The concept of staff leasing has existed for years in Serbia and enables companies to flexibly employ workers through agencies specialized in this type of service.
Nevertheless, what constitutes a challenge is the lack of a clear and comprehensive legal framework related to the provision of such services. Serbia ratified the International Labor Organization’s Convention 181 (C181 on Private Employment Agencies) three years ago and assumed the obligation to implement it within 12 months; however, many aspects of the process remain to be clarified.
The challenges are diverse and impact both the workers who are engaged in this manner, as well as the employers who effectively rent workforce and the agencies providing staff leasing services. Some of the open questions – among others - are related to health and safety at work, termination of employment, and working conditions in the agencies.
The Serbian legislation prescribes conditions related to issuing of licenses to employment agencies, both in terms of technical and spatial requirements as well as in terms of professional competence of their staff.
From the employer’s perspective, the advantages of hiring workers using this method include:
- no administrative actions required for the purposes of hiring, replacement or dismissal of workers;
- no legal responsibility under the Labor Law;
- absence of risk of labor disputes with workers;
- collective insurance against consequences of an injury at work with an insurance company;
- ability to contract workers on a fixed term;
- no legal obligation for employment of persons with disabilities;
- ability to reduce the number of employees for an indefinite period of time;
- no responsibility in case of a labor inspection.
Foreign companies often use PEO services when they are not in a position to hire staff themselves or feel that the administration of new hires would be a burden. Indeed, staff leasing providers offer the much-needed flexibility, simplicity and transparency for temporary employments. Additionally, one of the main advantages of using services of PEO agencies is the elimination of the requirement of incorporating a Serbian company, this lowering the cost both during the setup of the legal entity but also the ongoing company maintenance expenses.