Changes on the Employment Horizon

First Staff Leasing Law in Serbia comes into force

After years of legal vacuum, the new Law (Law) finally introduces the legal framework for the so-called “staff leasing”. The Law tackles conditions under which staff leasing is possible, rights and obligations of agency workers, their equal status of agency workers and comparable employees, conditions for licencing of agencies as well as the relation between agency and user employer as well as their liability towards the agency workers.

The Law is applicable as of 1 March 2020.

Equal treatment of agency worker and comparable employee

The Law introduces the concept of a comparable employee – a person employed at the user employer that performs or would perform the same jobs as an agency worker, considering the requested type and level of professional qualification, special knowledge, skills, competences, the complexity of jobs, responsibility and other requirements for the particular job. Agency workers should have equal working conditions as comparable employees.

However, with no comparable employees, the situation is not clear. The law requires that in these cases the agency worker receives the basic salary which cannot be lower than the basic salary paid to an employee with the same level of professional qualification. With only this criterion at hand, it remains unclear what other working conditions should be applied to the agency workers. Also, the employers will face challenges when it comes to complying with this requirement in the case when their employees have the same level of professional qualification as agency workers but work on completely different positions. The question remains how the salaries will be equalized then.

Definite and indefinite term contracts with Agency

Agencies can employ agency workers for both definite and indefinite terms.

Agency worker employed for an indefinite term with an agency is assigned to the user employer based on a referral to work. This referral is a substitute for the annex to the employment contract.

If agency workers are employed by agencies for a definite term, this term is equal to the duration of the engagement of agency workers by the user employer.

In cases of definite term assignments, referral to work or definite term employment agreement must contain legal grounds for definite term employment provided by the Labour Law.

Limitations

User employers can also engage the agency workers for definite and indefinite terms.

However, the assignment of definite term agency workers is subject to certain limitations.

  1. The first limitation that the Law provides is limitation in number of definite term employees assigned to the user employer.

If the employer has 50 or more employees, the number of agency workers engaged for a definite term cannot be higher than 10% of the total number of employees with the user employer.

On the other hand, user employers with less than 50 employees may engage:

  • one agency worker if they employ 2 to 9 employees,
  • two agency workers if they employ 10 to 19 employees,
  • three agency workers if they employ 20 to 29 employees,
  • four agency workers if they employ 30 to 39 employees, or
  • five agency workers if they employ 40 to 49 employees.
  1. The second is the duration limitations for the engagement of agency workers for a definite term. If the same agency worker has previously been engaged with the same user employer (directly or through any agency) for a total period of 24 months, such an employee cannot be assigned to that user employer anymore under the definite term agreement. It seems that the legislators wanted to cover and limit the periods of definite term engagement incurred after entering into force of the Law. However, this limitation can also be interpreted in a way that periods expired prior to entering into force of the Law can be calculated into a period of 24 months.

Moreover, if an employee remains at work with a user employer five days after the expiry of the assignment period, it will be considered that they entered into permanent employment with the user employer.

Assumption of assignment

The Law introduced the assumption of assignment that aims to cover cases in which entities that are not licensed agencies assign workers. Under the Law, employees who work for the needs of employers in the premises of the employer but have employment agreement or other engagement agreement with other entity shall be deemed as assigned employees, unless proven otherwise.

This is rather a catch-all clause that can be interpreted in a way to cover the outsourcing arrangements under this assignment assumption, which would lead to the application of this Law to outsourcing arrangements as well. The problem is that the Labour Law and the Staff Leasing Law do not make clear distinctions between the assignment of employees and outsourcing since there are no clear criteria based on which assignment and outsourcing would be distinguished with certainty.

Even if it seems that the Law was finally enacted in order to provide better working conditions for agency workers and to move them, together with agencies, from the “grey zone”, it seems that there will be a lot of challenges in the interpretation of its provisions. As usual, life is always more creative than law, so it remains to be seen how the practice will develop and cover existing gaps.

The information in this document does not constitute legal advice on any particular matter and is provided for general informational purposes only.