|GH 2017 Serbia|
The issue of re-characterisation of an independent contractor into an employee seems to be increasingly topical in Serbia as more domestic and foreign companies (especially in the IT sector) look for flexible forms of engagement. This is not necessarily to by-pass the rigid and expensive employment regime but often because the contractors prefer working outside the employment arrangements to allow greater independence (e.g. the possibility to work flexible hours and to develop their business by providing services to multiple companies).
When it comes to re-characterisation of the contractual relationship, Serbian court practice is still quite scarce. There are only about a dozen relevant court decisions, none of which specifically address the issue of re-classification of an entrepreneur working under a service agreement, which is probably the most commonly used type of engagement outside employment among IT and consultancy companies. The court practice mostly relates to blatant cases of clandestine work, such as when an individual holds no agreement at all with the employer, or has an agreement for work outside employment, which is clearly a sham (e.g. constant engagement under out-of-employment agreements designed for seasonal work).
Currently, the risk of re-classification is commonly perceived as being low to moderate.