Legislation Update

Significant Novelties and Legal Solutions of the new Labor Law in Montenegro

The new of (the “Law”) was published in the Official Gazette of Montenegro no. 74/2019 on December 30, 2019, and entered into force on January 7, 2020, whereas the Labor Law (“Official Gazette of Montenegro”, nos. 49/08, 59/11, 66/12, 31/2014 and 4/18) ceased to apply.

Significant novelties prescribed by the new Law are the following:

Obligations of the employer

Pursuant to the provisions of the new Law, the employer is now obliged to have an act on internal organization and systematization of workplaces in case employer has more than 10 employees, with the obligation of the employer to adopt the said act within 6 months as of the day the new Law entered into force.

Applying and advertising of vacant positions

The Law also prescribes that the employer needs to report the vacant positions to the Employment Bureau regarding any open position, which authority is obliged, at the request of the employer to make the public announcement of the vacant position.

Content of the employment contract

One of the novelties of the Law also refers to the mandatory content of the employment contract, whereas the following elements are prescribed as mandatory:

  • the length of paid leave and annual leave to which the employee is entitled or, if this cannot be stated, the manner of determining paid leave and annual leave,
  • the length of the notice period in the event of termination of the employment agreement,
  • the terms of the collective agreements applicable to the employer.

Probationary period

In addition to the provisions transposed from the General Collective Bargaining Agreement, the new Law contains provisions governing the subject matter. Specifically, it is provided that each contracting party may terminate the employment agreement before the expiry of the probationary period. The previous Law provided for this possibility but with a mandatory written explanation. The new Law also stipulates a novelty relating to the notice period of at least 5 days in the event of termination of the employment agreement prior to the expiration of the probationary period (previous Law did not contain such deadline).

Fixed-term employment agreements

In accordance with the legal solution of the new Law, an employer cannot conclude one or more employment agreements if their duration exceeds 36 months (extended from 24 months) with the same employee. An important novelty of the Law is that the period of 36 months does not include the duration of:

  • internships,
  • the period for which the employment agreement was extended due to temporary inability to work,
  • grounds of pregnancy,
  • maternity or parental leave, or
  • in case of adoption or foster care leave.

Also, the said restrictions regarding the conclusion of a fixed-term employment agreement do not apply to a director’s employment agreement.

Transformation of the fixed-term employment agreement

The new Law envisaged a novelty as to which under necessary time period for the transformation of the fixed-term employment agreement appertains the time period during which the employee was engaged with the employer under the employee transfer agreement with the Agency for the temporary assignment of the employees (the Agency). Therefore, in case to the employer is:

  • assign an employee who has already been engaged by the same employer under the assignment agreement for a period of 24 months, or
  • assign an employee who has been employed by the same employer for a period of 24 months, there is an obligation to transform the employment agreement of such employee (except in cases which allows the employer to conclude the employment agreement for more than 36 months, which cases are identical as in the previous Law).

Annex to the employment agreement

The law also introduces a novelty related to the offer for amending the employment agreement, prescribing an obligation of the employee, or employer, to submit the draft of the annex to the employment agreement alongside with the offer to the offered party. It is also stipulated that the offered party is obliged to declare upon the offer and submit the signed draft of the annex to the employment agreement (in case of offer acceptance) within a period which may not be less than 8 working days from the date of delivering the offer.

Emergency assignment

An emergency assignment is a novelty over the previous Labor Law. If it is necessary for the employer to perform a particular job without delay, the employee may be temporarily assigned to other appropriate jobs on the basis of a written order of the employer, without offering an annex to the employment agreement. This assignment can last for a maximum of 30 days and for a period of 12 months, in which case the employee retains the salary determined for work position from which he is deployed if such amount is more favorable to the employee.

Agency

The law also prescribes cases in which an agreement on the transfer of employees between the Agency and the employer cannot be concluded. Such cases are as follows:

  • assigning an employee to perform jobs for which the employer terminated employment agreements in the previous 6-month period due to redundancy,
  • the assignment of an employee who has already been engaged by the employer under the assignment agreement for a period of 24 months,
  • assignment of an employee who has been employed by the employer for a period of 24 months,
  • performing work which, according to the regulations on occupational health and safety, is a job with special working conditions, and the assigned employees do not meet these special conditions.

Unlike the previous Law which provided only that assigned employee was entitled to compensation in accordance with the employment agreement, the assigned employee is now entitled to the compensation as if he is in an employment relationship with the employer. Also, other rights and obligations of an employee assigned to the employer cannot be less favorable than the rights and obligations of other employees with the employer.

Overtime work

The provisions governing overtime work contain significant modifications, now stipulating that overtime may only last as long as it is necessary to remedy the reasons for which overtime work was introduced, with an average working time not exceeding 48 hours per week and within a period of 4 months. In this case, the maximum duration of weekly working time may not exceed 50 hours.

Annual leave

Provisions regulating holidays introduce important novelties with reference to the right to annual leave. This right cannot be replaced by monetary compensation, except in the case of termination of employment. Also, depending on the needs of the work process, the employer, on the basis of the annual leave plan, which needs to be adopted by 30 April of the current year at the latest, decides on the time of the annual leave, in consultation with the employee.

The provisions relating to the use of annual leave in parts are now amended. In that line, annual leave can be used in one or two parts, but exceptionally, at the request of the employee, annual leave may be used in several parts, if the work process with the employer allows such possibility. Also, in case the employee did not use or terminate the use of annual leave due to temporary inability to work under the health insurance regulations, absence from work due to child care and special child care, such employee has the right to use or continue to use annual leave once the employee returns to work. In that manner, the employee can use remaining annual leave in accordance with the agreement reached with the employer, depending on the needs of the work process, and no later than 15 months after the end of the year in which he acquired the right to annual leave.

Furthermore, if the employee did not use or terminated the annual leave due to the use of the right to maternity or parental leave, adoption and foster leave, the employer is in such case obliged to enable an employee to exercise this right no later than 15 months from the date of employee’s return to work.

Also, the employee now has the right to request, through the labor inspector, to be granted with the right to use the annual leave. The employer is in this case obliged to secure the exercise of this right within 30 days from the day when the decision of the labor inspector was issued.

Absence from work due to national and religious holidays

An employer who organizes work on national and religious holidays, in accordance with the new Law, is obliged to make a written decision and inform employees and labor inspection, within 3 days before the start of work.

Absence from work for health reasons

When the employee is absent from work for health reasons new Law prescribed additional documents, which need to be delivered to the employee – medical doctor’s certificate. Such a certificate needs to be delivered to the employer within 3 days from the day of the temporary inability of the employee, in person or through another person (previously the employee had only an obligation to notify the employer). In this case, the Doctor of Medicine is obliged to issue a certificate on the day of opening the temporary inability to work.

Additionally, if the employer doubts the reason for absence from work due to health reasons, the employer may request the competent authority to review the employee’s temporary inability.

Salary payment

An important amendment to the law relates to the manner of salary payment and imposes an obligation on the employer to pay the salary to the employee’s bank account, within the deadlines set by the collective agreement and the employment agreement, at least once a month. The salary calculation now has the power of an executive and not a credible document.

Free day for prenatal examination

Recognizing the necessity to protect pregnant employees the legislator introduced a free day for prenatal examination. A pregnant employee is now entitled to one day off from work during the month to perform prenatal examination. For the purpose of exercising such right, a pregnant employee is obliged to inform the employer in writing on the use of such right 3 days before the scheduled time for prenatal examination and to provide to the employer (if requested) proof of the performed examination. During the absence, a pregnant employee is entitled to salary compensation as if she were at work.

Protection against employment termination

One of the most important new provisions which have been adopted stipulates the protection of certain employees against employment termination. Pursuant to the new law solution, the employer may not terminate the employment agreement of the:

  • pregnant employee,
  • employee on maternity leave, and
  • employee on parental leave.

 

Until now, the employer could not terminate the employment agreement only with reference to the woman on maternity leave. Likewise, an employer cannot declare a woman on pregnancy maintenance as redundant.

Right to maternity leave

The right to maternity leave has been significantly changed, so now the employed woman needs to use a mandatory maternity leave of 98 days, of which 28 days before the expected birth and 70 days from the birth of the child. Exceptionally, maternity leave of 70 days from the birth of a child may be used by both parents at the same time if two or more children are born.

Employee protection

In accordance with the new Law, an employee who considers that his employment right has been violated, before initiating proceedings before a competent court is obliged to file a motion for amicable settlement of the dispute before the Agency for Peaceful Settlement of Labour Disputes or before the Center for Alternative Dispute Resolution. In this case, the employer is obliged to accept the procedure for the amicable settlement of the labour dispute. If the labour dispute is not resolved before the aforementioned authorities, the employee may bring the dispute before the competent court.

On the other hand, an employee whose employment has been terminated, has a right, but is not obliged to initiate proceedings before the said authorities for amicable settlement.

Statute of limitation for the employment claims

Significant novelty relates to the statute of limitations of the monetary claims with reference to work, which are now considered as obsolete within 4 years as of the date the obligation incurred. Nevertheless, claims relating to social contributions do not become obsolete. In addition, monetary claims arising from work incurred from 23 August 2008 (the day of the entry into force of the previously valid Labor Law) until the new Law enters into force, become obsolete within 4 years as of the date the new Law entered into force.

Employee responsibility

The Law now recognizes the division of violations for work responsibilities and, accordingly, prescribes different measures for different severities of violations, unlike the earlier Law which did not recognize such division. In that line, violations of work obligations can be minor and severe, and can be caused by the act or omission of an employee. The legislature now recognizes both warning and conditional termination of employment as a measure, as well as fines of a different range from the previous Law.

Compensation to the employer/employee

When it comes to the material liability or compensation to the employer and compensation to the employee, the legislator determines that the existence of the damage, its amount, the circumstances under which it was caused, and way of it compensation needs to be determined by a special commission formed by the employer.

Consensual termination of employment

In the part related to consensual termination of employment it is stipulated that the agreement also determines the date of termination of employment. An important novelty is that such an agreement has legal effect from the date of certification by a notary public, court or local competent authority, which mandatory verification previous law did not prescribe.

Employment termination by an employee

Such submission on termination must also be certified by a notary, court or local competent authority, whereas the employee is obliged to submit the notice of employment termination to the employer at least 30 days before the day declared as the date of termination of employment, unless the employee and employer otherwise agree.

Also, an important novelty of the new Law prescribes that in case the employee fails to comply with the notice period, the employer is entitled to compensation, which is determined proportionally to the length of the non-compliance period according to the employee’s salary in the month preceding the employee’s employment termination.

Collective layoff

The collective layoff procedure is being conducted in case of the planned layoff of at least 20 employees within 90 days. Contrary to the previous Law, which prescribed only the obligation to notify the employees, their representatives and other authorities, the new Law prescribes the obligation to initiate consultations with the labour union of the employees (or their representatives) and to notify the Employment Bureau about the consultations. Also, the employer cannot employ another person in the position deemed redundant for a period of 6 months. The employer is obliged to consider all proposals aimed at preventing the redundancy procedure or to mitigate its consequences, as well as to provide a written explanation on each submitted proposal.

Dismissal by the employer

The new law stipulates that an employer may terminate an employee’s employment agreement without conducting a disciplinary procedure if there is a justified reason for such actions. Prescribed reasons are quite similar to those from the previous law, with some of them being more precisely determined and taken over from the General Collective Bargaining Agreement. The reason added by the new Law is the disclosure of business secrets established by the act of the employer.

Furthermore, if the annex to the employment agreement considers a reduction of the salary in certain cases, the employee is entitled to a severance payment, which may not be less than 3 average monthly wages without social contributions in Montenegro. An employee is also entitled to severance pay in the event of a refusal to conclude the annex to the employment agreement (in the case of reassignment to another place of employment and changes related to salary).

Delivery

The Labor Law also prescribes as one of the significant novelties the method of delivery, whereby alerts, notices, invitations for hearings and decisions are now being delivered to the employee personally, at the employer’s premises, or to the employee’s place of residence or residence. If the employer has not been able to provide the employee with the documents in the aforementioned manner, he is obliged to make a written note about it. In this case, the aforementioned acts shall be published on the employer’s notice board and shall be deemed as delivered 8 days after their publication.

Protection of employee’s rights in the event of dismissal

Against a decision on dismissal by the employer, an employee can now initiate proceedings within 15 days of the day the decision is delivered to him also before the Center for Alternative Dispute Resolution (an earlier law provided for protection only before the Agency for Peaceful Settlement of Labour Disputes only). Also, during the court trial on termination of the employment agreement, the competent court may, at the request of the employee, if it considers that the employment agreement is illegally terminated, decide to temporarily return the employee to work until the court dispute is finally resolved. However, in this case, if the epilogue of the court dispute determines that the dismissal was lawful, the employer is entitled to reimbursement of the costs arising from the interim measure from the authority that imposed the measure.

Collective agreement with the employer

Article of the Law relating to collective agreements stipulates that there is an obligation for the employer to submit to the Ministry of Labor collective agreements with the employer.

Miscellaneous

One of the important changes relates to the manner and conditions of transformation of the employment agreement, so for fixed-term employment agreements and agreements on the transfer of employees which are concluded after the new Law entered into force, the time period employee spent before the entry into force of the new Law with the employer on the basis of a fixed-term employment agreement, as well as the time period for which the employee was temporarily assigned to the employer through the Agency, appertains under time period of 36 months required for transformation of the employment agreement.

The relevant provisions of the General Collective Bargaining Agreement have ceased to be valid since they have been transposed/amended by the new Law and relates to:

  • probationary period,
  • length of the internship,
  • annex to the employment agreement,
  • salary,
  • disciplinary procedure,
  • termination of employment agreements, and
  • Union.

Finally, it is envisaged that the provisions of branch and collective agreements with the employer must be harmonized with the Law within one year from the day the Law enters into force.

The Law contains several novelties aimed to substantially improve the position of employees. The main reason for the adoption of the Law was the harmonization of Labour legislation with the EU acquis, acts ratified by Montenegro as well as the recommendations of the International Labour Organization.

 

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