Employer of Record in Serbia

Employer of Record (EoR) as a concept of a company that employs workers, handles the payroll, and ensures compliance with local labour and tax legislations, but do not intervene in workflows and do not manage the work of the employees who work for foreign companies, is not foreseen or regulated by Serbian legislation.

  

However, for the purposes of this article, we did research and found out that one company in Serbia advertises itself as an EoR and offers its services as a local employer for various foreign companies that do not have a legal entity in Serbia. At first glance, we would say that this resembles as agency employment, which is regulated by Serbian law. But, even in this sense, the business of this company would not be in accordance with Serbian law since foreign companies appear as Economic Employers.

  

Namely, the provisions of the Law on Agency Employment stipulates that the business (service) contract concluded between the Agency and the Beneficiary Employer who performs activities on the territory of the EU with headquarters in the territory of EU, can apply on employees in order to work for the Beneficiary Employer only from the day of full membership of Republic of Serbia in the European Union. The concept of EoR would be applicable in Serbia in the sense of agency employment, only if Economic Employer have legal entity in Serbia and if the registration of entity is done in accordance with Serbian Law, otherwise it is not applicable.

As we have already mentioned, the EoR reminds us most of agency employment regulated by the Law on Agency Employment from 2019, which regulates the rights and obligations of employees who enter into a employment relationship with a temporary employment agency (previously mentioned as the Agency) for the purpose of assigning temporary work to the employer for whom the employee will work (previously mentioned as the Beneficiary Employer). This Law also regulates exercise of certain rights based on work, conditions for the work of temporary employment agencies, the manner and conditions of assigning employees, the relationship between the Agency and the Beneficiary Employer and the obligations of the Agency and the Beneficiary Employer towards the assigned employees.

  

Employees (seconded employees) are natural persons who are in employment relationship with the Agency, who will perform the work for the Beneficiary Employer.

  

Beneficiary Employer, according to Serbian regulations are Limited Liability Company/Representative office/Branch office/Entrepreneur, who are registered in accordance with the Laws on the territory of Republic of Serbia.

  

In order for the transfer of workers to be possible, a contract must be signed between the Agency and the Beneficiary Employer. This contract also has a mandatory form defined by the law: it is drawn up in writing and determines the obligation of the Beneficiary Employer to provide the Agency with accurate information about the number of assigned employees that are needed, the time period to which they are assigned, their place of work, the jobs they will perform and the working conditions.

  

The next step is the hiring out of workers. The Agency concludes an employment contract with the temporary employee for a definite or indefinite period equal to the time of transfer to the Beneficiary Employer. Therefore, the employee concludes either an indefinite-term or a fixed-term employment contract with the Agency. If it is temporary work, then it lasts as long as the time of referral to work at the Beneficiary Employer.

  

The provisions of the Law stipulate that the concept of employee transfer (according to which the employee performs work for the Beneficiary Employer), employment and work conditions, are mandatory provisions of the employment contract, as well as duration of transfer, obligations of the Agency towards the employee, the obligation for salary payment, salary compensation and expense reimbursement according to applicable Law, safety and health at work, liability for damage, collective right if transferred employees and other obligations of the Agency company and the Beneficiary Employer. The seconded employee has the right to the same working conditions as other employees of the Beneficiary’s Employer.

  

The Agency must have a work permit issued by the Ministry of Labour and registered as such with the Serbian Business Registers Agency under one of the following codes: 78.20 Activities of agencies for temporary employment or 78.30 Other Assignment of human resources. An agency operating without a license may be fined up to 12,800 ​euros. 

  

The law stipulates fines for violations in the amount of 6,700 euros to 12,800 euros, if the Agency or the Beneficiary Employer act contrary to the provisions of this Law. 

As regards taxes and contributions in this respect, the provisions of Labour Law, Personal Income tax Law, Social security Law shall be applied on payroll calculation for transferred employees, meaning the same conditions as for regular employees. Rates are as follows:

  

1. Salary tax and Social security Law on behalf of employee

  

2. Contributions on behalf of employer: