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Views/ European Employment Law Update - Montenegro
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10/09/2015
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This article, which was authored by Jelena Danilović, was originally published in the European Employment Law Update published by Shepherd and Wedderburn LLP

A New Collective Bargaining Agreement ("GCBA") for Montenegro entered into force on 30 March 2014. The new GCBA introduced a broader scope of labour rights, so Montenegrin employers must take care to comply with these new rights and obligations. The main features of the GCBA are as follows:

  • Additional situations where employment contract annexes may be applied (e.g. annex as a means of extending a definite term employment contract for up to 24 months; annex for a transfer from part time to full time work; annex for the introduction of non-competition clauses etc.);
  • Salary calculations under the new GCBA are complex and are based on elements envisaged in the former GCBA –the initial part of a salary (meal allowance + 1/12 of annual leave allowance), coefficient value (currently 90 EUR gross, but subject to change in the coming period) and job coefficient, the minimum of which is determined in the new GCBA. Each of these elements must be taken into consideration when calculating an employee's salary;
  • Disciplinary proceedings for a breach of working duties have been regulated in more detailed. These proceedings are mandatory and an employee cannot be dismissed for breach of work obligations/work discipline without going through the required internal disciplinary proceedings;
  • New grounds for the termination of employment, in addition to grounds determined by law, have been introduced (e.g. breach of non-competition clause, misuse of medical leave, criminal offence in relation to work, etc.); and
  • Payment of 0.2% of an employee's salary to the account of a Montenegrin representative trade union, for work disability prevention and recreational leave has been introduced. This obligation does not apply to employers that are, according to the branch CBAs, obliged to pay 

Divergence between the GCBA and the Labour Law

The introduction of new grounds for termination of employment under the GCBA, which are not recognised by the Labour Law, appear to be one of the most problematic issues of the new GCBA. In addition, the GCBA eliminates the legal obligation to issue a termination warning letter in certain specific cases of termination (e.g. for breach of a non-competition clause, or in case of violent behaviour of the employee).

The Labour Law does not envisage the possibility for such alteration of provisions related to termination of employment. As a general rule of Montenegrin employment law, provisions of the GCBA should not be less favourable for employees than provisions of the Labour Law. Accordingly, it is questionable whether certain provisions of the GCBA (introduction of new grounds for termination of employment, and eliminating of the legal obligation to issue a termination warning letter) are lawful, given that they provide that employees may be dismissed in cases which are not recognised by the law, or they oppose to the procedural means provided for in the law.

Signatories to the GCBA apparently intended to make it easier for employers to dismiss employees in certain cases where a breach is obvious (such as misuse of medical leave, breach of non-compete clause etc.), and to not require disciplinary proceedings in these situations. However, these intentions have not been adequately reflected in local employment regulations; the Labour Law provisions on dismissal cannot be altered by GCBA provisions. Court interpretation on this inconsistency is currently not available so the effects of application of these disputable provisions and procedures have yet to be determined in practice.

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