Dismissals in Serbia

1. Dismissal of employees

1.1 Reasons for dismissal

An employer may terminate an employment only under conditions and events stipulated in the Labour Law. The grounds for an employer to terminate employment include the following:

  1. An employer may terminate an employment contract for reasons relating to employee’s work ability and conduct, as follows:
    1. if he does not achieve the work results or does not have the necessary knowledge and skills to perform his duties;
    2. if he is convicted of a crime at work or related to work (through a final and binding court decision);
    3. if he does not return to work within 15 days of the expiry of a period of stay of employment or an unpaid absence.
  2. The employer may terminate the employment contract if the employee through his own fault commits a breach of a work duty, as follows:
    1. if he is negligent or reckless in performing the work duty;
    2. if he abuses his position or exceeds his authority;
    3. if he unreasonably and irresponsibly uses work-related instruments;
    4. if he does not use or uses inappropriately allocated resources and personal protective work equipment;
    5. if he commits another breach of work duty as determined by the collective agreement, employment rulebook or employment contract.
  3. The employer may terminate the employment contract if the employee does not comply with work discipline requirements, as follows:
    1. if he refuses without reason to perform work and execute the orders of the employer in accordance with the law;
    2. if he does not submit a certificate of temporary incapacity for work as required by the Labour Law;
    3. if he abuses the right to leave due to temporary incapacity to work;
    4. if he comes to work under the influence of alcohol or other intoxicating substances, or uses alcohol or other intoxicating substances during working hours, which has had or may have an impact on work performance;
    5. if he gives incorrect information that is critical for concluding the employment contract;
    6. if the employee working in a high risk job refuses to undergo a health check, even though specific health requirements must be met to work at such a job;
    7. if he does not respect labour discipline prescribed by an act of the employer, or if his conduct is such that he cannot continue to work for the employer.
  4. The employment may also be terminated if there is a valid reason relating to the employer’s needs, as follows:
    1. if as a result of technological, economic or organisational changes, the need to perform a specific job ceases, or there is a decrease in workload (i.e. a redundancy);
    2. if he refuses to conclude the annex to the employment contract pursuant to the Labour Law.

1.2 Form

Termination must be in written form, and given to the employee in person. It must contain the reasons for termination, and set out the employee’s right of appeal. In certain cases, the employer must give written notice of the reasons for termination to the employee, the facts supporting the decision to terminate, and the time limit for submitting the employee’s response prior to terminating the employment.

1.3 Notice period

If the employee is dismissed for failing to fulfil his duties or not having the qualifications and abilities to perform his duties, he has the right to continue working for a notice period of between eight and 30 days. This notice period, determined by the employer, depends on the period for which he has paid pension insurance.

In all other cases, the notice period may be defined in the individual employment contract.

1.4 Involvement of works council

There are no works councils in Serbia.

1.5 Involvement of a union

A trade union may answer a warning letter issued to an employee during the procedure of employment termination resulting from a breach of work duty or work discipline. Also, the representative trade union must be invited to give its opinion on the draft redundancy programme when there is an obligation to pass a redundancy programme.

1.6 Approval of state authorities necessary

Not applicable.

1.7 Collective redundancies

An employer must undertake a redundancy programme if it proposes dismissing the following numbers of employees employed on contracts of unfixed duration by reason of redundancy:

  1. within a 30-day period:
    1. ten employees where the employer employs more than 20 and less than 100 employees with contracts of unfixed duration; or
    2. 10% of employees where the employer employs 100 to 300 employees with contracts of unfixed duration; or
  2. 30 employees where the employer employs more than 300 employees with contracts of unfixed duration; or
  3. 20 employees within a 90-day period, regardless of the total number of employees employed.

The board of directors or the company director issues the redundancy programme.

1.8 Summary dismissals

Serbian Labour Law does not permit dismissal without notice.

1.9 Consequences if requirements are not met

If a court finds that employment has been wrongfully terminated, the employee has a right to request reinstatement. The court decides whether the employee will be reinstated. The employer must also pay damages to the employee equivalent to lost salary and other entitlements under Labour Law, the collective agreement or employment contract, and mandatory social insurance. Damages will be reduced by the amount of any income earned from any other source following termination of the employment agreement.

1.10 Severance pay

If the employee is dismissed for failing to fulfil or not having the necessary qualifications and ability to perform his duties, he has the right to continue working for a notice period of between eight and 30 days. The employee may agree to stop working prior to expiry of the notice period on payment of compensation for salary, the amount being determined by the General Act and the employment contract.

Regarding redundancy, the employee is entitled to a severance payment for an amount determined by the company’s internal acts and employment agreement. Where an employee exercises the right to severance pay, it cannot be lower than the sum of one-third of the employee’s average gross salary paid over the previous three months of employment preceding the month in which severance pay has been issued for each full year of employment with the employer.

1.11 Non-competition clauses

Post-contractual non-competition restrictions may last for a maximum of two years after the termination of employment. However, such restrictions are only valid if the employer undertakes to pay monetary compensation to the employee in the employment agreement.

1.12 Miscellaneous

The employer may not terminate employment, or in any other way put an employee in a disadvantageous position because of his status or activities as an employees’ representative, trade union member, or because of his participation in trade union activities.

The employer may not terminate a contract of unfixed duration under any circumstances if the employee is pregnant, on maternity leave, or on leave nursing or taking special care of a child.

2. Dismissal of managing directors

Serbian Labour Law stipulates that a director may enter into two types of agreement:

  1. an employment contract; or
  2. a management contract without the establishment of employment. When a managing director enters into an employment contract, the general rules for employment termination also apply.

2.1 Reasons for dismissal

Employment contract:

An employer may terminate an employment only under conditions and events stipulated in the Labour Law. The grounds for an employer to terminate employment include the following:

  1. An employer may terminate an employment contract for reasons relating to an employee’s work ability and his conduct, as follows:
    1. if he does not achieve the work results or does not have the necessary knowledge and skills to perform his duties;
    2. if he is convicted of a crime at work or related to work (through a final and binding court decision);
    3. if he does not return to work for the employer within 15 days of the expiry of a period of stay of employment or an unpaid absence.
  2. The employer may terminate the employment contract if the employee through his own fault commits a breach of a work duty, as follows:
    1. if he is negligent or reckless in performing work duties;
    2. if he abuses his position or exceeds his authority;
    3. if he unreasonably and irresponsibly uses work-related instruments;
    4. if he does not use or uses inappropriately allocated resources and personal protective work equipment;
    5. if he commits another breach of work duty as determined by the collective agreement, employment rulebook or employment contract.
  3. The employer may terminate the employment contract if the employee does not comply with work discipline requirements, as follows:
    1. if he refuses without reason to perform work and execute the orders of the employer in accordance with the law;
    2. if he does not submit a certificate of temporary incapacity for work as required by the Labour Law;
    3. if he abuses the right to leave due to temporary incapacity for work;
    4. if he comes to work under the influence of alcohol or other intoxicating substances, or uses alcohol or other intoxicating substances during working hours, which has or may have an impact on the work performance;
    5. if he gives incorrect information that is critical for concluding the employment contract;
    6. if the employee working in a high-risk job refuses to undergo a health check, even though specific health requirements must be met to work on such a job;
    7. if he does not respect labour discipline prescribed by an act of the employer, or his conduct is such that he cannot continue to work for the employer.
  4. The employment may also be terminated if there is a valid reason relating to the employer’s needs, as follows:
    1. if as a result of technological, economic or organisational changes, the need to perform a specific job ceases, or there is a decrease in workload (i.e. a redundancy);
    2. if he refuses to conclude the annex to the employment contract pursuant to the Labour Law.

Management contract: There is no statutory procedure for dismissing a director of a company. When a director signs a management contract, it may be terminated in accordance with the rules stipulated in the management contract or general contract rules.

2.2 Form

Employment contract – Written form delivered in person detailing reasons for termination.

Management contract – The law does not require a specific form. The form may be set out by the management contract, but it is advisable that termination be done in a written form. 

2.3 Notice period

Employment contract - If the Director is dismissed for failing to fulfil his duties or for other similar circumstances, a notice period of between eight and 30 days depending on length of pension insurance will be given and has to be determined by the employer. In other cases, this notice will be determined by the employment contract, company by-law or collective bargaining agreement.

Management contract – The law does not stipulate a notice period, but in case of an indefinite term-management contract the reasonable notice period should be applied unless the management contract sets out a specific notice period or does not require a notice period at all.

2.4 Involvement of works council

There are no works councils in Serbia.

2.5 Involvement of a union

Employment contract – A trade union may provide its answer to a warning letter issued to an employee during the procedure of employment termination due to a breach of work duties or discipline. Also, the representative trade union must be invited to give its opinion on the draft redundancy programme when there is an obligation to pass a redundancy programme.

Management contract – not applicable

2.6 Approval of state authorities necessary

Not applicable.

2.7 Collective redundancies

Employment contract – An employer must undertake a redundancy programme if it proposes dismissing the following numbers of employees on contracts of unfixed duration by reason of redundancy:

  1. within a 30-day period:
    1. ten employees where where there are more than 20 and less than 100 employees with contracts of unfixed duration; or
    2. 10% of employees where there are 100 to 300 employees with contracts of unfixed duration; or
  2. 30 employees where there are more than 300 employees with contracts of unfixed duration; or
  3. 20 employees within a 90-day period, regardless of the total number of employees employed.

The redundancy programme is issued by the board of directors or the company director.

Management contract – A managing director who has a management contract cannot be deemed redundant.

2.8 Summary dismissals

Employment contract – Serbian Labour Law does not permit dismissal without notice. 

Management contract – It is possible, if so agreed in the management contract.

2.9 Consequences if requirements are not met

Employment contract – If the court finds that employment has been wrongfully terminated, the employee has a right to request reinstatement. The court decides whether this employee will be reinstated. The employer must also pay damages to the employee equivalent to lost salary and other entitlements under the Labour Law. 

Management contract – Depends on the provisions of the management contract.

2.10 Severance pay

Employment contract – If the employee is dismissed for failing to fulfil or not having the necessary qualifications and ability to perform his duties, he has the right to continue working for a notice period of between eight and 30 days. The employee may agree to stop working prior to expiry of the notice period on payment of compensation for salary, the amount being determined by the General Act and the employment contract.

Regarding redundancy, the employee is entitled to a severance payment for an amount determined by the company’s internal acts and employment agreement. Where an employee exercises the right to severance pay, it cannot be lower than the sum of one-third of the employee’s average gross salary paid over the previous three months of employment preceding the month in which severance pay is issued, for each full year of employment with the employer.

Management contract – No statutory requirement, but it may be agreed upon in the management contract.

2.11 Non-competition clauses

Employment contract – Post-contractual non-competition restrictions may last for a maximum of two years after the termination of employment. However, such restrictions are only valid if the employer undertakes to pay monetary compensation to the employee in the employment agreement.

Management contract – Not regulated by the law. It may be agreed in the management contract.

2.12 Miscellaneous

Not applicable.