Published on and written by Cyril Jarnias
Serbian labor law constitutes a dense body of rules governing the employment relationship from hiring to retirement, covering working hours, remuneration, health and safety, and protection against discrimination. For employers establishing themselves in the Serbian market, as well as for employees—both local and foreign—understanding these mechanisms has become essential, especially as the country progressively aligns its legislation with European Union standards.
A Legal Framework Centered on the Labour Law
At the heart of the system is the Labour Law (Zakon o radu), published in the “Official Gazette of the Republic of Serbia” and amended several times. It establishes the general framework for employment relationships: hiring, contract, working hours, leave, wages, termination, worker representation. It works in conjunction with the Serbian Constitution, which enshrines fundamental social rights, and with a series of specialized laws.
Serbian labor law rests on several fundamental texts: the law on the peaceful resolution of labor disputes, the law on unemployment insurance, and the law on safety and health at work. It also includes thematic laws on the prevention of discrimination, harassment, gender equality, personal data protection, and whistleblower protection. Finally, it is influenced by International Labour Organization conventions (notably on forced labor and freedom of association), although some, such as the one on promoting collective bargaining, have not been ratified.
The scope of the Labour Law is broad. It covers all employees employed by an employer established in Serbia, whether they are Serbian nationals, foreigners, or stateless persons, unless otherwise stipulated. The law applies to both the private and public sectors, although the latter is also governed by specific texts, for example for state civil servants.
Employment Contract: Written Form and Essential Elements
In Serbia, the employment relationship must be based on a written contract, concluded before the first day of work. Otherwise, if an employee starts working without a formal contract, the relationship is deemed to be for an indefinite term from the first day, exposing the employer to significant penalties and automatic reclassification.
The contract must be signed in at least three originals (one for the employee, two for the employer) and must contain a core set of information: the employer’s identity and registered office, the employee’s personal data, job description and workplace, start date, duration (for a fixed-term contract), type of work (full-time/part-time), daily and weekly working hours, gross base salary, methods for calculating bonuses and overtime, payment frequency, and reference to applicable collective agreements or work rules.
The contract can be concluded for an indefinite term, which is the default form, or for a fixed term for objectively justified reasons (project, replacement, temporary increase in activity). The total duration of a fixed-term contract with the same employee cannot, in principle, exceed 24 months, except for exceptions related, for example, to foreigners’ work permits or the creation of a new entity. If the employee continues to work beyond five working days after the fixed-term contract expires, the contract is automatically converted to an indefinite-term contract.
It is possible to include a probationary period in the employment contract, with a maximum duration of six months. During this period, either the employer or the employee may terminate it by giving notice of at least five working days, without being required to provide a reason justifying termination. However, case law tends to require a rigorous assessment of the employee’s performance during the probation, thereby strengthening the obligations of the parties.
The employer may also use other forms of contracts that are not true employment contracts (occasional or temporary work, service contracts, internship or vocational training contracts, supplementary employment contract for an employee already working full-time elsewhere). These forms are strictly regulated and must not conceal a de facto employment relationship.
Working Hours, Overtime, and Rest: A Strict but Flexible Framework
The standard working time in Serbia is 40 hours per week, most often spread over five eight-hour days. However, the law allows for setting a lower weekly duration, provided it does not fall below 36 hours for full-time work. Minors (under 18) are even more protected, with a cap of 35 hours per week.
The employer can organize a redistributed schedule to adapt working hours to activity. The weekly duration can reach 60 hours on an occasional basis, but the average over the reference period (6 months, extendable to 9 by agreement) must not exceed the contractual hours. These are not overtime hours, except in case of contract termination before the end of the period, which triggers a recalculation and payment for excess hours.
Overtime, in the strict sense, refers to hours worked beyond the contractual duration at the employer’s request. They cannot exceed four hours per day and eight hours per week. Combined with normal time, total working time must never exceed 12 hours per day or 60 hours per week. Certain employees are protected: minors are not allowed to work overtime, and certain categories (pregnant or breastfeeding women, parents of very young children, employees with health problems) can only be subject to it with their written consent or not at all.
Minimum percentage increase of the base hourly rate for each overtime hour worked.
Employees are entitled to a daily break, included in working time: 30 minutes for a workday of at least six hours, 15 minutes between four and six hours, 45 minutes beyond ten hours of presence. This break cannot be scheduled at the very beginning or the very end of the workday. Furthermore, each employee must have a daily rest of at least 12 consecutive hours between two workdays, and a weekly rest of at least 24 consecutive hours, usually on Sunday. If an employee exceptionally works on their weekly rest day, an additional compensatory rest of at least 24 hours must be granted the following week.
Employers are obligated to keep accurate records of working time and overtime, under penalty of significant fines. The employee has the right to refuse overtime if the legal conditions are not met, and such refusal does not constitute a disciplinary offense.
Annual Leave, Sick Leave, and Family Leave
Regarding leave, the Labour Law guarantees each employee a minimum right to 20 working days of paid annual leave per year. This minimum can be increased by collective agreements or work rules, based on several criteria: seniority, arduous or hazardous working conditions, qualification level, performance, etc. The employer determines, in its internal acts or agreements, the exact number of additional days associated with each criterion.
The right to leave accrues pro rata based on time worked in the calendar year. The employee generally acquires the right to take leave after one month of continuous work with the same employer, and the right to full leave after six uninterrupted months. Periods of absence due to temporary illness or other paid leave are considered as continuous work time. Conversely, periods of unpaid leave or suspension of the employment relationship are not counted.
When an employee joins or leaves during the year, their leave is calculated pro rata (usually 1/12th of the annual entitlement per month). It can be taken all at once or in segments. If segmented, the first part must last at least two consecutive weeks and be taken within the calendar year. The balance can be carried over but must be used by June 30 of the following year. Employees on maternity or parental leave can use their untaken leave upon return, within the same deadline.
Annual leave is a matter of public policy: the employee cannot waive it, and the employer cannot substitute it with compensation, except in case of contract termination where unused days must be compensated based on the average remuneration of the last 12 months. During leave, the employee receives compensation equal to their average salary over the same period, subject to contributions and tax.
The leave schedule is set by the employer, who must consider both the needs of the business and the wishes of the employees. The employee must be informed in writing of their leave dates at least 15 days before they start, unless the leave was requested for a nearer date. In case of collective leave, the decision is posted on an information board at least 15 days in advance. The employer may change the dates for organizational reasons, giving notice at least five working days before the new date.
Sickness, Maternity, Paternity, and Parental Leave
For sick leave, every employee is entitled to leave for temporary work incapacity, with partial salary retention. They must inform the employer as soon as possible, usually within three days, and provide a medical certificate. For the first 30 days of absence, the employer pays compensation of at least 65% of the average remuneration of the last 12 months, provided that legislation or the collective agreement does not stipulate a higher rate. Beyond 30 days, the public health insurance fund takes over, often on the same 65% basis, with the employer sometimes advancing the amounts to be reimbursed later. Sick leave is not a cumulative right and does not give rise to compensation upon contract termination.
A pregnant employee can start her maternity leave between 28 and 45 days before childbirth. For the 1st and 2nd child, the total leave duration (maternity + parental) is 365 days. It increases to 2 years from the 3rd child. The compensation, covered by the state, is calculated based on the average salary of the last 18 months, with a minimum at the national minimum wage. The father can benefit from these rights if the mother is unable. The leave is maintained in case of stillbirth or infant death.
Fathers also benefit from seven days of paid leave upon the birth of a child. They can subsequently take, following or instead of the mother, parental leave until the overall duration is exhausted (365 days or two years depending on the child’s birth order). The employee must inform the employer of their intention to take parental leave at least 15 days before the leave begins.
The law provides for specific leave for adoption. For a child adopted under the age of five, the adoptive parent is entitled to leave until the child turns one. This leave is extended until the child turns two for the third adopted child and subsequent ones.
Other Paid and Unpaid Leave
Serbian law also provides for paid leave for important personal events, the exact terms of which are often set by collective agreements or internal policies. These typically include a few days for marriage, death of a close relative, moving, taking professional exams, or blood donation. Study leave may be provided to allow for exam preparation and sitting.
Unpaid leave is not an automatic right: it may be granted at the employer’s discretion, each time based on an individual agreement. During these periods, the employment relationship is suspended, the employee is not remunerated, and they do not count towards seniority related to leave. Some employers offer sabbatical leave, but this is not a legal right.
Public Holidays and Night Work
Serbia has several official public holidays that are non-working and paid: the two days of New Year’s, Orthodox Christmas, Statehood Day, the days of Orthodox Good Friday, Orthodox Easter (Sunday and Monday), Labor Day, and Armistice Day of World War I. Employees belonging to different religious communities also have the right to be absent on their own religious holidays, according to modalities specified by law.
Work performed on a public holiday entitles the employee to a minimum increased remuneration of 110% of the base hourly wage.
Night work is defined as work between 10 PM and 6 AM. It entitles the employee to an increase of at least 26% of the base salary, unless this component is already integrated into a lump-sum remuneration. This protection is cumulative with other increases (overtime, public holidays). Certain categories, such as pregnant women or minors, benefit from enhanced protection and cannot, in principle, be assigned to night work.
Minimum Wage and Compensation Policy
Every employee in Serbia has the right to a salary at least equal to the legal minimum wage for standard work performed under normal conditions. The minimum wage is defined as a net amount per hour of actual work, excluding taxes and contributions, and is set for the entire country. It is determined each year by the Socio-Economic Council, a tripartite body bringing together the government, trade unions, and employer organizations, and must be finalized by September 15 at the latest to take effect the following January 1. In case of disagreement within the Council, the government decides within 15 days.
The net hourly minimum wage in Serbia will be raised to 371 dinars on January 1, 2026, after a series of successive increases.
To illustrate the impact of these increases, it is useful to observe the corresponding monthly amounts for 2026, based on the number of hours worked:
| Hours worked per month | Net minimum wage (RSD) | Gross minimum wage (RSD) |
|---|---|---|
| 160 hours | 59,360 | 79,797 |
| 168 hours | 62,328 | 84,031 |
| 176 hours | 65,296 | 88,265 |
| 184 hours | 68,264 | 92,499 |
These amounts are part of an overall upward trajectory: the authorities have set the goal of gradually raising the monthly minimum wage to around 550 euros, in coordination with an increase in the non-taxable part of salaries to ease the tax burden and support both employee purchasing power and business competitiveness.
The minimum wage serves as the basis for calculating all increases (overtime, night, public holidays) if the base remuneration corresponds to it. The law prohibits its reduction from one year to the next. If an employer pays it for more than six consecutive months, they must justify the reasons to union representatives.
Beyond the minimum wage, many employers offer additional benefits: reimbursement of transportation costs, meal allowances, vacation bonus, voluntary pension savings, supplementary health coverage, or group life insurance. The law specifically provides for a “vacation allowance” intended to compensate for costs related to using annual leave. Its amount is not set by law but must be defined in the employment contract or the employer’s internal acts and is considered an integral part of the salary, subject to contributions and tax.
Health and Safety at Work: A Reinforced Fundamental Right
Occupational safety and health hold a central place in Serbian labor law. A new law on safety and health at work, adopted in 2023, modernized and strengthened the framework by largely conforming to the European Framework Directive 89/391/EEC. It applies to all employers—private companies, administrations, local governments, individual employers—and to all persons present in the work environment: employees, interns, trainees, prisoners working, volunteers, etc.
The employer bears an objective responsibility in implementing appropriate preventive measures. They must adopt a risk assessment act for all positions and workplaces, regularly updated in case of changes in processes, introduction of new technologies, or emergence of new hazards. Based on this, they choose technical, organizational, and medical measures to eliminate or reduce risks, following hierarchical principles: eliminate risks at the source, adapt work to the person, replace what is dangerous with less dangerous alternatives, prioritize collective protections over individual protections, train and inform employees.
The obligation to designate a safety manager depends on the sector and company size. In high-risk sectors (construction, industry, healthcare), a specialized advisor is required. For lower-risk activities, a safety associate is sufficient. In small structures in certain sectors, the manager can assume this function, provided they have passed a specific professional exam.
Obligations include the free provision of personal protective equipment, organized and maintained; safety training upon hiring, upon job changes, or introduction of new technologies; periodic checks of the work environment (noise, chemical agents, air quality, lighting, microclimate) by accredited bodies; as well as medical monitoring of employees, especially for risky positions or night work. Each employee’s right to medical exams appropriate to the risks of their position is expressly recognized, with a maximum periodicity generally set at five years.
Employers must insure their employees against work accidents and occupational diseases. They are required to record these events in an electronic accident register, jointly maintained by the employer, the treating physician, and the health insurance organization. Moreover, in case of immediate danger to life or health, the employer has a legal obligation to immediately suspend the concerned work.
The employee, for their part, has the right to refuse to perform work if they believe there is a serious and immediate danger due to non-compliance with safety measures, absence of mandatory medical examination or risk training, or non-conformity of equipment. They may leave the workplace to seek safety without this constituting a disciplinary offense, and they have the right to propose improvements and be consulted by the employer on health and safety issues, notably through elected representatives.
Enforcement of the law is ensured by the Labor Inspectorate, which can order corrective measures, impose fines, and, in case of serious breaches, temporarily or permanently suspend the activity of a site or part of a site. Financial penalties for non-compliance are high, sometimes exceeding one million dinars for legal entities, in addition to possible criminal liability for the most serious cases.
Protection Against Discrimination and Harassment
The Serbian system is characterized by a particularly comprehensive legislative arsenal regarding non-discrimination and the fight against workplace harassment. The Law on Prohibition of Discrimination and the Law on Prevention of Harassment at the Workplace complement the provisions of the Labour Law and the Constitution, which enshrine the principle of equality before the law and the right to respect for dignity at work.
The law defines discrimination as any unjustified differential treatment or omission based on a wide range of personal characteristics (sex, origin, age, disability, etc.). It distinguishes direct discrimination (less favorable treatment in a comparable situation) and indirect discrimination (a neutral measure disproportionately disadvantaging a group without objective justification).
Workplace harassment, or mobbing, is the subject of a specific law. It is defined as any repeated active or passive behavior aimed at, or having the effect of, violating the dignity, reputation, personal or professional integrity, health, or position of the employee, by creating a hostile, humiliating, or offensive environment, degrading working conditions, or isolating the employee. Sexual harassment, based on verbal, non-verbal, or physical behaviors of a sexual nature, is also prohibited.
Employers must inform employees in writing about the prohibition of harassment and recourse avenues before hiring, and establish internal procedures including mandatory mediation. In case of employer inaction (3-day deadline to propose mediation after a complaint) or failed mediation, the employee can go to court within a short period to seek redress. The law also sanctions abuse of the right to protection, when the procedure is initiated without reasonable grounds to cause harm or gain an advantage.
Institutionally, the central figure is the Commissioner for Protection of Equality, an independent authority created by the anti-discrimination law. Any individual who believes they are a victim of discrimination can file a written or oral complaint with the Commissioner, who must issue an opinion within 90 days. In case of a confirmed violation, they send a recommendation to the perpetrator, who has 30 days to comply. Otherwise, the Commissioner can issue a public warning and make the matter public. They also maintain a register of court decisions on discrimination, which helps structure an increasingly abundant body of case law.
Fines for violations of anti-discrimination rules in the context of the Labour Law can reach up to one million dinars for the employer.
Despite this sophisticated framework, surveys show that discrimination at work is widely perceived as widespread in Serbia, both by employers and employees/job seekers, and a significant proportion of respondents report having been victims. Labor-related complaints represent about one-third of the cases brought before the Commissioner for Equality, indicating a problem still far from resolved.
Social Dialogue, Trade Unions, and Collective Agreements
Labor law in Serbia also relies on social dialogue and collective bargaining. Employees have the right to organize into trade unions, participate in negotiating collective agreements, and seek amicable solutions to disputes. To be representative and authorized to sign a collective agreement, a union must meet several criteria, including representing at least 15% of the employees of the employer or the concerned sector. On the employer side, associations must also meet representativeness criteria, in terms of the share of the workforce covered.
The unionization rate and collective agreement coverage in Serbia are estimated at around 30%.
The Socio-Economic Council, established in 2001, is the central tripartite body. It issues opinions on economic and social policies, negotiates the minimum wage, and notably has a permanent working group dedicated to collective bargaining and amicable dispute resolution. In practice, however, its role sometimes remains marginalized.
Collective agreements, concluded at different levels (national, sectoral, company), must be registered and cannot be less favorable than the law. They can improve employee rights (wages, leave, dismissal). In the absence of an agreement, work rules can be adopted by the employer under certain conditions, such as the absence of a representative union or failed negotiations.
Employees can also elect an employees’ council in companies with more than 50 employees, a consultative body tasked with giving its opinion on economic and social issues, although its influence often remains limited in practice.
Termination of Employment Contract and Severance Pay
The end of the employment relationship in Serbia is strictly regulated. Unlike “at-will” employment systems, the employer can only terminate the contract for reasons provided by law and following a procedure that respects defense rights. The contract can end by mutual written agreement, by the employer’s unilateral decision, by the employee’s resignation, by the occurrence of a term (for a fixed-term contract), by reaching a certain age combined with a minimum insurance period, or by cessation of the employer’s activity.
In case of dismissal initiated by the employer, the reasons can be related to the employee’s person (non-compliance with professional obligations, serious disciplinary breaches, professional inadequacy, abuse of sick leave, commission of a criminal offense within the scope of work, failure to return to the post after unpaid leave or suspension) or to economic and organizational reasons (dismissal for economic or technological reasons).
For a disciplinary dismissal or for professional inadequacy (except for manifest serious fault), the employer must necessarily send a prior written warning to the employee. This warning must detail the reproaches, attach supporting documents, and allow a period (often eight days) for the employee to present their observations. The dismissal decision, which must be reasoned and notified in person or by registered mail with the avenues for appeal, can only be made after reviewing the employee’s response. Non-compliance with this procedure can lead to the nullity of the dismissal.
Notice periods depend on the employee’s seniority and the reason. The law provides, as a guideline, notice periods ranging from two weeks (for seniority less than five years) to eight weeks (beyond ten years), although other specific provisions impose periods of 15 to 30 days depending on the duration of insurance coverage. During the probationary period, a shortened notice, but at least five working days, applies. In case of gross misconduct or certain serious offenses, the employer can terminate without notice, but the qualification of serious fault must remain exceptional.
Threshold triggering enhanced economic dismissal procedures for companies with 20 to 100 employees.
This severance pay for economic reasons cannot be less than one-third of the employee’s average gross remuneration (calculated over the last three months) per full year of seniority with the employer. Collective agreements or individual contracts may provide for higher amounts. The severance must be paid before the contract end date. Furthermore, the employer does not have the right to recruit for a position declared redundant within three months following the dismissal, without first offering the position to the dismissed employee.
When an employee leaves the company due to retirement (old age, disability, or survivor’s pension), they are entitled to a minimum severance equivalent to two average national salaries (according to official Serbian statistics). Collective agreements may provide more favorable conditions. This severance must be paid within 30 days after the end of the employment contract.
Legal severance payments are, in principle, exempt from social contributions and income tax up to certain ceilings, which reinforces their role as a social cushion upon leaving employment.
An employee who considers their dismissal illegal—for discriminatory reasons, in contradiction with special protections (pregnancy, maternity or parental leave, union mandate, etc.), in violation of procedure, or in the absence of a real and serious reason—can take the matter to court. They have a period of 60 days from the notification of the decision or the discovery of the violation of their rights. The court can order reinstatement and require the employer to pay lost wages, or only award damages when continuing the relationship would be impossible. Depending on the severity of the irregularities, compensation can amount to 6, 18, or even 36 months’ salary.
Administrative fines for violations of dismissal rules are heavy: up to 2 million dinars for a legal entity and up to 150,000 dinars for the legal representative, in addition to compensations awarded by the courts.
Remote Work and New Forms of Employment
Serbia has also adapted its legislation to the rise of telework and remote work. The Labour Law recognizes the possibility of performing work outside the employer’s premises, whether at the employee’s home or another location, using information and communication technologies. The use of telework must be provided for by a specific contract or an addendum detailing the place of performance, schedule, methods for supervising results, provision and maintenance of equipment, and reimbursement of related costs (internet, electricity, use of personal equipment).
During the pandemic, employers could unilaterally impose telework, but this exceptional provision has ended. Now, the law imposes specific obligations on the employer for remote work: assess risks related to the employee’s work environment, provide safe equipment, provide training on preventive measures, and cooperate with the employee to ensure a healthy work environment outside the company’s premises.
On the international front, Serbia has modernized its work rules for foreigners: a single permit, combining the right to reside and the right to work, is now issued through an online procedure, with shortened deadlines. Incentive tax measures have been introduced to attract highly qualified workers and international teleworkers, as well as to encourage the return of Serbian expatriates, providing, for example, partial refunds of taxes and contributions under certain income and employment duration conditions.
Social Security, Retirement, and Insurance
The Serbian social security system is based on the principle of mandatory insurance funded by shared contributions between employers and employees. Contributions on salaries cover old-age, disability, and survivors’ insurance, health insurance, and unemployment insurance. Ceilings and floors are set for the contribution base, as a percentage of the national average gross salary. The public pension fund (PIO Fund) manages pensions, while the health insurance fund and the national employment service handle health benefits and unemployment benefits, respectively.
The statutory retirement age is 65 for men and is gradually increasing for women to reach 65 by 2032. A minimum contribution of 15 years is required. Early retirement is possible from age 60 for men (slightly lower for women) with 40 years of contributions, but it entails a reduction. Specific schemes exist: disability pension, survivor’s pension, and supplementary benefits (permanent assistance allowance, compensation for work-related bodily injury).
The amount of pensions is based on a system of points earned each year according to the ratio between the individual salary and the national average salary, weighted by the contribution period, with a cap of 45 years taken into account. The average replacement rate relative to salary is decreasing due to reforms aimed at controlling pension expenditures, but the authorities have reintroduced in recent years a mixed indexation mechanism based on prices and salaries (“Swiss formula”) to preserve, at least partially, retirees’ purchasing power.
Towards Convergence with European Standards
In the background, Serbia is pursuing its EU accession process and must, to this end, harmonize its labor law and social protection with the EU acquis, particularly regarding social policy, working conditions, safety and health, and adequate minimum wage. Action plans have been adopted, but their implementation sometimes remains incomplete or delayed, as evidenced by the absence of the opening of Chapter 19 dedicated to social policy and employment at the date of the latest reports.
The labor market is marked by a significant informal sector, a high frequency of fixed-term contracts, and strong gender inequalities, notably in industry. Trade union rights are regularly subject to pressure or violations, and court procedures to contest discrimination or wrongful dismissal remain lengthy.
Nevertheless, the Serbian regulatory framework regarding work is now relatively sophisticated, combining a detailed Labour Law, solid specialized laws (anti-discrimination, harassment, occupational safety, gender equality), institutionalized social dialogue, and notable developments on recent themes like remote work, digitization of administrative procedures, or attracting foreign talent. For both employers and employees, the key lies in a good understanding of the hierarchy of norms—law, collective agreements, work rules, contract—and in continuous vigilance regarding the many legislative and regulatory changes accompanying the transformation of the labor market in Serbia.
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Cyril Jarnias is an independent expert in international wealth management with over 20 years of experience. As an expatriate himself, he is dedicated to helping individuals and business leaders build, protect, and pass on their wealth with complete peace of mind.
On his website, cyriljarnias.com, he shares his expertise on international real estate, offshore company formation, and expatriation.
Thanks to his expertise, he offers sound advice to optimize his clients' wealth management. Cyril Jarnias is also recognized for his appearances in many prestigious media outlets such as BFM Business, les Français de l’étranger, Le Figaro, Les Echos, and Mieux vivre votre argent, where he shares his knowledge and know-how in wealth management.
