Crowe Horwath BDM Tax Newsletter July 2014 Audit | Tax | Advisory Amendments to the Labor Law have been adopted The Law on amendments to the Labor Law, published in the Official Gazette of the Republic of Serbia no. 75/2014, has entered into force on 29 July 2014. These amendments have significant impact on employee’s position, rights and duties deriving from the employment which at the end are influencing on current salary calculations, salary remuneration calculations and etc. In addition we are bringing to your attention most significant changes:  For the purpose of seniority increase calculation, solely the years of services with current employer shall be taken into consideration.  Work in shifts as the reason for salary increase has been abolished, while the salary increase for work at night remains.  Duration of fixed-term employment, with some exceptions, has been increased to a period of 24 months.  Severance pay due to retirement has been reduced from three to two average salaries in Serbia.  Redundancy due to technical, economical and organizational changes at employer is to be paid only for the years of services with the current employer.  Remuneration paid to a director on the basis of an Agreement on Rights and Duties of a Director is no longer considered as salary, entailing by means of this different tax treatment for such payments.  The minimum allowances set out in the "Decree on Per Diem Allowances and Severance Pay for Civil Servants and Public Sector Employees" for time spent abroad on business no longer applies to employees employed in privately held companies. Therefore, these allowances must be regulated either through employer’s internal labor acts or employment agreement itself.  For the purpose of salary compensation (during annual leave days, public holidays, paid leave and sick leave), average salary for the last 12 months shall be used.  Minimum amount of paid leave is reduced from 7 to 5 working days.  Employee is entitled on usage of his/hers annual leave days after one month of continuous work with the employer.  Annual leave may be used entirely or in parts, whereas the first part must last at least two uninterrupted weeks.  Possibility to issue an Annual Leave Decision electronically has introduced.  Compensation of damage for unused days of annual leave shall be paid out only in the event of employment termination.  Salary pay slips, for the salaries or compensations of salaries paid in total may be handed over to an employee electronically. Also, according to these amendments, payroll slips shall be considered as an executive title on the basis of which enforcement collection of salary may be exercised. Audit | Tax | Advisory  Meal allowance may be reimbursed either in pecuniary amount or in another way (e.g. in a restaurant, by providing vouchers for the purchase in specific store, etc.). In both cases, this reimbursement, in the Employment Agreement or Labor Manual must be stated monetary amount. Should you need and additional clarifications Crowe Horwath BDM remains available. Audit | Tax | Advisory Contact details: Bogdan Đurić Partner [email protected] +381 60 60 61 200 Pavle Ristić Tax Manager [email protected] +381 64 803 71 76 Vladimir Deljanin Tax Manager [email protected] +381 64 803 71 75 Crowe Horwath BDM d.o.o. Beograd Terazije 5, IV floor, 11000 Belgrade www.crowehorwath.rs Tel +381 11 65 58 500 Fax +381 11 65 58 501 E-Mail: [email protected] Audit | Tax | Advisory