Agency employment in Serbia

The Law on Agency Employment (hereinafter: the Law) was published in the Official Gazette of the Republic of Serbia in December last year, and it is applied from March 1, 2020. However, the provisions of the law related to the conditions of the work of employment agencies came into force in January, in order to enable agencies to obtain the necessary documentation and arrange their business so that from March they can be ready to apply the Law in its entirety.

Before analyzing the provisions of the Law, it is necessary to explain the reasons of its adoption as well as some of the basic terms that it contains.

What does the Law on Agency Employment regulate?

A large number of employees in Serbia start an employment relationship by concluding an employment contract with their employer which regulates issues such as working hours, salary, annual leave etc. However, employers also can hire the workers through agencies. Such an arrangement involves the participation of the following parties:

Temporary Employment Agency (hereinafter: the Agency) – a registered company or entrepreneur. The Agency concludes an employment contract with the Employee for the purpose of their assignment on temporary work to an Employer user.
Assigned Employee (hereinafter: Employee) – a person employed by the Agency.
Employer User (hereinafter: Employer) – a legal entity, entrepreneur, representative office or branch of a foreign legal entity, state authority, autonomous province authority or local self-government unit, for whom the assigned employee temporarily performs the work, all under his supervision and management.

Therefore, the Agency concludes a contract of employment with an Employee and assignes it to the Employer, so that Employee can temporarily work for him, all under his supervision and management.

It is clear that the person who concluded the employment contract with the Employer and the person hired through the Agency should enjoy equal legal treatment, ie have the same rights while working for the Employer. As a large number of workers in Serbia are employed through Agencies, it is clear that it is important to have a special law which legally regulates this legal matter.

In that sense, the Law explicitly stipulates that the Employees will have equal working conditions as well as Comparable Employees at the Employer. Comparable Employee is a person who performs the same or similar tasks as the assigned Employee, regarding the qualifications, job complexity, work experience and other relevant criteria.

Equality in this sense is guaranteed in the following aspects of work:

duration and schedule of working hours
overtime work
night work
rest from the work (in the course of work, on daily, weekly and annual basis)
absence from work with provided salary compensation
elements for calculation and payment of salary, salary compensation and exspenses compensation
safety and health at work
protection of pregnant women and breastfeeding mothers
protection of the youth
prohibition of discrimination on all grounds

Equality in this sense is ensured by the Employer. However, salary, salary compensation and exspenses compensation are calculated and paid to the Employee by the Agency.

Of course, it is clear that, while working for the Employer, the Employee has an obligation to conscientiously and responsibly performs the tasks for which he has been assigned for, as well as respects the organization of work of Employer.

After a brief explanation of the essence of the relationships regulated by the Law, we are going to explain the provisions which it contains.

Temporary employment agency

It has already been said that the Agency can be a company or entrepreneur registered with the Agency for Business registers. However, this is not enough, because a special license is required for this purpose.

Conditions for getting a licence

The law prescribes the following conditions:

Legal representative of the company, entrepreneur, or employee authorized to concludes employment contracts and assignment contracts on behalf of the Agency has the appropriate degree as a proof of required education level (higher education in basic academic studies of at least 240 ECTS points, master academic studies, specialist academic studies, specialist vocational studies, ie basic studies lasting at least 4 years or specialist studies in college)
Legal representative of the company, entrepreneur, or employee authorized to concludes employment contracts and assignment contracts on behalf of the Agency has passed the professional exam for working in temporary employment agencies
A company or entrepreneur fulfills the spatial and technical conditions for work

The license is granted for a period of 5 years, but it can be renewed under the same conditions and for an unlimited number of times. However, if this deadline expires and the Agency does not request an extension, the license becomes invalid.

The license also becomes invalid if a company/entrepreneur engaged in an agency employment activity is deleted from the Registry of Business Entities, as well as if they apply for the licence validity termination.

After getting the license, the company/entrepreneur submits an application for business and business name enrollment (the name must contain: “Temporary Employment Agency”), all in accordance with the Law on the procedure of registration in the Agency for Business Registers. Only after getting a license and registration the Agency is allowed to perform its activity. If the competent inspection body (labor inspection) determines that the Agency is performing an activity without a proper license, Agency can get it only after three years (counting from the day the act was passed by the inspection).

The law stipulates situations in which it is prohibited for the Agency to perform its activities, which will be discussed below.

Who is not allowed to establish the Agency?

An individual who has been convicted by a final judgment of one of the following criminal offenses with a sentencing unconditional imprisonment of at least six months:

criminal offenses in the field of work
receiving and giving bribes
embezzlement

The same person can not be a member or legal representative of the Agency.

When the license must be revoked?

An Agency whose license has been revoked is not allowed to perform agency employment activities within 3 years from the date of revocation of the license.

The license must be revoked if:

Legal representative of the company, entrepreneur, or employee authorized to concludes employment contracts and assignment contracts on behalf of the Agency no longer fullfils education level requirements
A company or entrepreneur no longer fulfills the spatial and technical conditions for work
The founder, member or legal representative of the Agency commits any of the above-mentioned criminal acts
If the misdemeanor responsibility of the Agency is determined within a year, on several grounds or in amount exceeding twice the maximum prescribed fine, and the labor inspection finds that because of that the Agency obviously violates the rights of the Assigned Employees, ie continuously violates the provisions of the Law

Assignment of the Employees

In order for the assignment to be realized, it is necessary to conclude two contracts:

Employment contract between the Agency and the Assigned Employee
Assignment contract between the Agency and the Employer

The content of both contracts is regulated by the Law, ie the legislator prescribes the mandatory elements of these contracts.

Employment contract

The contracting parties are the Agency and the Employee. This contract can be concluded at definite or indefinite period of time. Regardless of that, the contract must contain mandatory elements prescribed in Art. 33 of the Labor Law (information about employee and employer, job description, place of work, amount of basic salary, etc.). In addition to these elements, a contract for an indefinite period must also contain:

The type of job for which the Employee is assigned
A provision by which an Employee accepts to perform work for the Employer, all based on the Instruction

The above-mentioned Instruction is an integral part of the employment contract and together with the contract it must be delivered to the Employee before assignation. The employment contract, ie the instruction that are delivered to the Employee, must contain the following elements prescribed by law:

Business name, ie name and headquarter of the Employer
Information about person authorized to represent the Employer in his relations with Employees
Place of work
Name and description of the work that the Employee is obligated to perform for the Employer
Duration of assignment and basis of assignment (only if contract is concluded at indefinite period of time)
Day on which Employee is obligated to start to work
Amount of basic salary, elements for determining basic salary, work performance, increased earnings and salary compensation
Duration of working time (on daily and weekly basis)
Duration of annual leave

Assignment contract

The contracting parties are the Agency and the Employer. This contract must contain the following elements prescribed by law:

Obligation of the Employer to submit accurate information about number of Employee he needs from the Agency, jobs they will work on, place of work, working hours etc., all before assignation
The manner and deadline within which the Employer is obliged to submit to the Agency the information necessary for the calculation and payment of salary, salary compensation and exspenses compensation
Information about the person authorized to represent the Agency towards the Employer
Information about person authorized to represent the Employer towards the Agency
Information about the person authorized to represent the Employer towards the Employees
Compensation for services provided by the Agency to the Employer
Other rights and obligations of the contracting parties, as well as all other issues that may be relevant to the rights and obligations of the Assigned Employees

The assignment contract is not limited to the territory of the Republic of Serbia. Agency is allowed to send Employees to work in another state if the Employer performs activities in the territory of the state member of the European Union and the European Economic Area, but in this case assignment contract must contains some other elements prescribed by law (the employee’s right for paid comeback in Serbia, etc.).

When is it not allowed to conclude an assignment contract?

The law predicts situations in which this is prohibited:

If a strike is organized on the working place, but the ban does not apply if assigning is necessary for ensuring a minimum of work processes
For jobs where the Employer has determined the excess of the Employees in accordance with the law
If the assignment is made to the another Agency
On part – time jobs (in accordance with the regulations on safety and health at work) and jobs with benefited length of service (in accordance with the regulations on pension and disability insurance)
In the jobs of officials of Republic of Serbia and officials in local self-government and autonomous provinces
If the law prescribes the obligation to organize the public competition

Restrictions on concluding Assignment contracts

The law prescribes the number of Employees that the Employer can hire through the Agency, ie the maximum number of Employees that can be assigned to the Employer. That number is determined by the number of the regular Employees of the Employer as follows:

2-9 Employees – 1 Assigned Employee
10-19 – 2 Assigned Employees
20-29 – 3 Assigned Employees
30-39 – 4 Assigned Employees
40-49 – 5 Assigned Employees

A special restriction is prescribed for Employees assigned for definite period of time. The number of these employees can not be over 10% of the total number of the Employees at the Employer on the day of concluding the assignment contract, ie its change.

It is important to note that the provisions of the employment contract, assignment contract or any other act which prohibits or prevents the establishment of an employment relationship between the Employer and the Assigned Employee after the expiration of the assignment time do not produce legal effect.

What obligations does the Agency have towards the Assigned Employees?

Delivery of Instruction
Paying the salary, salary compensation and compensation of expenses, all on the basis of information about Employees working results provided by the Employer
Behaving in accordance with the ban on charging for the assignment service from the assigned Employee
Behaving in accordance to the rules about termination of the employment contract for reasons related to the Employer. Namely, The Agency may terminate the employment contract of, ie impose another measure, only if for there is a justifiable reason related to the working ability of the Employee and his behavior or another reason prescribed by the Labor Law. In that sense, the Agency is obliged to respect the law prescribed rules, because in case of illegal dismissal, the Employee is entitled to seek compensation damages for the period of time from the termination of employment until the expiration of the agreed period of assignment. Also, taxes and contributions for that period must be paid to him. However, for damages Employee can not receive an amount over 18 salaries.

What are the obligations of the Employer towards the Assigned Employee?

The law prescribes the obligations that the Employer has towards the Assigned Employees, all in accordance with the rule of equal treatment of Assigned Employees and other Employees who work for the Employer.

Giving work tasks, managing and supervising the work process
Informing Employee about job opportunities, all in order to enable him to conclude contract with the Employer for indefinite period of time
Making available food facilities and facilities for children of Employer to Employee
Providing organized transport
Ensuring safety and health measures at work
Introducing the Employee to the risks at work and providing medical examinations
Report an injury at work and an occupational disease of the Assigned Employee, so he can use his right to compensation on that basis (payment is made by the Employer, but that the Agency is subsidiary responsible)
Informing the relevant Unions about the engagement of Assigned Employees
Ensuring the protection of personal data of the Assigned Employee
Ensuring freedom for Employee to take part in activities of relevant Union

Misdemeanor liability

If the Agency or the Employer violates the provisions of the Law, they are committing an offense, and, due to that, are obliged to pay a fine in the prescribed amount.

Agency

Examples of violations for which the Agency is responsible are: performing activities without a licence, conclusion contracts with the Employer contrary to the legal rules, failure to submit Instruction to the Assigned Employee…

If the Agency commits a violation, it pays a fine in the following amount:

from 800.000 to 1.500.000 dinars if the Agency is a company + from 50.000 to 100.000 dinars for a responsible person in a company
from 200.000 to 400.000 dinars if the Agency is an entrepreneur

Employer

The Employer is committing an offense if he, for example, does not provide the same working conditions for the Assigned Employee and Comparable Employee, does not report an injury at work, does not conclude an employment contract with the Agency…

In that case, the Employer is obligated to pay a fine in the following amount:

from 800.000 to 1.500.000 dinars if the Employer is a company + from 50.000 to 100.000 dinars for a responsible person in a company
from 200.000 to 400.000 dinars if the Employer is an entrepreneur

For all further questions regarding to this topic, or any other questions relating to labor relations, feel free to contact our law firm.

Date: 05.05.2020.