave within a single year on marriage, birth, severe illness or even death of family members.

Maternity or paternity leave

• Female employees can get leave for 365 days as maternity leave and leave for childcare.
• Women on maternity leave get pay equal to their average salary during the first year, leading to the start of their leave.
• Termination during maternity leave isn’t an option for employers.
• Fathers get seven days of paternity leave.

Bonuses     

• Employees get a periodic bonus that is a certain percentage of their annual salaries.
• Some companies pay stimulation for motivating employees to achieve KPIs.
• Loyalty incentives- This is a one-time bonus that employees might receive for staying with a company for a certain period.
• Exit bonuses – This is an amount that gets paid to a director on the successful sale of capital or during a change of company ownership if the director remains employed on a particular day.
• Profit sharing – This is a share-in-profit statutory bonus that can be contracted at the employer’s discretion.
• Acquisition of stake in a company – This bonus comes with tax exemption.
• There is no legal bonus requirement for the bonus payment, but employees get around a 0.4% rise in pay for each year of work with a company/employer.

Taxes and social security contributions

• Employers stand a chance for a refund of up to 65% or even 75% of all paid taxes and contributions for a new employee as the latter’s headcount increases. The employees must be registered at Serbia’s National Employment Service for higher than six months or at least three months in case of first-time employees. 
• The employer payroll contribution stands at 11.00%, insurance for disability and pension stands at 5.15%, while insurance for health stands at 16.65% of the overall employment costs.
• The employee payroll contribution stands at 14%, insurance for disability and pension stands at 5.15%, while insurance for health stands at 0.75% and insurance. 

The Cost of Hiring an Employee in Serbia

The recruitment fees in Serbia vary depending upon the company policies. Here is a rough guide to the costs of the recruitment process in Serbia  or the hiring process in Serbia.

Resource

• The first cost involved is putting up advertisements and posts on sites such as Poslovi and social media.
• You can hire a resource to manage these posts and track the responses to the same.
• Magazines and newspapers are also reliable options to post job openings but come for a price again.

Recruitment companies

• You may outsource parts in the block for the hiring process in Serbia at a cost and free up your time or other resources for engaging in other operational areas.
• Recruitment companies can help in drafting employment contracts in compliance. 

Legal aid

• Seek legal assistance to understand compliance with laws if hiring internally.

Briefing new hires

• This is another cost to account for when initiating the recruitment process in Serbia and sealing the hiring process in Serbia.

Salary and bonuses

• Employers have to take care of the cost of paying annual salaries and bonuses to employees in exchange for services. 

Training costs

• Hiring foreign workers in Serbia requires additional costs due to the training process. It includes showing, orientations and others. 

What Does a Company Need to Hire Employees in Serbia?

Employers in Serbia can employ both permanent and part-time staff.  To hire new employees in Serbia, a company needs to set up its presence and then meet all taxation and legal obligations as employers. An employer must obtain the required licenses and permits from the concerned Serbian authorities. 

The next step is advertising for job positions in the market. Alternatively, a Serbian employer can also hire staff through an agency. 

Various options for Hiring Employees in Serbia         

Once you understand the processes for recruitment and hiring in Serbia, you might pick one of the two categories for completing the same-

1. Tie-up with a global EOR service: You can simply partner with an employer of record (EOR) such as Multiplier. The latter will deal with all logistics, including compliance, benefits, compensation, payroll, and workforce management, without needing to set up an entity.
2. Direct hiring: If you have a subsidiary or branch established in Serbia, you may directly hire in the country with an HR department at the helm.

The Steps to Hiring in Serbia

Step 1 – Advertisements

• Begin the hiring process in Serbia with advertisements of the job openings listed along with the minimum requirements across various channels

Step 2 -Scanning applications

• Collate relevant applications you receive across multiple channels.
• Shortlist the ones that match your requirements for the job.

Step 3-Telephonic interviews

• Arrange for a preliminary telephonic interaction to check if the candidate is suitable for further interviewing.

Step 4 – Round 1 interviews

• Form a panel with a hiring manager at the helm to interact with the candidates shortlisted. This will help employers understand potential candidates’ backgrounds, interests, experience, and competencies.
• Employers can also schedule a second interview. This is more of a casual interaction to help employers gauge a candidate better

Step 5-Assessments

• Employers need to conduct a test for psychometric assessment to understand the behavioral aspects of a potential new hire.

Step 6 – Reference check

• As an employer, you can ask referees a candidate mentions; questions about the performance and skill sets of the same.

Step 7  -Final offer

• The final step is identifying the most qualified applicants in the panel shortlists. The HR department works on drafting a letter of offer that you need to accept before moving on to signing an employment contract.

This concludes the hiring process in Serbia and closes up the recruitment process in Serbia too.

Let Multiplier be Your EOR Platform in Serbia

Recruiting prospective employees and onboarding them takes time and a lot of effort. From advertising jobs, shortlisting, scheduling interviews, and finally meeting compliance standards, there is much to do to smoothen up the recruitment process in Serbia.

You may choose to depend on a global PEO-EOR firm such as Multiplier. The experts here will make the recruitment process in Serbia a smooth ride. We offer Saas-based Employer of Record solutions related to talent employment. And yes, you don’t need to establish a branch or subsidiary in the country either. We can even help you understand newer markets and tackle automated payroll management for teams in Serbia.