Continuation of reforms in the field…

A new General Collective Agreement (“Official Gazette of Montenegro”, No. 150/2022) was concluded on December 26th, 2022 in Montenegro, and entered into force on December 30th, 2022 (hereinafter: General Collective Agreement 2022.). The General Collective Agreement marked the continuation of reform in the field of labor relations in Montenegro resulting in significant improvement of the financial conditions of labor for the employees. The reform started with amendments to the group of regulations that entered into force of January 1st, 2022 introducing the increased minimum salary in the amount of 450 EUR net and the non-taxable amount of income (inter alia, salary) to 700 EUR in the one hand and abolishing the contributions for mandatory health insurance in the other hand. Additionally, a special article of the Labor Law imposed the duty of employers, in the event of the abolition or reduction of the personal income tax rate, i.e., contributions for mandatory social insurance at the expense of the employee, to pay to the employees as a part of their salary the amount of funds that would be calculated, suspended and paid in accordance with the law on the basis of that tax, i.e., contributions.

What is the General Collective Agreement?

The collective agreement is an agreement concluded between the law designated participants which regulates the rights and obligations of employees arising from the employment relations, that is, based on work, the manner and procedure of their realization. The collective agreement cannot contain provisions which reduce employee’s rights or establish less favorable working conditions than the rights and conditions established by the law. On the other hand, and as a rule and the most common reason for concluding a collective agreement, collective agreements can establish a greater scope of rights and more favorable working conditions than the rights and conditions established in the law. There are several types of collective agreements depending on the persons to which it is applied, among which the general collective agreements has the broadest application.

The general collective agreement is concluded for the entire territory of one country and applies to all employers and employees. As such, the general collective agreement represents the collective agreement with the highest legal force.

Key novelties of the General Collective Agreement 2022.

Before the General Collective Agreement 2022, the General Collective Agreement (“Official Gazette of Montenegro”, No. 14/2014, 39/2016, 40/2018, 37/2019, 74/2019 and 8/2020 – other law and 21/2021) was applied in Montenegro. That agreement was concluded on March 20th, 2014, and came into force on March 30th, 2014 (hereinafter: General Collective Agreement 2014) with multiple extensions of application.

In accordance with the above mentioned, the following text will present an overview of the key differences between the General Collective Agreement 2022 and the General Collective Agreement 2014.

  → Implementation of the General Collective Agreement 2022

The General Collective Agreement 2022 expanded the application of the collective agreement, and it was specified that it also applies to employed foreigners who work for an employer in the territory of Montenegro, unless otherwise determined by a special law, as well as to natural persons engaged in a business activity for the purpose of acquiring profit, but on behalf of someone else.

  → Maximum annual duration of overtime work

Overtime work cannot last longer than 250 hours in one year. In addition to this newly introduced limitation, employers need to continue to take into account the legal limitations on the duration of overtime work on a daily and weekly level.

  → Paid leave

Unlike the General Collective Agreement 2014, which regulated that employees are entitled to paid leave of 5 working days when taking a professional exam, the new General Collective Agreement 2022 separates the case when an employee takes a professional exam in connection with the performance of work at the employer – when he/she is entitled to 5 working days of paid leave, and the case when the employee takes a professional exam unrelated to their job – when they are entitled to 2 working days of paid leave.

In addition, the General Collective Agreement 2022 established cases in which employee is entitled to paid leave regardless of the circumstances of whether in that calendar year he/she used the right to paid leave in the total maximum amount for one calendar year (7 working days).

  → The concept of a member of the immediate family

Unlike the General Collective Agreement 2014, the General Collective Agreement 2022, specified the term “member of the immediate family” , a term relevant for the realization of certain rights prescribed by that collective agreement (paid leave and unpaid leave in certain cases, assistance in the event of the death of an employee or a member of his/her immediate family). Immediate family members are defined separately and differ for each individual right from the collective agreement.

 → Salary payment deadline

A particularly significant novelty of the General Collective Agreement 2022 is the regulation of the deadline for salary payment – fifteenth of the month for the previous month.

   → Job complexity coefficients

According to the General Collective Agreement 2022, the job complexity coefficients for determining salary based on the complexity of the achieved learning outcomes for basic groups of jobs are almost doubled compared to the coefficients regulated by the General Collective Agreement 2014. Namely, the range of coefficients according to the General Collective Agreement 2014 ranged from 1,03 for the lowest level up to 4,12 for the highest level, while with the General Collective Agreement 2022, that range is from 3,30 for the lowest level to 7 for the highest. At this point, it is important to remember that according to the Labor Law of Montenegro, the basic salary is obtained by multiplying the calculated value of the coefficient and the coefficient of the complexity of the work, unless otherwise stipulated by a special law.

  → Earning of interns

One of the few rights that has been reduced in the General Collective Agreement 2022 compared to the General Collective Agreement 2014 is the right to earnings of interns. The new collective agreement has reduced the minimum percentage of interns’ wages to 70% (previous agreement regulated 80%).

 → Increasing salary per hour

In addition to the old cases and hourly salary increase percentages, the General Collective Agreement 2022 introduces two new hourly salary increase cases – an increase for work on Sundays in the amount of 80% on top of base hourly salary and increase for work with non-consecutive hours which is paid 10% (except in cases prescribed by the collective agreement). The salary increase is not included in the minimum wage according to the General Collective Agreement 2022.

Additionally, the General Collective Agreement 2022 stipulates a salary increase for each hour spent on standby in the amount of 10% of the hourly price determined according to the base salary of that employee. Also, as a rule (except in cases stipulated by the collective agreement), standby cannot exceed 10 days in a month. Finally, the time that the employee, who has been on standby, spends at the workplace performing tasks at the request of the employer is considered working time and it is paid as overtime work.

  → Membership in trade unions and union representatives

This segment stipulates the right of an employee engaged through a temporary assignment agency to opt for trade union organization at the employer, in which case the temporary assignment agency shall ensure that funds for the payment of union membership fees are paid to the account of the chosen union.

The General Collective Agreement 2022 entitles union representative to paid leave when attending union meetings, seminars, courses, congresses and conference in the country and abroad and defines procedure for this entitlement.

Duration of the General Collective Agreement 2022

The General Collective Agreement in 2022 was concluded for a period of three years, with the possibility for the contracting parties to extend its duration by special agreement until the submission of an initiative for its cancellation, amendment or drafting of a new collective agreement and until the expiration of the deadlines for acting on that initiative prescribed by that collective agreement.

Does the Republic of Serbia have a general collective agreement?

The last general collective agreement on the territory of the Republic of Serbia was the General Collective Agreement (“Official Gazette of the Republic of Serbia”, No. 50/2008, Annex I – 104/2008, Annex II – 8/2009-155) which ceased to apply on May 17, 2011 on the basis of expiration of period for which it was concluded, and as of the mentioned date, there has been no general collective agreement in Serbia.