Demand for Foreign Employees in Serbia: Navigating Legal Requirements and Fostering Inclusion
Serbia is actively seeking to attract a skilled workforce from abroad to support its economic development and address labour market needs. To facilitate this, the Serbian government has significantly adjusted its policies and legal framework. These changes are designed to simplify the process for foreign nationals to obtain residence and work permits and create a more welcoming environment for foreign professionals.
Is Every Foreigner Obliged to Obtain a Work Permit to Work in Serbia?
In general, any foreign employee must obtain a permit for legal residence and work in Serbia, regardless of their position. However, there is an exception for a foreigner appointed as CEO, i.e. statutory representative of a Serbian company. Such a foreigner may be exempt from the permit requirement because a CEO does not need to be employed through an employment contract but can have an agreement outlining their rights and duties as a director.
Engagement Process
The Employment of Foreigners Act regulates the employment process concerning regular employment, special cases such as assigned persons, intra-company transfers, independent professionals, individuals undergoing professional training, as well as self-employment.
The process of engaging a foreign employee involves several stages:
- Collection and submission of documentation;
- Assessment of employment conditions by the National Employment Service (NES);
- Security checks conducted by the Ministry of Internal Affairs or, in certain cases, the Security and Information Agency; and
- Final decision and issuance of the unified permit by the Ministry of Internal Affairs.
The NES assesses the fulfillment of employment conditions based on the state of the labour market and the satisfaction of the following criteria: (i) the employer has not terminated employees due to technological, economic, or organizational changes in the relevant positions within 90 days before submitting the application; (ii) the employer has initiated the labour market test as required by law; and (iii) there is a proposal for an employment contract or another agreement that implements work-related rights, in accordance with the law. The labour market test is a key step in the process, as the engagement of foreign employees depends on its result.
Labor Market Test
The primary purpose of the labour market test is to protect the local workforce by verifying that there are no unemployed Serbian citizens who meet the employer's requirements for a specific job before hiring a foreign worker. The labour market test involves interregional mediation, meaning that the entire national labour market is examined to determine if there are domestic employees available who can perform the same tasks as foreign employee.
If suitable candidates are found, they are referred to the employer for consideration. The NES provides a report on the availability of local candidates. The employer must review these candidates and provide feedback to the NES within 3 days. If the employer finds that the foreign candidate is more suitable, they must justify this decision in their response to the NES report. The NES then issues a certificate approving or rejecting the foreign worker's employment.
Unified Permit Process
Serbia has recently amended its Employment of Foreigners Act to reduce bureaucratic hurdles and expedite the approval process for residence and work permits. The changes introduced a joint procedure and unified permit under which both residence and work are authorized.
The key change is the complete digitization of the procedure. Now, requests for a unified work-residence permit are submitted through a single portal (’’e-Uprava’’), which means that the entire application, including all documents, is submitted electronically. Once the request is approved, the unified work-residence permit is issued as a biometric document.
The new procedure is designed to be less time-consuming, as the competent authority now decides on the application for a unified permit within 15 days from the submission of a proper request. A unified permit is issued for a period of up to three years (previously, it was up to one year) and can be extended for the same period, depending on whether the reasons for temporary residence persist.
The deadline for renewing existing temporary residence permits has been extended, allowing foreigners currently residing in Serbia to apply for a renewal until the expiration date of the previously valid permit (previously, the deadline was 30 days before the expiration).
Inclusion and Integration of Foreign Employees
Once granted a permit, a foreign employee in Serbia has the same legal status as a domestic employee, allowing them to exercise all rights guaranteed by labour legislation. All Serbian laws related to work rights apply to foreign employees without exception.
However, companies still need to make additional efforts to ensure the inclusion of foreign employees. This is necessary due to numerous differences, such as language barriers, cultural differences, and varying levels of familiarity with local business practices.
Considering all the challenges that employers face within the process of engaging foreign employees, bringing foreign talent into a company is more than just paperwork—it requires creating an environment where employees feel welcome, protected, and empowered. With EU due diligence regulations (like CSDDD and the German Supply Chain Act) affecting Serbian businesses, companies must also align with fair recruitment and ethical employment practices.
Therefore, companies should consider several factors listed below.
Legal Must-Haves: Getting it Right from Day One
- Work and Residence Permits: Handle all necessary paperwork before employment begins to avoid legal issues.
- Transparent Contracts: Clearly outline salaries, benefits, and rights in a language the employee understands.
- Fair Recruitment: Partner only with licensed agencies that do not engage in unethical practices, such as withholding documents or charging excessive fees.
Beyond Compliance: Making Foreign Employees Feel at Home
- Language and Culture Training: Offer Serbian and English courses, workplace culture sessions, and mentorship programs.
- Housing & Transport Support: Assist with housing, transport passes, or shuttle services, especially for employees living 30-40 minutes from work.
- Family & Relocation Support: Provide support with schooling for children, visa assistance for spouses, and general relocation help.
Empowering Employees: The Right to Speak Up
- Safe Reporting: Employees should feel safe reporting issues related to working conditions, salary disputes, or mistreatment.
- Anonymous and Multilingual Channels: Companies must provide anonymous and multilingual reporting channels and assure employees they will not face retaliation.
- Compliance and Reputation: This practice aligns with ILO labor standards and EU due diligence laws, helping businesses stay compliant and build a strong reputation.
Why It Matters?
- Compliance & Risk Reduction: Companies should ensure they avoid legal issues and reputational damage. They must comply with relevant immigration and employment regulations and best practices to avoid significant penalties, including monetary fines, prohibition from employing foreign employees for up to one year, deportation of the foreign employee, and potential criminal sanctions.
- Higher Retention & Productivity: Happy employees stay longer and work better.
Hiring and retaining foreign talent in Serbia requires careful planning and execution of legal and administrative procedures, as well as proactive efforts to foster inclusion and integration.
For more info, feel free to reach out to the PwC HR Solutions HUB team:
- Nebojša Lukač, nebojsa.lukac@pwc.com
- Bojana Račanović, bojana.racanovic@pwc.com
Looking for consultants that truly value the needs of the HR teams and focus on specialized HR support? Keep an eye on: https://www.pwc.rs/en/HR-solutions-hub.
