Temporary agency work with foreign workers in Serbia: licence, the 10% cap and equal pay

A foreign worker in Serbia may work for a user employer through a temporary work agency. The agency needs a licence from the ministry responsible for labour and an entry in the ministry register, assigned employees on fixed term contracts may not exceed 10% of the user employer's total headcount, and their pay must match that of a comparable employee at the user.

What the Temporary Agency Work Act introduced

The Temporary Agency Work Act was adopted on 6 December 2019 and has applied since 1 March 2020 (Paragraf Lex). Before that date, assignment of staff in Serbia had no dedicated legal frame, so the work ran through commercial cooperation contracts that gave the worker employee status with neither party. The Act ended that practice and set three pillars.

The first pillar is the licence. Since 1 March 2020, only an agency holding a licence from the ministry responsible for labour and employment, and registered in the agency register, may assign employees. A company without that licence may not assign people, whatever the contract is called. A user employer that takes workers from an unlicensed agency is running an arrangement the labour inspectorate treats as engagement outside the law.

The second pillar is the employment contract with the agency. The assigned employee signs with the agency, not with the user. The agency pays the wage, registers the worker for social insurance and keeps the employment record. The user gives the work instructions and answers for safety on its own site.

The third pillar is equal treatment. Under the Act, an assigned employee is placed on the same footing as the user's own staff in the basic working conditions: wage and wage compensation, working hours, rests and leave. The benchmark is the comparable employee, meaning someone doing the same job at the user, or a job of the same qualification level. Where the user has no such employee, the user's own internal pay act becomes the benchmark. This is the clause buyers most often miss. Procurement negotiates the agency rate as if it were a service price, while the Act holds a wage floor set by the user's own pay grade.

The 10% cap and what counts towards it

The Temporary Agency Work Act limits the number of assigned employees who hold fixed term contracts with the agency: at any one user employer, their number may not exceed 10% of that user's total headcount. The cap is measured at company level, not per site, and it does not cover assigned employees whom the agency employs on open ended contracts. The Act also provides exceptions for smaller employers and for certain situations, so a user with a small headcount should read the clause before planning an assignment.

For a foreign worker a second statute applies on top. Amendments to the Employment of Foreigners Act published in Official Gazette of the Republic of Serbia 62/2023 introduced temporary employment of a foreigner as assignment to a user employer (Paragraf Lex). That gave the assigned foreigner an explicit legal basis, and also a double paper trail: the employment relationship sits with the agency, while work and residence rights follow the permit route described in our note on changing employer on a single permit.

Supervision, timing and the cost of getting it wrong

Both statutes are supervised by the Ministry of Labour, Employment, Veteran and Social Affairs through the Labour Inspectorate. The practical order for a user employer runs like this: before signing the framework contract, check the agency licence number in the ministry register; before the worker travels, secure the work and residence basis; on the first working day, enter the assigned employee in the site attendance record. Step one takes a day. Step two is measured in weeks and it sets the realistic start date.

The penalties sit in the penalty provisions of the Employment of Foreigners Act. Unlawful engagement of a foreigner costs a legal entity 800,000 to 2,000,000 dinars, and a sole trader 50,000 to 500,000 dinars. The usual scenario is scheduling rather than bad faith: an agency brings fifteen people onto a project with a hundred employees, eleven of them already on fixed term agency contracts, and the user has crossed the 10% cap the same day. An inspector reads that off a single payroll table, and the correction means ending contracts for part of the crew mid shift. The same exposure follows a worker whose social insurance was never registered on arrival, which we cover in the guide to social insurance registration for foreign workers.

Agency assignment in Serbia has been a regulated and legitimate model since 1 March 2020, but it carries two counters the user employer has to keep itself: the share of fixed term assigned staff in total headcount, and the pay level of the comparable employee. Both are visible from the payroll, and both are settled before people arrive rather than after. What the whole engagement costs per worker is set out in our cost breakdown for hiring a foreign worker in Serbia and in the overview for employers.