Employer of Record in Serbia

Expanding into new markets like Serbia presents exciting opportunities for businesses looking to access a skilled talent pool. Navigating the local employment landscape, however, requires a clear understanding of Serbian labor laws, payroll regulations, and compliance requirements. For companies considering hiring in Serbia in 2025, there are typically a few primary avenues to engage local talent, each with its own complexities and benefits.

When looking to hire employees in Serbia, you generally have three main options:

• Establishing a local legal entity: This involves setting up a subsidiary or branch office in Serbia, which can be a time-consuming and resource-intensive process, requiring significant investment in legal, accounting, and administrative functions.
• Utilizing an Employer of Record (EOR): Partnering with an EOR like Rivermate allows you to hire employees in Serbia without needing to establish your own local entity, transferring all employment liabilities and responsibilities to the EOR.
• Hiring independent contractors: While offering flexibility, this option carries risks if not structured carefully, as misclassification can lead to significant legal and financial penalties under Serbian law.

How an EOR Works in Serbia

An Employer of Record (EOR) acts as the legal employer for your workforce in Serbia, handling all local employment complexities on your behalf while you retain full control over day-to-day management and business operations. Specifically, an EOR in Serbia takes care of:

• Payroll processing and tax withholdings: Ensuring timely and compliant salary payments, social security contributions, and income tax deductions according to Serbian regulations.
• Benefits administration: Managing mandatory and supplementary employee benefits such as health insurance, pension contributions, and other social charges.
• Compliance with Serbian labor laws: Drafting compliant employment contracts, managing leave entitlements, working hours, and termination processes.
• Onboarding and offboarding: Handling the administrative tasks associated with bringing new hires on board and managing their departure, including all necessary registrations and de-registrations.
• HR support and local expertise: Providing ongoing guidance on local employment practices and changes to labor legislation.

Benefits for Companies Looking to Hire in Serbia Without Establishing a Local Entity

Engaging an EOR offers several distinct advantages for businesses seeking to tap into the Serbian market without the burden of setting up a local entity:

• Rapid market entry: Hire employees quickly and efficiently, significantly reducing the time and cost associated with establishing a legal presence.
• Reduced administrative burden: Offload complex HR, payroll, and compliance tasks, allowing your internal teams to focus on core business objectives.
• Assured legal compliance: Mitigate risks of non-compliance with Serbian labor laws, tax regulations, and social security obligations.
• Cost-effective solution: Avoid the significant upfront and ongoing costs of entity registration, legal fees, and maintaining a local administrative team.
• Flexibility and scalability: Easily scale your team up or down based on business needs, without the rigidities of a permanent local entity.

Rivermate's transparent pricing model eliminates complexity with a single, competitive monthly fee per employee. Unlike traditional PEO providers, our pricing in Serbia includes comprehensive HR support, benefits administration, compliance management, and access to our proprietary dashboard for real-time workforce analytics. No hidden costs, no setup fees—just straightforward pricing that scales with your business needs while ensuring full legal compliance in Serbia.

In Serbia, employers must contribute to social security for employees, covering pension (11.75%), health (5.15%), and unemployment (0.75%) insurance, totaling 17.65% of gross salaries in 2025. They are also responsible for withholding income tax, which follows a progressive system: 0% up to RSD 60,000, 10% from RSD 60,001 to RSD 1,000,000, and 15% above RSD 1,000,000.

Employers must file monthly payroll returns (Form PPP-PD) and pay contributions and taxes by the end of the following month. Annual filings include individual income tax (by May 15) and corporate tax (within 180 days post-fiscal year). Employees benefit from deductions like personal allowances, dependents, and specific expenses, reducing taxable income.

Foreign entities and workers should consider Serbia's tax treaties, residency rules (over 183 days residency), and source-based taxation, with foreign income generally taxed only if sourced in Serbia. Proper compliance and professional advice are recommended for navigating these regulations.

Serbia's salary landscape varies significantly across industries and roles, with annual gross salaries ranging from €9,000 for customer support agents to €50,000 for senior IT project managers. Key salary ranges include:

The statutory minimum wage for 2025 is approximately 47,754 RSD gross (€405), with net pay around 38,203 RSD (€324). Employers must adhere to this minimum for all employees, including part-time and temporary workers. Compensation packages often include bonuses such as a customary 13th month salary, performance, holiday, and allowances for meals, transportation, and health insurance.

Payroll is processed monthly via bank transfer, with employers responsible for deducting income tax and social contributions. Employees are entitled to payslips detailing gross pay, deductions, and net salary. Trends indicate rising wages, especially in IT, increased emphasis on benefits, and the potential influence of remote work on salary standardization across regions. Staying competitive requires regular benchmarking and adaptation to these evolving market conditions.

Employees in Serbia are entitled to a minimum of 20 working days of annual vacation leave, which can be extended by collective agreements or contracts. Leave is accrued proportionally during employment, typically taken in one or two segments with at least two weeks in one segment, and unused days can usually be carried over. Employees receive compensation during leave, equivalent to their average salary over the past 12 months.

Serbia observes several public holidays in 2025, including New Year's Day, Orthodox Christmas, Statehood Day, Labour Day, Victory Day, Orthodox Easter, and Armistice Day, with paid time off generally granted on these days. Sick leave entitlements depend on the illness's severity, with the first 30 days paid at at least 65% of the salary, and longer periods covered by the state. Parental leave includes 365 days of maternity leave for the first two children, 2 years for subsequent children, 7 days of paid paternity leave, and adoption leave with similar durations, all typically compensated by the state.

Serbia mandates comprehensive employee benefits, including paid leave (minimum 20 days), sick leave (first 30 days paid by employer), maternity and parental leave, minimum wage, social security contributions, severance pay, and work injury insurance. Employers must contribute to social security funds covering pension, health, and unemployment insurance, with compliance crucial to avoid penalties.

Many employers enhance these statutory benefits with voluntary offerings such as private health and life insurance, pension plans, training, transportation, meal allowances, flexible work arrangements, company cars, and performance bonuses. Benefit packages vary by sector and company size, with large firms typically providing more comprehensive benefits, especially in IT and corporate sectors.

Employers must budget for mandatory social security contributions and optional benefits, ensuring legal compliance through proper record-keeping and timely payments. Private health insurance and other voluntary benefits add to overall costs but are key for attracting talent, especially in competitive sectors like IT.

Employment agreements in Serbia are essential for defining employer-employee rights and obligations, complying with labor laws. Properly drafted contracts help prevent disputes and ensure smooth operations, covering clauses such as probation, confidentiality, non-compete, and termination.

Serbian law recognizes various contract types tailored to different employment needs, including:

Key legal requirements include mandatory clauses, probation periods, and procedures for termination. Employers should ensure contracts are comprehensive to align with Serbian labor regulations and avoid legal issues.

Serbia has experienced a rise in remote work adoption, supported by its legal framework under the Labour Law, which mandates clear employment contracts, health and safety standards, and equal treatment for remote employees. Key flexible arrangements include full-time remote, hybrid, flexible hours, compressed workweeks, and job sharing. Employers should develop comprehensive policies covering eligibility, performance, communication, and technology, along with training and regular feedback mechanisms to ensure effective implementation.

Data protection aligned with GDPR is critical, requiring secure access controls, data encryption, employee training, and incident response plans. Equipment and expense policies should specify provision or reimbursement of devices, internet, and ergonomic setups. A robust technological infrastructure is essential, emphasizing reliable internet, collaboration tools, cloud solutions, technical support, and security software.

In Serbia, employee termination must follow specific legal procedures to ensure compliance and avoid disputes. Key aspects include adhering to minimum notice periods based on service length, calculating severance pay correctly, and following procedural steps such as providing written notice, offering an opportunity to respond, and documenting the process. Employers should also register terminations with relevant authorities.

Notice periods vary by tenure:

Severance pay is mandatory for redundancy or business reasons, calculated as one-third of the employee's average monthly salary multiplied by years of service, with exceptions for termination for cause. Employees are protected against wrongful dismissal, with rights to challenge, reinstatement, and compensation, especially for vulnerable groups like pregnant women or those on sick leave. Employers should seek legal guidance to ensure lawful termination and mitigate risks.

Serbia has experienced a notable increase in freelancing and independent contracting, driven by global trends towards flexible work and the expanding digital economy. Both local and international companies often engage Serbian talent through independent contractor agreements, especially for specialized skills and project-based work. However, businesses must navigate Serbia's legal and administrative frameworks, ensuring proper worker classification and compliance with tax and social contribution obligations to avoid penalties.

Correct classification between employees and independent contractors is crucial under Serbian law to prevent misclassification risks, such as back payments and fines. The "nine tests" criteria help determine if a contractor is effectively an employee, with factors like control over working hours, exclusivity, and client-provided tools suggesting an employment relationship. Contracts should clearly define the independent nature of the relationship, scope of work, compensation, and intellectual property rights to maintain compliance.

Independent contractors in Serbia typically register as entrepreneurs, choosing from tax regimes like lump-sum taxation or actual income taxation. They are responsible for their tax and social contributions, with rates varying by regime. Key sectors utilizing independent contractors include IT, creative industries, consulting, and education, with the IT sector being particularly prominent due to the rise of remote work.

Understanding these elements is essential for businesses to effectively and compliantly engage with Serbia's independent workforce.

Foreign nationals seeking employment in Serbia generally need both a visa and a work permit. As of March 1, 2025, visa applications can be submitted online by applicants or employers, streamlining the process. The main visa types are:

• Visa C (Short-Stay): Up to 90 days within 180 days, suitable for business trips, conferences, tourism, and family visits. It does not permit residence or employment.
• Visa D (Long-Stay): Valid for stays over 90 days (up to 180 days), necessary for obtaining work permits. It includes categories for employment, education, and family reunification.

The most relevant for workers is the Visa D for Employment, which requires proof of employment or a work permit. The process is designed to facilitate foreign workers' entry and stay, with applications for long-term visas now possible entirely online, either by the individual or the employer.