Serbia is a small country in Central Europe, landlocked by Hungary, Romania, Bulgaria, North Macedonia, Croatia, Bosnia and Herzegovina, Kosovo, and Montenegro. It’s home to 6.530 million people, making it the 107th-largest country in the world by population. However, Serbia has the world’s 76th-largest economy measured by GDP. This GDP has more than doubled in the past decade, already reaching $92.55 billion, with 3.5% growth expected in 2025. The country is known for producing fruits, berries, and grains, as well as machinery and automotive parts. Its top exports are insulated wire, electricity, copper ore, electric motors, and rubber tires, products it mostly trades with members of the European Union, though Serbia is not yet a member itself. 

Serbia has a labor force of over 3.229 million workers, many of whom are well-educated and highly skilled. Around 19% of these workers are employed in the agricultural sector, with another 28% in the industrial sector. The other 53% are employed in services, especially ICT, trade, transport, and tourism. These workers can be highly attractive to employers because of their skills and relatively low wages.

In this guide, we’ll explain how hiring workers through a Serbia EOR can be beneficial for both them and the bottom line of your organization.

How to Hire Employees in Serbia

Despite a relatively mature population, Serbia has a somewhat low labor participation rate of just 56.2%. Except for a small pandemic-era increase, the country’s unemployment rate has been declining since peaking in 2013. However, this rate is still high at 8.5%. The average salary for Serbian workers is around 150,000 RSD (Serbian dinars) per month (around 1,500 USD), showing that wages in the country are relatively low. Together, these factors mean that the market is loose and benefits employers, who can attract top talent easily by offering compensation packages only slightly above market rates. 

However, it can still be very challenging to connect with and hire Serbian workers because of the unfamiliar labor landscape, language, and culture in the country. Foreign employers, therefore, often use professional recruiters to help them find the talent they require. Once they have their employees selected, they can hire them through one of the following methods:

Entity Incorporation

If you expect to hire a significant number of workers and operate directly in the Serbian market for an extended period, it makes good business sense to incorporate a local entity. However, this may not be the best choice if you won’t work in the local market for a long time.

Investors typically choose to register limited liability companies (LLCs or društvo sa ograničenom odgovornošću), public limited companies (PLCs or akcionarsko društvo), or branch offices (podružnica). All three of these types of entities can be wholly foreign-owned in Serbia. The World Bank ranks Serbia 73rd out of over 180 countries for ease of starting a new business, as it can take just seven steps and seven days to do so. It’s also one of the easiest places in the world to procure construction permits and secure trade across international borders.

Once you’ve registered an entity, you can legally hire employees, but you’ll need to learn to handle HR for them, or hire an in-house HR team. You’ll likely also need to expend resources to work with tax and legal experts to ensure that you stay compliant with Serbia’s labor and tax laws.

Working with an EOR

If you want to hire real employees and have direct control over how and when they work, but you don’t want to register an entity, a Serbia Employer of Record, or EOR, is likely your best choice. When you partner with an EOR, it hires your workers for you and becomes their legal employer in Serbia. This also makes it responsible for legal compliance. EORs handle your employees’ HR concerns, so you won’t need to learn all the regulatory, cultural, and linguistic tools needed to manage Serbian workers. Instead, you can focus on how they can produce value for your business.

Hiring Independent Contractors

Instead of putting time and resources into the incorporation of a local entity, you can choose to work with independent contractors or freelancers in Serbia. You can hire them from abroad and manage their projects and payments remotely, without ever needing to visit Serbia. This can allow you to access special skills and knowledge that you may not be able to find in regular employees. While they may ask for higher fees than you might be able to pay in employee wages, you can often save money by only hiring them for limited times and specific projects. You also save on administration, as contractors take care of their own tax and social security payments. 

There are, however, also negative aspects to consider when hiring contractors. One is that they may not always be available when you need them, as they work for multiple clients (even your competitors). Another is that their work may not be consistent. You’re unable to control their methods of production, and if you do, you can risk being penalized for misclassifying workers. The same is true for their working hours. Instead, you have to depend on them to produce quality work on schedule, which doesn’t always happen.

Next, we’ll take an in-depth look at how EORs function in Serbia and how they benefit both employers and employees.

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Using an Employer of Record in Somalia

If you don’t own an entity in Serbia, working with an EOR is one of your best options for hiring workers and managing their HR needs in full compliance with local laws. In addition to contracting your employees directly, an EOR partner will also manage the following core activities for you:

  • Onboarding: You may have found employees on your own, or in conjunction with a recruitment agency, or even an EOR that also does recruitment. Regardless, your EOR will help you bring them on board quickly. Most EORs can onboard new workers in just a few hours to a few days. Their role includes collecting their personal and banking information, adding them to your payroll, and registering them with the appropriate authorities. At the same time, you’ll need to onboard them to your operation, often through orientations, job-specific training, and giving them access to the tools and systems they need to do their jobs.
  • Payroll: Payroll management is a core function of EOR services. Your EOR partner will first add each new employee to your payroll on its platform, then set up a specific calculation for each of them, based on their salary, benefits, and tax obligations. As their worksite employer, you’ll need to supply the EOR with your employees’ time and attendance data for each pay period. Once it receives this, it can run payroll, calculating how much to deduct and how much to pay in net salary to each employee. 
  • Taxes: Workers in Serbia are required to pay income tax on their employment earnings, and their employers must calculate and withhold these taxes accordingly. As part of payroll processing, your EOR will handle these actions for you. It will also remit the funds collected to the Tax Administration (Poreska Uprava), Serbia’s tax authority.
  • Benefits administration: Employees in Serbia are entitled to many mandatory benefits, including annual paid leave, maternity leave, public holidays, and social security benefits. Your EOR will manage the administration of these benefits for you by monitoring each employee’s entitlements and use of them. It will also deduct contributions to social programs as part of payroll and calculate our employer contributions as well. Many EORs also help you offer supplementary benefits to your team.
  • Contracts: Your workers’ contracts must be fully compliant with all Serbian labor laws. Your EOR takes on this responsibility as the party that actually enters into agreements with your Serbian employees. Most EORs also manage employee signatures and store contracts for future reference. 
  • Terminations: Because of the EOR’s status as the legal employer of your employees in Serbia, it is also the party that can officially terminate them. If you want to dismiss workers, you’ll need to inform the EOR. It will look at your reasons for the dismissals, decide if any notice periods or severance pay are required, and provide these if they are. 
  • Compliance: Your EOR partner will work with its legal experts to maintain constant compliance with all of the country’s laws. Should any changes be made to legislation, it will adapt your contracts and conditions accordingly to ensure workers always receive the benefits and working conditions they’re entitled to.
  • Recruitment: Not all EORs offer recruitment-related services. The ones that do may employ professional recruiters who will actively search out top talent to fill your open positions. Other EORs simply provide their clients with recruitment tools through their online platforms. These tools can include access to talent pools, connections to job sites in Serbia, and applicant tracking systems (ATSs).

Employment and Labor Laws in Serbia

Serbia’s legal system includes influences from German and French civil law, and is currently being adapted to EU standards as well. Important legal instruments that govern employment include the Constitution of the Republic of Serbia and the Labor Act.

While your EOR will handle compliance with these regulations, it’s still important that you’re aware of the main employment laws and your obligations to your employees.

Employment Contract Requirements

Employment agreements in Serbia must be written in Serbian and cannot be made verbally. According to the Labor Act, they must include details of the following:

  • Identification of the parties
  • Employee’s level of education and training
  • Work description
  • Location of the workplace
  • Type of contract
  • Start date
  • Duration (if fixed-term)
  • Hours of work
  • Wages
  • Evaluations and pay raises
  • Payment
  • References to collective agreements (if applicable)

Fixed-term contracts in Serbia are legal. They normally last for only 24 months, including renewals, but can be extended to 36 months for new employers. Workers who are less than five years away from retirement age can also be given fixed-term contracts for that remaining duration.

Standard Working Hours

Employees normally work five days a week and eight hours a day in Serbia, for a regular workweek of 40 hours. They must receive at least one unpaid 30-minute break after working six hours. They must also be given at least one full day of rest per week.

Overtime

Serbian workers can be required to work overtime in cases of unexpected work or emergencies. They are, however, limited to performing only four hours of overtime work a day and eight hours a week. These overtime hours must be paid at the rate of 126% or more of their normal wages.

Probation Periods

Probation periods are legal and are widely used in Serbia to assess new employees. They can last as long as six months and cannot be extended or rewed. During probation, either party can choose to terminate their employment agreement at any time, but must provide the other party with at least five days’ notice. No justifications or compensation are required for these terminations.

Payroll and Employment Taxes in Serbia

Fiscal Year

The normal fiscal year in Serbia follows the calendar year. While most companies follow this year, they can obtain special permission from the Ministry of Finance to use a different fiscal year, which they must then stick to for at least five years.

Payroll Cycles

Employers must pay their employees monthly in Serbia. They have until the last business day of the following month to pay their workers for each pay period.

Minimum Wage

Serbia’s minimum wage has been updated recently and takes effect from 1 October 2025. This new minimum rate of 58,630 (RSD) per month, or around 580 USD, will protect all full-time employees across all industries.  

Employer Tax Contributions

Serbian employers must support their employees by paying contributions to social schemes. These payments are made to the Tax Authority and then distributed to different programs. Employers pay a total of 15.15% of each employee’s salary.

  • Old Age, Disability, and Survivors Benefits: 10% of the employee’s earnings
  • Sickness and Maternity Benefits: 5.15% of the employee’s earnings

Employee Payroll Tax Contributions

Employees must also contribute to the same programs, as well as to unemployment insurance. Their contributions total 19.90% of their salaries.

  • Old Age, Disability, and Survivors Benefits: 14% of their earnings
  • Sickness and Maternity Benefits: 5.15% of their earnings
  • Unemployment Benefits: 0.75% of their earnings

Individual Income Tax Contributions

Employees have to pay personal income tax in Serbia, and it’s the responsibility of their employers to calculate what they owe, withhold it, and remit the funds to the Tax Administration.

Employees are assessed a flat 10% tax on their employment income, with those under the age of 40 only paying taxes on income greater than three times the average Serbian wage. However, individuals pay an additional supplementary tax of 10% on income greater than three times this average wage, and 15% on income six times greater.

Bonus Payments

A 13th-month salary is neither mandatory nor traditional in Serbia, though employers may choose to offer this bonus at their discretion. 

Employees are, however, entitled to raises in their pay each year. They must receive an increase of 0.4% of their basic pay annually.

Time Off and Leave in Serbia

Mandatory Leave Entitlement

Once employees have worked continuously for 30 days, they become entitled to annual paid leave. Their basic entitlement is for 20 working days a year, paid at their average salary for the previous 12 months. Annual leave can be carried over until the end of June the following year.

Public Holidays

Workers must be paid at least 210% of their normal wages if they are required to work on public holidays. Serbia typically celebrates 11-13 public holidays a year, including:

  • New Year’s (January 1 & 2) 
  • Orthodox Christmas Day (January 7) 
  • Statehood Day (February 15, 16, & 17)
  • Orthodox Easter (2-4 days, date varies) 
  • Labor Day (May 1 & 2)
  • Armistice Day (November 11) 

Sick Leave

The duration of sick leave is not limited in Serbia. The first 30 days of sick leave are paid by the employer at 65% of the worker’s normal salary. After that, workers receive sickness benefits through social security and are paid 100% of their normal wages. Sick employees have to notify their employers within the first three days of their illnesses, and must present medical certificates to their employers if sick for over three days.

Parental Leave

Pregnant women in Serbia are entitled to 365 days of maternity leave, which must start between 45 and 28 days before their expected due dates. This leave is fully paid through social security maternity benefits. Fathers are entitled to seven days of paternity leave upon the birth of a child, and this leave is also fully paid through social security.

Bereavement Leave

Employees are entitled to five days of paid leave upon the death of an immediate family member. 

Termination and Severance in Serbia

Termination

During probation, workers can be dismissed without cause if their productivity or the quality of their work is not up to the standard expected by the employer. After probation, employers can summarily dismiss employees for gross misconduct. 

Notice Periods

During probation periods, employees and employers must give each other five days’ notice if they wish to terminate their agreements. After probation, employees who are not dismissed for gross misconduct must generally be given notice. Workers receive one month’s notice if they’ve paid contributions to social security for less than ten years, two months if they’ve paid for 10- 20 years, and three months’ notice if they’ve paid for over 20 years. Employees must provide their employers with 15 days’ notice. 

Severance Pay

Severance pay may be required for employees who are terminated for unjust cause. Severance is normally paid in the amount of one-third of a month’s salary for each year of service the employee gave to the employer.

Why Hire in Serbia with an Employer of Record?

Serbia offers investors a growth economy and several other reasons to hire local workers, especially through an EOR. These reasons include:

  • Reduced risk: When you hire with an EOR, it becomes the legal employer of your workers in Serbia. It uses its knowledge of local laws to stay compliant at all times, thus protecting you from penalties. 
  • Low costs: Relative to employees in neighboring EU countries and developed countries around the world, Serbian wages are more affordable, and this can help you save on labor costs. The efficiency and professionalism of EORs can also help you save money compared to opening and managing your own HR department. 
  • Language skills: While the official language of the country is Serbian, workers also speak regional languages like Croatian and Hungarian. They also have important skills in international languages like Russian and German. English is also widely spoken in urban areas, and this can make communication with your employees smooth and easy.
  • Extensive opportunities: Serbia’s economy has been growing steadily for a decade, and this growth is predicted to continue. ICT, tourism, construction, and creative industries are all booming in this market, offering investors a multitude of opportunities for new business ventures.

How to Choose an Employer of Record in Serbia

An increasing number of EROs are providing services in Serbia, thanks to the country’s economic growth and affordable and skilled labor. To help you choose from the dozens of options available, we suggest focusing on these criteria:

Price

Set your budget, then look at online prices and request quotes from service providers that interest you. Any EORs who can’t offer the services you need within your budget can be eliminated from your consideration.

Services

All EORs will provide core services like payroll, benefits administration, and leave management. If you need more support, you may need to look for providers that offer extra services like supplementary benefits administration or recruitment.

Reputation

If an EOR has excellent online ratings and reviews, it lets you know that you can rely on the provider to see to your employees’ needs well, keep you compliant, and deal effectively with the Serbian authorities. 

Expand into Serbia Easily with Remote People’s Employer of Record in Serbia

Remote People’s Employer of Record (EOR) services in Serbia give your employees enterprise-quality HR care at an affordable price. To connect with a professional EOR partner in Serbia, contact Remote People today.