Employment of Foreigners in Serbia

Advokat za imigraciono pravo Sonja Pekic

Employment of foreigners in Serbia is increasingly becoming a better option for employers facing a shortage of qualified workforce.

This option has become even more attractive with the new Law on Foreigners, introducing changes that streamline the process of employing foreigners.

If you're interested in the obligations of employers when hiring foreigners, or if there are subsidies or other benefits for employers hiring foreigners, this article will provide answers to all your questions and many other useful information and tips on employing foreigners in Serbia.

Employment of Foreigners – legal regulation

The employment of foreigners in Serbia is regulated by the Law on Foreigners.

In February of this year (2024), a new, amended, and supplemented Law on Foreigners came into force, introducing certain benefits for immigrants in Serbia.

Specifically, the new provisions allow foreigners a longer temporary stay in the Republic of Serbia, up to 3 years.

Extending the duration of temporary stay has also introduced the benefit for foreigners to qualify for permanent residency in Serbia if they continuously reside in Serbia for a period of 3 years (instead of the previous 5).

For a detailed overview of all the innovations brought by the amendments to the Law on Foreigners, read our article on how foreigners can immigrate to Serbia.

Hiring Foreign Workers: Solution to the Labor Shortage in Serbia?

Hiring foreign workers represents a potential solution to the growing problem of labor shortages in Serbia.

According to unofficial information, Serbia currently faces a labor shortage of about 50,000 people, with suspicions that the actual number is even higher.

The issue of a shortage of skilled workers is most prominent in professions such as:

  • Construction workers
  • Various types of craftsmen
  • Programmers
  • Engineers from various fields (mechanical, electronics, electrical)
  • Pharmacists
  • Economists
  • Doctors and medical staff
  • Teachers (English, German, mathematics, physics)
  • Butchers, bakers, shop assistants
  • Drivers
  • Hospitality workers (waiters, chefs, support staff), etc.

From the above list, it is evident that there is a need for various profiles of workers, from highly educated to those with skills in crafts and service industries.

As this labor shortage problem canhave a negative impact not only on individual employers but also on the entire economy of Serbia, employing foreign workers emerges as one of the possible strategies to address this issue.

In the past two years, tens of thousands of work permits have been issued to foreigners from China, Russia, Turkey, India, Cuba, Macedonia, Ukraine, Nepal – and the list does not end here.

If hiring foreign workers seems like an appealing option to you, consult with an immigration lawyer about the process of obtaining work permits for foreigners.

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Employment of Foreigners – application steps

The application for employment of foreigners, or its submission, is the first step in the process of obtaining a work permit.

Namely, before the new Law on Foreigners came into force, the application for issuing a work permit was submitted to the National Employment Service (NES).

After the amendments, this application has been transformed into the so-called Unified License application, which combines the temporary residence permit and work permit.

This application is no longer submitted to NES; instead, the employer submits it online on behalf of the foreigner, on the eGovernment portal. When submitting, the employer attaches, among other things, evidence that the application for issuing the unified license is justified (There are various pieces of evidence, but some of them are: a proposal for a contract establishing an employment relationship, an excerpt from the rules on the organization and systematization of jobs, a statement by the employer containing special conditions for work at the job position, a public document on acquired appropriate level and type of qualification, etc.).

The fee for submitting the application for employing a foreigner is currently 21,593.00 Serbian dinars.

Employment of Foreigners: Key Information for Employers

Employment of foreigners in Serbia is carried out on the condition that they possess:

  • A visa for long-term stay based on employment
  • A unified License (a combined permit for temporary residence and work permit).

The employer can only employ a foreigner who legally resides in Serbia and meets the conditions for (temporary) employment. Also, they are free to conclude an employment contract with the foreigner similar to what they would with a domestic citizen.

It is important to know that within 90 days before submitting the application for a Unified License for employment, you must not dismiss employees following technological, economic, or organizational changes in the job positions for which you are requesting the issuance of a Unified License.

Also, you are obliged to initiate the implementation of the labor market test and send the foreign worker a proposal for one of the contracts that establish rights based on employment (e.g., an employment contract proposal).

Due to the complexity of the process of obtaining a labor market test report, it is recommended that an immigration lawyer handles this procedure.

Indefinite Employment Contracts for Foreigners

One of the common questions we receive from employers who see employing foreigners as a solution to the labor shortage problem is: "Is it possible to employ foreigners in Serbia on an indefinite basis?"

The answer is: Yes!

Establishing an indefinite employment relationship with a foreigner can be done by concluding an indefinite employment contract, just as you would with a domestic citizen. However, it is important to know that the Unified License can only be approved for a period of up to 3 years, after which you must renew it.

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Employment of Third-Country Nationals

Employment of third-country nationals and whether there are any specificities regarding this category of foreigners pose another common dilemma for employers.

However, the Law on Foreigners does not provide for third-country nationals as a separate category, and the only specificities it prescribes regarding foreign nationals are those related to EU citizens.

Subsidies for Employing Foreigners

Subsidies for employing foreigners in Serbia are mentioned primarily in the Personal Income Tax Law.

This law stipulates that a newly settled taxpayer is entitled to a 70% reduction of the base for income tax on earnings for earnings based on an indefinite employment relationship with a qualified employer.

If you are confused by the term "newly settled taxpayer," it refers to a person who has not spent much time in Serbia in the last two years before signing the employment contract, or a person who, at the time of signing the contract, is younger than 40 years old and has spent most of their time outside Serbia due to education or training.

As for the conditions for this subsidy, it is important that the newly settled taxpayer establishes an employment relationship in a job position for which there is a need for the person to have special professional education and for which there is a need that cannot be easily satisfied in the domestic labor market.

These conditions are considered met if the monthly salary of the newly settled taxpayer is higher than 344.082,00 dinars, or 229.388,00 dinars, depending on which of the above- mentioned alternative categories the newly settled taxpayer belongs to.

Essentially, the right to reduce the base is exercised by the newly settled taxpayer who, simultaneously with the establishment of the employment relationship or within a reasonable period after the establishment of the employment relationship, settles in Serbia and meets the conditions to be considered a tax resident based on the center of business and life interests in Serbia.

This right is exercised for a period of five years from the date of signing the employment contract.

This subsidy for employing foreigners is also provided for in the Law on Contributions for Compulsory Social Insurance.

Immigration attorney | Attorney for immigration law

Employing foreigners in Serbia can be a good solution for many employers struggling with a shortage of qualified workforce.

The new Foreigners Act offers excellent benefits for immigrants, allowing them longer temporary residence and facilitating the path to permanent residency in the country, while also making it easier for employers to fill positions that require special skills and education that are not easily found in the domestic labor market.

If you have any questions regarding the immigration process for workers, you can contact Pekić Law Office via email at [email protected]

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