Labour law in Bosnia and Herzegovina (Brčko District)

1.1. Employment contracts

Written form or written confirmation

The employment relationship is based on the employment contract, which must be concluded in written form and in accordance with the Employment Law of Brčko District (“Official Gazette of Brčko District” no. 34/19, 02/21, 06/21 and 15/22). The employer is obligated to deliver a copy of the agreement to the employee on the first day of commencing employment at the latest.  

Presumption of open-ended employment

If no fixed duration is stipulated in the contract it is presumed to be open-ended, unless otherwise stipulated in the collective agreement or the employer later on proves that the contract was a fixed-term contract. 

Necessary content

An employment contract must include the following: 

• name and address of the employer;  
• name, surname and address of the employee; 
• duration of employment (if employment is for a fixed-term); 
• date of commencement of employment; 
• place of work; 
• employment position the employee is assigned to and short job description; 
• duration and schedule of working hours; 
• salary and other types of remuneration; 
• salary compensation; 
• holiday entitlement; 
• term of notice for open-ended employment contracts; and 
• other information the parties consider as relevant to regulate the employment relationship. 

If an employment contract is concluded for the purpose of carrying out work outside the employer’s premises, the employment contract must in addition include the following: 

• method of organizing work outside the employer’s premises; 
• method of supervising the employee’s work; 
• term and conditions for use of the means of work and to determine compensation for such use; 
• compensation for other operation costs; and 
• other rights and obligations. 

Fixed term employment contracts may only be concluded for a maximum period of two years

A fixed-term agreement can only be negotiated for a maximum duration of two years. If an employee renews a fixed-term employment contract, explicitly or implicitly, with the same employer or if he explicitly or implicitly concludes a new employment contract with the same employer for a period of more than 2 years continuously, it is considered that an open-ended employment contract has been concluded. A fixed-term agreement can be concluded in cases where the duration of employment is limited due to objective reasons justified by a deadline, necessity to complete a specific work/job or occurrence of a specific event (e.g. seasonal jobs, temporary replacement of an absent worker, completion of a specific piece of work, temporary increase in workload, and conclusion of a management agreement). 

Probationary period

A probationary period may last up to 6 months and must include a notice period of at least 7 days.  

Choice of law

All employment relationships in Brčko District are normally governed by the employment law of Brčko District (with the exception of foreign diplomats).
 

Legal venue

With regard to contractual and statutory rights and duties it is not, in principle, possible to exclude the jurisdiction of local courts.

1.2. Service contracts

Services may also be provided within the framework of a service agreement i.e. where a contractor commits to providing services in exchange for remuneration. These services may include carrying out specific repairs. However, a service agreement such as this may not be used to avoid adhering to the provisions contained in employment law. As such, if a service provider is involved in the operation of a customer´s business and becomes subject to their directives while carrying out the designated “work”, this results in the creation of an employment contract and the term “service agreement” no longer applies.

1.3. Employment of foreign citizens

Right of residence and employment of foreign nations

In accordance with the Law on the Employment of Foreign Nationals in Brčko District (“Official Gazette of Brčko District”, no. 15/09 and 20/10), the BiH Law on Foreign Nationals  (“Official Gazette of BiH, no. 88/15, 34/21 and 63/23) and the BiH Rulebook on Entrance and Residence of Foreigners (“Official Gazette of BiH” no. 25/16 and 83/22), an employer cannot conclude an employment contract or a contract on conducting temporary and occasional works with a foreign individual prior to the temporary residence being approved for this foreign individual, nor can this foreign individual start his/her work prior to the residence being approved. In addition to the general legal preconditions and conditions envisaged by the collective agreement or employer’s rulebook, the foreigner, who intends to reside in BiH with the purpose of paid work must possess a work permit for an employment contract to be concluded. Also, the BiH Law on Foreign Nationals sets out the employment for which a work permit is not necessary. In these cases, the foreigner regulates his residence based on highly qualified employment, transfer within the legal entity, scientific research or work without a work permit with certificate for registration of work. The certificate for registration of work can be obtained under conditions and for period prescribed by the BiH Law on Foreign Nationals for specific occupations and types of work, such as members of supervisory boards and founders of companies, persons who carry out delivery work and assemble equipment, university professors, and scientists and researchers hired by universities in BiH. The procedure for obtaining of a certificate for registration of work is simpler than the procedure for obtaining a work permit as it requires significantly fewer documents to be submitted to the competent authority. Furthermore, university professors, scientists and researchers hired by universities in Brčko District and foreign military personnel which participate in joint projects with the BiH Armed Forces in BiH are not required to obtain work permits. Foreign journalists and reporters as well as artists, authors, actors, singers and others participating in cultural events are not considered to be workers and thus are exempt from obtaining work permits. 

Work permits

All foreigners who intend to conclude an employment contract with a domestic, natural or legal entity must possess a valid work permit. The government of Brčko District determines the annual quotas for the number of work permits that can be issued. When meeting the annual quota, extensions of work permits have priority over the issuing of new permits. Work permits are issued at the request of the employer who must, amongst other documents, submit an explanation on the justification of employment for a foreign citizen. Requests for work permits will be denied if there are persons registered at the Employment Office with the adequate qualifications, except for employers who are foreign investors or founders of a local company which can be granted a work permit regardless of whether there are persons with adequate qualifications in accordance with the applicable regulations registered at the Employment Office. Requests for work permits will also be denied if the employer had negative operational results in the previous year, its employees’ salaries are below the minimum wage stipulated in the collective agreement or if it did not pay taxes in accordance with the law. Work permits are issued for a specific work position and type of work and are issued for a maximum period of one year, unless otherwise decided by the relevant body as per its discretion.

Once the employer obtains the work permit, the foreigner must obtain a valid temporary residence permit based on the approved work permit, in accordance with the provisions of the BiH Law on Foreign Nationals. As stated above, the employee may only start his/her work after obtaining a validly approved residence permit.

2.1. Minimum Wage

Minimum wage pursuant to collective agreements or employment rulebook

In principle, the parties are free to agree upon such terms as basic salary, possible bonuses and benefits. However, the minimum wage stipulated (either generally or specifically) in the applicable collective agreements or employment rulebook (as decided upon by the relevant employer) must be considered. 

2.2. Pay raises

Legal basis

Pay raises can be negotiated at either the level of a collective agreement or an employment contract, as well as in the employment rulebook that has been decided upon by the relevant employer. 

2.3. Pay reduction

Only possible with the consent of the employee

In principle, employers can only implement changes to salary or working conditions with the consent of the affected employee. 

Altering terms and conditions of employment

Alternatively, in order to amend a worker´s terms and conditions of employment, an employer may terminate the existing employment contract under the conditions of, and in accordance with, the mandatory legal provisions on the termination of employment contracts. They may then re-offer the worker a new employment contract under altered conditions. In any event, the minimum wage stipulated in the applicable legislation, collective agreements or employment rulebook (as decided upon by the relevant employer) must be considered. If the relevant employee refuses to accept the new offer of employment, he is thereby dismissed (general rules in relation to dismissals must be considered in this regard (see point 6.). An employee’s refusal to accept the conditions offered in a new employment contract does not represent a valid reason for termination in itself. Furthermore, if the employee accepts the employer’s offer then he retains the right to dispute the permissibility of such amendments to the employment contract before the competent court, in accordance with the applicable law.

3.1. Regular working hours and breaks

Regular daily and weekly working hours

A standard working week consists of 40 hours (full-time work).  

Break time

Full-time employees are entitled to a daily 30-minute break which does not count toward their working hours.

3.2. Statutory minimum periods of rest

Minimum daily periods of rest

The minimum daily rest period for employees is at least a continuous period of 12 hours between two consecutive working days. This period may be reduced to 10 hours for agricultural and seasonal workers.

Weekly rest periods

Employees are entitled to a weekly rest period of at least 24 continuous hours according to a pre-determined schedule. However, if an employee is required to work on his rest day, he is entitled to an alternative day of rest negotiated between the employee and the employer.

3.3. Maximum weekly working hours 

50 hours

If the nature and necessity of the work require this, weekly working hours may be increased for a certain period, up to a maximum of 50 hours weekly. However, the weekly working hours for another period must then be reduced, so that the average weekly working hours for a calendar year are no more than 40 hours

Seasonal work

Seasonal workers may work for up to 60 hours a week for a certain period.

3.4. Overtime

General principles

Employees must work overtime upon demand if it can be justified by one of the following reasons:

• force majeure,
• an unusually high workload, or
• for other unanticipated reasons.

Limitations

In the above cases, the employee may work up to 10 hours of overtime per week so that the working week consists of 50 hours. In addition, the employee may voluntarily work for another 10 hours of overtime per week at the written request of the employer. But overtime work cannot last longer than 300 hours a year in total.

Notification of labour inspection office

If the requirement for overtime work lasts for more than three consecutive weeks or for a total duration of ten weeks in one calendar year, the labour inspection office must be notified.

Prohibition of overtime

Minors cannot work overtime under any circumstances.

Instruction to provide overtime based on written agreement

The following occupational groups may only work overtime upon their written consent: 

• pregnant women; 
• mothers or adoptive parents with children aged 3 year or younger; and/or 
• single parents or adoptive parents with children aged 7 years or younger. 

Compensation for overtime

Employees are entitled to an increased salary for working overtime. The increase in salary based on overtime is specified in either a collective agreement, an employment contract or employment rulebook, but it cannot be less than 30% of the monthly salary paid for regular working hours. 

Permitted in principle

In principle, work on weekly rest days and holidays is permitted. However, the employee must be paid a higher rate of pay for any work carried out on these days in accordance with the applicable legislation.

3.5. Increase in salary for other additional efforts

Heavy labour and night work

Employees are entitled to an increased salary for difficult work conditions, night work, as well as work on Sundays and holidays or any other day provided for as a non-working day by the law, in accordance with the collective agreement, employer’s rulebook and employment contract. The exact amount of the increase is stipulated by the collective agreement, employment contract or employment rulebook.

Holiday entitlement

Employees are entitled to at least 20 working days of paid holiday per year. When calculating holiday entitlement, public holidays and other statutory non-working days may not be considered. Holidays do not include the time spent on temporary inability to work, non-working holidays as well as other leave from work which is recognised as insured service years for the employee. In determining the holiday duration, the working hours are considered to be divided across 5 working days, unless otherwise specified by the collective agreement, employer’s rulebook or employment contract. 

All employees who perform tasks that are particularly harmful to their health are entitled to at least 30 days of paid holiday per year. Minors are entitled to at least 24 days of holiday per year.

When an employee is employed for the first time or if he has had a break of more than eight days between two employments, he will acquire a right to holiday after 6 months of continuous work. However, such employee is entitled to at least one day of holiday for every month of work.

Use of holiday entitlement

An employee may, in principle, use his/her holiday either in one or in more parts. Further regulations on how to use the holiday in more parts should be stipulated in the collective agreement. The employee must notify the employer about the use of holidays within a notice period stipulated in the employment contract. The use of holiday must be approved by the employer.

Remuneration

An employee is entitled to his full salary during the use of holiday entitlement as if he had been at work. The employee may also have a right to an additional holiday supplement in accordance with the collective agreements, work rules or employment contract. 

Payment in lieu of holiday 

An employee cannot waive the right to holidays and the employer cannot deprive the employee of the right to holiday. The employer cannot pay the employee for not using his holiday entitlement.

Remaining holidays

In accordance with the law, further provisions on the method of using holidays are stipulated in the collective agreement.

Duty to notify employer and provide medical certification

If an employee is absent from work due to an illness or accident, he must immediately inform the employer and, upon the employer’s request, provide a medical certificate. The certificate should confirm the employee´s inability to work and state the anticipated length of time that they will be absent from work. 

Entitlement to continued remuneration

An employee is entitled to remuneration of salary during temporary inability to work caused by sickness or injury or for other reasons, as envisaged by the Law on health insurance of Brčko District (“Official Gazette of Brčko District” no. 19/20 – consolidated text).  

Duration of entitlement to continued remuneration

While on sick leave, employees are entitled to receive remuneration. The employer is obligated to provide remuneration of salary until the 42nd day of sick leave. The employee is entitled to salary remuneration from the health insurance bureau for up to 12 months of uninterrupted temporary inability to work.

Employee’s duty of disclosure

The employee’s duty of disclosure is not specifically regulated, but in practice an employer may request to see evidence of satisfaction of general pre-conditions for employment such as the employee’s health condition through a medical certificate and a certificate on ability to work.

General information

An employment contract is terminated by the: 

• death of the employee; 
• mutual consent of the employee and employer; 
• termination with notice (ordinary) or without notice (summary dismissal) of employment by the employer; 
• termination by the employee; 
• the employee fulfils the requirements for retirement stipulated within the laws on retirement of FBiH or RS; 
• declaration of invalidity by the competent authority; 
• lapse of time (for fixed-term contracts); 
• sentencing of the employee to a prison sentence or if the employee is bound by a safety or protection measure with a duration over 6 months; 
• the employee is subjected to a security measure, an educational or protective measure with a duration over six months; and 
• a decision of the competent court, on the date determined in the court decision.

6.1. Formal requirements for the employer

Written form and reasons for termination

Termination of employment by the employer must be done in writing and should state the reasons for the termination. A copy of the termination must be delivered to the employee. Non-compliance with these requirements may result in the termination being invalid.

6.2. Terms of notice

At least 15 days by the employer and the employee

The minimum notice period for termination of employment both by the employer or the employee is 15 days. During the probationary period the minimum notice period is 7 days for both the employer and the worker.

Entitlement to remuneration during the notice period

During the notice period on termination of employment, employees are entitled to full remuneration and all other statutory rights.

6.3. Dismissal without notice

Serious breach of duty 

The employer may terminate the employment contract without notice if the employee is liable for a serious breach or serious breach of work obligations or if the employment is of such nature that the employer cannot be expected to continue the employment relationship.

In case of offense or breach of work obligations that are less severe, the employer will give a written warning to the employee. The written warning must contain a description of the offense and/or the breach of work obligations and the employer’s intention to terminate the employment contract without notice in case of repetition.

Promptness

If there is a valid reason for a dismissal without notice, the employee can be dismissed within 30 days of learning about the fact causing dismissal.

6.4. Causes for dismissal

Termination by employee

Employees may terminate employment relationships without giving reasons.

Termination by employer must include objective justification

Employers must provide an explanation (cause) for the termination of the employment contract. 

Reasons for termination

The employer may terminate an employment contract under the prescribed notice period in cases where: 

• termination is justified due to economic, technical or organisational reasons (in this case the employer may terminate the employment contract if, taking into account the size, capacity and economic condition of the employer and the worker’s capabilities, it cannot be reasonably expected from the employer to give the worker other jobs or educate or equip him for work in other jobs);  
• the worker is not capable of carrying out his employment contract obligations; or 
• other instances prescribed by the BD Employment Law. 

6.5. Mass redundancies

Definition

If an employer employs a minimum of 15 employees and intends to terminate the employment contracts of more than 20% of employee in the next three months due to economic, technical or organisational reasons, then this represents a “collective redundancy”.

Consultation duties

Before terminating the employment contracts, the employer must consult with the workers’ council or, if no workers’ council has been set up, the trade union that represents at least 10% of all employees.

6.6. Severance pay

If an employee concludes an employment contract for an unlimited duration and this is terminated by the employer after a minimum of two years of continuous work (except if the contract is terminated due to breach of employment obligations or non-performance of employment obligations by the employee), then said employee is entitled to a severance payment to an amount depending on his years of continuous employment relationship with that employer. Severance payment is determined based on the collective agreement, employer’s rulebook or employment contract, but it may not be lower than 1/3 of the monthly average salary for every year of service as paid to the employee within the last three months prior to termination of the employment contract. 

6.7. Special dismissal protection

Groups protected against dismissals 

In Brčko District, employees who belong to the following groups may not be made redundant:

• pregnant women, parents during maternity/paternity leave and parents of disabled children during care leave cannot be made redundant for economical, organizational or technological reasons; and
• employees who have suffered a work-related injury or illness may not be laid off during their inability to work. If the employment is fixed term the period of the inability to work will not be calculated as part of the employment contract term.

Union/workers’ council representatives

For the duration of their union/workers’ council activity as well as one year thereafter, the workers’ representative in the workers’ council or union may only be dismissed with the prior approval of the minister for labour issues.

6.8. Alteration of occupational circumstances

Altered occupational circumstances of an employee such as changes in working ability due to an injury at work or a work-related illness cannot damage the rights of an employee as arising out of an employment relation. An employee that is temporarily incapable of working is entitled to return to work under the condition that he received the necessary treatment and rehabilitation and after the written approval to return to work is issued by relevant physician/health institution. In the event that the authorised physician or health institution state that the employee has a decreased work capability, the employer is under a duty to offer in writing other jobs for which the employee is equipped. The employee that suffered an injury at work or suffered from professional work-related sickness is entitled to professional education and training, as organised by the employer. Only with the approval of the labour inspector can the employer terminate the employment contract of an employee with decreased work abilities due to an injury at work, work-related sickness or if the employee is in direct danger of a disability caused by work. 

Transfer of employment relationships upon consent of personnel

In case of a change in the employer (for example due to the sale of the company etc.), the rights and obligations arising from employment contracts will be transferred to the new employer if the employee consents to this. The new employer and employee may terminate the employment contract under the conditions agreed with the previous employer.

8.1. Unions and business management

Freedom to establish and join a trade union

All employees are entitled to freely establish or join a trade union of their choice under the conditions prescribed by the law. 

Union representation

The unions are free to decide how they wish to represent the rights of their members. 

Statutory competence

Unions and their members have the ability to do the following:

• attend appropriate training seminars during working time and have the entitlement to paid leave;
• employer’s employment rulebook: right to comment and right to challenge the introduction of such rules before the court (in absence of a workers’ council);
• elect workers’ councils: right to introduce workers’ council election procedures;
• in the absence of a workers’ council: right to practice certain rights that are otherwise undertaken by a workers’ council;
• expand the competency/scope of a (foreign) collective bargaining agreement: 
• right to comment on examinations by the labour inspectorate: 
• right to initiate such inspections;
• right to initiate a strike; 
• as parties to collective bargaining agreements, unions also represent the rights and interests of employees; and
• as parties to collective bargaining agreements, unions also represent the rights and interests of employees.

Collective agreements

Aside from these statutory rights, the main influence of unions undoubtedly lies in their capability to negotiate collective bargaining agreements with employers.

Strikes

In Brčko District, strikes or other means of influencing business management may in practice be undertaken by trade unions or workers’ councils in the private sector as long as all rights and regulations pursuant to collective bargaining agreements and other agreements are observed.

Power of unions

Furthermore, the influence of unions and workers’ councils is generally the strongest in large companies and public enterprises.

8.2. Statutory personnel representation

In companies that regularly employ at least 15 employees, a workers’ council can be established by the decision of at least one third of the employees or of a trade union representing at least 20% of employees working for the employer. The purpose of a workers’ council is to give opinions and proposals regarding employees´ interests. 

8.3. Collective agreements

Collective agreements and workers' council agreements

Collective agreements are negotiated between unions and employers or employer representation associations. No statutory provisions regarding workers’ council agreements exist.

Employer's duty to implement terms of agreement

Due to the fact that no general collective agreement exists for the territory of Brčko District, the provisions of specific general collective agreements applicable for territories of the two entities (RS or FBiH) may in practice be applied in regulating the employer-employee relationship. 

9.1. Disputes in courts of labour

Ordinary courts are generally responsible for deciding on employment-related disputes. For the time being, no labour courts exist in Brčko District.

Arbitral courts

Employment-related disputes can be arbitrated, as long as the parties (employer, employees/unions) agree to this, or have agreed upon this in advance (i.e. in employment or collective bargaining agreements).

9.2. Competency disputes

Arbitration boards

Disputes concerning the conclusion, implementation, adaptation or extension of collective bargaining agreements or other collective disputes should be resolved by agreement of the parties if possible. If not, the dispute is to be resolved by a “peace council”.

Composition

The “peace council” consists of three members: one member representing the employers’ association, one member representing the trade union and one member chosen by the parties in a dispute.

General

The social insurance system in Brčko District covers the following risks: motherhood, old age, illness, invalidity and unemployment.

10.1. Social insurance charges and taxes

Social insurance

Social insurance charges are calculated based on gross monthly salaries and include the following:

• Health insurance: 12.00%
• Unemployment insurance: 1.50%
• Pension and disability insurance: This insurance can be calculated either based on the Law on Pension and Disability Insurance of FBiH  or on the Law on Pension and Disability Insurance of RS. In the first case, the charges are 17% (employee) and 6% (employer) and in the second case, only the employee is charged at 18.5%. The employee is free to choose which entity’s social contribution legislation will apply.

10.2. Health insurance

Basic and extended insurance

In Brčko District, health insurance consists of basic (mandatory) insurance and extended health insurance, both provided by the health insurance fund of Brčko District. The level of insurance is based on the insurance paid. The basic insurance includes benefits in kind (such as medical care) and financial cover (such as pay during temporary inability to work up to one year).

Private health insurance

Aside from the governmental system, private health insurance may also be claimed. Charges and benefits depend on the insurance agreement between the employee and the insurance provider.

10.3. Retirement pension insurance

Mandatory and private pension insurance

In Brčko District, the employee is free to choose which entity social contribution legislation will apply since Brčko District does not have its own pension insurance fund. 

Premature and full old-age pension

The relevant age requirement will depend on the employee’s choice of applicable legislation i.e. whether he will be subject to pension legislation applicable in FBiH or RS.

Calculating old-age pension

The rates for the calculation of the old-age pension will depend on the employee’s choice of applicable legislation i.e. whether he will be subject to pension legislation applicable in FBiH or RS.

10.4. Unemployment benefit schemes

Cash benefits and programs

The government combats unemployment through numerous labour market policies and supports the unemployed through monetary benefits.

Unemployment benefits

All persons who have paid unemployment contributions: (i) for at least eight consecutive months during the last twelve months prior to unemployment; or (ii) for at least a total of twelve months during the last eighteen months prior to unemployment, are entitled to monetary benefits, health insurance, and pension and disability insurance (unemployment benefits). The duration of unemployment benefits depends on the number of years insured and can be between 1 and 12 months.