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Termination of Employment in Serbia

Understand the legal requirements, procedural obligations, and financial costs of terminating employment in Serbia — before you need to use them.

Overview

This page is intended for foreign employers operating in Serbia who need to understand the legal framework for ending an employment relationship. Serbian labour law is employee-protective, and termination of employment is one of the most heavily regulated areas of the Labour Law. An employer cannot simply decide to let an employee go — every termination must be based on a legally recognised ground, follow a prescribed procedure, and comply with mandatory notice and severance requirements. Failure to follow the correct process renders the termination unlawful, regardless of whether the underlying reason for termination is legitimate.

For foreign employers accustomed to at-will employment (common in the US) or more flexible termination frameworks (common in the UK), the Serbian system requires a fundamental adjustment in approach. Terminations must be planned, documented, and executed with precision. The cost of getting it wrong is significant: the employee can challenge the dismissal before the labour court within 60 days, and if the court finds the termination unlawful, the employer may be ordered to reinstate the employee, pay back wages for the entire period of litigation (which can take 12–24 months or more), and pay damages. Prevention through proper procedure is always more cost-effective than defence through litigation.

Termination of Employment in Serbia

Grounds for Termination by the Employer

The Labour Law provides an exhaustive list of grounds on which an employer may terminate an employment contract. Termination on grounds not recognised by the Law is unlawful.

Redundancy (Tehnološki višak)

The employer may terminate employment if the employee’s position is no longer needed due to technological, economic, or organisational changes. This is the most commonly used termination ground for workforce reductions, restructuring, and operational changes. Redundancy is not a disciplinary measure — it reflects a genuine business decision that a particular position or positions are no longer required.

Redundancy triggers specific obligations that do not apply to other termination grounds: the employer must apply objective selection criteria if choosing between multiple employees for the same or similar positions, offer the employee any available suitable alternative position within the company before proceeding with termination, pay mandatory severance, and not hire another person for the same position within three months of the redundancy.

Poor Performance

The employer may terminate employment if the employee fails to achieve the expected work results or lacks the required knowledge and abilities for the position. This ground requires the employer to have previously issued a written warning to the employee identifying the specific performance deficiencies, provided the employee with a reasonable deadline to improve (the law does not prescribe a specific minimum period, but 30–60 days is common practice), and documented the employee’s continued failure to meet the expected standards after the improvement period.

The written warning and improvement opportunity are mandatory procedural prerequisites. Terminating for poor performance without a prior written warning is procedurally unlawful, even if the performance concerns are genuine and well-documented. The warning must be specific — a general statement that the employee’s work is “unsatisfactory” is insufficient. It must identify the particular results, tasks, or standards that are not being met.

Disciplinary Breach

The employer may terminate employment if the employee commits a violation of work obligations or work discipline as defined in the employment contract, the Employment Rulebook, or the Labour Law itself. Common grounds include:

  • Unjustified absence from work for three or more consecutive working days, or five working days within a 12-month period.
  • Breach of confidentiality obligations.
  • Refusal to perform assigned duties without justified reason.
  • Reporting to work under the influence of alcohol or drugs.
  • Violation of safety and health at work regulations.
  • Criminal or dishonest conduct in connection with work.

Disciplinary termination requires a specific procedure: the employer must issue a written notice to the employee describing the alleged breach, give the employee an opportunity to respond in writing (typically within 5–8 working days), consider the employee’s response, and then issue the termination decision if the breach is confirmed. The entire procedure must be documented in writing.

Other Statutory Grounds

Additional grounds for termination include: the employee’s refusal of a transfer to another position or location in circumstances permitted by the Labour Law, the employee’s failure to return to work within 15 days after the expiration of a leave of absence, the loss of professional qualifications or licences required for the position, and the employee’s refusal to accept changed working conditions offered through an annex to the employment contract (subject to the requirement that the employer must first offer the annex before proceeding with termination).

Notice Periods

The Labour Law prescribes minimum notice periods for termination:

  • Employer termination — The statutory minimum notice period for termination by the employer is 8 working days. The employment contract or Employment Rulebook may prescribe a longer notice period, up to a maximum of 30 working days.
  • Employee resignation — The statutory minimum notice period for resignation by the employee is 15 working days. The contract may prescribe a longer period, up to a maximum of 30 working days.

During the notice period, the employee continues to work and receive their salary. The employer must allow the employee at least 5 hours per week of paid leave during the notice period for the purpose of seeking alternative employment. The notice period begins on the day the written termination decision is delivered to the employee.

In cases of summary dismissal for serious disciplinary breaches (such as criminal conduct, intoxication at work, or violent behaviour), the employer may terminate without notice. However, even summary dismissal requires the employer to follow the disciplinary procedure described above — written notice of the breach, opportunity to respond, consideration of the response, and a written termination decision.

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Severance Pay

Severance pay (otpremnina) is mandatory when employment is terminated due to redundancy. It is not payable for termination on other grounds (performance, discipline, resignation). The minimum statutory severance is calculated as follows:

One-third of the employee’s average monthly salary, calculated over the preceding three months, multiplied by each full year of employment with the employer. Years of employment with related entities (companies within the same corporate group) and predecessor employers (in cases of business transfer or succession) are counted toward the total.

Severance Calculation Examples

  • Example 1 — Employee with 3 years of service, average monthly salary EUR 2,000: minimum severance = EUR 2,000 × 1/3 × 3 = EUR 2,000.
  • Example 2 — Employee with 8 years of service, average monthly salary EUR 3,000: minimum severance = EUR 3,000 × 1/3 × 8 = EUR 8,000.
  • Example 3 — Employee with 15 years of service, average monthly salary EUR 2,500: minimum severance = EUR 2,500 × 1/3 × 15 = EUR 12,500.

The statutory minimum severance amount is exempt from income tax. Amounts paid above the statutory minimum (through contractual agreement or settlement) are subject to standard tax treatment. In practice, many employers offer severance above the statutory minimum as part of a mutual termination agreement, either to incentivise the employee to accept the termination without litigation or to resolve the separation quickly and amicably.

Three-Month Rehiring Restriction

After terminating an employee due to redundancy, the employer may not hire another person for the same position within three months. If the employer needs to fill the position within this period, the redundant employee must be offered the position first. Violation of this restriction renders the original termination potentially unlawful and exposes the employer to a claim for reinstatement.

Protected Categories

Serbian law provides enhanced protection against termination for certain categories of employees. Employers must be particularly cautious when considering termination of:

  • Pregnant employees and parents on leave — Pregnant employees, employees on maternity leave, and employees on parental leave. Termination during pregnancy or leave is prohibited except in cases of summary dismissal for serious disciplinary breaches, and even then is subject to heightened scrutiny.
  • Trade union representatives — Employees elected as union representatives are protected from termination for the duration of their mandate and for a specified period thereafter, unless the termination is for cause unrelated to their union activities.
  • Employees with disabilities — Employees with disabilities benefit from additional procedural protections and may be entitled to priority in alternative placement in redundancy situations.
  • Employees nearing retirement — Employees approaching retirement age (within five years of qualifying for old-age pension) may have enhanced protections under certain collective agreements.
  • Employees on sick leave — Employees on sick leave cannot be terminated for reasons related to their absence during the sick leave period, though termination on other grounds (redundancy, discipline) may still be possible subject to strict procedural requirements.

Termination of employees in protected categories carries elevated litigation risk. Any procedural error or perception of discriminatory motive can result in the court finding the termination unlawful and ordering reinstatement with full back pay. Foreign employers should seek specific legal advice before initiating termination proceedings for any employee in a protected category.

Employee’s Right to Challenge

An employee whose employment has been terminated may challenge the termination before the competent labour court within 60 days of receiving the written termination decision. The challenge can be based on:

  • The termination ground is not legally valid (the reason does not fall within the statutory grounds for termination).
  • The employer failed to follow the mandatory procedure (no written warning for performance-based termination, no opportunity to respond for disciplinary termination, no alternative position offered for redundancy).
  • The termination is discriminatory (based on a protected characteristic such as gender, age, nationality, religion, or union membership).
  • The employer failed to comply with notice period or severance requirements.

Consequences of Unlawful Termination

If the court finds the termination unlawful, the standard remedies include reinstatement to the previous position (or an equivalent position), payment of back wages for the entire period between the termination and the court decision (which can span 12–24 months or longer depending on the duration of proceedings), reinstatement of all employment rights (pension accrual, annual leave, seniority), and potentially damages for non-material harm (in cases involving discrimination or harassment).

The financial exposure from an unlawful termination can be substantial. For an employee earning EUR 2,000 gross monthly, a court case lasting 18 months results in back pay liability of approximately EUR 36,000 in gross salary plus approximately EUR 5,454 in employer contributions — a total exposure of over EUR 41,000, before legal costs. This calculation underscores the importance of getting the termination process right the first time.

Mutual Termination Agreements

In practice, many employment terminations in Serbia are resolved through mutual termination agreements (sporazumni prestanak radnog odnosa) rather than through unilateral employer-initiated termination. A mutual termination agreement is a written contract between the employer and employee that both parties agree to end the employment relationship, typically on agreed terms regarding the termination date, any severance or compensation payable, treatment of outstanding annual leave, return of company property, confidentiality and non-compete obligations, and release of claims.

Mutual termination agreements offer several advantages for employers. They eliminate the risk of court challenge (because the employee has agreed to the termination), provide certainty on costs (the agreed severance is the final cost), and allow for a clean separation without the adversarial dynamics of a unilateral termination. For employees, they often result in a higher severance payment than the statutory minimum and avoid the uncertainty of litigation.

The key legal requirement is that the mutual termination agreement must be genuinely voluntary. An agreement obtained through coercion, deception, or undue pressure is voidable. The employee should be given adequate time to consider the terms and, ideally, encouraged to seek independent legal advice before signing. Injac Attorneys drafts mutual termination agreements that balance the employer’s interests (certainty, cost control, claim release) with the legal requirements for enforceability.

Collective Redundancy

When an employer plans to terminate 20 or more employees within a 90-day period due to redundancy, the collective redundancy procedure applies. This procedure imposes additional obligations beyond those for individual redundancy:

  • The employer must notify the National Employment Service at least 30 days before the planned terminations.
  • The employer must consult with the trade union (if one exists) or with employee representatives regarding the reasons for redundancy, the number and categories of affected employees, the selection criteria, and measures to mitigate the impact (retraining, redeployment, outplacement).
  • The employer must adopt a redundancy program (program rešavanja viška zaposlenih) that sets out the criteria for selecting employees, the timeline, and any support measures.
  • The employer must consider alternative positions for affected employees before proceeding with termination.

The collective redundancy process is more time-consuming and procedurally complex than individual termination. It requires careful planning and documentation to ensure compliance with all statutory requirements. For foreign companies undertaking restructuring that involves significant headcount reduction, early engagement with legal counsel is essential.

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Termination During Probation

Employment contracts may include a probationary period of up to six months, during which either party may terminate the employment with a minimum notice period of five working days. The employer must provide written notice stating the reasons for termination. The Labour Law does not require a formal performance improvement procedure during probation, and the Supreme Court’s recent judgments (2024–2025) have generally aligned with this position.

However, best practice for employers is to document any performance concerns in writing during the probation period, even though formal procedures are not required. Written documentation strengthens the employer’s position if the employee challenges the probationary termination and demonstrates that the decision was based on objective assessment rather than arbitrary or discriminatory grounds.

If the employer does not terminate the employment before the probationary period expires, the employment continues automatically on the terms specified in the contract. There is no separate confirmation step required — the absence of a termination decision constitutes confirmation.

Resignation by the Employee

An employee may resign at any time by submitting a written resignation to the employer. The statutory minimum notice period for resignation is 15 working days, though the employment contract may prescribe a longer period up to a maximum of 30 working days. The employer cannot refuse to accept the resignation — it takes effect upon expiry of the notice period regardless of the employer’s position.

For foreign employers, the most common challenge with employee resignations is managing the transition: ensuring handover of responsibilities, return of company property and confidential information, and compliance with any post-employment non-compete or confidentiality obligations. These matters should be addressed in the employment contract (or a separate separation agreement) rather than at the point of resignation.

For contract provisions including non-compete and confidentiality, see: Employment Contracts in Serbia.

Practical Checklist for Employers

Before initiating any termination, employers should verify:

  • Is the reason for termination one of the grounds recognised by the Labour Law? If not, termination is unlawful regardless of the circumstances.
  • Has the correct procedure been followed for the applicable ground? Written warning for performance, disciplinary procedure for misconduct, selection criteria and alternative positions for redundancy.
  • Is the employee in a protected category? Pregnancy, union representation, disability, sick leave, approaching retirement.
  • Has the notice period been correctly calculated and documented?
  • Has severance been calculated (for redundancy) and budgeted?
  • Is a mutual termination agreement a more appropriate and cost-effective alternative to unilateral termination?
  • Has legal advice been obtained before issuing any written notices or decisions?

Consulting a Serbian employment lawyer before initiating the termination process — not after problems arise — is the single most effective risk mitigation measure available to foreign employers.

Key Takeaways

  • No at-will termination — Serbian employment can only be terminated on grounds prescribed by the Labour Law. At-will termination does not exist.
  • Procedure is everything — Procedure matters as much as the reason. Failure to follow the correct process makes the termination unlawful even if the grounds are valid.
  • Severance = 1/3 salary × years — Minimum statutory severance for redundancy is one-third of average monthly salary per year of service. Not payable for performance or disciplinary termination.
  • 60-day challenge window — Employees can challenge termination in court within 60 days. Unlawful termination can result in reinstatement plus 12–24 months of back pay.
  • Mutual agreements are safer — Mutual termination agreements eliminate litigation risk and are the preferred approach in most situations.
  • Extra care for protected employees — Protected categories (pregnancy, union, disability, sick leave) require heightened caution and specific legal advice.
  • Legal advice before action — Always consult a lawyer before initiating termination. Prevention costs a fraction of defence.

8–30 Days

Notice period.

1/3 × Years

Minimum severance.

60 Days

To challenge in court.

3 Month Ban

Rehiring restriction.

Need legal support? Get in touch — our team is here to guide you every step of the way. When the law gets complicated, we make things clear — and get things done.

Email:

inquiry@injac.rs

Tel:

+381 11 2458 945

Address:

Makenzijeva 17,

11000 Belgrade - Serbia

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Email:

inquiry@injac.rs

Tel:

+381 11 2458 945

Address:

Makenzijeva 17,

11000 Belgrade - Serbia

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