New Labour Act in Montenegro

New Labour Act in Montenegro

Author: Jelena Bogetic, BDK Advokati

New Montenegrin Labour Act introduces important changes to the regulation of employment.

1. The maximum duration of fixed-term contract is extended to 36 months

Although the basis for conclusion of fixed-term contracts remains limited (work the duration of which is pre-determined by a deadline, by completion of certain work, or occurrence of a specific event), the maximum duration of fixed-term employment agreements is extended from 24 months to 36 months. The time the employee spent working with the employer through a staff leasing agency counts towards the 36 month-limit. If the employee continues to work for the employer after the expiry of the 36-month limitation, the employment is converted into an indefinite engagement.

2. Obligation to adopt the Work Posts Systematization Act

Employers who employ more than 10 employees have to adopt an internal general enactment which lists work posts and sets out job descriptions, the number of employees planned for each work post, the requirements for each work post, such as skills, education and work experience.

3. Changes in the regulation of working hours

Part-time work cannot be shorter than 10 hours per week, except for the GM/CEO. Full working hours are 40 hours per week as they used to be under the old law. With overtime, the weekly limit is set to 50 hours, provided, however, that no employee can work more than 48 hours per week, including overtime, on average within the period of four months.

An exception is the work under redistribution of working hours regime. This regime allows longer hours in one period (not treated as overtime), which are compensated with shorter hours in another period. The redistribution period cannot be shorter than one month and longer than six months within one calendar year. During the redistribution period, working hours may not exceed 48 hours within a single week (including overtime) while the average number of weekly working hours must not exceed the normal weekly hours stated in the employment agreement. If the collective agreement so provides and the employee consents to such redistribution regime, the maximum number of weekly hours may be 54 (60 for seasonal jobs), provided the redistribution period does not exceed four months (six months, if the collective agreement specifically provides so).

If the redistribution of working hours is not regulated by a collective agreement, the employer is obliged to adopt a plan of redistribution of working hours and submit it to the labour inspection before the implementation.

4. Night work

An employee who works at night at least three hours a day is entitled to periodical medical check-ups. No one can work a night shift for more than an average of 8 hours within 24 hours over the reference period of four months. Night work must be notified to the labour inspection.

5. Annual leave

Minimum statutory annual leave is 20 working days for regular jobs and 30 working days for jobs with severe conditions where full-time working hours are reduced from 40 to 36 hours per week. Employees who have a six-day long work week are entitled to a minimum of 24 working days of annual leave. The employer is obliged to adopt an annual leave plan until 30 April of the calendar year for the current year. Employers are not allowed to compensate the employees for unused annual leave, except in the case of employment termination that occurs before the employee has consumed his entire annual leave entitlement for the given year.

If there is a need for work during public holiday, the employer (with some exceptions made in public interest) is obliged to give the affected employees and the trade union, if any, a three-day notice.

6. Shut down

During the employer’s shut down, the employees can receive 60% of their average salary earned in the previous six months, but not less than the minimum wage, for a maximum period of four months within a calendar year.

Shut down is permitted in case of: (i) problems in the employer’s business; (ii) order to cease activities by a state authority; (iii) natural disasters; and (iv) other cases stipulated in the collective agreement.

7. Salaries must be paid into bank account

The previous Labour Act did not contain a specific provision that would oblige employers to pay salaries into bank account, so many employers were paying cash. The new Labour Act contains an explicit provision to the effect that the employer may only pay salaries to the employee’s bank account.

8. Special protection of pregnant women and parents

Employment may not be terminated during pregnancy or maternity, or parental leave, except for serious breach of work duties.

Maternity leave is redefined as a leave which begins 28 days prior to childbirth and ends 70 days after childbirth. The period of 70 days after the childbirth may be used by both parents at the same time, in case of the birth of two or more children. The parental leave begins after the maternity leave and lasts until the expiry of 365 days after the childbirth. Parental leave may be used by both parents in equal parts, but not simultaneously. If one parent started using the parental leave, the other parent may continue to use it after the expiry of 30 days from the commencement of the leave.

The employer may not declare the employee redundant while the employee is on any leave related to pregnancy, childbirth or childcare. If a fixed-term employment agreement expires during any of these leaves, it is extended until the end of the leave.

In addition, a pregnant woman is entitled to a one-day absence every month for prenatal medical examinations. She is obliged to inform the employer in writing of the scheduled examination three days in advance. Also, there is a right to a two-hour break per day for breastfeeding.

9. Mandatory mediation

The employee is obliged to initiate proceedings in front of the Agency for Peaceful Resolution of Labour Disputes or in front of the Centre for Alternative Dispute Resolution before initiating court proceedings against the employer. Court proceedings may be initiated within 15 days from the end of the mandatory mediation.

10. Statute of limitations

The statute of limitations for monetary claims arising out of employment is four years from the date the obligation became due. The claims for payment of contributions for pension and disability insurance are not subject to any statute of limitations.

11. Dismissals

The procedure for determination of breach of work duties is still complicated. However, the law now clarifies that dismissal for breach is now possible without having to first conduct disciplinary proceedings in the following cases:

a. if the employee’s behaviour is such that he cannot continue to work for the employer (e.g. coming to work intoxicated, drinking or using narcotics during work, refusing to undergo medical test to determine intoxication, abusive, offensive, or inappropriate behaviour to the customers or the employees, etc.);

b. if the employee gave inaccurate data during the recruitment process;

c. abuses of sick leave;

d. failure to return to work after the expiry of unpaid leave.

12. Notarization of the agreement on employment termination

Agreements on consensual termination will from now on have to be certified by a notary.

13. Change of employer

The employer must notify the employees of the change of status (merger, spin-off) or a legal transaction that results in the “change of employer” no later than 15 days prior to the change. The predecessor employer and the successor employer are obliged to inform the trade union or the employees’ representative at the latest 30 days before the change of:

a. the effective date of the change;

b. the reasons for the change;

c. legal, economic and social consequences for employees; and

d. measures for mitigating the socio-economic impact of the change on the employees (if any).

In the event of “change of employer”, employees transfer to the employer’s successor who is bound to respect all of their rights. The employee who opposes the transfer to the successor employer is entitled to a severance pay in the amount higher of: (i) 1/3 of the employee’s average net monthly salary earned within the period of six months prior the termination, for each year of service with the employer and (ii) 1/3 of average monthly net salary in Montenegro, but in any event, no less than the higher of (a) three average monthly net salaries the employee earned from the employer in the period of six months prior to the termination and (b) average net salary in Montenegro in the last six months prior to the termination.

The successor employer is responsible for the obligations arising from the employment incurred up to the date of transfer of the employment agreements jointly and severally with the predecessor employer. The successor employer is obliged to conclude new employment agreements with the employees within five days from the change of status. If the employee refuses to conclude the new employment agreement within five days, his employment terminates. The new employment agreement cannot provide for less favourable rights of the employee compared to the previous agreement.

Author: Jelena Bogetic, BDK Advokati

New Montenegrin Labour Act introduces important changes to the regulation of employment.

1. The maximum duration of fixed-term contract is extended to 36 months

Although the basis for conclusion of fixed-term contracts remains limited (work the duration of which is pre-determined by a deadline, by completion of certain work, or occurrence of a specific event), the maximum duration of fixed-term employment agreements is extended from 24 months to 36 months. The time the employee spent working with the employer through a staff leasing agency counts towards the 36 month-limit. If the employee continues to work for the employer after the expiry of the 36-month limitation, the employment is converted into an indefinite engagement.

2. Obligation to adopt the Work Posts Systematization Act

Employers who employ more than 10 employees have to adopt an internal general enactment which lists work posts and sets out job descriptions, the number of employees planned for each work post, the requirements for each work post, such as skills, education and work experience.

3. Changes in the regulation of working hours

Part-time work cannot be shorter than 10 hours per week, except for the GM/CEO. Full working hours are 40 hours per week as they used to be under the old law. With overtime, the weekly limit is set to 50 hours, provided, however, that no employee can work more than 48 hours per week, including overtime, on average within the period of four months.

An exception is the work under redistribution of working hours regime. This regime allows longer hours in one period (not treated as overtime), which are compensated with shorter hours in another period. The redistribution period cannot be shorter than one month and longer than six months within one calendar year. During the redistribution period, working hours may not exceed 48 hours within a single week (including overtime) while the average number of weekly working hours must not exceed the normal weekly hours stated in the employment agreement. If the collective agreement so provides and the employee consents to such redistribution regime, the maximum number of weekly hours may be 54 (60 for seasonal jobs), provided the redistribution period does not exceed four months (six months, if the collective agreement specifically provides so).

If the redistribution of working hours is not regulated by a collective agreement, the employer is obliged to adopt a plan of redistribution of working hours and submit it to the labour inspection before the implementation.

4. Night work

An employee who works at night at least three hours a day is entitled to periodical medical check-ups. No one can work a night shift for more than an average of 8 hours within 24 hours over the reference period of four months. Night work must be notified to the labour inspection.

5. Annual leave

Minimum statutory annual leave is 20 working days for regular jobs and 30 working days for jobs with severe conditions where full-time working hours are reduced from 40 to 36 hours per week. Employees who have a six-day long work week are entitled to a minimum of 24 working days of annual leave. The employer is obliged to adopt an annual leave plan until 30 April of the calendar year for the current year. Employers are not allowed to compensate the employees for unused annual leave, except in the case of employment termination that occurs before the employee has consumed his entire annual leave entitlement for the given year.

If there is a need for work during public holiday, the employer (with some exceptions made in public interest) is obliged to give the affected employees and the trade union, if any, a three-day notice.

6. Shut down

During the employer’s shut down, the employees can receive 60% of their average salary earned in the previous six months, but not less than the minimum wage, for a maximum period of four months within a calendar year.

Shut down is permitted in case of: (i) problems in the employer’s business; (ii) order to cease activities by a state authority; (iii) natural disasters; and (iv) other cases stipulated in the collective agreement.

7. Salaries must be paid into bank account

The previous Labour Act did not contain a specific provision that would oblige employers to pay salaries into bank account, so many employers were paying cash. The new Labour Act contains an explicit provision to the effect that the employer may only pay salaries to the employee’s bank account.

8. Special protection of pregnant women and parents

Employment may not be terminated during pregnancy or maternity, or parental leave, except for serious breach of work duties.

Maternity leave is redefined as a leave which begins 28 days prior to childbirth and ends 70 days after childbirth. The period of 70 days after the childbirth may be used by both parents at the same time, in case of the birth of two or more children. The parental leave begins after the maternity leave and lasts until the expiry of 365 days after the childbirth. Parental leave may be used by both parents in equal parts, but not simultaneously. If one parent started using the parental leave, the other parent may continue to use it after the expiry of 30 days from the commencement of the leave.

The employer may not declare the employee redundant while the employee is on any leave related to pregnancy, childbirth or childcare. If a fixed-term employment agreement expires during any of these leaves, it is extended until the end of the leave.

In addition, a pregnant woman is entitled to a one-day absence every month for prenatal medical examinations. She is obliged to inform the employer in writing of the scheduled examination three days in advance. Also, there is a right to a two-hour break per day for breastfeeding.

9. Mandatory mediation

The employee is obliged to initiate proceedings in front of the Agency for Peaceful Resolution of Labour Disputes or in front of the Centre for Alternative Dispute Resolution before initiating court proceedings against the employer. Court proceedings may be initiated within 15 days from the end of the mandatory mediation.

10. Statute of limitations

The statute of limitations for monetary claims arising out of employment is four years from the date the obligation became due. The claims for payment of contributions for pension and disability insurance are not subject to any statute of limitations.

11. Dismissals

The procedure for determination of breach of work duties is still complicated. However, the law now clarifies that dismissal for breach is now possible without having to first conduct disciplinary proceedings in the following cases:

a. if the employee’s behaviour is such that he cannot continue to work for the employer (e.g. coming to work intoxicated, drinking or using narcotics during work, refusing to undergo medical test to determine intoxication, abusive, offensive, or inappropriate behaviour to the customers or the employees, etc.);

b. if the employee gave inaccurate data during the recruitment process;

c. abuses of sick leave;

d. failure to return to work after the expiry of unpaid leave.

12. Notarization of the agreement on employment termination

Agreements on consensual termination will from now on have to be certified by a notary.

13. Change of employer

The employer must notify the employees of the change of status (merger, spin-off) or a legal transaction that results in the “change of employer” no later than 15 days prior to the change. The predecessor employer and the successor employer are obliged to inform the trade union or the employees’ representative at the latest 30 days before the change of:

a. the effective date of the change;

b. the reasons for the change;

c. legal, economic and social consequences for employees; and

d. measures for mitigating the socio-economic impact of the change on the employees (if any).

In the event of “change of employer”, employees transfer to the employer’s successor who is bound to respect all of their rights. The employee who opposes the transfer to the successor employer is entitled to a severance pay in the amount higher of: (i) 1/3 of the employee’s average net monthly salary earned within the period of six months prior the termination, for each year of service with the employer and (ii) 1/3 of average monthly net salary in Montenegro, but in any event, no less than the higher of (a) three average monthly net salaries the employee earned from the employer in the period of six months prior to the termination and (b) average net salary in Montenegro in the last six months prior to the termination.

The successor employer is responsible for the obligations arising from the employment incurred up to the date of transfer of the employment agreements jointly and severally with the predecessor employer. The successor employer is obliged to conclude new employment agreements with the employees within five days from the change of status. If the employee refuses to conclude the new employment agreement within five days, his employment terminates. The new employment agreement cannot provide for less favourable rights of the employee compared to the previous agreement.