Expand in Serbia: A Complete Guide

Serbia operates under a distinct employment framework, with several requirements that differ from those commonly seen elsewhere in Europe.

The minimum wage is set as an hourly rate instead of a monthly figure, termination isn't at-will, and total payroll contributions run close to 35% of gross salary once you combine the employer and employee side. These requirements are manageable but often surprise employers accustomed to Western European payroll practices.

This guide walks through Serbia’s employment and payroll requirements, so you know what to expect before your first hire — and find out if an Employer of Record is the right solution for hiring.

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Overview

Serbian employment is governed by the Labor Law, along with separate rules covering social contributions, income tax, and family leave. Serbia is an EU candidate but not a member state, so EU employment directives don't apply here directly.

A few things worth knowing upfront:

•      Contracts must be in writing and signed before the employee's first day.

•      The minimum wage is hourly, not monthly, so the pay floor changes with the number of working hours in a given month.

•      Dismissals require specific legal grounds. There's no at-will termination.

•      Personal income tax is a flat 10%, and combined statutory contributions add up to roughly 35% of gross salary.

Most foreign companies hire in Serbia one of three ways: setting up a local entity, engaging independent contractors, or working with an Employer of Record like Knit that already has a Serbian entity in place. Each has different cost and speed trade-offs, covered in Section 10.

Employment Contracts

Contracts must be in writing and signed before the employee's start date. If someone starts working without a signed contract, Serbian law still treats the employment relationship as having begun on their first day, so the employer loses the protection of agreed terms without avoiding any of the obligations.

A compliant contract should cover the job title and duties, workplace, start date (and end date, if fixed-term), working hours, base salary and payment schedule, and whether the role is full-time or part-time.

Contract types:

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Probation is optional. When used, it can't exceed six months, and either party can end the contract during probation with at least five working days' notice.

Contracts are also typically issued in Serbian. You can add an English translation, but the Serbian version usually governs if there's a dispute.

Working Hours and Overtime

The standard workweek is 40 hours, usually spread across five 8-hour days. Employers can set shorter full-time schedules, but not below 36 hours a week.

Employees working 6 or more hours a day get a 30-minute break (15 minutes for 4 to 6 hours). Between shifts, employees need at least 12 hours of rest, plus 24 consecutive hours off each week.

Overtime is capped at 4 hours a day and 8 hours a week, and total hours worked, including overtime, can't exceed 12 in a single day. It can only be required for specific reasons, like unexpected workload spikes or urgent, time-sensitive tasks.

Pay premiums (minimums, on top of base salary, and additive when more than one applies):

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Hence, an employee working overtime at night is owed at least 52% on top of their base pay for those hours.

Minimum Wage

Serbia sets its minimum wage as a net hourly rate, which is unusual for the region. A tripartite council made up of government, employer, and union representatives proposes the rate each year. If they can't agree, the government sets it independently.

As of January 1, 2026, the minimum wage is RSD 371 net per hour, up from RSD 337. Because working hours vary by month, so does the monthly minimum.

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The minimum wage can't drop below the prior year's rate, and pay is calculated using the rate in effect on the payment date, not the date the work was done. Since this figure is revised annually (and has shifted mid-year before), confirm the current rate before finalizing offers or budgets.

Payroll and Taxes

Serbia applies a flat 10% personal income tax on employment income. It's calculated on gross salary after subtracting employee social contributions and a monthly non-taxable allowance, which is RSD 34,221 for 2026.

High earners face an additional annual surcharge on top of the flat rate: 10% on the portion of annual income between 3 and 6 times Serbia's average annual salary, and 25% above that. This gets reconciled through an annual return rather than withheld monthly.

Employers withhold tax and contributions each payroll cycle and remit them monthly, generally by the 15th of the following month. Payslips should clearly show gross salary, contribution deductions, taxable base, tax withheld, and net pay.

Social Security Contributions

Contributions fund pension and disability insurance, health insurance, and unemployment insurance. Both employer and employee contribute, based on gross salary.

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For 2026, contributions apply to a monthly floor of RSD 51,297 and a ceiling of RSD 732,820. If gross salary falls below the floor, contributions are still owed on the floor amount, which matters for part-time or reduced-hours roles. Earnings above the ceiling aren't taxed further.

As a rule of thumb, budget for gross salary plus about 15.15% in employer contributions. For most professional roles, total employer cost lands around 115% of gross salary before any additional benefits.

Leave Entitlements

Employees get a minimum of 20 working days of paid annual leave, on top of public holidays, prorated for part-time roles. They can generally start using it after one month of continuous employment, and unused days typically carry over to June 30 of the following year.

Serbia observes 12 non-working public holidays a year, including New Year's Day, Orthodox Christmas, Statehood Day, Labor Day, Orthodox Easter, and Armistice Day. Since Serbia follows the Orthodox calendar for religious holidays, Christmas and Easter fall on different dates than in Western Europe, which is easy to overlook when scheduling across regions.

Sick leave has no waiting period. For the first 30 days of non-work-related illness, the employer pays at least 65% of average salary. After that, the state health insurance fund takes over, generally at 100%. Work-related illness or injury is paid at 100% from day one, at no cost to the employer. As of January 1, 2026, sick leave is reported through a mandatory electronic system rather than paper certificates.

Maternity and childcare leave together total 365 days for a first or second child, extending to two years for a third or later child. It must start no later than 28 days before the due date, and pay is 100% of average salary over the prior 18 months, funded by the state rather than the employer, though the employer typically handles the paperwork.

Fathers get a minimum of 5 working days of paid paternity leave, and can take over the remaining childcare leave in certain situations, such as if the mother is unable to care for the child.

Employee Benefits

Mandatory benefits include enrollment in the state pension, health, and unemployment system, paid annual leave and public holidays, sick pay, maternity and paternity leave, a length-of-service pay increase of at least 0.4% per year, reimbursement for commuting costs, and a minimum meal allowance.

Beyond that, common additions employers use to stay competitive include private health insurance, transport or meal allowances above the legal minimum, performance bonuses, flexible or remote arrangements, and learning budgets. There's no statutory 13th-month salary in Serbia. Any extra payment is a matter of company policy.

Equity compensation isn't common practice here either, since Serbia has no standard framework for employee share ownership. Companies offering equity to Serbian hires usually structure it as phantom equity or profit-sharing instead, which is worth reviewing with local counsel.

Termination Requirements

Serbia doesn't recognize at-will termination. Employers can only end a contract for specific reasons: redundancy, failure to meet job requirements, breach of work duties or discipline, refusal to sign a lawful contract amendment, expiry of a fixed-term contract, retirement, or mutual agreement.

Notice periods:

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Severance is required for redundancy terminations. The minimum is one-third of average monthly salary (based on the last three months) per completed year of service. For example, 10 years of service at an average monthly salary of RSD 120,000 works out to at least RSD 400,000 in severance. Retirement carries a separate, smaller severance equal to two average national salaries.

Larger layoffs (roughly 10% or more of a workforce of 50+ employees within a year) trigger a formal collective redundancy process, including a redundancy plan and consultation with labor authorities.

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Hiring Through an Employer of Record (EOR)

Companies hiring in Serbia usually pick from three routes.

1.    Setting up a local entity gives full control but takes time and ongoing compliance work.

2.    Engaging contractors is faster but carries real misclassification risk if the relationship looks like employment.

3.    Using an Employer of Record means a third party with an existing Serbian entity becomes the legal employer for payroll and compliance, while you continue directing the person's day-to-day work.

An EOR tends to make sense when you want to hire quickly, test the market before committing to an entity, or skip building in-house expertise in Serbian contribution rates and termination rules. Which route fits best really depends on headcount, timeline, and how much local HR and legal capacity you already have.

If you're weighing your options for hiring in Serbia, we're happy to help you. Reach out to Knit to discuss your hiring needs, or explore our country guides.

Frequently Asked Questions

What is the minimum wage in Serbia?

RSD 371 net per hour as of January 1, 2026. Since it's set hourly rather than monthly, the pay floor shifts depending on working hours in a given month.

Is probation mandatory in Serbia?

No. It's optional, and capped at six months when used.

Can I terminate an employee without cause in Serbia?

No. Every dismissal needs documented legal grounds, and some require a statutory notice period.

How much does it cost to employ someone in Serbia beyond salary?

Employer contributions run 15.15% of gross salary. Total employer cost typically lands around 115% of gross for a mid-range professional role.

Is there a 13th-month salary requirement?

No. Any extra payment is up to company policy or a collective agreement.

How long is maternity leave, and who pays for it?

365 days for a first or second child (two years for a third or later child), paid at 100% of average salary by the state, not the employer.

Do I need a local entity to hire in Serbia?

No. You can hire through an EOR, engage contractors, or set up your own entity, depending on scale and timeline.

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This guide reflects Serbian employment law and statutory rates as of 2026 and is intended as general information, not legal, tax, or financial advice. Rates and thresholds change periodically, so confirm current figures with a licensed local professional before finalizing payroll or contract terms.

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