December 2019 – After more than 15 years since staff leasing was introduced in practice in Serbia, the Serbian parliament finally adopted the first law regulating this type of hiring – the Staff Leasing Law (the "Law").
The implementation of the Law requires companies that are using this type of hiring to change their budgets and business models, to change their systematisation of jobs and internal policies on benefits and awards, and to renegotiate their arrangements with staff leasing agencies. However, the deadline for such all-encompassing changes is apparently too soon, as the Law takes effect from 1 March 2020.
In this article we will present the most important new requirements introduced by the Law, areas requiring special attention, and an overview of the problems we expect in practice.
Limitations related to headcount
According to the Law, leased staff will need to be employed by the staff leasing agency, and this can be both unlimited-term and fixed-term employment.
If a user of staff leasing services takes on agency employees who are employed for an unlimited period of time, there are no limits when it comes to the maximum number of hired agency staff. However, if a user of staff leasing services would hire agency employees who are employed at the agency based on a fixed-term employment contract, it can only hire:
- one agency employee, if it has a headcount of two to nine employees;
- two agency employees, if it has a headcount of 10-19 employees;
- three agency employees, if it has a headcount of 20-29 employees;
- four agency employees, if it has a headcount of 30-39 employees;
- five agency employees, if it has a headcount of 40-49 employees; or
- 10% of the total headcount as agency employees, if the headcount exceeds 50 employees.
Limitation related to period of engagement
According to the Law, an agency employee who is employed by an agency for an unlimited period of time can work for the same user of staff leasing services for an unlimited period of time.
On the other hand, an agency employee who is employed by the agency based on a fixed-term employment contract can work for the same user of staff leasing services up to 24 months in total, regardless of how long the breaks between certain work periods last and also regardless of whether the user of staff leasing services used different staff leasing agencies to hire the same person.
If the same agency employee continues to work for the user of staff leasing services after the maximum 24-month period expires, it will be deemed that this person is an employee of the user of the staff leasing services and that this employment is for an unlimited period of time.
The Law allows for certain exceptions where the maximum period for hiring of fixed-term agency employees may last longer and makes a reference to the same exceptions that apply in case of fixed-term employment under the Labour Law (e.g., project-related work, replacing of a temporary absent employee, etc.).
Please note that it is not completely clear whether the counting for the above 24-month period in case of existing staff leasing arrangements will start only as of the date when the Law becomes applicable or as of the starting date of engagement. According to an unofficial interpretation of the Ministry of Labour stated at one of the many public debates before the Law was adopted, the maximum period of engagement shall start to expire only as of the date when the Law becomes applicable. However, please be reminded that in case of the amendments to the Labour Law in 2014, when new rules on the maximum term of fixed-term employment were introduced, we had a situation where the Ministry of Labour took an official view that the maximum periods of fixed-term contracts shall start to expire anew as of the starting date of application of the new rules, while, on the other hand, the Serbian courts took a completely different approach in many court cases, taking only the starting date of engagement as the relevant date for the maximum period. Therefore, in case of existing arrangements where users of agency services have been hiring agency staff who are not employed with the employment agency for an unlimited period of time, we recommend that the above risk is carefully evaluated before the Law starts to apply.
The Law implements the equal treatment rule from EU Directive 2008/104/EC but adds a wider definition of what is considered as the "same job". In short, if the user of staff leasing services already has an employee working at the same job as the agency employee, the agency employee will need to be given the same base salary and the same level of other mandatory benefits as given to the employee doing the same job. Also, if the user of staff leasing services does not have an employee doing the same job, but has another similar job position which requires the same type and level of qualifications, skills, work experience and the same level of complexity, responsibility and other special work conditions, the agency employee will need to be given the same base salary and the same level of other mandatory benefits applicable to this "similar job position".
And now we come to, probably, the most problematic clause of the Law – if the user of staff leasing services does not have the above "similar job position", then it will need to give to the agency employee at least the lowest base salary that it pays to its employees who have the same level of qualifications as the agency employee. Since the Law does not take into consideration also the type of qualifications (i.e. the area of expertise) but only the level of education (i.e. high school, Bachelor degree, Master degree, etc.), and also does not provide that these "mirrored" qualifications must comply with what was required for the job for which the agency employee was hired in the first place, we can easily have a situation where, for example, a warehouse worker who has a Master degree in literature can demand to be paid as a mid-level manager who has a Master degree in business administration, only because this position is the lowest paid position where the user of staff leasing services has an employee who has a Master degree, regardless of the area of expertise.
The above clauses on comparable employees are expected to cause problems and different interpretations in practice, and users of staff leasing services should carefully re-examine and adjust their existing systematisations of employment positions and their staff leasing arrangements.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.