The year 2025 began with a development that raised important questions regarding the interpretation of the Serbian Labor Law, specifically concerning employees’ right to compensation for commuting costs.
According to the law, employees are entitled to reimbursement for commuting costs, at a minimum equal to the cost of a public transportation ticket, unless the employer provides their own transportation.
Since January 1, 2025, public transportation in Belgrade has become free for all users, which raised the question of whether employees still have the right to compensation for commuting costs, especially those using public transportation.
This situation has prompted discussions among legal experts and employers seeking advice on the matter.
The Right to Compensation for Commuting Costs
The legal framework on commuting costs remains unchanged, and employers are still obligated to reimburse employees for commuting costs unless they provide their own transportation (e.g., a bus). The law specifies a minimum reimbursement equal to the cost of a public transportation ticket.
If an employer wants to reimburse employees for actual commuting costs (e.g., fuel costs for using a personal car) or a higher amount than the legally required minimum, this must be addressed in the employment contract or the employer’s general act.
The right to compensation for commuting costs does not obligate employees to use public transportation, but with the new development, the scope of this right can no longer be determined as it was in the past.
Employees who previously used public transportation will no longer have commuting costs, but legal practice has previously acknowledged that employees are entitled to compensation even when no costs are incurred.
Court Practice and Ministry’s Stance on Commuting Costs
Over the years, the court practice and the views of the Ministry of Labor have been inconsistent regarding the right to compensation for commuting costs.
Some views suggest employees are entitled to compensation regardless of whether the costs were actually incurred (regardless of the distance, even in cases of walking to and from work), while others argue that employees should not receive compensation if no costs were incurred, to prevent abuse (in cases where, based on a reasonable assessment, it would be obviously unjustified, as well as in cases of absence from work due to any legal grounds, such as annual leave or temporary incapacity for work).
In relation to the specific situation, the Ministry confirmed at the end of January 2025 that commuting costs, if no transportation is provided, must be reimbursed and that the basis for reimbursing these costs is the amount of the last reimbursement paid for this purpose, prior to the new situation.
Conclusion
The reimbursement of commuting costs represents compensation for actual damages, as defined by the Serbian Law on Obligations. This compensation applies when there is a reduction in an employee’s property due to commuting expenses.
However, in cases where no actual costs are incurred, the very right to compensation could be questioned.
Despite this, current practice implies that employers must continue to reimburse for these costs unless they provide their own transportation.
Further clarification is expected from the Ministry of Finance on how this reimbursement should be treated for tax purposes, considering the recent changes.
Ultimately, this situation underscores the need to reconsider the current legal framework for commuting cost compensation.
By Ivana Ruzicic, Managing Partner, and Borinka Dobrnjac, Senior Associate, PR Legal
This article was originally published in Issue 12.3 of the CEE Legal Matters Magazine. If you would like to receive a hard copy of the magazine, you can subscribe here.
