Serbia: New Law to Cover “Staff Leasing”

The practice of “staff leasing” is widespread in Serbia yet has to date been unregulated. The Ministry of Labor has, however, announced a Draft Law on Agency Employment that should regulate these workers.

The draft law will require staff leasing agencies to conclude employment agreements with their agency employees—either for an indefinite (permanent) or definite (fixed-term) period. Under the draft law, the agency and its client organization will enter into a separate contract to assign agency workers.

The draft law requires that the leased employees have equal working conditions to other employees at the client organization in terms of, inter alia:

• The duration and schedule of working hours;
• Overtime and night work;
• breaks during work;
• Paid leave; and
• The elements for the calculation and payment of salaries.

The obligation of the client organization is to provide these working conditions for employees, while the calculation and payment of the salary is the obligation of the agency as the formal employer of the employees. However, the client organization has subsidiary liability with the agency for paying salaries and costs to the employees.

The draft law foresees a limitation to the maximum number of leased staff, suggesting a figure between 10 percent and 30 percent of all employees—the precise level will be determined before the draft becomes law. These numbers have been critically received by companies and investors in Serbia, as many companies currently have a higher percentage of leased staff than those envisaged by the draft law.

Further, according to the draft, the agency may only assign an employee to a client organization for a definite period in certain specified circumstances, including during times of an increased workload, to replace an absent employee, and to work on a project of limited duration.

A leased definite-term employee who had previously worked for the client organization through the same or different agency contrary to the provisions of the draft law, or who continues to work for the employer for at least five working days after the expiration of the lease period, will be considered permanently employed with the client organization.

The client organization will be liable for cases of an injury at work or occupational illness. However, the draft law envisages subsidiary liability of the agency if the employee is unable to get redress from the client organization.

It is yet to be seen what the final version of this draft law will look like, as a number of companies and other commentators have submitted suggested amendments.

Written by Milena Jakšić Papac and Srđan Šijakinjić in cooperation with Karanović & Partners and Roger James of Ogletree Deakins

© 2019 Karanović & Partners and Ogletree, Deakins, Nash, Smoak and Stewart, P.C.