Employer of Record in Montenegro

Businesses can only operate smoothly in Montenegro if they comply with local labor laws including drafting compliant employment contract agreements and meeting taxation and payroll obligations. Learn more about the employment laws and regulations in Montenegro below, to avoid any compliance issues.

Employment Contract Requirements

Montenegro adheres to the 2008 Labour Act, encompassing a range of labor rights and conditions, and in January 2020, introduced a new Labour Act to align with EU standards. Employment formalities in Montenegro encompass:

• Employment Type
• Compensation and Benefits
• Working Hours and Schedule
• Termination Conditions

Onboarding Process

We can help you get a new employee started in Montenegro quickly, with a minimum onboarding time of just 1-2 working days. The timeline starts once the employee submits all required information onto the Playroll platform and completes any necessary local authority registrations.

For non-nationals, the Right to Work assessment (if applicable) may add up to three extra days. Additional time may be needed for follow-ups on this assessment. Please note, payroll cut-off dates can impact the actual start date. Playroll's payroll cut-off date is the 10th of each month unless otherwise specified.

Working Hours in Montenegro

The regular work schedule consists of 8 hours per day and 40 hours per week, from Monday to Friday.

Overtime in Montenegro

In Montenegro, overtime can be scheduled to meet specific work demands, but there are regulatory guidelines in place. These include restrictions on weekly working hours, which should not surpass an average of 48 hours per week over four months, with a maximum limit of 50 hours per week.

In some cases, collective agreements may establish an annual cap of 250 hours for overtime. Additionally, the rate for overtime pay, typically defined in employment agreements or collective agreements, must be at least 140% of the regular wage.

Probation Period in Montenegro

In Montenegro, the probationary period, usually lasting three months, is defined within either the collective agreement or the employment contract, with a maximum duration of six months.

Fiscal Year in Montenegro

1 January - 31 December is the 12-month accounting period that businesses in Montenegro use for financial and tax reporting purposes.

Payroll Cycle in Montenegro

The payroll cycle in Montenegro is usually monthly, with employees being paid on or before the last day of the month.

Minimum Wage in Montenegro

The minimum wage for employees in Montenegro is typically 3.33 EUR per hour, amounting to ~532.54 EUR per month for a typical 40 hour work week.

Bonus Payments in Montenegro

In Montenegro, there are no legal requirements or regulations that mandate the payment of 13th salaries, however this is considered common practice.

The provision of a 13th salary, also known as a Christmas bonus or a year-end bonus, is generally determined by individual employment contracts, collective agreements, or company policies

Employer Tax Contributions

Employer payroll contributions are generally estimated at an additional 8.3% on top of the employee salary in Montenegro.

Employee Payroll Tax Contributions

In Montenegro , the typical estimation for employee payroll contributions cost is around 24%.

Individual Income Tax Contributions

In Montenegro, the income tax operates on a Pay As You Earn system, with rates ranging from 0% to 15%. The calculation of income tax is dependent on the individual's income as follows:

Pension in Montenegro

In Montenegro, the pension system is funded through contributions from both employers and employees. Employers are required to contribute 5.5% of their employees' salaries to both the Pension and Disability insurance funds. Employees are eligible for pension at the mandated retirement ages. However, to qualify for a pension, individuals must have a minimum contribution period of 15 years.

Mandatory Leave Entitlement in Montenegro

The annual leave entitlement in Montenegro is 20 days for a full time worker. These can include public holidays on top of that or within those days, which would otherwise be unpaid.

Public Holidays In Montenegro

Montenegro observes several national holidays, and many of them extend over multiple days, granting employees the entitlement to take the day off.

Paid Time Off in Montenegro

Employees have the right to annual leave, as determined by a collective agreement, with a minimum of 20 working days each calendar year. If employees work six days a week, they are entitled to a minimum of 24 working days of annual leave.

Maternity Leave In Montenegro

Female employees in Montenegro are entitled to a fully paid maternity leave lasting 98 days. Out of this duration, 28 days are taken before childbirth, with the remaining 70 days available after the child's birth.

Paternity Leave In Montenegro

In Montenegro, there is no statutory paternity leave specifically designated for fathers. However, parental leave provisions allow either parent to take leave following the mother's maternity leave.

Sick Leave In Montenegro

In Montenegro, employees can take paid sick leave for up to 365 days, however there is no limit to amount of sick leave. The payment rates and sources vary depending on the duration: for the first 60 days, the employer covers 70% of the salary, while from the 60th day onwards, payment is covered by the Health Insurance Fund of Montenegro.

Parental Leave In Montenegro

In Montenegro, parental leave begins following maternity leave and extends for 365 days. Both parents are eligible for parental leave, but they cannot take it simultaneously. There is a 30-day waiting period for the second parent to start their parental leave if the first parent has already taken it.

Adoption Leave

An adoptive parent of a child under eight years old is eligible for a continuous one-year leave from work for childcare, with corresponding salary compensation.

Other Types Of Leave

Depending on the collective agreement or employment contract, employees may be given additional types of leave as agreed upon by the employer and employee. Employees are entitled to up to seven days of paid leave for: marriage, childbirth, professional examinations, and the death of an immediate family member

Termination Process in Montenegro

Termination of a fixed-term contract by employers can occur for business reasons, personal reasons, or due to worker misconduct. Termination necessitates prior notice and a written explanation. Juist grounds for termination may include:

• Probation period evaluation
• Objective grounds
• Disciplinary reasons
• Unsuitability for job performance

Notice Period in Montenegro

In Montenegro, the termination of employment must be communicated through written notice, typically with a minimum of 30 days in advance, unless otherwise specified in the employment contract or collective agreement.

Severance in Montenegro

The employment contract or collective agreement must explicitly define severance pay, with the minimum severance payment equal to an amount of 1/3 if employee average salary for the proceeding 6 months. However the severance payment cannot be less than at least 3 times the employee's salary or average monthly salary in Montenegro (calculation therefore performed on whichever is higher). This payment should be provided without any deductions for taxes and contributions.