Labour law in Bosnia and Herzegovina - Entity of Republika Srpska (“RS”)

1.1. Employment contracts

Written form or written confirmation

The employment relationship is based on an employment contract, which must be concluded in written form and in accordance with the Employment Law of RS (“Official Gazette of RS”, no. 1/16, 66/18, 91/21 – CC Decision and 119/21). The employer is obligated to deliver a certified copy of the agreement to the worker prior to the commencement of employment. 

Presumption of open-ended employment

If no fixed duration is stipulated in the employment contract, it is presumed to be an open-ended agreement.

Necessary content

An employment contract must include the following:

• name and address of the employer; 
• name, surname, address and qualifications of the worker; 
• date of commencement of employment;
• Employment position the worker is assigned to;
• place of work;
• duration and schedule of working hours;
• salary and other types of remuneration;
• holiday entitlement;
• duration of employment (if employment is for a fixed-term);
• term of notice for open-ended employment contracts;
• assignments with special work-place conditions, if applicable; and
• other information the parties consider to be relevant to regulating the employment relationship.

Certain content does not have to be expressly listed, but can be included by referring to the provisions of the employment law, collective agreements or employment rulebooks. Additional information must be listed if the worker is employed to perform temporary and periodic work and if the worker performs work outside the premises of the employer.

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

A fixed-term agreement can be concluded in cases where the duration of employment is limited due to objective reasons (e.g., a deadline, completion of a specific piece of work etc.). A fixed-term agreement can be negotiated only for a maximum duration of two years. However, the fixed-term employment contract can be extended for more than two years in the following situations:

• if a worker is temporarily absent from work and there is a need for his replacement in the meantime;
• for a project that has a set deadline, but only until said project is completed; and
• if a worker lacks up to 5 pensionable years of employment.

Probationary period

A probationary period may last up to three months. It may, as an exception, be extended for a further three months by the mutual agreement of both parties.

Choice of law

All employment relationships in RS are governed by the Employment Law of RS (with the exception of foreign diplomats).

Legal venue 

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

1.2. Service contracts

If a service provider becomes involved in the customer´s business operation

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 the 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. 

Please note that managerial or special agreements with directors regulating the rights and obligations of the company and the director may also be referred to as service (or management) contracts. By concluding such an agreement, directors do not enter into an employment relationship, but they are entitled to remuneration in the nature of a salary, as well as other rights and obligations, and responsibilities in accordance with the agreement. 

1.3. Employment of foreign citizens 

Right of residence and employment of foreign nations

IIn accordance with 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 Foreign Nationals (“Official Gazette of BiH” no. 25/16 and 83/22), a foreign individual who intends to reside in BiH in order to undertake paid work may only start working in Bosnia and Herzegovina based on a work permit once his/her residence permit is approved. In such a case, the employer cannot conclude an employment contract or other corresponding agreements with a foreign individual before his/her temporary residence is approved. In order to employ foreign nationals, an employer must comply with the Employment Law of RS and the Law on Employment of Foreign Citizens and Persons without Citizenship of RS.

Work permits

In accordance with the BiH Law on Foreign Nationals and the BiH Rulebook on Entrance and Residence of Foreign Nationals, a foreign individual who intends to reside in BiH in order to undertake paid work may only start working in Bosnia and Herzegovina based on a work permit once his/her residence permit is approved. In such a case, the employer cannot conclude an employment contract or other corresponding agreements with a foreign individual before his/her temporary residence is approved. In order to employ foreign nationals, an employer must comply with the Employment Law of RS and the Law on Employment of Foreign Citizens and Persons without Citizenship of RS. 

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 same legal entity, scientific research, or work without a work permit with a certificate for registration of work. The certificate for registration of work can be obtained under certain conditions and for a 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, scientists and researchers hired by universities in BiH. The procedure for obtaining 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 RS and foreign military personnel who 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. According to the Law on Employment of Foreign Citizens and Persons without Citizenship of RS, the government of RS determines annual quotas for the number of work permits that can be issued. When meeting the annual quota, extending existing work permits has priority over issuing new permits. Work permits are issued at the request of the employer who must, inter alia, submit a justification for employing a foreign citizen. Requests for work permits will be denied if there are persons registered at the Employment Office with adequate qualifications, except for employers who are foreign investors or founders of a local company whose employees can be granted a work permit regardless of whether there are persons with adequate qualifications registered at the employment office. Work permits are issued for a specific work position and type of work and are issued for a maximum period of one year. Work permits are not transferable between different work positions or employers. 

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 worker may only start his work after obtaining an approved residence permit

2.1. Minimum Wage

Minimum wage pursuant to collective agreements or the employment rulebook

The general minimum wage in RS is determined by the Government of RS on the recommendations of the RS Economic-Social Council in the last quarter of the current year for the following year. The minimum wage for professions regulated by their own collective agreements can be determined by those agreements, but may not be lower than the general minimum wage.

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 employer. However, a general point of reference for all employers does not exist.

2.3. Pay reduction 

Only possible with the consent of the worker

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

Altering terms and conditions of employment

Alternatively, in order to amend a worker´s terms and conditions of employment an employer may offer the worker an option to conclude an annex to the employment contract that includes the altered terms and conditions. In any event, the minimum wage stipulated in the applicable legislation, collective agreements or employment rulebook passed by the relevant employer must be considered. A worker’s refusal to accept the conditions offered in a new employment contract represents a valid reason for termination in itself. If the worker accepts the new employment contract, he retains the right to legally challenge the permissibility of such alteration 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 workers are entitled to a daily 30-minute break which counts toward their working hours.

3.2. Statutory minimum periods of rest

Minimum daily rest periods of rest

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

Weekly rest periods

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

3.3. Maximum weekly working 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 52 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 workers may work for up to 60 hours a week for a certain period.

3.4. Overtime

Workers must work overtime upon the demand of the employer and in case of an unusually high work load or in order to remedy the effects of weather conditions, fire, earthquake, epidemics and other accidents.

A worker may work a maximum of 10 hours of overtime a week (maximum of 4 hours per day). As an exception, the worker may voluntarily, upon the demand of the employer, work an additional 10 hours overtime a week. However, the total amount of overtime in a calendar year may not exceed 180 hours. However, collective agreements can determine the total amount of overtime in a calendar year to be a maximum of 230 hours. 

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.

Minors cannot work overtime under any circumstances.

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

• pregnant women;
• mothers with children aged 3 years or younger; and
• single parents with children aged 6 years or younger.Workers are entitled to a salary increase of 25% during the overtime work. 

3.5. Increase of salary for additional efforts

Workers are entitled to an increase in their basic salary for very complex and important work, for working in difficult conditions and for achieving special work results. The amounts are stipulated by collective agreements or other applicable regulations. Moreover, workers are entitled to an increase in their basic salary for night work. Night work is defined as work between 10:00 pm and 06:00 am of the next day. If overtime work is conducted during the night, the increases for overtime and night work are added together. Also, workers are entitled to an increase in their basic salary for work during holidays and other non-working days. Rates may be stipulated by the employment contract, collective agreements or the employment rulebook. 

Holiday entitlement

Workers are entitled to at least 20 working days of paid holiday per year. When calculating holiday entitlement, public holidays, other statutory non-working days and the worker’s absence from work on other legal grounds (such as inability to work) may not be considered. If the employer’s work is organised as less than six working days a week, then when calculating holiday entitlements said work will be considered as organised in five working days a week, unless otherwise stipulated by the employment contract, collective agreement or employer’s rules. 

Increased holiday entitlement

All workers 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.

Accrual of holiday entitlement

Workers acquire holiday entitlement after 6 months of continuous employment. Workers without 6 months of continuous employment have a right to at least 1 day of holiday entitlement per every month of employment completed.

Use of holiday 

A worker may, in principle, use his/her holiday without interruption. However, depending on the demands of the employment, the employer may decide that the worker uses the holiday in two parts. The employer and worker may agree on the use of holiday entitlement in more than two parts, in which case one of the parts must last at least two weeks continuously.

Remuneration

A worker is entitled to his full salary during the use of holiday entitlement, which will be paid if he were at work. The worker may also have a right to an additional holiday supplement in accordance with collective agreements, the employment rulebook or employment contract. 

Payment lieu of holiday 

A worker cannot waive the right to holiday and the employer cannot deprive the worker of the right to holiday. The employer cannot pay the worker for not using his holiday entitlement. The worker can receive monetary compensation for not utilizing his annual leave if the worker fails to exercise his right to annual leave due to the employer’s fault, e.g. if the employer denies the worker’s request for annual leave.

Remaining holidays

If a worker does not use their accrued holiday entitlement within the respective calendar year, the remaining leave can be carried over but must be used by the end of June in the following year.

Duty to notify employer and provide medical certification

If a worker is temporarily unable to work due to an illness or injury, he must immediately inform the employer and deliver a doctor’s certificate within three days from the start of his absence. The certificate should confirm the worker´s inability to work and state the anticipated length of time that they will be absent from work. If, due to serious illness, the worker is unable to notify his employer or provide verification of his illness, then members of his family should do so or, if the worker lives alone, he must deliver the certificate within three days of the reasons preventing him delivering the certificate ceasing to apply.

Entitlement to continued remuneration

Workers are entitled to remuneration (sick pay) while temporarily unable to work. If the temporary inability is caused by a work-related injury or illness, the remuneration shall amount to 100% of the worker’s average salary in the previous period or the salary the worker would have earned had he/she been at work. If the temporary inability is caused by an illness or injury (not work-related), the remuneration shall amount to at least 70% but not more than 90% of the net salary the worker would have earned had he been at work.

Duration of entitlement to continued remuneration

The remuneration for the first 30 days of temporary inability to work due to illness or injury is paid by the employer. After 30 days, the remuneration is paid by the health insurance fund of RS, but for no longer than 12 months. If the temporary inability is due to a work-related injury or illness, the employer is obligated to pay the remuneration for the entire duration of the temporary inability to work until the worker is determined by the relevant bodies to be permanently unable to work.

Worker’s duty of disclosure

The worker’s duty of disclosure is not specifically regulated, however in practice an employer may, in order to satisfy general pre-conditions for employment, ask to see evidence of the worker’s health condition through medical certificates and a certificate on ability to work (if necessary and relevant for the work position in question). 

General information

An employment contract is terminated by

• the expiration of the employment contract;
• the death of the worker;
• the mutual consent of the worker and employer;
• the termination of employment by the employer or worker;
• the worker having worked for 40 years (35 years for women) with paid pension benefits and being of 60 years of age (58 years for women); or 65 years of age with at least 15 years of work with paid pension benefits;
• delivery to the employer of a final decision on permanent loss of the worker’s working ability;
• sentencing of the worker to a prison sentence, if the worker is subject to a safety or protection measure with a duration of over six months;
• a decision of the competent court on a date determined in the court decision;
• termination of the employer’s activities;
• on the request of a parent or guardian of a worker younger than 18 years of age; or
• other reasons in accordance with the applicable laws.

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 worker. Non-compliance with these requirements may result in the termination being invalid. Additional requirements may apply depending on the grounds for termination. 

6.2. Terms of notice

The minimum notice period for termination of employment by the employer is 30 days. The minimum notice period for termination of employment by the worker is 15 calendar days. During the probationary period the 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, workers are entitled to full remuneration and all other statutory rights.

6.3. Dismissal without notice

Serious breach of duty & failure to return to work

Termination without notice (summary dismissal) is only lawful if the worker commits a grave breach of the work duties or breach of work discipline, instances of which are prescribed by the law, employment contracts and employers’ internal acts. 

6.4. Causes for dismissal

Termination by employer 

An employer may terminate an employment contract in accordance with the reasons specified in the applicable law. 

Reasons for termination

The employer may terminate an employment relationship for the following reasons:

1)    if there is a justified reason for termination (such reasons are prescribed in the applicable law); 
2)    if the worker commits a grave breach of work duties prescribed by the applicable law (such grave breach is prescribed by law); and
3)    if the worker does not follow the employer’s work discipline (instances also prescribed by law).  

Possibility of continued employment 

A worker can be notified about the deficiencies in his work and be provided with guidelines and a deadline for an improvement in his work abilities. If the worker fails to improve his work abilities by the prescribed deadline, then an employer can move such worker to a more suitable work position within the company. If a more suitable work position does not exist in the company, than employer may terminate employment.

6.5. Mass redundancies

Definition

An employer is obliged to create a programme for dealing with surplus workers if that employer determines that due to economical, technical or organisational reasons within period of 90 days it will be necessary to dismiss workers employed based on open-ended employment contract. Therefore, a programme must be created if a need for work of workers with open-ended employment contracts ceases for at least:
-    ten workers within employer that has more than 30, and fewer than 100 employees with open-ended employment contracts,
-    10% of workers within employer that has more than 100 employees with open-ended employment contracts,
-    30 workers within employer that has over 300 employees with open-ended employment contracts.

A worker is obliged to create a programme if a need for work of at least 30 workers ceases within 90 days due to economical, technical or organisational reasons, no matter of total number of employed persons within employer.

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 workers, as well as with the Employment Bureau of RS.

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 workers, as well as with the Employment Bureau of RS.

6.6. Severance pay

2 year term

If a worker 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, or due to breach of work duties and discipline by the worker), then said worker 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 (after taxes) for every year of service as paid to the worker within the last three months prior to termination of the employment contract. The severance pay may not exceed six average monthly salaries paid to the worker in the last three months before the termination of the employment contract.

6.7. Special dismissals protection

Groups protected against dismissals 

In RS, workers who belong to the following groups may not be made redundant:

• pregnant women, parents during maternity/paternity  leave and those working part-time due to the special care of children cannot be made redundant (i) for economical, organisational or technological reasons, (ii) if workers do not achieve work results or do not have the necessary knowledge and abilities to perform his/her job or (iii) if the worker refuses to conclude an annex to the employment agreement in accordance with the law.
• workers who have suffered a work-related injury or illness may not be made redundant while they are unable to work. If the employment is fixed term the period they are unable to work will not be calculated as part of the duration of the employment contract.

Termination only permissible with the
approval of the federal ministry of labour

During their union/workers’ council activity as well as six months thereafter, a workers’ representative in the workers’ council or union may only be dismissed with the prior approval of the union/workers’ council.

  6.8. Alteration of occupational circumstances

If a worker’s occupational circumstances change, i.e. changes in working ability due to an injury at work or work-related illness and if, after appropriate treatment, the worker is declared as fit for work, he is entitled to return to performing the tasks he performed prior to his inability to work, or other tasks corresponding to his occupational circumstances i.e. work ability. In the event that the worker possesses decreased work capabilities, the employer is under a duty to offer him to another work position in accordance with his abilities (altered occupational circumstances, i.e. change in work capabilities, do not represent a valid reason for termination) and the applicable law. 

Transfer of employment relationships upon consent of personnel

In case of a status change of an employer (for example due to the sale of the company etc.), in accordance with the law, the employer’s legal successor takes over from the legal predecessor all general regulations and all employment agreements valid on the date of the respective change.  The successor employer is obliged to apply general acts of the predecessor employer for at least one year, unless such general acts cease to be valid. 

8.1. Unions and business management

Freedom to establish and join a trade union

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

Union representatives in the company

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

Statutory competence

The unions and their member have the following rights:

• to initiate initiatives, submit requests and proposals and take positions relevant to the material, economic and social status of workers;
• to have first considered the opinions and proposals of the trade union are when deciding what is relevant to the material, economic and social position of workers; 
• to comment on the employment rulebook proposed by the employer;
• to establish workers’ councils;
• to request/initiate inspections by the labour inspectorate;
• to strike: the right to initiate a strike; and
• to represent the rights and interests of workers when negotiating collective bargaining agreements, etc.

Collective bargaining 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 RS, in practice strikes or other means of influencing business management can be undertaken by trade unions or workers’ councils in the private sector as long as all rights and responsibilities pursuant to collective bargaining agreements and other agreements are observed.

Power of unions

The influence of union and workers’ council is generally strongest in large companies and public enterprises.

8.2. Statutory personnel representation 

Workers’ council

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

8.3. Collective agreements

Collective bargaining agreements and workers’ council agreements

Generally, collective agreements are concluded between the government of RS, the representative union confederation for RS and the representative employers’ association. Collective bargaining agreements are negotiated between industry/branch representative unions and employer associations. No statutory provisions regarding workers’ council agreements exist.

Employer´s duty to implement terms of agreement

A collective agreement can be signed at the level of the entire RS, for a certain profession, or for one or more employers. Generally, a collective agreement is only binding on the parties that have signed up to it. However, the ministry of labour may decide to expand application of collective agreements to parties that have not signed it.

9.1. Disputes in courts of labour

Ordinary courts

Ordinary courts (Basic courts) are generally responsible for deciding employment-related disputes in the first instance. Second instance courts are District courts in RS. For the time being, no labour courts exist in RS. 

Arbitral courts

Employment-related disputes can be arbitrated as long as the parties (employer, workers/unions) agree, 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 appointed by the ministry of labour, one by the majority union in the territory of RS and one by the employers’ association which represents the majority of employers in RS.

Economic and Social Council

The Economic-Social Council has the purpose of establishing and developing social dialogue regarding issues of professional and social importance for workers. It has three members: one appointed by the ministry of labour, one by the representative majority union in the territory of RS and one by the representative majority of the employers’ association in RS.

General

The social insurance system in RS 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:

• Pension insurance: 18.50%
• Health insurance: 12.00%
• Child protection charges: 1.70%
• Unemployment insurance: 0.8%

10.2. Health insurance

Basic and additional insurance

In RS, health insurance consists of basic (mandatory) insurance and extended health insurance, both provided by the health insurance fund of RS based on 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 worker and the insurance provider.

10.3. Retirement pension insurance 

Single level retirement and accident insurance

In RS, there is a single level mandatory pension insurance system. However, workers may choose to also obtain voluntary pension insurance.

Premature and full old-age pension

The right to an old-age pension arises at the age of 65, provided that the worker has paid 15 years of pension insurance premiums, or at the age of 60 (58 for women), provided that the worker has paid 40 (35 for women) years of insurance premiums.

Calculating old-age pension

The amount of old-age pension granted is calculated, in essence, though a coefficient system using the number of years that the worker has paid insurance as a basis, as well as the salary the worker received in the years he/she paid insurance premiums.

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). Unemployment benefits vary between 35% and 40% of the worker’s average net-salary over the last three months prior to unemployment, depending on the number of years for which the worker was insured. The duration of unemployment benefits depends on the number of years insured and can be between 1 and 12 months.