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Law on Employment of Foreigners

Tax alert - December 2014

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Law on Employment of Foreigners

On the 25th of November 2014, the National Assembly of the Republic of Serbia has passed the Law on Employment of Foreigners, published in the Official Gazette of RS, no. 128/2014. The Law on Employment of Foreigners (hereinafter: the Law) enters into force on the 4th of December 2014. The Law regulates conditions and procedure for employing and issuing work permits to individuals who are not citizens of the Republic of Serbia. Moreover, the Law defines the requirements for the exercise of rights from the employment relationship, as well as in the case of unemployment.  

The Law recognizes various groups of foreigners that are excluded from the application of the aforementioned requirements, such as: foreigners with immunity, foreigners that reside and perform work without employment contract under contracts with international organizations, contracts between competent authorities of the Republic of Serbia and other states or international technical cooperation projects, volunteers, representatives of foreign media registered in the official record of the competent Ministry, etc.

Furthermore, it is envisaged that the requirements for the employment of the foreigners do not apply to certain categories of individuals under the condition that they do not reside in the Republic if Serbia more than 90 days in the period of six months since their first entrance in the country, including owner, founder, representative or the member of the body of a domestic legal entity (if he is not employed with that legal entity) as well as an individual that resides in the Republic of Serbia for the purpose of business networking, attendance of business meetings and conducting business activities for establishment of foreign employer in the Republic of Serbia.

In the light of Serbian EU integration process, the Law prescribes special treatment for EU, EEA or Swiss Confederacy nationals, as well as individuals assigned to work in the Republic of Serbia by the foreign employer from these countries. Namely, these individuals are exempted from the compliance with the requirements for the employment of the foreigners provided by the Law. Yet, the implementation of the Law is postponed until the moment of accession of the Republic of Serbia to the EU.

Work permits

The new Law introduces two new basic categories of work permits:

1.    Personal work permit – destined to foreign citizens that arrive and enter the work market in the Republic of Serbia freely – request for issuance of the work permit is submitted by the foreign citizen;

2.    Work permit – related to foreign citizens that are assigned to the Republic of Serbia or are professionally engaged in the Republic of Serbia to work for an employer, or as an entrepreneur.

Because of an easier understanding and differentiating, the Law defines a Foreign Employer as foreign legal entities or individuals registered abroad. On the other hand, the Law defines an Employer as a domestic legal entity or person registered for conducting activities in the Republic of Serbia, as well as branch or representative office of the foreign employer registered for conducting activities in the Republic of Serbia.

 

Types of work permits 

The work permit encompasses three different types:

  • work permit for employment – request is submitted by the employer;
  • work permit for specific cases of employment - request is submitted by the employer;
  • work permit for self-employment – request is submitted by the foreign citizen.

In any case, work permits are issued for the period of maximum one year, unless the Law or international agreements do not prescribe otherwise.

1)    Work Permit for Employment

The employer has to fulfill following conditions:

  • No employees were laid off from positions that work permit is requested for due to technical, economic or organizational changes;
  • Unavailability of adequate workforce that does not need the work permit or the foreigners  holding the personal work permit for the position in question, enlisted in the records of the National Employment Agency in the past month;

The employer submits corresponding documents, alongside the request. Employee has to comply with all the requirements enlisted in the request of the employer. 

2)    Work Permit for Specific Cases of  Employment

It encompasses:

  • Assignment of the individuals – destined for individuals working or providing services  on the basis of the agreement between the employer and the foreign employer;   
  • Assignment within the company – destined for individuals on key positions who are assigned to work for the employer (branch, subsidiary) by the parent company; 
  • Independent professionals – destined for foreign citizens who provide services for the employer on the basis of the corresponding agreement. 

The Law prescribes an obligation for the employer to prove the existence of the relationship with the foreign employer, as well as the existence of the relationship between the professionally engaged foreign citizen and the foreign employer (employment with the foreign employer for at least one year prior to the assignment).  

3)   Work Permit for Self-employment

This type of work permit is envisaged for foreign citizens that have intention to conduct activities on the territory of the Republic of Serbia by establishing a legal entity or by registering for conducting activities in accordance with the applicable law. 

Restrictions on employment of foreigners

In particular cases there is a possibility to limit the number of work permits for foreigners. This limitation does not apply to foreigners and employers that file requests for personal work permit and work permits for assignment within the company.  

Procedure for Issuance of Work Permit

In accordance with the Law, the National Employment Agency is in charge of the issuance of the work permits. The Law not only specifies the procedure for the issuance and extension of the work permit, but also introduces the possibility of invalidation of the work permit in certain cases (e.g. in case of belated commencement of the activities or in case of the work for another employer). Besides, the Law now enumerates the reasons for termination of the work permit.

Sanctions in Case of Violation of Provisions of Law

The Law prescribes significant pecuniary fines for both employers (ranging from RSD 800,000 to RSD 1,000,000) and foreign nationals (ranging from RSD 15,000 to RSD 150,000) in the case of incompliance with the Law. Additionally, it introduces the possibility of imposition of provisional measures of protection concerning the prohibition of conducting certain activities. 

Future steps

In the upcoming months it is expected that the appropriate bylaws will be enacted, that will provide guidelines for the implementation of the Law.

Contacts:

Tatjana Milenković

Senior Manager

+381 11 3812 168

tmilenkovic@deloittece.com  

 

Slobodanka Kolundžija

Consultant

+381 11 3812 176

skolundzija@deloittece.com  

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