Employment contracts in Serbia

Employment contract for definitive or indefinitive period of time, probation work, interns and state incentives

An employment contract can be concluded for definitive or indefinitive period of time.

Usually, maximum duration of employment contract for a definitive period of time (Article 37 of the Employment Act) is 2 years.

But in some cases it could be even longer.

For example for newly established companies this kind of contract could be possible for up to 3 years period.

Exception in maximum duration is sick or maternity leave, which happens during employment period.

In this case you don’t need to worry to much because after 1st month of employee’s leave, other monthly salaries for that employee are paid by the state in whole amount. After this period of leave you can terminate the contract.

This employment contract can be canceled at any point without difficulties. We advise contract which define employment period as this:

“The Employee shall be temporary employed with the Employer, with ______ working time. For period from ___________, up to ___________ , due to increasing in the volume of work, and in case of a subsequent decrease in the volume of work, the contract can be terminated even before the deadline.”

Usually, contract for definitive period of time is concluded successiely every 3 or 6 months.

If, after the expiration of the period for which the employment contract is concluded, the employee continues to work for at least 5 working days (the employee has not received a new employment contract or has not been provided with a decision on the expiration of the employment contract), the employment relationship is considered to be based indefinitely.

When employment contract for a definitive period expires, it is necessary to make a decision on the expiration of an employment contract that informs the employee that the contract of employment has expired and that there is no longer a need for its engagement. The decision to terminate the employment contract is signed by the employer and the employee.

An employment contract for an indefinite period can not be terminated by the end of the period of employment because it is an indefinite period of time, but is interrupted for reasons set forth in Article 175 of the Law:

  1. after the expiry of the period it was concluded for;
  2. when an employee reaches the age of 65 and a minimum of 15 social insurance years, unless otherwise agreed between the employer and the employee;
  3. by an agreement between the employee and the employer;
  4. by notice of cancellation of employment contract by the employer or the employee;
  5. at the request of a parent or guardian of an employed minor under 18 years of age;
  6. in the event of death of the employed;
  7. in other cases specified by the law.

Other cases could be:

  1. Violation of the contract by the employee (in this case employer has obligation to warn employee in written notice of this violation before termination of the contract)
  2. Ending needs for the working position. In this case employer have obligation to:
    • pay to the employee unpaid earnings
    • pay the employee severance payment (Article 158 of the Law). This amount is not to much high. It is 1/3 of monthly average salary (average salary of last 3 months for that employee) mulitplied with each full year of employment with the employer where he exercises the right to severance pay. For example for working period of 3 years you would pay leaving payment of one monthly salary.
    • enable employee to use remaining days of his holiday hours, or to pay him compensation in money if he can’t use it.

Probation period

In the case of employment contract for definite and indefinite period, the probation work for performing the work for which the engaged person can be contracted (Article 36 the Law).

The employer himself determines the period of probation, and the trial can not last longer than 6 months.

This provided an opportunity for employers to cancel a contract of employment if the employee did not show appropriate work and professional capacity, or does not possess the appropriate qualifications for performing the assigned job.

In this case, the employment relationship is terminated on the day of the expiry of the probationary period specified in the employment contract.

The probationary work may be interrupted even before the test work expires both by the employer and the employee.

The mutual legal notice period is minimum 5 working days. In case of cancellation of an employment contract by the employer, a written notice of the reasons for termination of the employment contract is sent to the employee.


The employment contract can be made between the employer and the person who is for the first time employed, as an intern, for the occupation for which a person has acquired a professional qualification, if this is a condition for working on those jobs. Internship lasts for a maximum of one year, unless otherwise provided by law. The intern is entitled to earnings and all other rights from work in accordance with the Law, General act and the employment contract.

State incentives

You should know that there is posibility to refund 65% or 75% of paid taxes and social contributions for new employees (when you increasing the number of employees) wich are registered at the National Employment Service more than 6 months (3 months for first time employed persons).

What is the total cost for an employer can be checked on our page Calculators for salaries.

Author: AKTIVA sistem

Related regulations:


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