A few words about the Law on Agency Employment ahead of its implementation

Immediately before the end of 2019, the National Assembly adopted the Law on Agency Employment (“Official Gazette of the RS”, No. 86/2019), after a long announcement, controversy, refinement and proposal for comprehensive legal regulation of the so-called employment on leasing.

Upon final definition and adoption of the legal text, the expert public, on the one hand, positively evaluates the submission to the legal framework of work that was present in our market, which at the same time created unequal working conditions and exploited the fact of lack of legislation, while on the other hand there was dissatisfaction with the lack of adoption of individual proposals and amendments submitted (such as questions about the total number of employees hired through an agency or defining a mandatory bank guarantee which would provide security to the employees in the event of termination of the Employment Agency).

What, among other things, does the text of the Act bring?

In addition to defining the conditions for work of the Agency for Temporary Employment (permit of the Ministry responsible for labor affairs, registration of activities, restrictions for members and legal representatives of the Agency regarding non-conviction for certain criminal offenses), the Law on Agency Employment also establishes the conditions of employment of seconded persons, and thus, in Article 9, it defines that the Agency concludes a contract with a seconded employee on a permanent or temporary contract equal to the time of the transfer to the beneficiary employer.

We must mention here that some doubts about the practical scope and substance of the law can be caused by the fact that it, in its first article, regulates the rights and obligations of employees who conclude a contract with a temporary employment agency, in order to assign temporary work to the employer employer (therefore, the emphasis is on the word “temporary”), while defining the conclusion of a permanent employment contract should imply a certain duration and absence of uncertainty on the part of the employee regarding his / her work engagement.

Article 24 of the Law provides that a posted employee who has a permanent employment contract with the Agency shall be entitled to remuneration in the period between two postings to the beneficiary employer, and that “in the event of termination of employment, he/she shall be entitled to severance pay on the basis of redundancy in accordance with the law governing work“.

However, how this will be applied in practice remains unclear.

 First, bearing in mind that the termination of an employment contract on the basis of redundancies implies the implementation of a certain procedure in accordance with the Labor Law, and above all the existence of reasons and grounds for organizational, economic or technological changes, the question arises whether the Temporary Employment Agency will be obliged to carry out the procedures prescribed by law, what will be the basis for their implementation and whether, for example, the basis of redundancy will relate to changes occurring with the Agency or perhaps with the beneficiary employer (the latter – organizational changes with the employer of the beneficiary in practice so far, it has been the basis of cancellation of a contract of employment concluded with employment agencies that operated despite the lack of legal regulation).

 Although it is indisputable that the Law in question regulates and determines the equalization of all employees, ie prescribes equal treatment of the posted employees in relation to the exercise of certain rights from employment ((the emphasis of the Law is on working hours, overtime, vacations, absence with remuneration and for employees perhaps the most important issue – earnings), we believe that the legal solution regarding termination of employment and the rights of posted employees on this occasion, is not fully regulated.

 Termination of employment contract – for reasons arising from the beneficiary employer is regulated by Article 23 of the Law in three paragraphs, and as such leaves considerable doubts, first of all regarding the procedure regarding termination of the employment contract. It is also underlined that paragraph 3 of the article, despite the efforts to equalize employment through the Agency and direct employment with the employer, in the case of unlawful dismissal, creates significant differences in the rights of these employees.

Thus, an employee hired under the Labor Law will be entitled to full reintegration (returning to work or    instead of returning to work a maximum of 18 salaries, compensation in the form of lost wages and payment of the necessary contributions for compulsory social insurance for the period in which the employee did not work), whereas, under the Agency Employment Act, employees in a labor dispute against the Agency will have (only) the right to compensation of damages in the amount of the remaining amount of wages from the moment of termination of employment until the expiration of the contractual termination, up to a maximum of 18 wages, as well as the right to payment of taxes and contributions for the period.

In addition to certain provisions whose implementation has already begun (the conditions for the Agency’s work), the Law on Agency Employment begins to apply from 01.03.2020. after which, through the direct application and interpretation of individual provisions, the effects of the Act will be clearer.