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New Law on Agency Employment

The National Assembly of the Republic of Serbia adopted the Law on Agency Employment (the “Law”), which came into force on 14 December 2019 applicable as of 1 March 2020. This Law regulates the employment through staffing agencies, which has been present on the Serbian labor market for many years but not properly regulated. One of the reasons for the enactment of the Law is the harmonization of legal regulations of the Republic of Serbia with international sources of law and the consequence of European integrations and the process of Serbia’s accession to the European Union.

The aim of the Law is to establish a non-discriminatory and transparent framework for the protection of workers hired through Temporary Staffing Agencies (the “Agencies”), i.e. to make rights and duties of the employees, who have entered into employment agreements with the Agency (“Assigned Employees”), uniform with the rights and duties of the employees who have entered into employment agreements directly with the Client Company, as well as to establish flexibility in work and to reduce unreported employment.

The Law guarantees to the Assigned Employees the right to equal working conditions to those enjoyed by those directly employed by the Client Company (working time arrangements, remuneration, annual leave, etc.). When there is no comparable employee at the Client Company, the basic salary of the Assigned Employee cannot be lower than the basic salary of the employee who is directly employed by the Client Company holding the same education/qualification level.

The Law regulates termination of employment agreement of the Assigned Employees for the reasons attributable to the work for the Client Company. The Client Company is required to provide the Agency with all the necessary evidence related to the circumstances supporting the termination of such employment. In this manner, the Client Company practically conducts the entire procedure regarding the termination of the employment agreement, while the Agency makes a decision on termination based on the evidence collected by the Client Company. On the other hand, in case of unlawful termination of employment, the Assigned Employee has the right to file a claim against the Agency with the court of competent jurisdiction.

It is certainly positive that with this Law the legal framework of agency employment is aligned with European standards and regulates this area with the intention of protecting the Assigned Employees. It remains to be seen through practice what the Law will bring and whether and to what extent the enactment of the Law will affect the so-called outsourcing of employees.

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