This article addresses redundancy – a topic that was selected through a poll that Prica & Partners recently posted on LinkedIn. The response it received suggests not only its practical importance, but also a possible reflection of broader developments in the labour market. Below, we outline the key aspects of employee redundancy, from legal requirements to the standard practices confirmed by courts and insights from our extensive experience in advising and assisting clients with redundancy procedures.

Employee redundancy is regulated under the Serbian Labour Law (“Official Gazette RS”, nos. 24/2005, 61/2005, 54/2009, 32/2013, 75/2014, 13/2017, 113/2017, 95/2018, and 109/2025 – hereinafter “Law”). The Law allows employers to terminate the employment of employees hired for an indefinite period in the event of technological, economic, or organizational changes at the employer.

The duration and complexity of the procedure depend on the number of employees affected by redundancy.

Full redundancy program

A full redundancy program is required where redundancy affects:

1) 10 employees with an employer employing more than 20 but fewer than 100 employees engaged for an indefinite period;

2) 10% of employees with an employer employing between 100 and 300 employees engaged for an indefinite period;

3) 30 employees with an employer employing more than 300 employees engaged for an indefinite period;

in all three cases within a 30-day period, or:

4) at least 20 employees within a 90-day period, regardless of the total number of employees.

In such cases, the employer is obliged to develop a solution-finding program for employee redundancy (hereinafter: the “Program”), which must include:

1) reasons for the reduction in workforce needs;

2) total number of employees with the employer;

3) number, qualification structure, age, and years of insurance coverage of redundant employees, and jobs they perform;

4) criteria for determining employee redundancy;

5) measures for mitigating the impact of redundancy, such as transfer to other roles, employment with another employer, retraining or additional training, part-time work of at least half the full-time hours, and other measures;

6) resources necessary to address the social and economic position of redundant employees;

7) notice period within which the employment contract shall be cancelled.

Employers must liaise with the representative labour union at the employer and the National Employment Service. In cooperation with these bodies, the employer is required to take appropriate measures mitigating the impact of redundancy. The draft Program should be shared with both bodies to obtain their opinions, which the employer must consider when finalizing the Program.

Simplified procedure

When the number of affected employees does not meet the thresholds above, employers are not required to adopt a formal redundancy program or consult with the labour union or National Employment Service. Nevertheless, redundancies must still comply with legal requirements and established court practice.

Although the Law does not explicitly require it, standard practice dictates that the employer must issue a decision in place of a formal Program. This decision should include all elements that would be mandatory in a Program, particularly the criteria used to determine employee redundancy. Judicial practice further emphasizes that, even in simplified cases, employers should take measures to resolve the status of employees as favourably as possible before termination.

In both the full redundancy program and simplified procedure, the employer’s rulebook on organization and systematization of working positions should be updated to reflect the reduced workforce. If positions are entirely eliminated, all employees occupying those positions are deemed redundant. When only a reduction in the number of employees is required, employees must be evaluated according to the criteria set out in the Program or employer’s decision.

Following the evaluation, individual termination decisions should be issued to employees identified as redundant.

Criteria

The Law does not provide detailed guidance on how redundancy should be determined, except to explicitly prohibit the use of the following criteria: sick leave, pregnancy, maternity leave, leave for nursing a child, and leave for special care of a child.

Court practice also prohibits the use of age or other discriminatory traits as criteria.

Commonly used criteria, in addition to work performance, include: the employee’s attitude toward work, financial situation, number of income-earning household members, length of service, health status of the employee and their family, number of children who are minors or in education, and similar factors.

Severance payment

Before terminating employment, the employer must pay the employee a severance payment. The minimum amount under the Law is one-third of the employee’s salary for each full year of service with the current employer. Employment with the employer’s predecessor or affiliates is also included for calculation purposes.

Important considerations

 The general protections against termination during pregnancy, maternity leave, leave for nursing a child, and leave for special care of a child also apply in redundancy situations. An employee who is pregnant or on any of these leaves may be identified as redundant, but their employment cannot be terminated until the protection period ends.

Particular attention should be given to clarity and transparency throughout the redundancy procedure. The reasons for redundancy should be clearly explained, specific to the employer’s circumstances and, where possible, supported by documentation. Simply stating “technological, economic, or organizational changes” without further explanation is insufficient.

Similarly, employee evaluation must be conducted carefully. The criteria applied should be clearly defined, consistently applied, and capable of objective verification. A well-reasoned, properly conducted and documented, and transparent procedure significantly improves the employer’s position in the event of a dispute.

Given the complexity and individual circumstances of each case, it is always advisable to consult a lawyer early in the process to ensure compliance and minimize risk.

For further inquiries or support with implementing a redundancy procedure, please contact us at office@pricapartners.com.