Recently, the Parliament of Montenegro has amended the labour regulations by adopting two amendments to the Labour Law in August and September 2024, and by adopting the amendments to the Law on Contributions for Mandatory Social Insurance in September 2024.
1. Novelties in the Labour Law
The recent amendments to the Labour Law introduce two main novelties:
- Change of the maximal duration of the fixed-term employment; and
- Change of the minimal salary.
a) Change of the Maximal Duration of the Fixed-Term Employment
The amendments to the Labor Law related to the maximum duration of a fixed-term employment agreement entered into force on 13 August 2024. These amendments reduce the maximum duration of fixed-term employment from 36 months to 24 months. After 24 months, the employer may only conclude an indefinite employment agreement with the same employee.
There is an exception from this rule, that relates to fixed-term employment agreements that were concluded for a period longer than 12 months (based on one or more agreements) before 13 August 2024, i.e. before these amendments of the Labour Law came into force. To fixed-term employment agreements concluded in such a way, the previous provisions of the Labor Law would remain applicable, allowing such fixed-term agreements to last up to 36 months.
b) Change of the Minimal Salary
Amendments to the Labor Law relating to the minimal salary in Montenegro entered into force on 1 October 2024. These amendments envisage that the minimal net salary amounts to:
- at least EUR 600, for the employees who are employed on the jobs with I to V level of educational qualification; and
- at least EUR 800, for the employees who are employed on the jobs with VI or higher level of educational qualification.
2. Novelties in the Law on Mandatory Social Insurance Contributions
The amendments to the Law on Contributions for Mandatory Social Insurance also entered into force on 1 October 2024. These amendments introduce a decrease in contributions for pension and disability insurance from 20.5% to 10%.
This reduction is shared between contributions borne by the employer and employee. Specifically, the employers will no longer bear the burden of contributions, as their part will be reduced from 5.5% to 0%, while the employee’s burden will be reduced from 15% to 10%.
When it comes to insured persons fully responsible for bearing salary contributions (e.g. members of the board of directors, Montenegrin citizens employed abroad, etc.), their burden is reduced from 20.5% to 10%.
The Government proposed these amendments, explaining that the labour costs significantly affect micro and macro competitiveness, the level of investments, and ultimately economic growth. Also, the level of these levies is directly related to the unemployment rate, as well as the existence of informal employment. In any case, the direct result of these changes will certainly be an increase of the net salaries of the employees.
The information in this document does not constitute legal advice on any particular matter and is provided for general informational purposes only.
By Milena Jaksic Papac, Partner, Milijana Tomic and Sandra Perisic, Senior Associates, and Ana Pavlovic, Associate, Karanovic & Partners
