Although Serbia’s Labor Law has remained unchanged for years, adjacent legislative developments reflect how employers are adapting to evolving workplace realities. Two such areas, work from home and labor shortages, have been addressed through the new Law on Safety and Health at Work and updated regulations on employing foreign nationals, both adopted in 2023. These developments indicate a gradual but meaningful adjustment in regulatory priorities in response to practical challenges faced by employers.
The new Law on Safety and Health at Work introduced a range of obligations for employers, who were given until May 2025 to fully align their practices. The new provisions strengthen employee protection by mandating more robust preventive measures and ensuring tighter oversight of working conditions. For the first time, the law recognizes remote work and work from home, emphasizing the employer’s duty to ensure occupational health and safety, in cooperation with the employee. This resolves a long-standing, pre-pandemic ambiguity regarding the extent of the employer’s liability in such arrangements. While a formal risk assessment is possible, it is not mandatory. However, the new law only touches on these issues superficially, failing to provide comprehensive regulation.
Work from home and remote work are covered under the Labor Law, which lists only the additional elements an employment agreement should include, such as working hours, cost reimbursement, and work supervision. It does not address newer forms of work, like hybrid models, project-based arrangements, or digital nomads. As a result, regulation is largely left to employers, who often interpret and fill legal gaps themselves, leading to uneven and potentially arbitrary implementation.
Additional clarity would be desirable concerning the tax treatment of cost reimbursements for employees working from home. While the Law on Income Tax does not explicitly regulate these payments, a 2013 official opinion of the Ministry of Finance states that they should be treated as taxable salary. Given the significant rise in remote work since then, updated guidance and the introduction of non-taxable thresholds would be beneficial.
According to a survey conducted by several prominent private sector organizations focused on career development and employee wellbeing, up to 26% of employees had the possibility to work from home in 2024 and increasingly prioritize such arrangements. In light of all the aforementioned, work from home remains a central concern for HR in Serbia, highlighting the need for a more comprehensive and consistent regulatory approach.
In parallel, Serbia is addressing another pressing challenge: a shrinking domestic labor force. The amendments to the Law on Employment of Foreign Nationals, effective from February 2024, introduced a Single Permit system that combines temporary residence and work permits, significantly reducing administrative burdens and processing times. The reforms also liberalized the labor market by simplifying permit issuance, digitalizing the application process, and introducing new exemptions for certain categories of foreign nationals who no longer require work permits to engage in lawful employment in Serbia. This regulatory shift reflects a growing reliance on foreign labor. In the past four years, Serbia has issued approximately 240,000 work permits to foreigners, with the majority of recent arrivals coming from Russia, China, Turkiye, India, and Nepal. These workers predominantly fill roles in construction, IT, services, transport, manufacturing, hospitality, and trade and crafts. Surveys suggest that while demand is particularly high for low-skilled labor, there is also a need for high-skilled professionals. In early 2024, the Ministry of Labor established a working group to draft a list of deficit occupations exempt from labor market testing prior to permit issuance. As of the time of writing, however, this list has yet to be officially adopted.
To support long-term workforce development, the 2023 amendments to the Law on Dual Education introduced the possibility of incentives for employers hosting students in vocational training programs. A list of deficit occupations was prepared for the past school year to align education programs with market demand. Participating employers were eligible for grants, reflecting a broader effort to connect education with labor market needs and address structural shortages.
Looking ahead, amendments to Serbia’s Labor Law are expected in the near future, supported by two EU-funded projects launched in late 2024 and mid-2025. The first focuses on strengthening social dialogue, with the International Labor Organization providing technical assistance to improve the legal framework for collective bargaining, labor dispute resolution, the Socio-Economic Council, and the right to strike. The second project is aimed at broader alignment of labor legislation with EU standards and preparing Serbia for participation in EURES, the European network of employment services.
By Danica Gligorijevic, Partner, and Iva Popovic, Associate, Prica & Partners
This article was originally published in Issue 12.6 of the CEE Legal Matters Magazine. If you would like to receive a hard copy of the magazine, you can subscribe here.
