Hiring Employees in Serbia: Contracts, Payroll, and Compliance for Foreign and Serbian-Owned Companies

This guide explains how hiring works in Serbia—whether you run a Serbian LLC (DOO) or a branch/representative office of a foreign company. You’ll learn the essentials of employment contracts, working time and premiums, payroll and contributions, leave entitlements, worker classification, and common compliance pitfalls that trip up newcomers. The goal: help you hire confidently, stay compliant, and build a healthy, scalable operation in Serbia.

Contract types: indefinite, fixed-term, and probation

Working time, overtime, and night work premiums

Annual leave, sick leave, public holidays

Payroll, income tax, and social contributions (employer + employee)

Recordkeeping, HR inspections, and on-time registrations

Contractor vs. employee classification tests

Bringing foreign workers: the single residence & work permit

A practical compliance checklist and next steps

Indefinite Term as the Default

In Serbia, an employment relationship defaults to an indefinite term unless a different arrangement is clearly stated in writing. If your offer or contract is silent on duration, the law treats it as indefinite. This matters for notice periods, termination, and long-term planning.

Fixed-Term Contracts and the 24-Month Cap

Fixed-term contracts are generally capped at 24 months. If a fixed term expires and the worker continues to perform work beyond a short grace window (e.g., no timely renewal), the relationship can convert to an indefinite term. Use fixed terms for genuine temporary needs (project-based work, seasonal spikes), and plan renewals carefully.

Probation (Trial Period)

A probation period may be agreed in writing, up to a maximum of six (6) months. It can be shorter, but it cannot be extended by chaining new probationary contracts for the same role. Attempting to “reset” probation by swapping fixed-term agreements or similar tactics is both non-compliant and risky in a dispute.

Weekly Hours and Daily Caps

Standard full-time work is 40 hours per week. Overtime is limited by statute (e.g., capped at eight hours per week) and subject to daily limits. You must track hours, comply with break rules, and maintain records that withstand HR inspections.

Overtime Premiums

Overtime pay carries a statutory premium above base pay. Ensure your payroll policy explicitly defines:

• When overtime begins and how it’s approved

• The calculation method (base hourly rate + premium)

• How time is recorded, verified, and paid

Night Work Premiums

Work performed during night hours also attracts a premium. If an employee performs overtime during night hours, both premiums apply (stacked correctly according to law and internal policy). If you serve international clients and require late or overnight shifts, budget these premiums into your staffing model.

Paid Annual Leave

Employees in Serbia are entitled to paid annual leave (minimum statutory entitlement). Many employers observe a cultural cadence of summer and winter splits (e.g., 10 + 10 days), but your policy must be codified in writing and aligned with statutory minimums. Accrual, carryover, and scheduling rules should be clear in your internal rulebook.

Public Holidays and Sick Leave

Public holidays and sick leave are regulated. Document who approves, how to document absences, and how pay is calculated during sick leave. Consistent, written procedures prevent disputes and protect you during inspections.

Flat Wage Tax & Contribution Burden

Serbia is known for a flat personal income tax on salaries and a defined set of social contributions (payable by both employee and employer). Exact rates and ceilings are subject to periodic legislative updates. Your payroll setup should:

• Apply the current income tax rate to gross salaries

• Calculate employee contributions (e.g., pension/PIO, health, unemployment)

• Calculate employer contributions on top of gross payroll

• Respect minimum and maximum bases where applicable

• Produce compliant payslips and ledgers for inspections

Practical note: Many newcomers try to copy payroll “formulas” from their home country. Don’t. Set your payroll engine to the Serbian rules, confirm current rates and bases, and update your system each year when the government publishes changes.

Serbia sets and periodically updates minimum pay bases and contribution ceilings. Your HR and payroll policy should state that the company always applies the current legal thresholds and references the official publications your bookkeeper monitors.

You must be able to evidence compliance at any time. That means more than “doing the right thing”—it means documenting that you did the right thing.

Written Contracts

• Always issue written employment agreements (bilingual is best if one party isn’t fluent in Serbian).

• State the type (indefinite vs. fixed-term), probation, working hours, pay, premiums, leave, notice, and policies referenced (internal rulebook, privacy policy, etc.).

Working Time Records

• Maintain accurate timekeeping (start/end times, breaks, overtime approvals).

• Ensure managers know the approval chain for overtime and night shifts.

Payroll Records

• Keep gross-to-net calculations, tax/contribution breakdowns, payslips, and payment confirmations.

• Archive records per statutory retention periods.

Internal Rulebooks (HR Policies)

• Create an internal labor rulebook that operationalizes the Labor Law inside your company.

• Cover overtime procedures, leave approvals, remote/hybrid policies, conduct, disciplinary steps, and data protection basics.

Misclassification is one of the most common and costly errors. Indicators that a “contractor” is really an employee include:

• You control their schedule and location of work.

• You supply core tools/equipment and direct daily tasks.

• They work exclusively for you and are integrated into your org like staff.

If several of these apply, you likely need an employment contract (not a services agreement), full payroll treatment, and all the associated contributions. If you truly engage contractors, contract for deliverables, avoid day-to-day control, and ensure they work for multiple clients. Build a simple classification checklist and apply it consistently before onboarding.

Serbia expects timely registrations for employees, payroll, and mandatory filings. Late or incorrect registrations invite fines and increase risk during inspections. Have a clear internal SLA:

• Before start date: file all requisite registrations

• Monthly: run payroll, pay taxes/contributions, archive proof

• Annually: align your rulebooks and payroll engine with the latest legal changes

If you cannot source local talent, Serbia uses a single electronic procedure that combines residence and work authorization for foreign employees. As an employer, you can coordinate the hiring plan and ask a local counsel/agency to manage:

• Position description and labor market compliance

• Electronic filing of the unified permit

• Validity up to three years, with pathways for family reunification where applicable

Note: Relocation consulting firms typically do not place jobseekers; they assist corporate clients who already have roles to fill and need help with permits, onboarding, and compliance.

Contract Type: Indefinite or fixed term (with valid reason) stated in writing

Probation: Up to 6 months; no reset via serial fixed terms

Working Time: 40 hours/week standard; daily/weekly caps respected

Premiums: Overtime and night work premiums defined and applied

Leave: Annual leave policy at or above statutory minimum; holiday/sick leave rules documented

Payroll: Correct tax and contributions; payslips and ledgers archived

Registrations: All filings on time; changes promptly reported

Rulebooks: Internal HR policies adopted, communicated, and enforced

Classification: Contractor vs. employee test documented before onboarding

Inspections: Records organized and accessible; staff trained on procedures

Copy-pasting foreign policies into a Serbian context

Letting fixed-term contracts run over 24 months without cause

Resetting probation through sequential contracts

Under-documenting overtime and night work

Misclassifying contractors and skipping payroll

Missing filing deadlines for employment and payroll registrations

Bilingual contracts tailored to role, duration, and business reality

Internal HR rulebooks aligned to Serbian law and your workflows

Payroll setup and administration (premiums, leave, contributions)

Foreign worker permits via the unified electronic procedure (corporate clients)

Ongoing compliance support to prepare for audits/inspections

Hiring in Serbia is straightforward when you respect the contract structure, timekeeping and premiums, leave rules, and payroll mechanics that the law requires. The most efficient employers write everything down, file on time, and build repeatable processes. Avoid shortcuts with probation, fixed terms, or “contractor” labels—those are the places companies most often get burned. With a clean framework and the right local support, you can scale your team in Serbia with confidence.