The Parliament of the Serbian Republic passed the new Employment Law on the 12th December 2001 (published in the Official Gazette RS No.70/ 2001), after extended negotiations between the trade unions and the Government. A compromise was reached after the Government accepted 33 out of the 50 amendments proposed by the unions.

The Law has been drafted in the spirit of E.U. employment standards. The recommendations of the International Employment Organisation have also been taken into account, as Yugoslavia has just become a member.

The intention of the legislator was to make a completely new law, and together with other legal reforms, to create a totally different approach in this field of legislation.

By this law the legislator has not tried to protect nither the interests of the employer to the detriment of the employee, nor those of the employee at the expense of the business, nor the State, but to promote the development of the labor market itself.

The former law gave considerable protection to employees, which caused public and socially owned enterprises to suffer from frequent employee absence and general indifference on the part of employees. In private enterprises, the high level of protection given to employees was rarely respected, and employees enjoyed in practice even fewer rights than the new law provides.

These issues give an insight into the key reasons for expecting that the provisions of the new law will be followed in practice. In essence, the new law guarantees more rights to private employees than they had during the currency of the former law. Employers may enforce provisions of the new law consistently without risking interference and interruption of his business. The decision as to whether to observe the law or make a profit no longer needs to be taken.

Main characteristics of the new law

The title of the law

The title of the Law itself points to the essential changes that were made in this area. The name of the Law is Labor Law and it regulates rights, obligations and liabilities based on labor. The previous Republic Law on Labor Relationships defined the labor relationship as the principal characteristic of labor law.

The basic provisions

The Law determines general and particular sources of law, which regulate the rights, obligations, and liabilities related to labor

the laws that have to comply with the international conventions and treaties;

collective agreements;

the employer's rulebook; and

employment contract.

According to the Law, it is no longer obligatory to conclude a collective agreement. The only obligation on behalf the employer and the union is to negotiate in order to conclude collective agreement.

The labor relationship may be regulated solely by provisions of the employer's rulebook and the employment contract if none of the unions can establish in accordance with legal requirements that they properly represent the employees concerned, or if the parties to a collective bargaining do not achieve an agreement after negotiation. In that case, the employment relationship may be regulated by the employers' rulebook and the employment contract or solely by the employment contract

The basic rights, obligations and liabilities

This legislative aspect was previously settled solely by the Federal authorities. The new Republic law partly supersedes and repeats provisions of the Federal law with a few amendments, such as the omission of the provisions on collective agreements. The right of employees to establish a works council or to participate in management has been abolished.

The new provisions prohibit discrimination based on sex, birth, language, race, nationality, political conviction, etc. This was necessary in order to fulfil obligations undertaken as a signatory to international conventions.

Establishing the labor relationship

General requirements for entering into the labor relationship remain the same: the employee has to be older than 15 years and to be medically fit to work (general work ability). Special requirements may be determined by decision of the employer.

The labor relationship is established by an employment contract concluded between the employer and the employee.

The new Law does not regulate the means by which the labor relationship must be concluded, which means that the employer is no longer obliged to notify unoccupied work positions to the relevant employment organisation . The obligation to make public announcements of unoccupied work positions is also not prescribed by the new law.

Types of employment contracts

An employment contract may be concluded for an indefinite period of time (permanent employment contract) and for a fixed period of time (temporary employment contract).

Temporary employment may be agreed for certain jobs, as decided by the company, for a period of time no longer than 3 years. If the employee continues to work more than five working days after the expiry of the term provided by the temporary contract, his employment will be deemed to have become permanent.

The Law foresees some other types of employment contracts, such as:

trial period (no longer then three months);

high-risk work;

work outside the office area;

special terms for first-time employees.

The possibility to conclude a contract for voluntary work no longer exists, since the right to an adequate salary is one of the basic rights of the employee.

Disposition of employees

The new law does not regulate the disposition of employees at all, which means that the employer is not limited by any provision to arrange the disposition of the workers.

Working hours

Full time employment is 40 hours in a week. Overtime work cannot last longer than 4 hours per day, and not more than 240 overtime hours per year. The former law allowed for 10 hours' overtime work per week.

Annual leave and paid leave

The relevant provisions of the new law are the same as in the previous law regarding minimum breaks during the working day (30 minutes), between consecutive working days (12 hours) and weekend break (24 hours).

The law prescribes a minimum of 18 working days' paid annual leave. The main distinction between the former and the new law is in the fact that the new law does not prescribe the obligatory criteria for determining duration of the annual leave.

The right to paid leave is reduced to 5 working days during the calendar year in total. The Law specifies reasons for which paid leave may be approved; it is a short list in comparison to the provisions of the previous Law.

Protection of employees

The major changes in protection of employees concerns the duration of maternity leave. Maternity leave lasts up to three months counting from the day of delivery and may commence up to 45 days prior to expected date of delivery. After the expiry of maternity leave, the mother or father of the child may use the right to paid leave for the purpose of infant care for a total 365 days, counting from the day on which maternity leave began.

Wages and salaries

The right to be paid salary, one of the basic rights of the employee, is established by the Law, but not in as much detail as it was in the previous Law. It is provided that all employees should be paid the same for equal work, or for the same value of work, from the same employer. Also, the minimum salary is specified for the standard employment output during full working hours. If there is no agreement between the Government, the association of employers and the trade union, the minimum salary mentioned above, will be established by the Government of the Republic of Serbia according to criteria which are determined by the Employment Law.

The employee has a right to increased payment for overtime work, work during the night, during the holidays and shift work.

For sick leave the employee has a right to 65% of the salary that he would have received if he were working. According to the previous General Collective Agreement, the employee had a right to 80% of the salary during sick leave.

Termination of the labor relationship

The labor relationship can be ended in one of the following ways:

Independently by the decision of either employer or employee;

By the decision of either employer or employee;

By the mutual agreement of employer and employee.

The reasons for termination of the employment contract are provided by the Law. The employer must justify his decision each time it intends to terminate the employment contract.

The employment contract can be terminated if any of the reason mentioned below appears:

An employee does not achieve satisfactory work output;

An employee does not have appropriate knowledge and capabilities for his work position;

If an employee violates his working obligations;

If an employee misuses his right to sick leave;

If an employee does not observe the disciplinary code at work;

If the employee does not return to work within 15 days after the expiry of the deadline for unpaid leave;

If the employee perpetrates a criminal act at work or in relationship to work;

If for the reason of the altered technological and economic requirements, there is no longer a need for a certain work position.

For the last of the reasons mentioned above, the employment contract can be terminated only if the employer cannot find another working position for that employee, i.e. to requalify for doing some other job. This obligation is imposed only on employers who have more than 50 employees.

In any case, the employer is obliged to pay the employee a severance payment. The amount of this severance payment depends on the years of service of the employee.

If the employment contract is terminated for reasons of unsatisfactory work output or insufficient knowledge and capabilities, the amount of the severance payment depends on the time spent in the service of that particular company.

The termination of the employment contract is the only sanction for the breach of work-related obligations, although the termination is only the way of ending the labor relationship.

In the new Employment Law there are no provisions concerning the responsibility of employees, disciplinary fines or the competent authorities for proceedings in those cases, as existed in the previous law. This makes relations between the employer and employees much easier than it was before.

Protection of the employees' rights

The employer is responsible for making decisions about the employee's rights, obligations and responsibilities. Arbitration is established as a facultative organ for resolution of disputes. In case that in a particular company, arbitration is not provided for, the decision of the General Manager is final.

If the employee goes to court to protect his rights, those proceedings must be ended within 6 months from the date they started.

The employee's rights are also protected by the employment inspectorate. The performance of any activities by the employer shall be forbidden by the Employment Inspectorate if any of following situations appear:

The employer has not concluded an employment contract with any of its employees;

Applications for social security have not been submitted;

The employer has not paid salaries or minimum salaries although he had enough money in his account;

The prohibition shall remain in force until the employer corrects the defect.

Collective agreements

As has been mentioned, one of the most important innovations of this Law is that there is no longer an obligation to conclude a collective agreement. A collective agreement is concluded by the representative trade union and the employer or the representative association of employers. The Ministry of Employment is authorised, according to the Law, to decide that a collective agreement shall be applied to an employer even if it did not take part in its conclusion. This will be done only in cases in which it can be justifies in the interests of achieving particular goals of economic and social policy in the Republic of Serbia. This is the only exception to the rule that the conclusion of collective agreements is not obligatory.

Prohibition of competition

For the first time the Law regulates that the employer has the right to protect his reasonable interests. In order to protect its interests it is possible to provide special terms in employment contracts, in relation to certain working positions. By those provisions it might be forbidden for some employees to perform certain activities on his own behalf or for a third party without the employer's consent.