Serbia: Do I Need an Employment Rulebook?

When discussing an employer’s internal enactments, Serbian regulations expressly designate certain ones as mandatory, such as the Rulebook on Job Classification (Systematization) or the Rulebook on the Rights of Whistleblowers, provided the statutory conditions relating to the number of employees are met. In addition to these, other rulebooks not explicitly regulated by law are frequently encountered in practice and play an important role in day-to-day operations, such as, for example, a Bonus Rulebook or a Rulebook on the Use of Company Vehicles.

Within this diverse group of general enactments, the Rulebook on Labor occupies a special place.

Employers frequently ask whether adopting a Rulebook on Labor is mandatory. The answer is no. But is a Rulebook on Labor something an employer needs? The answer is: absolutely, yes.

Although its adoption is never a statutory obligation, it opens up a range of possibilities for the employer to regulate employment relationships more precisely, to offer employees benefits above the statutory minimum, and thereby to secure stability and predictability within the organization. In practice, this means less improvisation and greater clarity for both the employer and the employees.

It is important to emphasize that the need for a Rulebook on Labor does not depend on company size. It is equally useful to an employer with 5 employees as to one with 105 employees, as it serves as a tool for regulating internal rules and protecting business interests regardless of the scale of the organization.

In the text that follows, we present 5 reasons why every employer should adopt a Rulebook on Labor, and, for those who already have one, an opportunity to check whether they have made full use of all the benefits this enactment can provide.

Reason 1: Greater Options for Employers

TL;DR: The law permits certain employment-related matters to be regulated by the Rulebook on Labor instead of by the employment contract. If the employer does not make use of this option, those same matters must be individually negotiated and included in each employee’s employment contract.

The law provides that rights, obligations, and responsibilities arising from employment are to be regulated by a collective bargaining agreement and by the employment contract, and by a rulebook on labor only where the Labor Law so provides.^[1]

In other words, the law provides that certain matters may be regulated by a rulebook on labor where the law expressly allows for it. Otherwise, if the employer fails to make use of this statutory option to regulate certain matters through a rulebook on labor, those same matters would have to be negotiated between the employer and each employee within the employment contract itself.

Examples of provisions where the Labor Law grants employers the option of regulating certain matters through a rulebook on labor include the following:

1. Expanding the Grounds for an Annex to the Employment Contract

The law itself provides for a limited number of grounds for amending agreed working conditions, that is, for offering an annex to the employment contract. However, the law leaves room for agreed working conditions to be amended on other grounds as well, provided those grounds are set out in the employer’s rulebook on labor. This allows the employer to establish additional grounds for offering annexes to employment contracts, rather than being confined solely to the statutory grounds. This is significant given that, absent a specific ground for offering an annex, the employer cannot lawfully offer employees an amendment to their agreed working conditions.

2. Resignation by the Employee and the Notice Period

The Labor Law provides that an employee may resign from the employment contract with at least 15 days’ notice prior to the date indicated as the termination date. The Rulebook on Labor may establish a longer notice period, but not exceeding 30 days.

Accordingly, the Rulebook on Labor makes it possible to define the notice period applicable to employee resignations in greater detail, within the limits permitted by law.

3. Termination by the Employer for Breach of Work Duties or Violation of Work Discipline

The law provides that an employer may terminate an employee’s employment contract if the employee commits a breach of work duties or fails to observe work discipline, and the law itself sets out certain typical examples of such breaches. However, given that every employer’s business is specific in nature, the law leaves room for the rulebook on labor to prescribe additional instances of breach of work duties or violations of work discipline that may result in termination of employment.

For this reason, it is clearly advantageous for the employer to make use of this statutory option and to specify additional breaches of work duty that are particular to its business or that it is currently encountering.

For example, if an employer is dealing with the problem of employees excessively using their mobile phones for personal purposes at work and neglecting their job duties, the employer could specifically designate this conduct as a breach of work duty in its Rulebook on Labor, and could then rely on this ground in the event of such a violation by employees.

4. More Precise Definition of the Procedure for Establishing Damages

Where an employee causes damage to the employer in the course of performing their job duties, the law provides that the existence of the damage, its amount, the circumstances under which it occurred, who caused it, and how it is to be compensated are to be determined by the employer in accordance with the rulebook on labor or the employment contract.

Given that the statutory provisions prescribe only a minimum set of rules, if this matter is not addressed in the rulebook on labor, it could be said that the statutory provisions become practically inapplicable should an employee cause damage to the employer.

For this reason, it is certainly advisable to make use of the options the law affords employers and to protect the employer’s interests to the fullest extent possible.

5. Remote Work

One area frequently addressed in detail in the Rulebook on Labor concerns clear rules for working from home and outside the employer’s premises, as well as the rights, obligations, and responsibilities of both the employer and the employee during remote work.

In this regard, it is particularly important for employers to define the work model (hybrid or fully remote), the costs the employer covers for the employee during remote work, matters relating to work equipment, supervision of the employee’s work, occupational health and safety issues during remote work, and other related matters.

Reason 2: Unilateral Amendment by the Employer

TL;DR: The Rulebook on Labor is amended by a unilateral decision of the employer, without requiring the employees’ consent. It is sufficient that employees be notified, and the general enactment enters into force on the 8th day following its posting on the notice board.

Unlike the employment contract, which is amended by an annex requiring the employee’s consent, the rulebook on labor is amended by a unilateral decision of the employer to amend the rulebook. Accordingly, the employees’ consent to amendments of the rulebook on labor is not required, though they must be notified of such amendments.

Employees are deemed notified once the amendment is posted on the employer’s notice board (or electronic notice board).

It is important to note that an employer’s general enactments enter into force on the 8th day following their posting on the employer’s notice board.

We illustrate this with an example of how amending a particular provision looks when it is set out in an employment contract, as compared with when it is prescribed by a rulebook on labor.

For example, suppose your company has 50 employees and you have granted employees the right to one day of paid leave in the event of relocation.

You have noticed abuse of this entitlement by employees and wish to abolish it.

If this employee entitlement is regulated by the employment contract, you would need to send each of your 50 employees an offer to conclude an annex to their employment contract and allow them 8 working days to respond. Employees may accept the change or decline to sign the annex. Thus, in addition to the fact that the procedure takes a certain amount of time, the change itself is contingent on the employee’s consent. Absent the employee’s consent, you would have no ability to change this provision, given that it is contained in the employment contract.

On the other hand, if you had defined the employees’ entitlement to one additional day of paid leave in the event of relocation through the Rulebook on Labor, it would be sufficient to adopt a decision amending the rulebook and abolish this entitlement. Once it enters into force, the new rule would automatically begin to apply to all your employees. In addition to the shorter duration of the procedure, it does not depend on the employee’s consent. The employer may adopt such a decision unilaterally.

Reason 3: Uniform Regulation of Employment Matters Through the Rulebook on Labor

TL;DR: When employment matters are regulated by the Rulebook on Labor, they apply equally to all employees, thereby reducing the risk of discrimination and related litigation.

Another advantage of regulating certain employment matters through the rulebook on labor is that they are regulated in a uniform and equal manner for all employees, such that no distinction is made among employees. This is especially important given that employers are obligated to treat all employees in the same situation equally, and any form of discrimination in the field of employment is strictly prohibited.

For example, the Labor Law provides that an employee is entitled to reimbursement of expenses in accordance with the general enactment (rulebook on labor) and the employment contract, namely: reimbursement of commuting costs to and from work; business travel expenses; meal allowances during working hours; and vacation allowance (regres).

By uniformly regulating the amounts of expense reimbursement in the Rulebook on Labor, the employer ensures that an equal level of entitlement is guaranteed to all employees, eliminating the risk that employees might claim they were treated differently or discriminated against, thereby reducing the likelihood of litigation against the employer.

Reason 4: A Shorter and Less Complex Employment Contract

TL;DR: If the employer has a Rulebook on Labor, the employment contract may contain only the statutory minimum, with a simple reference to the Rulebook sufficing for all other provisions. This makes the contract shorter and more acceptable to employees for signing.

Where an employer has a Rulebook on Labor, this simultaneously makes the employment contract considerably shorter and less complex. Specifically, in such a case, the employment contract need only contain the minimum provisions required by law, while all other provisions may simply refer to the more detailed provisions of the Rulebook on Labor.

A shorter and less complex employment contract generally meets with greater approval from the employees who are required to sign it.

Specifically, the Labor Law prescribes the mandatory content of the employment contract. It likewise specifies which provisions the employment contract need not contain, provided the rulebook on labor contains them, in which case it is sufficient for the employment contract to include a reference to the rulebook on labor.

Thus, the Labor Law provides that provisions concerning the elements for determining base salary, work performance, salary compensation, salary increases, and other employee earnings need not be contained in the employment contract, but that it is sufficient for it to contain a referring provision pointing to the rulebook on labor. Given that these are complex provisions, it is certainly preferable for them to be set out in the rulebook on labor.

Likewise, provisions concerning termination of the employment contract, conditions for concluding an annex to the employment contract, disciplinary proceedings, and the procedure for establishing damages caused to the employer by an employee can sometimes be extensive, and significantly shorten the employment contract if all such provisions are transferred to the rulebook on labor.

Reason 5: Employee Benefits – a Competitive Advantage in the Labor Market

TL;DR: Through the Rulebook on Labor, an employer may provide benefits that are not required by law, ranging from long-service awards and solidarity assistance to salary compensation above the statutory minimum, thereby making the company more competitive in the labor market.

The Rulebook on Labor may provide for additional employee benefits that are not mandatory under law but are standard in the industry, or perhaps innovative, and may thereby make the employer more attractive in the labor market.

There are numerous such benefits seen in practice: from voluntary health insurance to additional grounds for paid leave, and similar arrangements.

For example, some employers choose to pay 100% of average salary in the event of absence from work due to temporary incapacity for work, even where the reason for such incapacity is not a work injury but an ordinary illness, although by law they are only required to pay at least 65%.

When discussing additional benefits, we may divide them into two categories: those the law expressly designates as available options, and others that are not prescribed by law but that the employer may nonetheless provide.

Benefits Arising from the Labor Law

The first category would include, for example, long-service awards and solidarity assistance for employees.

A long-service award is a monetary or other award that an employer may pay to an employee on the occasion of reaching a certain number of years of service (e.g., 10, 20, 30 years), most commonly for continuous service with the same employer or for total years of service.

Solidarity assistance is most commonly monetary support that an employer, based on the principle of solidarity, may provide to an employee in the event of difficult life or social circumstances.

Likewise, the law prescribes a formula for calculating severance pay where an employee is declared redundant (the sum of one-third of the employee’s salary for each completed year of service with the employer from whom the employee is entitled to severance). However, if an employer wishes to provide more favorable terms and a higher severance payment, it may do so through the rulebook on labor.

Benefits Not Provided for by the Labor Law

On the other hand, the second category includes benefits not prescribed by law but which employers may provide for through the rulebook on labor, guided by the general principle of labor law that employees may always be granted greater rights. In practice, numerous such benefits are frequently seen, such as salary compensation at 100% during sick leave (although the statutory obligation is only 65%), or the introduction of “personal business days” with salary compensation.

Another particularly topical employee benefit is team building, in respect of which an employer may obtain a tax exemption where this matter is regulated through the rulebook on labor.

Why a Properly Drafted Rulebook on Labor Is Key to Legal Certainty for Employers

Precisely because of the numerous strategic advantages it brings, an increasing number of employers are choosing to establish a clearly defined Rulebook on Labor from the very outset of their operations. Even companies with a long history in the market, at some point, recognize the need to introduce or improve this document, in order to make full use of the framework and possibilities afforded by labor law regulations.

However, the value of the Rulebook on Labor becomes evident only when it is carefully and professionally drafted, in line with the specific nature of the employer’s activity, organizational structure, and business objectives. A well-designed rulebook not only improves internal organization and reduces the risk of legal uncertainty, but also represents an investment in the sustainability of the business.

On the other hand, incorrectly drafted or unlawful provisions can produce serious consequences. Whether this involves the denial of statutorily guaranteed rights, such as reimbursement of transportation costs, or other deviations from the statutory minimum, the employer may be exposed to litigation, financial expenditure, loss of time, and reputational risk. In such cases, the disputed provisions will be declared void, further undermining the company’s legal certainty.

For all of the reasons stated above, adopting a Rulebook on Labor should not be viewed as a mere formality, but rather as an important element of risk management and of building a stable and compliant employment framework. A carefully, professionally, and lawfully drafted Rulebook represents one of the most effective tools available to an employer for the long-term regulation of employment relationships and the protection of business interests.

Frequently Asked Questions about the Rulebook on Labor

Is the Rulebook on Labor mandatory for an employer?

No. Adopting a Rulebook on Labor is never a statutory obligation, but it opens up a range of possibilities for the employer to regulate employment relationships more precisely, offer employees benefits above the statutory minimum, and ensure stability and predictability within the organization. This holds true regardless of company size. It is equally useful to an employer with 5 employees as to one with 105 employees.

Is employee consent required to amend the Rulebook on Labor?

No. Unlike the employment contract, which is amended by an annex requiring the employee’s consent, the Rulebook on Labor is amended by a unilateral decision of the employer. It is sufficient for employees to be notified of the amendments, usually by posting on the employer’s notice board.

When do amendments to the Rulebook on Labor enter into force?

An employer’s general enactments, including the Rulebook on Labor, enter into force on the 8th day following their posting on the employer’s notice board (or electronic notice board). After this period, the new rule automatically applies to all employees.

What benefits can an employer provide for through the Rulebook on Labor?

An employer may provide benefits that are not required by law, such as long-service awards, solidarity assistance, salary compensation at 100% during sick leave instead of the statutory 65%, severance pay higher than the statutory minimum, or additional days of paid leave. These benefits can make the employer more competitive in the labor market.

Does the Rulebook on Labor affect the length of the employment contract?

Yes. If an employer has a Rulebook on Labor, the employment contract may contain only the statutory minimum of provisions, while for more detailed matters (notice period, disciplinary proceedings, grounds for termination, and similar matters) the contract simply refers to the Rulebook. This makes the contract shorter and, in practice, more acceptable to employees for signing.

By Zunic Law, Serbia, a Transatlantic Law International Affiliated Firm. 

For further information or for any assistance please contact serbia@transatlanticlaw.com

Disclaimer: Transatlantic Law International Limited is a UK registered limited liability company providing international business and legal solutions through its own resources and the expertise of over 105 affiliated independent law firms in over 95 countries worldwide. This article is for background information only and provided in the context of the applicable law when published and does not constitute legal advice and cannot be relied on as such for any matter. Legal advice may be provided subject to the retention of Transatlantic Law International Limited’s services and its governing terms and conditions of service. Transatlantic Law International Limited, based at 84 Brook Street, London W1K 5EH, United Kingdom, is registered with Companies House, Reg Nr. 361484, with its registered address at 83 Cambridge Street, London SW1V 4PS, United Kingdom.