It is expected that the Law on Agency Employment (i.e. staff lease) will soon be adopted, regulating for the first time this matter in Serbia. The draft law was referred to the National Assembly for consideration in August 2019 and it is expected that once adopted it will reach full application as of 1 March 2020.

The draft of the Law on Agency Employment (the “Draft Law“) should finally regulate the matter of staff lease – a tripartite relation which was so far widely used in practice but without any legal frame, thus leaving many issues to interpretation and no protection in practice for all parties involved. We will present below some of the specific rules which will be introduced and which will need to be respected when engaging into a staff lease relation. We note that additional amendments to the text of the Draft Law are possible during the parliamentary procedure, but we do not expect major amendment to what we present below.

The Employer Agency relationship

According to the Draft Law, the Employer-Agency relationship is established by an agreement on employee transfer. When the need for hiring workers is identified, the Employer will be able to contact the Agency, which will find and employ workers of appropriate profiles and assigns them to work with the Employer; for the provided service the Employer will pay a financial compensation to the Agency. The salary of the worker and other remuneration will be paid by the Agency, but with joint and several liability of the Employer, as a mechanism of protection of the Employee.

The Draft Law also prescribes certain restrictions in order to avoid mass recruitment through Agencies. Some of the most important restrictions are the prohibition of hiring employees to replace other employees during strike (except for the purpose of securing the minimum work process), as well as the prohibition of hiring through an Agency in case of proclaimed redundancy in previous period of 3 months. The Employer may, through the Agency, hire up to a maximum of 10% out of the total number of employees who have definite time employment contract, in relation to the total number of employee at the Employer on the date of concluding or amendment the agreement of employee transfer (the Employees with indefinitely time employment contract are not included in the calculation). If the Employer has fewer than 50 employees specific restriction apply.

The Agency-Employee relationship

The Agency-Employee relationship is based on an employment contract, which can be concluded for a definite or indefinite period of time. An indefinite term employment contract allows the Employee to be referred repeatedly to various Employers, while for the period outside of engagement with an Employer, the Employee in question will be entitled to remuneration. The referral is made by an instruction which must contain all the elements of an employment contract and which replaces an annex to the employment contract. A definite term employment contract is concluded only when an Employee is engaged with one specific Employer.

The Employee-Employer relationship

Employees are guaranteed all rights under the Labor Law and equal working conditions as those employees on the same or similar position directly hired by the Employer, including the right to equal pay.

In the event of damage caused to the Employer by the Employee at work or in connection with work, the Employee is liable to the Employer for intent or gross negligence in the same manner as employees are liable under the Labor Law. On the other side, in case of an injury at work or a professional work related disease, the Employee may claim compensation directly from the Employer, with the Agency being subsidiary responsible if the Employee fails to recover the entire amount of damages from the Employer.

Authors: Miodrag Klančnik and Ana Marić