The Government of the Republic of Serbia adopted the Draft Law on Agency Employment (hereinafter referred to as the “Draft Law“) on August 01, 2019.This Law will in the future regulate the field of employment through Agencies that have been represented on the labor market for many years, but so far it has not been legally regulated in Serbia. One of the reasons for the adoption of the Draft Law is the harmonization of legal regulations of the Republic of Serbia with international sources of law and the consequence of European integrations and the process of Serbia’s accession to the European Union.
On February 20, 2013, the National Assembly of Republic of Serbia adopted the Law on Ratification of International Labour Organization (ILO) Convention No. 181 on Private Employment Agencies, while the Draft Law was also adopted to comply with EU Directive 2008/104 / EC on Temporary Agency Work (hereinafter referred to as “the Directive“).
The aim of the Directive is to establish a non-discriminatory (equal treatment) and transparent framework for the protection of workers recruited through Temporary Employment Agencies, and represents a legislative response to the perceived diversity of the labor market and industrial relations, as well as the need for employers to establish flexibility in work.
The Draft Law, adopted by the Government of the Republic of Serbia, regulates equal treatment of employees who conclude an employment agreement for an indefinite or definite period of time with the Temporary Employment Agency (hereinafter referred to as “the Agency“), which then concludes an agreement on assignment of employees with the employer user. The aim of the Draft Law is to equalize the rights and obligations of employees who conclude an employment agreement with the Agency, with employees who conclude an employment agreement directly with the employer, as well as to define the conditions for obtaining a license for the Agency and the conditions for the assignment of employees.
The publication of the Draft Law caused various disagreements among the social partners – representatives of employers and employees (trade unions), both ideological and legal.The social partners only agreed that the area of employment through Agencies should be legally regulated. Precisely because this issue was not regulated, there were various abuses of workers’ rights in practice. Workers were denied basic rights -entitled to annual leave, temporary incapacity for work resulting from illness, entitled to salary, and many other rights.
Trade unions responded extremely negatively to the Draft Law when they addressed the public. They particularly emphasized their dissatisfaction regarding Article 14 of the Draft Law and the Draft Law, which stipulates restrictions on concluding agreement on assignment of employees. In particular, unions are dissatisfied with the restriction that the number of assignment employees with an employment agreement for a definite period of time with the employer user may not exceed 10% of the total number of employees with the employer user at the time of concluding an agreement on assignment of employees. Trade unions point out that this restriction is applied only to employees who have concluded agreement for a definite period of time with the Agency, while employees who have concluded agreement for an indefinite period of time with the Agency, can be hired by the employer without restriction. They point out that the stated limit of 10% of the total number of employees should apply to all employees who have concluded an employment agreement with the Agency, that is, to employees who have concluded an employment agreement for an indefinite period of time with the Agency.
The union’s position is that this will lead to abuses, and that employers will hire most employees through the Agency, that is, employers will not directly conclude an employment agreement with most employees in the future.
Trade unions in particular express their suspicion that the Agencies will duly fulfill their obligations based on an employment agreement towards employees, that is, they will not properly pay their salaries, and consider that the omission of the Draft Law is that it does not stipulate an obligation for the Agencies to provide a bank (financial) guarantee upon establishment. We can often hear in the public that the assigned employee will continue to be treated as “modern slaves”, that is, rented “goods”, and that their status with the employer user will continue to be insecure and uncertain, and that they feel “not belonging” to an employer will not be motivated to do their work effectively, which will directly affect the productivity of employers and therefore the economy of the state (which, they say, is the reason why the Scandinavian countries have abandoned the adoption of this law).
On the other hand, employers criticize Article 14 of the Draft Law, but from their point of view, which is diametrically different from the position of the trade union. Employers believe that, as private entities, they should have the freedom to make business decisions that are in line with the flexibility of work and the desire to maximize economic efficiency, because they bear the responsibility of their business. Due to the 10% limit, most employers claim that they will be forced in the future to hire persons through student-youth cooperatives which are not regulated by the Draft Law, as well as to conclude agreement on temporary and periodic work, which are work outside employment relations and do not guarantee to employees all rights provided by the Labor Law. The consequences of the implementation of the Draft Lawwill especially affect multinational companies, that is, large companies that hire most of their employees through the Agencies.
The question is what the Draft Law really brings. Through a legal analysis of the Draft Law, we find the advantages and disadvantages that can be reflected in the implementation in practice.
The Draft Law in its first Article stipulates that the Law regulates the rights and obligations of employees who conclude an employment agreement with the Agency. The practice so far has been different, so the Agencies with the hired persons could also conclude an agreement on temporary and periodic work, and often the persons hired through the Agencies were deprived of their rights. The Draft Law will solve this problem by explicitly stipulating that Agencies conclude an employment agreement on definite period of time or on indefinite period of time with the employees. Also, Article 16, which regulates the duration of the assignment, stipulates that the Agency can assign the employee who has concluded the employment agreement on definite period of time, to the employer user in cases and for the duration determined in the employment agreement on definite period of time, in accordance with the law governing the work. The Draft Law seeks to prevent abuses of the institute of the employment on definite period of time by invoking and aligning with the Labor Law.
Article 18 of the Draft Law guarantees to employees during temporary employment with employer user the right to equal working conditions as comparable employee who is employed by the employer user, such as duration and schedule of work, remuneration, annual leave, etc.
A comparable employee is the institute which Draft Law introduces, and its definition in the Draft Law leaves room for different interpretations, discussions and remarks.
The definition of a comparable employee includes the phrase “an employee who is employed by the employer user who perform or would perform the same activities.”
This formulation is superfluous and, in our opinion, can cause various dilemmas in practice. There is also the question of how to apply the institute if there is no comparable employee employed by the employer user, as defined in the Draft Law.
In the Draft Law, this situation – when there is no comparable employee at the employer user is regulated in the way that it is stipulated that the basic salary of the assigned employee cannot be determined lower than the basic salary of the employee who is employed by the employer user with the same level of education, i.e. level of qualifications.
The question arises what happens if the employer user does not have the employee with the same level of education or level of qualifications as the assigned employee. On the other hand, Article 2, paragraph 5 of the Draft Law introduces additional problems in practice if the employer user has only highly qualified employees performing complex jobs, in extremely responsible positions, for which they receive high salaries, and a person with the same degree is hired through the Agency with same qualification as an employee in a managerial position, but the assigned employee is engaged in administrative work, for example, and it is quite expected that the salary will be lower than the salary in a managerial position given the type and complexity of the job and the responsibility of the employee. However, it follows from paragraph 5 of Article 2 of the Draft Law that the employer has a clearly defined restriction that he must provide the same basic salary to the assigned employee as the salary of the employee who is employed by the employer user with the same level of education or level of qualification.
Certainly,such defined restriction will not be applicable in practice and will cause several problems. Unless there is a comparable employee, the employer user should have the discretion to determine the amount of basic salary assigned to the employee given the type and level of qualifications, as well as the complexity and responsibility of the jobs for which he or she is hired.
The Draft Law also regulates the issue of termination of an employment agreement – for reasons arising from the employer user (Article 23 of the Draft Law). This Article requires the employer user to provide the Agency with all the necessary evidence to determine the circumstances which are the basis for the termination.In this way, the employer user practically conducts the entire procedure regarding the termination of the employment agreement, while the Agency makes a decision on termination based on the evidence collected by the employer user. On the other hand, in case of unlawful termination of employment, the assigned employee has the right to file a lawsuit against the Agency. Finally, the special difference between the Draft Law and the Labor Law is that the Draft Law does not provide the return to work of an employee, as a measure that can be imposed by a court in the event of unlawful termination of employment.
The protection of assigned employees and their equality with the employees employed by the employer user is also called into question in the case of harassment at work.Law on prevention of harassment at work (“Official Gazette of the RS”, No. 36/2010) stipulates that only the employer can be sued for harassment–however, in this case, the employer is the Agency, while the harassment may be suffered by the employer user.This is just one example of how other legal regulations will need to be harmonized in the future to ensure the equality of the assigned employees and employees who are employed by the employer user.
Regarding the 10% limit, looking at comparative legislation, most Southeast European countries do not foresee such a restriction, except for Slovenia and Bulgaria.In Bulgaria, the maximum number of assigned employees is limited to up to 30% of the total number of employees at the employer user. In Slovenia, only the number of assigned employees who have an employment agreement on a definite period of time is limited to 25% of the total number of employees, from what kind of restriction are exempted the employers who employ 10 or fewer employees.
It is certainly positive that in this way the legal framework is aligned with international ILO and EU standards and regulates this area with the intention of protecting the assigned employees. It remains to wait for the adoption of the Law and to see through practice what the New Law will bring us, first of all whether employers will choose to engage persons through youth cooperatives whenever possible, whether and to what extent the adoption of the law will affect the work of the Agencies and how will be applied in practice so-called outsourcing or contracting out, that is, the use of external sources of business services and work, i.e. whether the proclaimed goals of the Directive and the Draft Law will be achieved.