Hiring guide in Montenegro

What should I know about hiring in Montenegro?

Legal framework

Types of employment contracts

Employment relationships in Montenegro can be formalised as permanent employment and fixed-term employment.

Permanent employment, known as “radni odnos na neodređeno vrijeme,” is the standard form of employment where the duration of the relationship isn’t predetermined. The key characteristic of permanent employment is its temporal continuity, meaning the relationship continues indefinitely without a specified end date. 

Fixed-term employment, or “radni odnos na određeno vrijeme,” is established for a specific, predetermined period. This type of employment is typically used for a particular purpose or task, such as replacing an absent employee, completing a project, managing a temporary increase in workload, or fulfilling roles in seasonal industries or fields like film production and education. The employment relationship automatically ends when the specified task is completed, the absent employee returns or the predetermined period expires.

Content of an employment contract

An employment contract in Montenegro includes the employer’s information, such as the name and address of the company, as well as the employee’s details, including their name, education, personal identification number, and, if applicable, a foreign worker’s personal ID number. The contract also specifies job-related information, including the job title, the workplace location, and the start date of employment.

It further includes details about the work schedule, specifying the duration and arrangement of work hours, as well as compensation, outlining the salary, monetary compensations, and any other earnings. The contract also addresses leave entitlements, such as information on annual leave, and for fixed-term contracts, it specifies the duration of employment.

Plus, the contract outlines termination notice requirements, including the timeframes and conditions for ending the employment relationship. Any special conditions, such as specific working conditions, obligations, or responsibilities of the employee, are also included, along with any other relevant information necessary for the employee to perform the job effectively.

Download a free employment contract for Montenegro through Native Teams.

Oral, written or electronic employment contracts

The employment contract is essential to the employer-employee relationship. It must be signed before the employee starts their job, ensuring both parties understand their rights and responsibilities from the beginning.

The contract takes legal effect once both the employer and employee have signed it. The written contract is the preferred form of employment contract in Montenegro, as it helps avoid any misunderstandings.

Working hours

Working hours can be categorised based on several factors, such as duration, distribution, time of day, and consistency. Duration refers to how long the working period lasts, while distribution focuses on how the hours are spread throughout the day or week. Time of day refers to the specific hours during which work is performed, and consistency concerns whether the work schedule remains the same every day or changes.

There are various types of working hours. Full-time work typically involves a standard schedule of around 40 hours per week, ensuring employees receive regular compensation and protecting them from overwork. 

Part-time work involves fewer hours than a full-time schedule and can be adjusted to suit the employee’s or employer’s needs. It’s often chosen to accommodate personal circumstances or provide more flexibility.

Reduced working hours refer to a situation where employees work fewer hours than the full-time norm but still maintain regular employment. This arrangement might arise due to operational needs or agreements between the employer and employee.

Overtime occurs when employees work beyond the standard full-time hours, typically exceeding 40 hours per week. Overtime is compensated at a higher rate and is regulated to ensure it doesn’t lead to excessive working hours.

Night work

Night work refers to work performed between 10:00 p.m. and 6:00 a.m. the following day, which entitles employees to additional compensation.

Employees who work at least 3 hours during their nightly shift or at least one-third of their total annual working hours are entitled to special protections under occupational health and safety regulations. These protections are designed to address the health and safety challenges associated with night work.

If a qualified health authority concludes that night work may harm an employee’s health, the employer is obligated to transfer the employee to a suitable daytime position. This reassignment helps prevent potential health issues arising from disrupted sleep patterns and other risks linked to night shifts.

Types of leaves and breaks

Rest rights are protected by various legal frameworks, including both international labour laws and domestic regulations. 

The general provisions governing rest apply to all employees, regardless of sector or occupation, ensuring a baseline of rest and recovery. In addition to these overarching regulations, specific rules and agreements may exist for certain industries or job types, taking into account the unique nature of the work and setting appropriate rest periods accordingly.

Regarding types of leave, employees are entitled to several forms of rest. Daily work breaks for full-time employees must last at least 30 minutes. Employees are also entitled to a minimum of 12 uninterrupted hours of daily rest and at least 24 uninterrupted hours of weekly rest, typically taken on Sundays.

Annual leave

The law mandates a minimum duration for annual leave, typically 20 working days per year. However, certain categories of employees may be entitled to additional leave: employees under 18 years old are entitled to at least 24 working days, while employees working reduced hours have a minimum entitlement of 30 working days. The duration of annual leave may also increase depending on factors such as job complexity, length of service, and the employee’s health condition.

Public holidays

Montenegro observes several public holidays throughout the year, including both state holidays and other public holidays. State holidays in Montenegro include May 21, which is Independence Day, and July 13, which is Statehood Day. Other public holidays include January 1, New Year’s Day, and May 1, Labor Day.

Both state and other public holidays are celebrated for two days, which includes the holiday itself and the following day. These two-day observances are collectively referred to as “holiday days.”

Salary

Salary in Montenegro is determined based on the law, collective agreements, and the individual employment contract. It’s generally paid monthly for the previous month. Both men and women are guaranteed equal pay for the same work or work of equal value, where “work of equal value” is defined as tasks requiring the same level of education, qualifications, responsibility, skills, working conditions, and results.

The salary is made up of several components. The basic salary represents the core earnings an employee receives, while the special part of the salary may include allowances or bonuses related to the specific nature of the job or its working conditions. Salary increases can be tied to factors such as length of service, performance, or other criteria. The performance-based portion of the salary directly links the employee’s compensation to their actual work contributions, encouraging productivity and efficiency.

To calculate the salary and taxes in Montenegro, click here.

Sick leave

The law classifies health-related work absences into 2 main categories.

The first category is a temporary inability to work due to illness or injury. This includes situations where an employee is temporarily unable to work because of illness, injury (whether it occurred at work or outside of work), or other specific circumstances defined by health insurance regulations. 

Such situations include when the employee is unable to work due to illness or injury, is under medical supervision or in quarantine, is isolated as a carrier of an infectious disease or due to an outbreak in their household, or is taking care of a sick family member. Additionally, this category covers when an employee is donating blood, organs, tissues, or cells voluntarily or when they accompany a sick person to a medical treatment or examination or are hospitalised.

The second category concerns the voluntary donation of blood, tissues, or organs. In this case, the employee is entitled to receive full salary compensation as though they were working, and the collective agreement determines the duration of the absence.

Parental leave

Parental leave allows one parent to take time off work to nurture and care for their child, and it can be taken for up to 365 days following the birth. The duration of parental leave is 1 year (365 days) starting from the birth of the child.

A parent has the option to return to work before the full year of leave is taken, but they can’t return earlier than 45 days after the child’s birth. Once the parent returns to work, they forfeit the right to take the remaining portion of the parental leave.

If one parent decides not to use their remaining parental leave, the other parent is entitled to transfer and use the unused portion of the leave.

Paternity and maternity leave

Maternity leave entitles a female employee to 98 days of mandatory leave, which includes 28 days before the expected delivery date and 70 days following childbirth. During both maternity and parental leave, the employee is entitled to compensation equal to the salary she would have earned if she were working. Once the maternity or parental leave ends, the employer must reinstate the employee to her original position or an equivalent one, ensuring that the salary is at least the same as before the leave.

In the unfortunate event that the employee gives birth to a stillborn child or the child dies before the maternity leave concludes, she is entitled to extend her maternity leave for a period necessary for recovery, as determined by a licensed specialist, but no less than 45 days. During this extended leave, she retains all maternity leave benefits.

Paternity leave grants both parents the right to take 70 days off from the birth of their child. If the birth involves twins or more children, both parents may take this leave simultaneously. In cases where the mother is unable to care for the child due to severe conditions, the father can begin his paternity leave immediately after the birth. This provision reflects a compassionate response to situations where the mother’s health or circumstances prevent her from fulfilling her caregiving role.

Methods of employment termination

Employment can end for several reasons, including by the force of the law, by mutual agreement, or through a termination notice.

In cases where employment ends by force of law, there are various circumstances. Employment automatically ends when an employee reaches the age of 67 and has at least 15 years of insurance experience. This termination takes effect on the day the final decision is delivered to the employee. Similarly, if an employee is legally determined to have lost their work capacity, their employment ends when the final decision regarding this is delivered.

Employment may also end due to legal restrictions if an employee is prohibited from performing certain duties and cannot be reassigned. In such cases, the termination is effective on the day the final decision is delivered. If an employee is absent from work due to serving a prison sentence for more than 6 months, their employment ends on the day they begin serving the sentence. The same applies if an employee is subject to security, corrective, or protective measures lasting more than 6 months and is required to be absent from work.

Employment also ends when the employer faces bankruptcy, liquidation, or another form of business cessation. For employees on fixed-term contracts, employment automatically ends when the contract expires. Finally, employment terminates upon the employee’s death.

Ordinary dismissal by employer

An employer may decide to terminate an employee’s contract under various conditions. These conditions can include performance issues, such as when an employee consistently fails to meet the performance targets outlined in collective agreements, employer directives, or the employment contract for a period of at least 30 days.

Behavioural issues also serve as grounds for termination, especially if the employee’s actions pose a risk to health and safety, involve substance abuse, or are linked to criminal activities related to work. Other reasons for termination in this category include violating company policies, providing false statements during the hiring process, or refusing to sign amendments to the contract.

Absenteeism and misconduct are additional valid reasons for termination. An employee may be terminated for unexcused absences, such as missing work for three or more consecutive days or five or more days intermittently within a 12-month period. Misuse of sick leave or failing to return to work after taking unpaid leave can also result in termination.

In cases of collective termination, where layoffs are planned for multiple employees, the employer must adhere to specific procedures to ensure compliance with legal requirements. Additionally, termination is permissible under legal provisions, such as a final court decision for abuse of office or the disclosure of business secrets.

Notice period and challenging the dismissal

When an employer terminates an employee’s contract, the employee is required to work for a minimum of 30 days following the receipt of the termination notice. This period, known as the notice period or otkazni rok, requires the employee to continue fulfilling their work responsibilities. However, in cases of severe breaches of duty, as defined by relevant legal provisions, the employer may terminate the contract immediately without observing the notice period.

If an employee wishes to terminate their employment, they must provide written notice to the employer at least 30 days before the intended end date. This notice period gives both parties time to prepare for the transition. While the standard notice period is 30 days, both the employee and employer may mutually agree to a different notice period, allowing for flexibility to accommodate specific circumstances.

Employees who feel their dismissal is unjust or their rights have been violated must first attempt to resolve the matter through peaceful dispute resolution mechanisms. This involves submitting a proposal for resolving the dispute to the Agency for Peaceful Resolution of Employment Disputes or the Center for Alternative Dispute Resolution before considering legal action. This process aims to settle conflicts without the need for court intervention.

Rights and obligations of unemployed individuals

Besides unemployment benefits, employees who are unemployed are also entitled to health, pension, and disability insurance while receiving compensation. To access these benefits, individuals must register with the Employment Office (Zavod za zapošljavanje) within 30 days of their employment termination and submit a request for financial compensation.

To be eligible for financial compensation, the individual must have at least 12 months of continuous insurance (employment) or 12 months of insurance with breaks within the past 18 months. Part-time workers are also eligible to claim compensation, provided their working hours meet the necessary conditions.

Individuals whose employment ended through no fault of their own and in accordance with specific laws, and who apply within the required timeframe are entitled to compensation. There are also exceptions that allow individuals who resigned due to special circumstances, such as the relocation of a spouse or health issues, to receive compensation.

Severance pay

Severance pay is a one-time payment designed to help mitigate the financial impact of job loss, unlike regular wages. Employees are entitled to severance pay when their position is no longer needed, and the employer is unable to offer any alternatives, such as reassignment to another position within the company that matches the employee’s qualifications, reassignment to a different employer with the employee’s consent, or professional retraining or reskilling for a different role, either with the same employer or a different one.

For employees with disabilities who are declared redundant, the severance pay is determined differently depending on the cause of the disability. If the disability results from an injury outside of work or an illness, the employee is entitled to at least 12 times their average salary, excluding taxes and contributions.

However, if the disability is work-related, such as a work-related injury or occupational illness, the severance pay must be at least 36 times the employee’s average salary, excluding taxes and contributions. The calculation of severance pay for employees with disabilities is based on the employer’s average salary, if this is more favourable to the employee.

Probationary period

The probationary period can’t exceed 6 months. The length of this period is outlined in the employment contract based on the nature, complexity, and conditions of the job.

During this period, the employer establishes the methods for monitoring and evaluating the employee’s performance. This assessment is key to determining if the employee can handle the responsibilities of the role independently.

Intellectual property rights

Intellectual property law involves several legal areas, typically divided into 2 main categories: copyright and related rights and industrial property rights.

Copyright and related rights cover the rights of authors of literary, scientific, and artistic works, as well as the related rights of performers, phonogram producers, film producers, broadcasting organisations, and publishers. It also includes special (sui generis) rights for database producers.

Industrial property rights include patent law, trademark law, industrial design protection, geographical indication protection, protection of integrated circuit topography, plant variety protection, unfair competition law, and trade secrets.

Employee data privacy

Data minimisation dictates that personal data should only be processed to the extent necessary to achieve the intended purpose. Any over-collection or unnecessary processing of data is prohibited.

Purpose limitation mandates that personal data be processed solely for the specific purpose for which it was collected. Data can’t be used for other purposes unless the individual has given explicit consent or the law permits it under specific circumstances.

Accuracy and storage stipulate that personal data must be accurate, complete, and kept up-to-date. If no legal retention period is specified, data that can identify individuals should only be kept for as long as necessary to fulfil the purpose for which it was collected.

Prohibition of competition

A non-compete clause may only be included if the employee acquires valuable technological knowledge, specialised skills, a wide network of business contacts, or access to sensitive business information and trade secrets through their work with the employer.

The geographic scope of the non-compete clause, which outlines where it applies, is determined by the nature of the employee’s work and is specified in the collective agreement or employment contract.

If the employee breaches the non-compete clause, the employer is entitled to terminate the employment contract and seek compensation for any damages resulting from the violation.

Remote working policy

Employment can be arranged for tasks performed outside the employer’s premises when the nature of the work permits it. This flexibility acknowledges the evolving work dynamics, especially for roles that don’t require physical presence at an office or designated location.

This category includes remote work, where tasks are carried out from any location outside the employer’s premises, such as a co-working space, and work from home, where the duties are performed from the employee’s residence.

Responsibilities within a remote work arrangement

To ensure clarity for both the employer and the employee, the employment contract must address key aspects of remote work. This includes outlining the nature of the work, how it will be managed, and practical details such as the use of personal equipment and compensation for any additional costs incurred by the employee.

Health and safety at home

It’s the employer’s responsibility to ensure that health and safety measures are equally applied to remote workers as they are for those working on-site. This includes providing the necessary equipment and ensuring a safe working environment, even when the employee works outside the employer’s premises. The employer must consistently manage workplace safety and health, regardless of the employee’s location.

For employees working from home, employers are required to sign an addendum or contract that outlines the specific tasks, necessary resources (such as infrastructure, software, and equipment), and the employer’s obligation to supply the tools required for the job. Additionally, employers must ensure that remote workers have a safe environment and provide guidelines to manage potential risks despite the absence of constant supervision.

What are the advantages of hiring employees from Montenegro vs other countries?

Salaries in Montenegro are generally lower than in Western Europe or North America, making it a cost-effective option for businesses seeking skilled labour without the high costs associated with other regions.

On top of that, Montenegro has a growing number of highly educated and skilled professionals, especially in sectors like IT, engineering, and tourism. These educated people typically speak multiple languages, which is beneficial for international business. 

Finally, the country operates in the Central European Time (CET) zone, making it convenient for companies working with European and some global markets. This can improve communication and reduce delays in business processes.

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• Compliance expertise: we can assist your company in navigating the regulatory environments and ensure you meet all relevant requirements.
• Local support: We can assist you in understanding and complying with the relevant local laws.