An employment contract represents the most important legal framework establishing the employment relationship between an employer and an employee. It clearly defines the mutual rights, obligations, and responsibilities of both parties, ensuring legal certainty and a foundation for the exercise and protection of labor rights. As such, the employment contract plays a crucial role in employment law, as it allows work to be performed within a legally regulated framework, while respecting the principles of equality, fairness, and legality.
For employers, an employment contract is a fundamental HR management tool that allows for lawful governance of the workforce. It clearly defines the scope of work and conditions under which work is to be performed. This minimizes the risk of misunderstandings and potential disputes while encouraging professional accountability and operational discipline.
Simultaneously, the employment contract serves to protect employees, who are generally considered the weaker party in the employment relationship. In this regard, Article 33 of the Labor Law mandates the employer to conclude the contract in written form. The same article stipulates the following mandatory elements of an employment contract:
- Employer’s name and registered seat
- Employee’s full name, place of residence or temporary residence
- Type and level of education or qualifications required for the position
- Job title and job description
- Place of work
- Type of employment (fixed-term or indefinite-term)
- Duration of a fixed-term employment contract and the legal basis for such employment
- Commencement date of employment
- Working hours (full-time, part-time, or reduced hours)
- Amount of base salary on the date of signing the employment contract
- Criteria for determining base salary, performance bonuses, salary compensation, and other employee benefits
- Salary payment deadlines and deadlines for other compensations
- Duration of daily and weekly working hours
Some of these elements may be defined by the employer’s general act (e.g., work regulations or internal policies), in which case they are not required to be explicitly included in the contract itself.
COMMENCEMENT OF EMPLOYMENT
Before commencing work, the employer is legally obliged to inform the employee about the working conditions, prepare the employment contract, and, after signing, register the employee with the Central Registry of Compulsory Social Insurance (CROSO). Failure to do so, or commencing work without a signed contract, constitutes undeclared (illegal) work, also known as “working off the books“.
A critical aspect of onboarding includes informing employees about their rights and obligations under the Law on Personal Data Protection, the Law on Prevention of Harassment at Work, and the Whistleblower Protection Act (some of Employment Laws in Serbia). Mistakes or omissions during the hiring process or in drafting the employment contract and related documentation can lead to lengthy court proceedings and labor inspections, often resulting in substantial financial penalties for employers and their responsible personnel. Our law firm provides tailored and comprehensive legal support — from the preparation of employment contracts and internal labor documentation to representation in litigation and misdemeanor proceedings.
To illustrate the importance of compliance, employers who fail to conclude an employment contract in accordance with the Labor Law (concise explanation of the Labor Law) may face fines ranging from RSD 800,000 to RSD 2,000,000.
In practice, it is not uncommon for an employee to start working without an employment contract, which may lead to a presumption of permanent employment (indefinite-term contract) upon commencement of work.
TYPE OF EMPLOYMENT – FIXED-TERM VS. INDEFINITE-TERM CONTRACTS
One of the most significant clauses in an employment contract is the designation of whether the contract is for a fixed-term or an indefinite-term (“permanent”) position. As a general rule, employment should be established for an indefinite period. A fixed-term employment contract is an exception permitted only under specific, objectively justified circumstances, such as the duration of a specific project or replacement of a temporarily absent employee.
In accordance with the Labor Law, a fixed-term employment relationship may not exceed 24 months, unless otherwise provided by law under specific conditions.
An employment contract is not a mere formality, but the cornerstone of a lawful and secure employment relationship. Its proper drafting and legal understanding are of paramount importance to both employers and employees, as it ensures mutual clarity and protects legal interests. In modern workplaces, where flexibility and legal compliance are equally valued, the employment contract remains one of the key instruments of labor law protection.
Therefore, we strongly recommend seeking professional guidance from an employment lawyer when drafting or reviewing employment contracts to ensure full compliance with applicable labor laws and to avoid potential legal or financial risks. A well-structured employment contract not only protects legal rights but also builds a foundation of trust and stability, essential for any successful business relationship.
Our law office offers full legal support at every stage of the employment process — from legal consultation, employment documentation, and onboarding compliance, to court representation. To review your employment practices or prevent potential liabilities, feel free to contact us for personalized legal advice.
FREQUENTLY ASKED QUESTIONS (FAQ)
Can the employer inform the employee of their salary after starting work?
• No. Salary must be disclosed as one of the mandatory elements prior to the commencement of work, and it must be included in the employment contract.
How many copies of the employment contract are required?
• The employment contract must be signed in at least three copies: one for the employee and two for the employer.
Can an employee work without a signed employment contract during the probationary period?
• No. A probationary period must be explicitly defined in the employment contract, and the employee must be registered in the Central Registry of Compulsory Social Insurance (CROSO) before the probation begins.
