5 reasons why all employers should have an Employment Rulebook
When it comes to employers’ internal regulations, Serbian law recognizes certain acts as expressly mandatory – such as the Rulebook on Job Classification or the Rulebook on the Protection of Whistleblowers – provided that the statutory conditions relating to the number of employees are met. In addition to these, business practice often includes other rulebooks that are not explicitly regulated by law but nevertheless play an important role in day-to-day operations, such as a Bonus Policy or a Company Car Use Policy.
Within this diverse set of general internal acts, the Employment Rulebook occupies a particularly important position.
Employers often ask whether the adoption of an Employment Rulebook is mandatory. The answer is no. But is an Employment Rulebook necessary for an employer? The answer is – absolutely YES.
Although its adoption is never a statutory obligation, an Employment Rulebook provides employers with a wide range of opportunities to regulate employment relationships in greater detail, to offer employees benefits beyond the statutory minimum, and thereby to ensure stability and predictability within the organization. In practice, this means less improvisation and greater clarity for both employers and employees.
It is also important to emphasize that the need for an Employment Rulebook does not depend on the size of the company. It is equally valuable for an employer with five employees as for one with 105, as it serves as a key tool for structuring internal rules and safeguarding business interests, regardless of the scale of the organization.
In the text that follows, we present five reasons why every employer should adopt an Employment Rulebook – or, if one is already in place, why it is worth reviewing whether all the advantages this instrument can offer are being fully utilized.
Reason 1: Greater Flexibility for Employers
The law provides that the rights, obligations, and responsibilities arising from employment are regulated by a collective agreement and an employment contract, while an Employment Rulebook may be used only in cases expressly permitted by the Labor Law.
In other words, the law allows certain matters to be regulated by an Employment Rulebook where such possibility is explicitly prescribed. If an employer does not make use of this statutory option, those same matters would have to be regulated individually in each employment contract with employees.
Below are some examples of provisions where the Labor Law expressly allows issues to be regulated through an Employment Rulebook:
1. Extension of the grounds for amending an employment contract
The Labor Law provides a limited number of grounds for changing agreed employment conditions, i.e. for offering an amendment to an employment contract. However, it also allows agreed employment conditions to be amended for additional reasons prescribed by the employer’s Employment Rulebook. This enables the employer to define additional grounds for offering amendments to employment contracts, rather than being limited solely to statutory grounds.
This is particularly important because, in the absence of a specific legal basis for offering an amendment, an employer may not lawfully propose changes to agreed employment terms.
2. Termination by the employee and notice period
The Labor Law stipulates that an employee may terminate the employment contract by giving at least 15 days’ notice prior to the date specified as the termination date. An Employment Rulebook may provide for a longer notice period, provided that it does not exceed 30 days.
Accordingly, an Employment Rulebook allows employers to regulate the notice period in greater detail in cases of termination initiated by the employee, within the limits set by law.
3. Termination by the employer due to breach of work duties or work discipline
The Labor Law allows an employer to terminate an employment contract if the employee breaches work duties or fails to observe work discipline, and it lists certain typical examples of such breaches. However, given that each employer’s business operations are specific, the law allows additional breaches of work duties or work discipline to be defined in the Employment Rulebook as grounds for termination.
For this reason, it is often in the employer’s best interest to use this statutory option and define additional breaches that are specific to its business or reflect issues encountered in practice.
For example, if an employer faces recurring issues with employees excessively using mobile phones for private purposes during working hours and neglecting their duties, this behavior may be expressly defined as a breach of work duties in the Employment Rulebook, providing a clear legal basis for action in case of violations.
4. More precise regulation of the procedure for determining damages
If an employee causes damage to the employer in the course of performing work duties, the law provides that the existence of damage, its amount, the circumstances under which it occurred, the person responsible, and the manner of compensation are determined by the employer in accordance with the Employment Rulebook or the employment contract.
Since statutory provisions set only a minimum framework, the absence of detailed regulation in the Employment Rulebook may render these rules practically unenforceable in situations where an employee causes damage to the employer.
For this reason, it is highly advisable for employers to take advantage of the flexibility granted by law and regulate this matter in a way that adequately protects their business interests.
5. Remote work
One of the areas most commonly regulated in detail in an Employment Rulebook concerns clear rules for working from home and working outside the employer’s premises, as well as the rights, obligations, and responsibilities of both the employer and the employee during remote work.
In this context, it is particularly important for employers to define the working model (hybrid or fully remote), costs reimbursed to employees during remote work, work equipment, supervision of employees’ work, occupational health and safety issues while working from home, and other relevant matters.
Reason 2: Unilateral Amendments by the Employer
Unlike an employment contract, which may be amended only by an addendum to the contract and with the employee’s consent, an Employment Rulebook may be amended by a unilateral decision of the employer. In other words, employees’ consent to amendments of the Employment Rulebook is not required; however, employees must be duly informed of such amendments.
Employees are deemed informed through the publication of the amended rulebook on the employer’s notice board (or the employer’s electronic notice board).
It is important to note that general internal acts of the employer enter into force on the eighth day following their publication on the employer’s notice board.
To illustrate the practical difference, we will compare the amendment of a provision regulated by an employment contract with one regulated by an Employment Rulebook.
For example, suppose your company has 50 employees and grants employees the right to one day of paid leave in the event of relocation. You subsequently identify abuse of this right and decide to abolish it.
If this right is regulated in the employment contracts, you would be required to deliver an offer to conclude an addendum to the employment contract to each of the 50 employees and allow them a period of eight working days to respond. Employees may either accept the proposed amendment or refuse to sign the addendum. Accordingly, the procedure is time-consuming and, more importantly, the amendment is conditional upon the employee’s consent. Without such consent, you would have no legal means to amend or abolish the provision if it is contained in the employment contract.
On the other hand, if the right to one additional day of paid leave in the event of relocation is regulated by the Employment Rulebook, it is sufficient for the employer to adopt a decision amending the rulebook and abolishing this entitlement. Once the amendment enters into force, the new rule will automatically apply to all employees. In addition to being a significantly faster process, this approach does not depend on employees’ consent, as the employer is entitled to make such a decision unilaterally.
Reason 3: Uniform Regulation of Employment Matters through the Employment Rulebook
Another key advantage of regulating certain employment-related matters through an Employment Rulebook is that such matters are defined in a uniform and equal manner for all employees, ensuring consistency and eliminating differences in treatment. This is particularly important given that employers are legally obliged to treat all employees in comparable situations equally, and that any form of discrimination in the field of employment is strictly prohibited.
For example, the Labor Law provides that employees are entitled to reimbursement of certain costs in accordance with a general internal act (the Employment Rulebook) and the employment contract, including: reimbursement of commuting expenses for travel to and from work, business travel expenses, meal allowances during working hours, and annual leave allowance (holiday bonus).
By regulating the amounts and conditions for cost reimbursement uniformly in the Employment Rulebook, the employer ensures that the same level of entitlements is guaranteed to all employees. This significantly reduces the risk of claims by employees alleging unequal treatment or discrimination, and consequently lowers the likelihood of labor disputes or court proceedings being initiated against the employer.
Reason 4: A Shorter and Less Complex Employment Contract
When an employer has an Employment Rulebook in place, the employment contract itself becomes significantly shorter and less complex. In such cases, the employment contract may contain only the minimum mandatory provisions required by law, while all other matters may be regulated by reference to the more detailed provisions of the Employment Rulebook.
Shorter and less complex employment contracts are generally better received by employees who are required to sign them, as they are clearer and easier to understand.
Specifically, the Labor Law prescribes the mandatory content of an employment contract, while also specifying which provisions need not be included in the contract if they are regulated by the Employment Rulebook and the contract merely contains a reference to it.
Accordingly, the Labor Law provides that provisions concerning the elements for determining base salary, performance-based pay, salary compensation, increased pay, and other employee benefits do not have to be included in the employment contract, provided that the contract contains a reference to the Employment Rulebook. Given the complexity of these provisions, it is generally preferable for them to be regulated in detail within the Employment Rulebook.
Similarly, provisions governing termination of employment, conditions for concluding amendments to the employment contract, disciplinary proceedings, and the procedure for determining and compensating damage caused to the employer by the employee can often be extensive. Transferring these matters to the Employment Rulebook significantly contributes to a shorter and more streamlined employment contract.
Reason 5: Employee Benefits – A Competitive Advantage in the Labor Market
An Employment Rulebook may provide for additional employee benefits that are not legally mandatory, but are either industry standards or innovative incentives that can make an employer more attractive and competitive in the labor market.
In practice, such benefits are numerous and varied, ranging from voluntary health insurance to additional grounds for paid leave, and similar perks.
For example, some employers choose to compensate employees at 100% of their average salary during periods of absence due to temporary incapacity for work, even when the cause is ordinary illness rather than a work-related injury, despite the legal obligation being a minimum of 65%.
When discussing additional benefits, they can generally be divided into two categories: those expressly recognized by the Labor Law and those not regulated by it.
Benefits arising from the Labor Law
The first category includes, for example, jubilee awards and solidarity assistance for employees.
A jubilee award is a monetary or other form of reward that an employer may grant to an employee upon reaching a certain number of years of service (e.g. 10, 20, or 30 years), most commonly for uninterrupted service with the same employer or for total length of service.
Solidarity assistance is most often a form of financial support that an employer may provide to an employee, based on the principle of solidarity, in cases of severe personal, social, or life circumstances.
In addition, the Labor Law prescribes a statutory formula for calculating severance pay in cases of redundancy (one-third of the employee’s salary for each completed year of service with the employer, granting the severance). However, if an employer wishes to provide more favorable terms and a higher severance payment, this may also be regulated through the Employment Rulebook.
Benefits not provided for by the Labor Law
The second category includes benefits that are not prescribed by law but may nevertheless be introduced by employers, guided by a fundamental principle of labor law – namely, that employees may always be granted rights more favorable than the statutory minimum.
In practice, such benefits often include payment of salary at 100% during sick leave (despite the statutory minimum of 65%), or the introduction of paid “personal days” for handling private matters.
Another increasingly relevant employee benefit is team building activities. Notably, employers may also be entitled to certain tax exemptions when such benefits are regulated through the Employment Rulebook.
Why a Well-Drafted Employment Rulebook Is Essential for an Employer’s Legal Certainty
Precisely because of the numerous strategic advantages it offers, an increasing number of employers choose to establish a clearly defined Employment Rulebook at the very outset of their business operations. Even companies with a long-standing presence in the market often recognize, at some point, the need to introduce or upgrade this document in order to fully leverage the framework and opportunities provided by labor law regulations.
However, the true value of an Employment Rulebook becomes evident only when it is carefully and professionally drafted, taking into account the specific nature of the employer’s business activity, organizational structure, and business objectives. A well-designed rulebook not only improves internal organization and reduces the risk of legal uncertainty, but also represents an investment in the long-term sustainability of the business.
Conversely, poorly drafted or unlawful provisions may lead to serious consequences. Whether it involves denying employees statutory rights – such as reimbursement of commuting expenses – or other deviations from the legally prescribed minimum standards, the employer may be exposed to labor disputes, financial liabilities, loss of time, and reputational risk. In such cases, the disputed provisions are likely to be declared null and void, further undermining the company’s legal certainty.
For these reasons, the adoption of an Employment Rulebook should not be viewed as a mere formality, but rather as a key element of risk management and the establishment of a stable and compliant employment framework. A carefully, professionally, and lawfully drafted Employment Rulebook is one of the most effective tools available to employers for the long-term regulation of employment relationships and the protection of business interests.
