Termination of an employment contract in Serbia is often a challenging situation for both the employer and the employee whose employment is ending. It involves a specific set of legal procedures that the employer must strictly follow in cases where the termination is initiated by the employer.
In this comprehensive guide, we will clarify all common questions regarding employment termination procedures in Serbia, including the employer’s legal obligations, employee rights, and practical steps for a lawful dismissal.
What Is Employment Contract Termination in Serbia?
Termination of an employment agreement in Serbia is a legally regulated process governed by the Serbian Labor Law. It is essential to distinguish between employment contract termination and other forms of employment cessation.
The employment relationship may cease in the following cases:
- Upon expiration of the fixed-term employment contract;
- When the employee reaches the age of 65 and has at least 15 years of pension insurance, unless otherwise agreed between the employer and the employee;
- By mutual agreement (mutual termination of employment contract);
- By dismissal (termination of employment contract by the employer);
- Upon an employee’s employment voluntary resignation (termination of contract by the employee);
- At the request of the parent or guardian of an employee under the age of 18;
- In case of the death of the employee;
- In other situations defined by law, such as expiration of a work permit for foreign nationals in Serbia.
Among these, employment dismissal (contract termination by the employer) is often the most complex, as it involves specific legal grounds and procedures. Employers must strictly follow procedures to avoid claims of unlawful termination or potential lawsuits for wrongful dismissal.
In cases of employment termination by the employer, employees may also be entitled to severance pay under certain conditions, depending on the reason for termination.
Types of Termination: Voluntary and Involuntary
When it comes to employment contract termination in Serbia, there are two primary categories based on who initiates the termination:
- Involuntary Termination (Dismissal and termination must be employer-initiated),
- Voluntary Termination (in which employee initiated resignation), and
- Mutual Termination Agreement.
Involuntary Termination
This refers to situations where the employer terminates the employment contract. Such employment relationship can be terminated due to specific legal grounds according to the labor law, such as:
- Violation of work duties;
- Redundancy (redundancy dismissal);
- Incompetence or inability to perform work duties.
This type of involuntary termination requires a formal procedure, including:
- Advance written notice;
- Detailed explanation of the reasons for dismissal;
- Respect of employee rights and deadlines;
- In some cases, the employee may also be entitled to severance pay.
Failing to comply with these rules can result in wrongful termination claims and legal liability of the employer.
Voluntary Termination (Employee-Initiated Resignation)
In contrast, voluntary termination occurs when the employee resigns from their position. This process typically requires the employee to submit a written resignation notice in accordance with the contractual notice period.
Unlike involuntary termination, voluntary resignation does not entitle the employee to severance pay.
Mutual Agreement
Apart from voluntary and involuntary termination, mutual termination of the employment contract is also common. In this case, both parties agree on the termination terms, including the expiry of the contract, final date of employment and any potential financial compensation, such as severance payments or other benefits.
Key Differences:
- Involuntary termination involves more strict legal procedures and higher risk for employers if done improperly;
- Voluntary termination gives more freedom to the employee but usually limits their financial entitlements;
- Mutual agreement allows for flexible arrangements, but both parties must consent to the terms in writing.
Employer-Initiated Termination: Legal Grounds and Procedure
As previously mentioned, the legal grounds for employment contract termination (dismissal) by the employer may include:
- Breach of work duties;
- Violation of work discipline;
- Failure to achieve work results;
- Termination due to redundancy.
For a more detailed understanding of what constitutes a breach of work duties or violation of work discipline, it is essential to carefully review the employment contract as well as any Non-Disclosure Agreement (NDA) that may have been signed. Depending on the employee’s specific job position, the employer may define additional circumstances that qualify as a breach of duty or a violation of workplace discipline.
Legal Procedure for Termination Due to Breach of Work Duties and Violation of Work Discipline
If an employee commits a breach of work duties or violates work discipline, the employer has the right to initiate the employment contract termination procedure.
This procedure involves sending a written warning to the employee, clearly explaining the grounds for termination and describing the specific facts and actions that constitute a breach of work obligation or violation of work discipline. It is possible that the employee’s actions may involve multiple breaches of work obligations or disciplinary violations. In such cases, all violations must be addressed in the warning, supported by appropriate evidence.
The warning must strictly comply with the legal requirements and must:
- Provide a clear explanation of the reasons for termination,
- Specify the timeframe within which the employee can submit a response to the allegations.
Once this period expires, or upon receiving the employee’s response, the employer may issue the decision on the termination from the employment contract. The termination must be justified and decision must include all elements required by the Serbian Labor Law, including a provision obligating the employer to pay all outstanding salaries, wage compensations, and other financial entitlements to the employee within a period of 30 days from the date of termination. Failure to comply may allow the employee to initiate a lawsuit to recover outstanding payments.
The termination decision must also include instructions on legal remedies, informing the employee of their right to file a lawsuit before the court within 60 days from the date the decision is delivered.
It is also crucial to consider the statute of limitations for such termination grounds. The employer may terminate the employment contract with employee for breaches of work duties or employment discipline:
- Before the expiration of the six months from the date they became aware of the relevant facts, and
- Within one year period in which the employee committed the violations.
Timely action is essential in such cases, and it is strongly recommended to consult a qualified employment law attorney to ensure legal compliance.
In summary, the termination procedure in these cases requires:
- A written warning specifying the grounds for termination, and
- A formal decision on termination of the employment contract.
Legal Procedure for Termination Due to Failure to Achieve Work Results
Termination based on failure to achieve work results involves a specific procedure that differs significantly from the process applied in cases of work discipline violations or breaches of work duties.
Although this procedure also includes a written warning followed by a termination decision, the content of the warning is different. In this case, the employer must issue a written warning that contains:
- A clear explanation of the employee’s work deficiencies,
- Specific instructions and guidelines for improving work performance,
- A reasonable timeframe for improvement.
It is not sufficient for the employer to merely send the warning and request a response; the employer must also allow the employee an appropriate timeframe to improve their work performance based on the provided guidelines.
During this period, the employer must monitor the employee’s performance, and only after the period of monitoring employer can lawfully terminate the contract if the employee does not improve their performance.
Legal Procedure for the Termination Due to Redundancy (Technological Surplus)
One of the most common termination grounds in practice is termination due to redundancy (also referred to as technological surplus), which occurs when, as a result of technological, economic, or organizational changes, the need for certain job positions ceases or the volume of work is reduced.
Although this termination ground frequently arises, many employers fail to comply with the legally prescribed procedure, which can lead to lawsuits for unlawful termination.
In such cases, the employee’s position is either eliminated or the number of employees performing similar work is reduced. This process also requires amendments to the employer’s internal rulebook on job organization and systematization—which is mandatory for employers with more than ten employees.
A specific feature of this type of termination is the employer’s obligation to pay severance pay before terminating the employment contract. The severance amount cannot be lower than one-third of the employee’s monthly salary for each full year of service with the employer where the redundancy occurs.
Employee Resignation: Rights and Obligations
An employee has the right to terminate the employment contract at any time during the course of the employment relationship. This is done by submitting a written resignation notice. The employee is not required to provide reasons for the resignation or to explain the decision in any way.
However, the employee is legally obligated to respect the notice period, which must be at least 15 days. This means that the written resignation must be delivered to the employer at least 15 days before the intended termination date stated by the employee. The notice period may be longer than 15 days if such a provision is set forth in the employment contract or the employer’s internal regulations, but it cannot exceed 30 days.
By prescribing a minimum notice period, the law aims to protect the employer by allowing sufficient time to manage the operational consequences of the employee’s departure. Therefore, it is essential for the employee to comply with the notice period requirement.
Nevertheless, if an employee fails to respect the notice period and the employer suffers financial damage as a result, the employer may initiate a lawsuit seeking compensation for damages in the termination procedure.
In such legal proceedings, the employer would need to prove both:
- That the employee failed to comply with the notice period; and
- That the employer suffered direct financial loss as a consequence.
Termination by Mutual Agreement
A mutual termination of the employment contract occurs when both the employer and the employee agree that the employment relationship should end. In such cases, the parties sign a mutual termination agreement that clearly defines their respective rights and obligations.
This type of termination is based on the mutual consent of both parties, and it is essential that the agreement be signed by both the employer and the employee. This is a key feature that distinguishes mutual termination from other forms of employment contract termination.
The agreement must be in written form and should cover all relevant terms, including:
- The notice period (if applicable);
- Payment of any outstanding salaries, wage compensations, or other entitlements;
- Other specific details related to the termination.
In practice, it is quite common for the mutual termination agreement to include a provision for the payment of severance pay to the employee. However, unlike cases involving redundancy termination, the employer is not legally required to offer severance pay in mutual termination cases. Any such severance payment is entirely subject to the agreement reached between the employer and the employee, including whether it will be paid and in what amount.
Another very important aspect of mutual termination is the employer’s obligation to provide the employee with a written notification about the consequences related to unemployment rights before the agreement is signed.
Termination of Fixed-Term Employment Contracts
A fixed-term employment contract differs significantly from an open-ended (indefinite-term) employment contract, particularly in how the employment relationship is terminated.
In Serbia, a fixed-term employment contract usually ends automatically upon the expiration of the agreed period or upon completion of the specific task for which it was concluded. In this case, there is no need for a formal termination notice or additional procedures—the employment simply ends on the agreed date.
However, early termination of a fixed-term contract is also possible, but only under certain legally defined conditions. The fixed-term contract may be terminated before its expiration:
- By mutual agreement between the employer and the employee;
- By dismissal based on valid legal grounds such as breach of work duties, violation of work discipline, or failure to achieve work results;
- By voluntary resignation of the employee, with a required notice period.
Notice Periods and Severance Pay in Serbia
As previously mentioned, in the case of employment contract termination by the employee (voluntary resignation), the employee is required to respect the notice period. This notice period cannot be shorter than 15 days or longer than 30 days, depending on the duration stipulated in the employment contract or the employer’s internal regulations.
On the other hand, when an employment contract is terminated by the employer, the Serbian Labor Law prescribes a notice period only in one specific case—termination due to failure to achieve work results. In such cases, the employee is entitled to a notice period determined by the employer’s internal regulations or the employment contract, based on the employee’s length of service. However, this period cannot be shorter than 8 days or longer than 30 days.
Severance pay is mandatory only in cases of redundancy (termination due to technological surplus). In practice, severance payments are often included in mutual termination agreements, but in such cases, they are not required and specified in the law. Instead, they depend entirely on the agreement reached between the employer and the employee, including the amount and payment terms.
Employee Rights Upon Termination
When an employment relationship ends, it is essential to understand the employer’s obligations and the employee’s rights related to the termination of the employment contract.
First and foremost, the employer is required to pay the employee all outstanding wages, salary compensations, and any other entitlements earned up to the termination date. This payment must be made within 30 days from the official end of employment.
If the employer fails to fulfill this obligation, the employee has the right to file a lawsuit for collection of receivables – to recover outstanding employment-related claims. It is important to note that such claims are subject to a statute of limitations of three years. After this period, the employee can no longer legally claim unpaid amounts related to their employment.
Severance Pay Obligation in Redundancy Cases
In cases of termination due to redundancy (technological surplus), the employer is legally required to pay severance compensation before the employment contract is terminated. In such cases, severance pay is a mandatory precondition for lawful termination.
Employee Rights to Unemployment Benefits
It is also crucial for employees to understand their rights regarding unemployment benefits. Not every termination of employment entitles the employee to receive unemployment compensation. This right can only be exercised in certain situations, including:
- Termination due to redundancy;
- Termination due to failure to achieve work results or lack of required skills and abilities;
- Expiration of fixed-term contracts, temporary and occasional work contracts, or completion of probationary work.
However, in cases of mutual termination of the employment contract, the employee is not entitled to unemployment benefits. In such cases, the employer is legally required to provide the employee with a written notice informing them about the loss of this right before signing the mutual termination agreement.
Unlawful Termination and Legal Remedies
If an employee believes that their employment termination was unlawful (wrongful dismissal), they have the right to initiate court proceedings within 60 days from the date of receiving the termination decision.
During the court proceedings, the court examines the lawfulness of the termination and determines whether the employment relationship was terminated without legal grounds.
If the court finds that the employment was terminated unlawfully, it may—based on the employee’s request stated in the lawsuit—order the following:
- Reinstatement of the employee to their previous job position;
- Payment of compensation for damages suffered by the employee;
- Payment of all social security contributions for the period during which the employee was not working.
If, however, the employee does not request reinstatement in their lawsuit, the court may instead order the employer to pay compensation for damages in an amount not exceeding the equivalent of 18 monthly salaries of the employee.
Additionally, if the court determines that the termination of the employment relationship was unlawful, but the employer proves that there are objective circumstances making it impossible to reinstate the employee, the court may award the employee financial compensation instead of reinstatement.
It is also important to note that if the court finds that the employee indeed committed a breach of work duties or violated work discipline, but the employer failed to properly follow the legally prescribed termination procedure, the court will still award the employee compensation for damages.
This clearly demonstrates the importance of strictly complying with the employment termination procedure by the Labor Law. Following the proper procedure not only respects the employee’s legal rights but also protects the employer from potential financial liability.
Termination in Special Cases (Pregnancy, Sick Leave, Trade Union)
Terminating the employment of a pregnant employee or an employee on maternity leave constitutes a serious violation of employment rights and can lead to severe legal consequences for the employer.
Employees who are on maternity leave, childcare leave, or who have notified their employer of their pregnancy enjoy special legal protection against dismissal under Serbian labor law.
If an employer attempts to terminate the employment contract during this protected period, such termination can be declared unlawful (wrongful dismissal). To ensure legal security, every pregnant employee or employee on maternity leave should be fully aware of how to respond to any attempt of dismissal and what legal rights and remedies are available through the competent authorities.
At the same time, employers must act with extreme caution in such cases to avoid lawsuits, financial penalties, and reputational damage resulting from unlawful termination.
FAQs About Employment Agreement Termination in Serbia
Can an employer terminate a contract without warning in Serbia?
No, in case the employment agreement is terminated due to violation of work duties or work discipline or in case of termination due to poor performance, employer must issue firstly warning notice.
Am I entitled to severance pay if I am made redundant in Serbia?
As the law prescribes, it is obligatory for employer to pay severance before termination of employment.
What happens if I resign without a notice period in Serbia?
If employer in that case suffers damage, employer can file a claim for compensation of damages.
Is it legal to terminate the employment relationship during sick leave?
Sick leave cannot be a reason for termination, but employment may end during sick leave due to, for example, the expiration of a fixed-term employment contract.
Can an employee dispute wrongful termination in Serbia?
Yes, employee may file a claim to the competent court within 60 days from the day of receipt of decision on termination.
Conclusion and Legal Support for Contract Termination in Serbia
Being aware of your employment rights is essential for every employee. Unfortunately, unlawful dismissals and attempts to place employees at a disadvantage are not uncommon. In such situations, timely engagement of an experienced labor law attorney can be crucial.
A skilled lawyer can help you exercise your legally protected rights, initiate court proceedings, challenge unlawful termination, and secure compensation for damages. Do not let your rights remain only “on paper”—legal protection exists, and its effectiveness depends on how informed and prepared you are to act.
This article is for informational purposes only and does not constitute legal advice. If you need additional information regarding the topic in question, please feel free to contact us by email at office@ncrlawyers.com or by phone at +381677049551.
