Termination of Employment Contracts in Montenegro

In Montenegro, terminating an employment contract is a strictly regulated process that requires both employers and employees to follow legally established procedures. Below are the key aspects of employment termination, excluding mutual agreement terminations and financial settlements such as salary and leave payments.

1. For Employers: Main Grounds for Dismissal

1.1. Workforce Reductions

Workforce reduction is one of the most common reasons for dismissal.

📌 Conditions:

• Justified by economic or organizational necessity.
• Employers cannot hire new employees for the same positions within six months.

📌 Notice Period:

• 30 days – if fewer than 20 employees are laid off.
• 30 days of consultation with the union or employee representatives – if 20 or more employees are affected.
• Notification of the Employment Center to assist affected employees.

📌 Compensation:

• At least 1/3 of the average monthly salary for each year of employment.
• Minimum three average monthly salaries.

1.2. Company Liquidation

📌 Conditions:

• The decision to liquidate must be documented and registered with the authorities.
• Employees must be notified of the contract termination.

📌 Compensation:

• At least two average monthly salaries (excluding taxes and contributions) or more if specified in the employment contract.

📌 Additional Steps:

• Notification of the Employment Center and providing information about affected employees to support their reemployment.

1.3. Unsatisfactory Work Performance

📌 Conditions:

• The employer must provide written instructions and allow 30 days for the employee to correct their performance.
• Dismissal is possible if improvements are not made.

📌 Notice Period:

• At least 5 working days before contract termination.

📌 Compensation:

• Not applicable.

1.4. Violation of Work Discipline

📌 Grounds for Dismissal:

• Repeated tardiness, absences, or violation of workplace safety rules.
• Alcohol or drug use in the workplace.

📌 Procedure:

• Documented evidence of violations is required.
• The employee must be given 5 working days to provide an explanation.

📌 Compensation:

• Not applicable.

1.5. Contract Expiration

📌 Conditions:

• Fixed-term contracts automatically expire at the end of the agreed period.

📌 Notice Period:

• Not required.

📌 Compensation:

• Not applicable.

1.6. Probationary Period

📌 Conditions:

• In Montenegro, the probationary period can be up to 6 months.
• The employer can terminate the contract without justification.

📌 Notice Period:

• 5 days.

📌 Compensation:

• Not applicable.

2. For Employees: Rights and Compensation

2.1. Severance Pay

Employees are entitled to compensation in the following cases:

✔ Workforce Reduction:

• At least 1/3 of the average salary for each year of service.
• Minimum three average monthly salaries.

✔ Company Liquidation:

• At least two average monthly salaries.

✔ Unlawful Dismissal:

• Employees can file a complaint in labor court or with the Labor Inspectorate for reinstatement and compensation.

2.2. Right to Appeal

📌 If an employee considers the dismissal unlawful:

• Labor Inspectorate Complaint: Within 30 days.
• Court Appeal: Within 15 days after receiving the dismissal notice.

3. Special Conditions for Foreign Employees

3.1. Employment Contract Conditions

• Maximum contract duration: 1 year (renewable).
• Contracts must be notarized.
• If the employee does not speak Serbian, the contract must be bilingual and notarized by a translator.

3.2. Termination Procedure

• Foreign employees have the same rights and obligations as Montenegrin workers, including compensation and compliance with legal procedures.

4. Mass Layoffs

📌 If 20 or more employees are dismissed:

Notice Periods:

• 30 days of consultation with trade unions and the Employment Center.
• 30-day notice to employees.

Compensation:

• Minimum 1/3 of the average salary per year of service.

📌 Additional Support:

• Employment Center assistance (retraining, job placement).

5. Penalties & Risks for Employers

📌 Failure to comply with dismissal regulations may result in:

❌ Fines for labor law violations.
❌ Legal claims by employees.
❌ Court-ordered reinstatement of unlawfully dismissed workers.
❌ Compensation for forced unemployment.

6. Summary Table: Employment Termination Conditions

Conclusion

📌 Compliance with employment termination laws is a legal obligation for employers. Failing to follow proper procedures may lead to significant fines, legal disputes, and reputational damage.

📌 Employees should be aware of their rights to ensure they are treated fairly and can challenge unlawful dismissalsthrough labor courts or government agencies.