When it comes to expanding a business in Serbia, understanding the costs associated with hiring employees is crucial. From mandatory expenses like minimum wage and social contributions to optional costs such as bonuses and training, each element plays a role in the overall cost of hiring.
In this article, we will explore the various factors that contribute to the cost of hiring an employee in Serbia, providing insights and considerations for employers.
Required costs of hiring
Minimum Wage
The minimum wage in Serbia is a crucial factor to consider when hiring employees. In 2023, the minimum wage in Serbia was set at RSD 230 (USD 2.15) per hour and an average of 504.83 USD per month. However, it's important to note that the minimum wage can be adjusted periodically by the Serbian government based on economic conditions and negotiations with social partners. It is important to stay up to date.
Employers must ensure that they comply with minimum wage requirements to provide fair compensation to their employees. On average, the cost of living in Serbia is 42.9% lower than in Canada and 48.5% lower than in the United States. A typical meal costs 800 RSD (~7.29 USD). This results in lower salaries as well.
The average gross salary in Serbia is 117,669 RSD (~1,072 USD), while the average net salary amounted to 85,485 RSD (~779 USD). Pay varies depending on experience and skills. Generally, the highest-paid industries in Serbia are medicine, law, banking, marketing, academia, and airlines averaging from 189,000 RSD (~1723.35 USD) to 354,000 RSD (~3227.86 USD).
Overtime Pay
In Serbia, standard working hours are typically eight hours per day and up to 40 hours per week. Although overtime payment is not mandatory, any hours worked outside of the standard work hours are considered overtime.
The following scenarios are classified as overtime and entail specific payment rates:
- Work conducted between 22:00 and 06:00 - 126% of the hourly rate
- Work performed outside of normal working hours - 126% of the hourly rate
- Work carried out on a public holiday - 110% of the hourly rate
Paid Time Off and Other Leave
In Serbia, employees are entitled to 20 days of paid annual leave and 30 paid sick days. Additionally, 12 public holidays are observed in Serbia.
Maternity Leave
Mothers in Serbia are entitled to generous maternity leave benefits. For the birth of their first or second child, mothers receive 365 days of fully paid leave (100% of their regular salary). Expecting mothers of twins are granted one year of leave, while those expecting triplets or more are entitled to two years of leave. During the first 30 days of absence, the employer covers the maternity leave salary, after which the government's Republic Fund of Health Insurance fully pays for the leave.
Paternity Leave
Fathers also have paternity leave. They can take five days of paid leave, funded by the employer. In exceptional circumstances, such as when the mother is unemployed, abandons the child, or passes away, the father can assume the remainder of the maternity leave.
Adoption and Foster Leave
Employees who adopt or foster a child under five years old are entitled to eight months of paid leave. If the child is adopted or fostered before turning three months old, the leave period extends until the child reaches 11 months. Foster parents receive 8 months of paid leave until the child. During this leave, the employee is compensated at their normal salary.
Care Leave
In the case of a legal guardian, adoptive parent, or birth parent caring for a child with special needs, they are allowed to work half of the regular working hours until the child reaches the age of five. This arrangement commences after the conclusion of maternity leave and childcare leave.
Bereavement Leave
Employees have the right to a paid bereavement leave of five working days when an immediate family member passes away, with compensation at their regular salary.
Unpaid Leave
Unpaid leave is available for specific situations, including military service, temporary assignments with other employers, appointments to trade unions, state agencies, political organizations, or public offices, as well as prison sentences lasting up to three months.
Social Contributions and Taxes
In addition to the employee's gross salary, the employer is responsible for contributing to various mandatory social security insurance. These include pension and disability, health, and unemployment insurance.
The portion paid by the employer is considered an operating cost, while the employee's share is deducted from their gross salary. Employers must contribute 10% to pension and disability insurance and 5.15% to health insurance.
Personal income tax is applied separately to different types of income at flat rates of 10%, 15%, or 20%. Employers are responsible for calculating, paying, and withholding salary taxes on behalf of employees.
Severance Pay
In Serbia, severance pay is only mandatory in the case of layoffs. The amount is at least a third of the employee's monthly salary for each year of service.
Regarding probation periods, they can vary depending on the specific terms outlined in the employment contract. However, it is important to note that the probation period cannot exceed six months in Serbia.
Optional Costs of Hiring
Bonuses and Allowances
Bonuses and allowances play a significant role in the overall compensation package for employees in Serbia. These additional forms of remuneration can incentivize performance, recognize achievements, and provide financial support for specific circumstances. Some common types of bonuses include performance bonuses, travel allowances, and meal allowances.
Training and Development
Investing in training and development is crucial for organizations in Serbia to enhance employee skills, improve performance, and drive overall growth. The specific budget allocation for this varies depending on the size and industry of the company.
Employee Benefits
Employers may offer various health and wellness benefits, such as contributions to health insurance premiums in addition to their national insurance, gym memberships, or wellness programs. These benefits promote employee well-being and contribute to a positive work environment. For example, a typical gym membership in Serbia costs approximately 2,951 RSD (~26.90 USD) per month.
Borderless Can Help
Hiring employees in Serbia involves both required and optional costs that employers need to consider. From minimum wage and social contributions to bonuses and training, each element adds to the overall expense of hiring. By understanding and budgeting for these costs, employers can navigate the hiring process in Serbia more effectively while complying with local labor laws.
Partnering with an EOR like Borderless streamlines budgeting and hiring. We provide transparent cost estimates and ensure compliant hiring in Serbia. Book a demo today!
Disclaimer
Borderless does not provide legal services or legal advice to anyone. This includes customers, contractors, employees, partners, and the general public. We are not lawyers or paralegals. Please read our full disclaimer here.
