Hiring employees in Serbia requires more than just finding the right candidate – it also means ensuring your employment contracts comply with local labor laws. For foreign employers, navigating Serbian regulations can be complex, especially when it comes to contract structure, employee rights, and mandatory provisions.
This 2025 guide offers a clear overview of what you, as an employer, need to know to draft legally sound employment contracts in Serbia. From mandatory content to common mistakes , this guide is designed to help you avoid legal risks and establish strong, transparent working relationships.
The employment contract is the cornerstone of every employment relationship. It sets the framework for how the relationship between you and your employee will function – defining rights, responsibilities, and expectations on both sides.
To ensure your contracts are enforceable and compliant, they must align with Serbian Labor Law, any applicable collective agreements, and your company’s internal policies (such as, for example, Employment Rulebook). The Labor Law outlines the minimum standards for employee rights – your contract can offer more, but never less.
In practice, this means that if a contract includes terms that fall below the legal minimum (for example, reduced leave or shorter breaks), those provisions will be considered invalid, and the statutory minimum will automatically apply. To protect your business and maintain good employee relations, getting this right from the start is essential.
For example:
- Serbian labor law requires that any employee working at least 6 hours a day must receive a minimum 30-minute break during their workday.
- For full-time employees (those working 8 hours per day), this 30-minute rest break is mandatory and counted as part of their working hours.
- If an employment contract provides for a shorter break (e.g., only 15 minutes), that clause would be considered invalid, and the legal minimum of 30 minutes would automatically apply.
- However, you are always free to offer more favorable terms to your employees. For example, you may choose to grant a 45-minute break, which would go beyond the legal minimum and reflect a more employee-friendly policy.
This example highlights why aligning your contracts with the law – and knowing where you can offer flexibility – is key to staying compliant and building a positive workplace culture.
Formalities around signing an Employment Contract in Serbia
In Serbia, employment contracts must be concluded in writing and signed by hand. Electronic signatures are not recognized for employment documentation under current labor regulations.
The contract should be signed in three copies:
- One for the employee,
- Two retained by the employer.
Importantly, the contract must be finalized before the employee begins work – ideally, it should be signed at least one day prior to the employee’s official start date.
Contracts can be concluded for a fixed or indefinite term. If the duration is not explicitly stated, the law assumes the employment is indefinite. Additionally, if a fixed-term contract is signed without legal justification, or in situations where fixed-term hiring isn’t permitted, the relationship will legally be treated as indefinite.
If an individual starts working without a signed contract, this is considered de facto employment. In such cases, the law assumes an indefinite-term contract has been established from the first day of work.
Proper documentation from the outset isn’t just a legal formality – it’s key to reducing risk and ensuring clarity in the employment relationship.
Essential Elements of an Employment Contract in Serbia
Under Serbian Labor Law, every employment contract must contain specific mandatory elements to be legally valid. Ensuring these elements are included protects both the employee and the employer – and helps avoid compliance issues down the line.
What must be included:
- Employer information – full company name and registered business address;
- Employee information – full name and place of residence or temporary residence;
- Qualifications – educational background required for the role;
- Job position – title and a brief description of duties;
- Place of work;
- Type of employment – fixed-term or indefinite;
- If fixed-term – contract duration and legal justification for the fixed term;
- Start date of employment;
- Working hours – whether full-time, part-time, or reduced hours;
- Gross salary – the employee’s base salary in gross 1 amount (not net).
If any of these are omitted, the statutory provisions of the Labor Law will automatically apply, which may not always reflect your business needs or intentions.
Mandatory, But Flexible in Form
Some details in an employment contract aren’t optional—but the way you include them is. According to Serbian Labour Law, the following elements must be covered either directly in the contract or by clearly referring to another official document like a Rulebook, collective agreement, or employer’s general act:
- How pay is determined – This includes the formula for base salary, performance bonuses, overtime, and any other income your employees are entitled to.
- When payments are made – Clearly define when salaries and other compensation are paid out.
- Structure of working hours – Lay out how long the workday and workweek are, including any nuances like shifts or reduced hours.
If these are already defined elsewhere (like in your internal Rulebook), you don’t need to repeat them in full. However, the employment contract should point to the specific document in force at the time of signing.
Being clear about where these terms are documented isn’t just a legal requirement, it’s a practical way to keep everyone informed and aligned.
Start date matters
The start date listed in the contract is critical. That is the date from which the employee officially begins to earn rights and assume responsibilities. If the employee does not show up for work on that date, and the reason is not justified (or agreed otherwise), the employment relationship is considered not established. You can define what counts as a “justified reason” directly in the contract to avoid ambiguity.
Protective and Restrictive Covenants in Employment Contracts
To keep your business protected and avoid messy legal drama later, it’s smart to include a few extra clauses in your employment contracts, especially for roles that touch sensitive data, intellectual property, or potential competitors. These aren’t legally required, but they can save you a world of trouble down the line.
- Non-compete obligations – This clause keeps employees from jumping ship and joining (or becoming) your direct competition, either during their employment and for up to two years after they leave.
- Confidentiality and data protection – Make it crystal clear that confidential business information stays confidential, and that personal data belonging to employees is handled with care. A solid clause, or even a separate NDA builds trust and legal protection on both sides.
- Intellectual property rights and transfer of work-related creations – If your employees are creating code, designs, content, inventions this clause spells out who owns what..
Think of these clauses as your contract’s security system: you hope you never need it, but you’ll be glad it’s there if things get complicated.
Remote work specifics
Working from home (or anywhere else outside the office) is here to stay—but it also comes with its own set of rules. If an employee is going remote, your contract must spell out the practical stuff clearly. Here’s what to include:
- Daily and weekly working hours – how many hours the employee will work on a daily and weekly basis, and what the schedule of those working hours will look like;
- How the employee’s performance will be monitored and evaluated;
- Equipment and tools the employer will provide to support the employee in performing their duties effectively;
- Use of the employee’s personal equipment, including any applicable reimbursement terms or support provided by the employer;
- Reimbursement of work-related expenses, including how costs are calculated, approved, and processed;
- Any additional rights or obligations tied to remote work.
One Size Fits All? Not When It Comes to Employment Contracts
Employment contract templates can be a great starting point. But that’s all they are: a start. Every company is different, every role has its own nuances, and what works for one situation might leave serious gaps in another. Relying on a generic, copy-paste agreement might seem efficient in the moment, but it can lead to confusion, legal risks, or even disputes down the line.
Tailoring your contracts to reflect your actual working conditions, business needs, and legal obligations isn’t just good practice, it’s essential.
So before you use a standard template, take a moment to ask: does this contract really cover what matters?
Getting the employment contract right from the start – and ensuring it’s fully compliant with the law – is essential for several key reasons:
1. Legal Certainty
A well-drafted employment contract protects the interests of both the employer and the employee. By clearly outlining each party’s rights and obligations, it helps prevent misunderstandings and significantly reduces the risk of legal disputes.
2. Avoiding Inspections and Penalties
Failure to comply with labor law can lead to misdemeanor proceedings initiated by labor inspectors, often resulting in substantial fines. However, beyond the financial cost, one of the most serious risks for employers is damage to reputation, which can impact employee trust, business relationships, and public perception.
For example, if an employer assigns overtime work to an employee in violation of the provisions of the Labor Law, they may be fined up to RSD 1,500,000.
3. Valid Regulation of the Employment Relationship
An employment relationship can only function effectively when the contract is precisely and clearly defined. If any mandatory elements are missing – or if the contract grants fewer rights than those guaranteed by law – legal provisions will automatically override the contract. That’s why it’s essential to include all required elements and, where possible, add strategic clauses that protect your interests as an employer.
4. Transparency and Trust
A detailed and clear employment contract fosters a culture of trust. It demonstrates that the employer respects the law and values its employees, which positively impacts:
- employee satisfaction,
- motivation and loyalty,
- the employer’s reputation.
5. Protection in Case of Termination
If the employment contract is terminated by the employer, the employee may initiate legal proceedings if they believe the termination was unlawful. In such cases, the contents of the contract become a key piece of evidence.
The more detailed and clearer the contract, the stronger the employer’s legal position in proving that the termination was lawful.
If the contract is vague or contains ambiguities:
- the employer risks the termination being declared unlawful,
- the employee may seek reinstatement, damages, and reimbursement of legal expenses.
6. Avoiding Burdensome Contract Amendments
While it is possible to amend an employment contract after signing – by issuing a written annex – it’s far more efficient and practical to ensure the contract is complete and accurate from the outset. Making changes later can create unnecessary administrative burdens for both the employer and the employee, which could easily be avoided with proper planning.
If an annex is needed, the employer is legally required to provide the employee with a formal written proposal and allow a minimum of 8 working days for them to respond.
Additionally, it is more difficult to negotiate more favorable provisions for the employer at a later stage – provisions that could have been defined from the outset.
It is also possible to raise the question of the legal basis for offering an annex to the employment contract.
If the employee refuses to sign the annex, in certain situations prescribed by law, this may constitute grounds for termination of the employment contract; however, the employee may challenge such termination in court. On the other hand, even if the employee accepts an annex that was offered without proper legal grounds, they still retain the right to contest the legality of the annex before the court.
Employment Contract drafting: Key mistakes to avoid
In practice, the most common mistakes in employment contracts stem from non-compliance with legal requirements, vague language, and poorly defined working conditions. Below is a summary of the key issues to watch out for:
1. Concluding a fixed-term employment contract without valid legal ground
Abuse of fixed-term contracts is common in practice.
A fixed-term employment contract may only be concluded when justified by the nature of the job (e.g., increased workload) and may last no longer than 24 months (except in the case of a few legal exceptions).
If a fixed-term contract is concluded contrary to the Labor Law – either without legal grounds or for a duration that exceeds the legal limit – it is considered that an indefinite-term employment relationship has been established.
Why does this matter so much?
Because Serbia is not an at-will employment country. Employers can’t just terminate indefinite-term contracts at their convenience. They need a legally justified reason (e.g., serious misconduct, redundancy with proper process, etc.). If you improperly use a fixed-term contract (say, to “test” an employee or delay committing), the law may treat it as if you’ve entered into an indefinite-term contract from the start.
That means the employee gains full legal protection, and you’ll need a solid legal basis to end the employment later, or risk facing serious consequences.
2. Errors related to regulating the employee’s salary
The most common mistake is that employers indicate only the net salary amount, while the law requires that the gross 1 salary be stated in the employment contract.
Another frequent error is the improper definition of salary components, for instance, when reimbursable expenses are bundled into the salary amount. These must be listed separately and not treated as part of the base wage.
A particularly recurring issue is the vague or missing explanation of the variable portion of the salary related to work performance. Without a clear formula or criteria, this can lead to disputes and confusion down the line.
3. Referencing outdated or non-existent documents
It is often seen in practice that employment contracts refer to outdated versions of the Labor Law.
Less commonly – but still possible – the contract refers to an internal act of the employer (e.g., the Rulebook on Systematization) that was never formally adopted or has not been updated to reflect the current organizational structure.
4. Incorrectly drafted non-compete clause
The Labor Law prescribes specific requirements for how a non-compete clause must be formulated. Any deviation may result in the clause being null and unenforceable, meaning it provides no legal protection to the employer.
The most common mistake is failing to include the employer’s obligation to pay compensation to the employee during the non-compete period following termination of employment.
Omitting this automatically renders the non-compete clause invalid.
5. Errors related to intellectual property transfer
When it comes to intellectual property (IP), many employers underestimate just how critical it is to get the details right—until it’s too late.
Failing to properly address IP ownership in employment contracts can leave valuable creations in legal limbo and expose the company to serious risk. This is especially crucial in international company structures. Without a clean and enforceable chain of IP transfer, the group’s ownership rights can be called into question.
It’s also a major red flag in due diligence. Whether you’re seeking investment, preparing for a merger, or considering a sale, any potential investor or buyer will scrutinize your IP arrangements closely. If there’s any ambiguity around ownership, it can delay the deal, or derail it entirely.
Some of the most common mistakes include:
- Failing to account for employee’s pre-existing IP contributions;
- Using vague language when defining the scope of transferred rights;
- Ignoring post-employment obligations, which could allow former employees to exploit work they created under your roof.
Bottom line: If your business involves any form of innovation, content creation, or proprietary systems, don’t treat IP clauses as boilerplate. They’re not just legal formalities, they’re essential business assets.
6. International templates and local compliance
A common mistake is that employers use their international contract templates, typically applied by their foreign parent companies – something often seen with multinational corporations.
This approach is extremely risky, as it fails to ensure even the minimum compliance with local regulations, which is essential. Specifically, employment relationships in the Republic of Serbia are governed by Serbian labor law, regardless of the international nature of the employer’s operations.
For example, if a non-compete clause after termination of employment is included without providing compensation to the employee, such a clause – though potentially valid under the foreign law of the employer’s home country – would not comply with Serbian labor law and would be considered null and void.
Conclusion: Get It Right from the Start
An employment contract in Serbia isn’t just a formality. It’s a foundational document that shapes the entire employment relationship. In a legal system where termination without cause is not an option, getting the terms right from the beginning isn’t just good practice – it’s essential risk management.
From properly classifying the type of employment, defining salary structures, and addressing remote work, to including key clauses on intellectual property and restrictive covenants, every detail matters. Mistakes, even unintentional ones, can lead to legal exposure, operational headaches, or costly disputes down the line.
For companies operating across borders, or those looking to attract investors, well-drafted contracts are also a sign of professional maturity. Clear, compliant agreements strengthen internal processes, support talent retention, and protect critical business interests.
Whether you’re hiring your first employee or scaling a growing team, take the time to tailor your employment contracts to the realities of Serbian law and the specifics of your business. Your future self, and your employees, will thank you.
