Although a good part of the business was done online even before the Coronavirus pandemic, we are sure that it was the pandemic that put electronic signatures into focus even more and proved that most jobs can be done remotely. Does this also mean that the employer and the employee can conclude the employment agreement online? If you want to increase the salary of your employee who is working from home, can you sign the annex of the employment agreement with an electronic signature?
As we wrote earlier, the Law on Electronic Document, Electronic Identification, and Trust Services in the Electronic Business (hereinafter: the Law on Electronic Document) has been in force for several years and there is no doubt that electronic signature has been slowly but surely taking its place in everyday lives of employers and employees in Serbia.
However, evident discrepancies in the regulations, as well as questionable opinions and misunderstandings by the authorities put us in a situation where it’s impossible to use all the benefits that are legally available.
1. Inconsistency with the Regulations
The Law on Electronic Document implies that the electronic document is created by using one of the available information and communication technologies and that its validity, power of evidence, and written form cannot be disputed just because it is in electronic form. This way, when it comes to validity, the power of evidence, and written form, the Law equates electronic documents with handwritten documents.
This applies only to the electronic document that is signed with the qualified electronic signature, and not with just any electronic signature.
The main principle of the Law on Obligations concerning the form in which the contracts must be concluded implies that the conclusion of an agreement is not subject to any form unless otherwise provided by the Law.
There are legal transactions for which the Law requires a specific form, which is why it is not possible to conclude them by using an electronic signature. For example, when buying an apartment, we cannot expect to sign this agreement electronically instead of going to the notary public and signing the agreement by hand.
On the other hand, for many years, there have been transactions in Serbia that are executed exclusively via electronic documents. An example of this is the submission of regular financial reports to the BRA.
However, in the field of employment law regulations there is a certain room for improvement when it comes to electronic signatures since there are still some open questions regarding the signing of:
- Employment agreements,
- Outside employment agreements (e.g., Agreements of temporary and occasional jobs),
- All documents required during employment (e.g., Decision on annual leave),
- Documents that are necessary upon the termination of employment (e.g., the Decision on termination of the employment agreement).
Lawyers specialized in the field of labor & employment law daily face the questions of employers who, in their pursuit to modernize their business and deprive it of bureaucracy, are curious to find out whether these documents can be signed electronically, whether the electronically signed documents are valid, as well as what are the legal consequences and risks of electronically signing the documents.
2. Employment Law and Written Form
The Employment Law regulates all labor relations in a unique way. This law underwent its last revision in 2018. The law still does not contain provisions for the electronic signing of employment-related documents.
It is clear from provisions in the Employment Law that the paper, i.e., the printed form of a document has absolute primacy over the electronic form, which is allowed only in specific situations.
Here are some examples:
- The employment agreement is concluded before the employee starts working, in a written form and three identical copies.
- The employee is given a written decision on exercising the rights, obligations, and responsibilities, with an explanation and instruction on the legal remedy – this refers to the annex to the employment agreement, the decision on salary reduction, the decision on dismissal, and other decisions which directly decides on the rights, obligations, and responsibilities of employees.
- Employment may be terminated based on a written agreement between the employer and the employee.
- The employee submits the termination of the employment agreement to the employer in written form, at least 15 days before the day the employee stated as the day of termination of employment.
The provisions from the Employment Law about the submission of the termination of employment are based on the fact that all these documents are submitted in printed form, which eliminates the possibility of submitting them in electronic form. It is prescribed that the decision on dismissal must be delivered to the employee in person at the employer’s premises, or by mail, with a return receipt if the above mentioned is not possible, and in case it cannot be delivered this way, it must be placed on the employer’s notice board.
a. Exceptions from the Employment Law
There are only two exceptions from the Employment Law, two documents that can be in electronic form with certainty. These are the decision on the use of annual leave and a payslip.
However, at the request of the employee, the employer is obliged to deliver to the employee the decision on the use of annual leave in printed form.
So, this so-called convenience becomes completely meaningless because the employee can ask for a “paper” version of this document too.
b. Why is the rule from the Employment Law disputable?
What is concerning is the fact that the Employment Law differentiates between printed and electronic form, while at the same time it implies that the written form is the printed form.
If the Law on Electronic Document equates printed and electronic documents when it comes to validity, how come the provisions of the Employment Law may dispute this equality?
From our point of view, if the printed form of a document is required for the document to be valid, the electronic document signed with the qualified electronic signature must be considered valid as well.
However, considering provisions from the Law, and the opinions of the authorities, it is for now very disputable if the electronic document signed with the qualified electronic signature, and sent via email in the PDF form, meets the criteria of the written form from the Employment Law.
Another problem is that the Employment Law wrongly equates written with the printed form of a document. We came to this conclusion because the Employment Law exceptionally allows only two documents to be in electronic form, while for the rest, it requires the written, non-electronic = printed form.
3. Disputable Views of the Competent Authorities
The Ministry brings even deeper confusion to this matter.
The opinion of the authorities has not changed in years, and it is inclining towards the obligatory conclusion of the employment agreements and other labor & employment law documents in printed form, although in the meantime, the new law came into force, and digitization has been constantly promoted.
The Ministry of Labor, Employment, Veterans and Social Affairs, the Labor Sector, gave their opinion in June 2015:
“…when the decision on the use of annual leave is delivered to the employee in electronic form, we are of opinion that it should be delivered scanned in electronic form, and not be sent to the employee in electronic form without a signature and a stamp. Also, the employer must provide proof that he submitted the decision electronically to the employee, ie that the employee received and read the email.”
Ministry of Labor, Employment, Veterans and Social Affairs also gave the following opinion in January 2021:
“Article 75, paragraph 6 of the Employment Law implies that the employer may deliver the Decision on the use of annual leave to the employee in electronic form, and at the request of the employee, the employer is obliged to submit that Decision in written form. Having the above mentioned in mind, when the Decision on the use of annual leave is delivered to the employee in electronic form, we are of the opinion that it should also be submitted scanned in electronic form, as well as that the employer should provide proof that the Decision is delivered electronically, and that the employee received and read the email. Article 121, paragraph 5 of the Employment Law implies that the payslip based on which the salary was paid, i.e., the salary compensation in full, can be submitted to the employee in electronic form.”
The problem with these opinions is that they make the purpose of the electronic document and electronic signature completely meaningless. It seems that the Ministry considers an electronic form of the document the one that is in paper form and which contains a signature and a stamp, and which is afterward scanned!
Another problem is that the employer is obliged to provide proof that the employee received and read the email in which the scanned (by the opinion of the authorities – electronic) document was submitted. Does this mean that the employer needs to ask for confirmation from the employee that he received the email and that in case the employee doesn’t confirm, it would be considered that the employer didn’t deliver the document to the employee?
When it comes to valid regulations, the document in the electronic form is the electronic document with a qualified electronic signature. However, it seems that the authorities in charge of employment-related matters don’t share this opinion.
It is very important to mention that these opinions are not obligatory and the inspectors can act differently in certain situations. However, our practice and experience have shown that the inspectors usually support these opinions and almost always act identically. Besides that, it would be up to you as an employer to prove that you acted according to the regulations, and what electronic documents and electronic signatures are.
4. Eventual Risks and Consequences
The electronic signing of the employment law documents is a common practice in most European countries, regardless of the coronavirus pandemic and the fact that employees work much more often from home.
Our Law on Electronic Document provides for a possibility to be included in the list of countries that use the benefits of electronic signing.
However, even besides the above mentioned, in Serbia, there are numerous risks for employers, primarily because the Employment Law is not harmonized with the Law on Electronic Document, as well as because of questionable opinions of the Ministry.
According to the current regulations, if you conclude an employment agreement with an employee using a qualified electronic signature, we are of opinion that it would be invalid. However, that would not mean that the employment relationship isn’t established, due to the legal fiction stating the employment relationship is established on the day the employee starts working – regardless of whether the agreement is signed. That kind of employment relationship would be considered employment for an indefinite period. That further implies that the concluded employment relationship would be fully regulated by the provisions of the Employment Law, and not by an employment agreement (since it is invalid).
This would imply the following:
An identical situation and risk level would exist with signing some of the agreements based on which an employment relationship is not established – such as, for example, agreements on temporary and occasional jobs or service agreements.
There is a huge risk for the employer when submitting dismissal documents to the employee, given that the court could, in case the employee sues the employer, consider that the formal procedure prescribed by the Employment Law, regarding proper delivery of the documents to the employee, has not been complied, which is why the legality of the submission may be in question. When there are formal omissions in the dismissal procedure, the employer may be obliged to pay the employee compensation in the amount of up to 6 salaries the employee.
We believe that the new amendments to the Employment Law should include a provision that allows all documents that can be concluded in printed form to be concluded in electronic form as well. In this way, the harmonization with the provisions of the Law on Electronic Document would be effective, which implies that electronic document’s validity, power of evidence, or written form will not be questioned simply because it is in electronic form. Such amendments to the Employment Law would be the basis for the Ministry to form a different opinion and introduce legal certainty.
5. Storing the Agreements in Electronic Form
According to the Employment Law, an employer is obliged to keep the employment agreement, i.e. other agreements by the law or their copies, at the company seat or other business premises, or elsewhere, depending on where the employee performs work. Practically, this means that in the case of possessing a document in electronic form, the employer is obliged to keep the copies of the electronic document as well, to fulfill legal obligations. Each printing of the electronic document would be considered its copy, and for the copy to be valid, it is required that the document is printed under the supervision of an authorized person, and to note and confirm that the electronic and printed form are identical, and to put a stamp and signature of the authorized person.
If the employer doesn’t follow the above-described legal obligation, the employer could be fined for the misdemeanor, with the prescribed fines ranging from RSD 400,000 to 1,000,000.
Taking the uncoordinated regulations and misunderstanding of the authorities into consideration, there is no doubt that there are great risks and uncertainties for employers if they decide to electronically sign employment law documents. For now, the employers have sole discretion in deciding whether they are ready to deal with the risks to make the procedure simpler by signing the employment agreement (or any other labor-related agreement) with a qualified electronic signature.
Our assessment is that the current state of the legislation signing an employment contract and other labor law documentation with an electronic signature in cases when this is not explicitly allowed by the Employment Law is the same as taking an unnecessary risk, despite the common view of the employment relationship as a relationship of trust and respect between the employer and the employee.
