During the last year, the number of labor disputes which were resolved through mediation and arbitration in Serbia have increased fivefold. To improve the process of peaceful labor dispute resolution, amendments to the Amicable Labor Dispute Resolution Act (the “Act”) are expected.

One of the motives for amendments is an increase in authorizations of the Republic Agency for Amicable Resolution of Labor Disputes (the “Agency”). At this moment, during the process of mediation or arbitration, mediators and arbitrators are authorized to hear both parties, employee and employer, and to decide which party is a “winner”. As stated by the Agency, it is not unusual that parties are willing to settle during mediation or arbitration, but the arbitrator or mediator is not authorized to participate in the settlement procedure. Thus, the Agency expects that after amendments to the Act, arbitrators and mediators will be authorized to create a mutually acceptable solution for both parties – a win-win solution.

The main difference between mediation and arbitration is in the dispute type to be resolved. Mediation is a procedure in which the mediator provides their assistance in collective labor disputes and arbitration is a procedure in which individual labor disputes are to be resolved. Additionally, the arbitrator’s decision is binding and enforceable and parties have an obligation to act in accordance with it. Conversely, even though the mediator’s decision is not binding for the parties, it is clear that in a large number of cases it shall be respected.

The procedure of amicable resolution of the labor dispute may be initiated by one party, employee or employer, by a motion which is submitted to the Agency. The Agency then delivers it to the other party inviting it to declare, within three days, whether it accepts the proposal. If the other party accepts it, the procedure is initiated by the decision of the Agency.

Compared to court proceedings which may last up to 10 years and incur huge cost for both parties, mediation and proceedings are limited up to 30 days and are much less expensive. In this regard, the number of labor disputes which are resolved amicably is rising and it is expected that any amendments made to the Act will result in a further increase of out-of court labor dispute resolution.