Labour law in North Macedonia

1.1. The Employment Contract

Employment is established the moment the employer and the employee (jointly referred to as the “Parties”) sign the employment contract.

The rights and obligations related to employment commence the moment the employee starts working, as stipulated in the employment contract. 

The employment contract contains the following elements:

1. data on the employee and the employer, as well as their residence address or registered seat; 
2. date of work commencement;
3. title of the job, i.e. data on the type of work, with a brief description of the job duties; 
4. provisions on the obligation of the employer to inform the employee about job risks, special professional qualifications, knowledge and necessary special medical supervision in accordance with the law, specifying the special risks that may be a consequence of the work;
5. location of the workplace. If the exact location is not indicated, the employee will be deemed to be performing work at the employer’s head office;
6. duration of employment, when a contract is concluded for a fixed term;
7. provision on full-time or part-time employment;
8. provision on regular daily or weekly working hours and the distribution of working hours;
9. provision on the amount of the basic salary, expressed in monetary terms;
10. provision on other allowances to be provided to the employee;
11. provision on annual leave, or the manner of determining annual leave; andindication of the employer’s general acts that determine the employee’s working conditions.

The term of employment may be fixed or unlimited. In case of fixed-term employment, the maximum term is 5 years. If the purpose of the employment contract is to substitute for an employee, the employment term may be conditioned by the return of that employee. 
Fixed-term employment will be transformed into unlimited employment if the employee continues to work after the employment contract expires. Exceptionally, fixed-term employment may also be transformed into unlimited employment under the following conditions:

1. the employee works in the same post for more than 2 years;
2. the post has been left open due to retirement;
3. the funding for the post is already planned; and 
4. the employee establishes the necessity of long-term employment.

Macedonian labour legislation is in the process of harmonisation with the acquis communautaire. Among other EU directives, Macedonian labour legislation has been harmonised with: 

1. Council Directive 2000/43/EC of 29 June 2000 implementing the principle of equal treatment between persons irrespective of racial or ethnic origin;
2. Council Directive 2000/78/EC of 27 November 2000 establishing a general framework for equal treatment in employment and occupation; and
3. Directive 2006/54/EC of the European Parliament and the Council of 5 July 2006 on the implementation of the principle of equal opportunities and equal treatment of men and women in matters of employment and occupation (recast).

1.2. Other contractual types

1.3. Employment of foreigners

In order to conclude an employment contract, foreigners have to obtain a temporary residence permit on grounds of employment and a work permit. 
The temporary residence permit will be granted upon a positive opinion by the Employment Agency and is required for: 

1. employment of a foreigner; 
2. seasonal employment of a foreigner; and
3. seconded employees. 
   A foreigner is only entitled to work in the post indicated in the temporary residence permit

1.4. Special rules for executives?

The employment contract may be terminated on the following grounds:

1. expiry of the term of the contract; 
2. death of the employee or the employer (if a natural person);
3. termination of the employer;
4. settlement; 
5. resignation;
6. court decision; and
7. other cases stipulated by law. 

2.1. Minimum wage

2.2. Pay increases

Pay increases may be stipulated in the employment contract. 

However, the pay increases stipulated by the employment contract may only be more favourable for the employee compared to the pay increases stipulated by the Private Agreement (described above).

2.3. Reduction of salary

3.1. Standard working hours and breaks

The employee who works 6 hours daily has the right to a lunch break of 30 min. The lunch break may not be used during the first 2 hours of work, nor in the last three. 

The employees who work between 4 and 6 hours are entitled to a lunch break of 15 min.

3.2. Minimum rest periods

3.3. Maximum allowed working hours

3.4. Overtime work

The employer is obliged to keep a register of overtime work and to indicate the overtime work separately in the monthly salary calculation. 

The employee who has worked over 150 hours annually and has not been absent from work for more than 21 days in one year (excluding the annual holiday), in addition to the salary supplement, is entitled to a bonus in the amount of one average salary in the Republic of North Macedonia.

A penalty in the amount of EUR 3,000 will be imposed on the employer for the following actions: 

1. ordering employees to work longer than the statutory limit for overtime work;
2. failure to register or improper registration of the overtime work; or
3. failure to notify the inspectorate for implementing overtime work. 

3.5. Working during the weekend and on public holidays

As indicated above, the employee is entitled to a weekly rest period of 24 hours plus an additional 12 hours’ daily rest. 

The weekly rest period occurs most often on Sunday. However, the choice of the day depends on the organization and the nature of the working assignments. 

The employee may organize work in shifts. The shifts should be organized in a plan and the time of the shifts can be set depending on the necessity for employees. Considering the stipulated minimum daily rest, one employee cannot be obliged to work in consecutive shifts.  

Besides the minimum daily and weekly rest, there is no limitation on the time for organizing the shift. Nevertheless, the employee is entitled to premiums if working on days intended for weekly rest or during holidays (please see answer to point 3.6.). 

3.6. Premiums for work during public holidays and night work

Work during holidays is permitted if the production is a continuous process or if the nature of work imposes such a necessity. 

In case of working during public holidays, employees are entitled to a premium of 50% over the amount of agreed salary per day. 

As a general note, the premiums on different grounds must be calculated cumulatively.

Employees who work at night are entitled to a premium, namely the hourly basic rate is increased by 35% for every hour spent in night work. 

The employer is obliged to provide the following to employees who perform night work:

1. longer rest;
2. appropriate food or compensation for food expenses in the amount of 20% of the average salary in North Macedonia for the previous year, proportionally with the nights on work;
3. expert management of the work or production process; 
4. medical examinations prior to performing night work, as well as on regular basis after the commencement.  

Furthermore, the employee who works in an aggravated and heath damaging environment also has certain rights stipulated by the Labour Law. Namely, the work time shall be shortened proportionally to the damaging impact on the health and the salary for this work time is equal to a full-time salary.

4.1. Holiday entitlement

The employee is entitled to an annual holiday of at least 20 days. 

The annual holiday may be prolonged to 26 days by an employment contract or collective agreement. 

In addition to the annual holiday, employees are entitled to a paid holiday due to following personal or family reasons:

1. marriage – 3 days;
2. marriage of child – 2 days;
3. giving birth or adopting a child – 2 days; 
4. death of marriage partner or child – 5 days;
5. death of parent, brother or sister – 2 days;
6. death of grandparents – 1 day;
7. expert exam for the employer’s needs – 3 days; and 
8. natural disasters – 3 days.  

The total amount of additional holiday granted for the above stated reasons may not exceed 7 days annually. 

4.2. Forfeiture of the holiday entitlement

Sick pay depends on the duration of the sick leave:

1. up to 7 days – 70% of the salary;
2. up to 15 days – 80% of the salary; 
3. above 15 days – 90% of the salary. 

The employer bears the burden of the sick pay if the employee’s inability to work lasts up to 30 days. Above 30 days, health insurance should calculate the sick leave. 

The employment contract may be terminated on the following grounds: 

1. expiry of the term; 
2. death of the employee or employer (if natural entity);
3. termination of the employer;
4. settlement;
5. resignation;
6. court decision; and
7. other cases stipulated by law.

The Parties may terminate the employment any time by concluding a written settlement. In order to be valid, the statement must meet the following conditions:

1. it contains a clause that stipulates the consequences of consensual termination of employment on the employee’s social security rights in case of unemployment;
2. it is signed on the day of termination, and 
3. it contains the following handwritten elements signed by each of the Parties: name and surname, date of termination, and signature.

The employer may only terminate the employment agreement if:

1. a valid reason exists related to employee’s behavior (personal reason on the employee’s side),  
2. the employee breaches the work order, discipline and work obligations (reason of fault);
3. a valid reason exists related to the employer’s necessity for functioning (business reason).

The termination has immediate effect – i.e. no mandatory minimal notice period is required – if the employer terminates the employment due to severe breaches of work order and discipline, in particular in the following cases: 

1. unjustified absence from work for three consecutive days or five days in one year;
2. misuse of sick leave;
3. failure to adhere to health protection regulation, protection at work, protection from fire, explosion, harmful chemical or other regulations for environmental protection;
4. use of alcohol and narcotics;
5. theft or casing harm with gross negligence related to work; and
6. disclosure of business, official or state secret.

6.1. Formal requirements to be observed by the employer

In the following specific circumstances, the employer must request an approval from the trade union even if the employee has severely breached the work order and discipline:

1. during pregnancy, birth and parenthood, 
2. during the placement of a child with an adoptive parent,
3. during the absence of a parent or child adopter for parental leave, or
4. during part-time work due to the care of a child with developmental disabilities and special educational needs and disabilities up to three years of age.

6.2. Notice Period

6.3. Limited reasons to terminate the employment

The employer may terminate the employment only if no further engagement is possible due to the following reasons: 

1. the employee is unable to perform the contractual or other employment obligations (personal reason) due to his or her behaviour, lack of knowledge or ability, or failure to meet the specific requirements prescribed by law; 
2. the employee violates contractual or other employment obligations (reason of fault); or
3. the need to perform a particular job under the conditions specified in the employment contract ceases for economic, organizational, technological, structural or similar reasons on the part of the employer (business reason).

In case of termination for business reasons, the employer is obliged to pay the employee the following amount:

1. up to five years of employment - up to one net salary,
2. five to ten years of employment - two and a half net salaries; 
3. from ten to 15 years spent in employment - in the amount of three and a half net salaries,
4. from 15 to 20 years spent in employment - in the amount of four and a half net salaries,
5. 20 to 25 years of employment - six net salaries; and
6. over 25 years of employment - up to seven net salaries.

The basis for calculation of the remuneration is the average net salary of the employee in the last six months before the dismissal, but not less than 50% of the average net salary paid per employee in North Macedonia in the last month before the termination.

6.4. General protection against termination of employment

As a general protection measure against termination, if the employer intends to terminate the employment of at 20 or more employees due to business reasons within a period of 90 days, the employer must consult the staff representatives. The consultations focus on the means and assets available for avoiding termination, reducing the number of terminations, or mitigating the consequences by using social measures. 

Another general protection measure against termination exists for a status change and merger/acquisitions. According to this concept, all the rights and obligations from the previous employer are transferred to the new entity – the acquirer (please see point 9). 

6.5. Employees with special protection against termination of employment

The Labour Law regulates a prohibition for terminating the employment contract of the following employees during: 

1. pregnancy, birth and parenthood, 
2. placement of a child with an adoptive parent,
3. absence of a parent or child adopter for parental leave, or
4. part-time work due to care of child with developmental disabilities and special educational needs and disabilities up to three years of age (“Special Protection Measure”).

There are no special rules that stipulate protection from redundancy. However, the above stated prohibition applies to redundancies.

Exceptionally, in specific circumstances the Special Protection Measure can be waived, and the employer may terminate the employment upon a consent from the trade union. If the trade union fails to respond to the request for consent, consent will be deemed to have been granted.

These specific circumstances refer to severe breaches of the work order and discipline, in particular in the following cases: 

1. unjustified absence from work three consecutive days or five days in one year;
2. misuse of sick leave;
3. failure to adhere to health protection regulation, protection at work, protection from fire, explosion, harmful chemical or other regulations for environmental protection;
4. use of alcohol and narcotics;
5. theft or causing harm due to work-related gross negligence; and
6. disclosure of a business, official or state secret.

6.6. Involvement of staff representatives

6.7. Termination in connection with a reduction of salary

In such cases, all the rights and obligations arising out of the employment contract are transferred to the new entity (after statutory change) or to the acquirer of part or all of the company (“New Employer”). The Previous and the New Employer are obliged to inform the trade union organizations in advance of this fact and to consult them in order to reach an agreement on:

1. the fixed or proposed date of transfer;
2. the reasons for such transfer;
3. the legal, economic and social implications for workers; and
4. the measures envisaged in relation to workers.

8.1. Labour unions and management

Yes. The labour Law stipulates numerous obligations to consult with the trade unions. The general rule on consultations is stipulated in cases in which the company has more than 50 employees. The consultation must include information about the imminent and future trends in the company’s activities, and their economic situation, about the situation, structure and possible course of employment in the trade company, and about each planned measure, especially when there is a threat to employment, about any decisions that may lead to essential changes in the work organization or in the contractual obligations.

The information must be given in a time frame, in a manner and with such contents suitable for enabling the staff representatives to conduct an appropriate analysis, and when needed to prepare for consultation.

Furthermore, consultations are also stipulated in other separate occasions (massive lay-offs, statutory changes, etc.).

8.2. Influence of Labour unions

8.3. Creation of a works council or staff representatives mandatory

8.4. Rights of staff representatives

8.5. Staff representatives and the right of paid release

8.6. Staff representatives and material expenses

8.7. Collective Agreements

The collective agreement may provide for arbitration for the purpose of settling collective labour disputes. As a rule, the composition, procedure and other issues relevant to the arbitration process are stipulated by a collective agreement of the employer or other internal acts. 

According to the Labour Law, if the employer and the employee agree on settling the labour dispute by arbitration, the arbitration award is final and binding for both parties. Also, based on a separate law on mediation, labour disputes may be subject to mediation, in a procedure and under the terms set by the law.

However, there is not much practice in this regard, i.e. most of the labour related issues are solved in courts and not by mediation/arbitration. 

10.1. Contributions for social insurance

The social security contribution rates applicable in North Macedonia in 2024 are:

1. 18.8% - mandatory contribution to pension insurance;
2. 7.5% - mandatory contribution to health insurance;
3. 1.2% - mandatory contribution to unemployment insurance; and
4. 0.5% - additional contribution to health insurance in case of an accident at work or occupational disease.

10.2. Retirement age

10.3. Calculation of the pension

The old-age pension base (“Pension Base”) is the monthly average of the salaries paid to the insured person in the course of the entire duration of the insurance, at the earliest as of 1 January 1970.

The amount of old-age pension would be determined as а percentage of the Pension Base depending on the duration of the service by the insured person. The yearly percentage of the Pension Base for the old-age pension would be increased by 1% (men) or 1.14% (women) for each year of service. Whereas for a pensionable service lasting less than one year, but not less than six months, it amounts to 0.5 % (men) or 0.57% (women). 

10.4. Private Pension Systems

10.5. Unemployment benefits