The dismissal process in Serbia - termination of the employment

Multilateral termination

• An employment relationship may terminate on the ground of agreement, in writing, between the employer and the employee.
• Before signing the agreement, the employer is bound to notify the employee, in writing, on consequences that may ensue in the procedure for acquiring the unemployment benefits.
• In case of some issue with an employee, the best practice is to offer to the employee some benefits to sign the multilateral agreement (e.g. notice period or severance).

Termination of the employment agreement by the expiration

• If the employment agreement is on definite time, the employment agreement is terminated if it is not extended by the new employment agreement.
• Employer shall issue the decision on the termination to the employee.

Unilateral termination of the employment by the employer:

1)     If an employee is in the probation period (up to the first six months of the employment)

• Before the expiration of the time for which the probation work was contracted, the employer may terminate the employment contract with a notice period that may not be shorter than five working days.
• Employer shall be obliged to give reasons for termination of the employment contract.

2)     Non-performance

• First, the employer shall give to employee the written notice regarding the deficiencies in work of the employee, guidance, and an appropriate deadline to enhance work performance,
• What is the given (appropriate) time is not defined by the Law. The best practice should be at least one month.
• If the employee does not enhance the work performance within the given deadline, the employer may terminate the employment agreement with a notice period from minimum 8 to maximum 30 days.

3)     A breach of a work duty or employee does not respect the work discipline

• First, the employer shall give the employee the written Warning, where an employee is given 8 days to answer to this Warning.
• Based on the answer, the employer may terminate the employment agreement.

Unilateral termination of the employment by the employee:

• An employee is entitled to terminate the employment contract with the employer.
• The employee delivers the notice of termination to the employer in writing, at least 15 days before the day indicated by the employee as the day of termination of employment relationship (notice period).
• A bylaw or employment contract may determine a longer notice period, but not longer than 30 days.

Important rules regarding the delivery of the Decision on termination

• An employment contract is terminated by a decree in writing which must include an explanation of reasons and legal recourse instruction.
• The decree is served on the employee in person, in the premises of the employer, or the permanent or temporary residence of the employee.
• Should the employer be unable to deliver to the employee the decree as described above, he is obliged to make an official note in writing about that.
• In the event specified in the previous bullet, the decree is posted on the billboard of employer, and upon expiry of eight days following such posting, it shall be considered as delivered.

Consequences of the possible unfair dismissal

The following consequences may occur in case of unfair dismissal (several options):

• Each employee which employment agreement is terminated, except for multilateral termination, may initiate court proceedings against the Decision of the employer within 60 days after the termination.
• If the unfair dismissal is only because of procedure not followed by the employer, the court shall reject request of the employee to be reinstated and shall order the employer to compensate the damages in the amount of up to six salaries.
• If a court determines during the proceedings that the employment relationship is terminated unlawfully, the court shall, at the request of the employee, decide that the employee shall be reinstated, compensated for the damage and that his contributions for compulsory social insurance shall be paid for the period in which the employee has not been working. Taking into account that litigation procedure last more than 3 years, this means that for the whole period, the salaries must be paid. That is the reason why indefinite employment is riskier. In case the employment is on definite time, e.g., 6 months, the max. 6 months can be paid to the employee, and no request to return to work can be applied if the decision of the court is brought after 6 months.
• If the court, during proceedings, establishes that the employment relationship ceased unlawfully, and the employee does not seek reinstatement, the court shall, at the request of the employee, bind the employer to compensate the employee for damages in the amount of up to 18 salaries of the employee, at most, depending on time spent in an employment relationship with the employer, the age of the employee and a number of dependent family members.
• If the court, during proceedings, determines that the employment relationship is ceased unlawfully, but during the proceedings, the employer proves that the circumstances exist which reasonably indicate that the continued employment, taking into account all the circumstances and interests of both sides in the dispute, is not possible, the court shall deny the request of the employee to be reinstated and order the employer to compensate the employee for damages in the amount up to 36 salaries.

Besides litigation, in case of labor law inspection, the following sanction may apply to the employer:

• A fine of 800,000 to 2,000,000 dinars (from ca. 7,500 – 16,800 EUR) shall be imposed on the employer who has a status of a legal person if they terminate the employment contract of the employee contrary to the provisions of Law. A fine ranging from 50,000 to 150,000 dinars (from ca. 420 – 1,200 EUR) shall be imposed on a director.
• Also, a fine ranging from 150,000 to 300,000 dinars (from ca. 1,200 – 2,400 EUR) shall be imposed for a misdemeanor on an employer who has the status of a legal person in the following case - If they deny the right of the employee to notice period i.e., compensation of salary. A fine ranging from 10,000 to 20,000 dinars (from ca. 80 – 160 EUR) shall be imposed on a director.