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This country guide is for general informational purposes only and should not be construed as legal advice, nor as binding based on your relationship with Lano. When using Lano's solutions, the specifics may depend on your EOR and Payroll setup with our partners. Although we update this guide regularly, it may not reflect current legal developments. Lano Software GmbH disclaims any liability for any actions you take or refrain from taking based on the content contained in this country guide.
Located on the Adriatic Sea and bordering Serbia, Kosovo, Bosnia and Herzegovina, Albania and Croatia, Montenegro is a strategic business location for companies looking to establish a presence in Southeastern Europe. The country’s attractive tax system, the dynamic growth rate of the economy and its business-focused government strategy are further reasons for international organizations to set up business in the Balkan state.
Traditionally focused on the service sector, the country is nowadays putting a major effort into developing its ICT sector. The local workforce is highly skilled and English is widely spoken.
Employment contracts in Montenegro are typically concluded for an indefinite term, but fixed-term contracts are possible if certain conditions are met. However, fixed-term contracts may not exceed a period of 36 months.
It is mandatory to put a written employment agreement in place before the employee starts working for the business. There are no specific language requirements with regard to employment contracts, but official employment documents should be written in Montenegrin - or be provided in bilingual form. In any case, the chosen language should be one that the employee can easily understand.
Employment contracts should at least contain the following information:
Identification of both parties
Job title, description and required qualification
Type of employment (i.e. fixed-term or permanent)
Date of commencement (and employment duration for temporary contracts)
Basic salary as well as other compensation or benefits
Working hours and schedule
Total number of holidays
Terms of termination
Employee and employer can agree on a probation period of up to 6 months. During this time, the notice period is shortened to 5 days.
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It is normal for employees to work a 40-hour week, which is typically split into 5 days of 8 hours each. Working hours might, however, be reduced under an applicable collective bargaining agreement.
Full-time employees must have a lunch break of no less than 30 minutes, which is to be included in the employee’s standard working hours. For part-time employees working between 4 and 6 hours per day, the daily break cannot be shorter than 15 minutes. If an employee’s daily working hours exceed 10 hours, they are entitled to a 45-minute break.
Employees must have a rest period of at least 12 hours between two working days, as well as a continuous 24-hour rest period per week - this is the legal minimum. In Montenegro, the weekly rest day usually falls on a Sunday.
Overtime must be requested in a written form by the employer and is only permitted under specific circumstances that trigger a sudden increase in the organization’s workload. It is further mandatory to inform the labor inspectorate about the introduction of overtime work within 3 days from the first day on which employees are required to work overtime.
Under no circumstances are employees allowed to work overtime for more than 10 hours per week, bringing the total weekly working time to 50 hours. Overtime pay is regulated by collective agreements or by the individual employment contract.
Employees in Montenegro usually get paid on a monthly basis. Usually, the payday falls on the last day of the month. It should be noted that cash payments of salaries and wages are no longer allowed.
In the beginning of 2022, the national minimum wage rose to EUR 450 per month.
Employers have to provide employees with sick pay for at least 5 days per year. Any additional days are normally covered by statutory sickness benefits. Employees who are unable to work due to illness or injury must inform their employer about their condition within 3 days, and provide a medical certificate.
There are no legal provisions for a 13th month salary.
Employees and employers in Montenegro are subject to the following tax and social security contribution rates (last review February 2023):
9% - 15%
9% - 15% corporate tax rate
21% VAT (standard rate)
up to 15%
Up to EUR 700: 0%
EUR 700 - EUR 1,000: 9%
Above EUR 1,000: 15%
Municipalities in Montenegro charge additional income tax of between 13% and 15%.
5.5% pension and disability insurance (subject to specific annual cap)
0.5% unemployment insurance
15% pension and disability insurance (subject to specific annual cap)
0.5% unemployment insurance
* Employers may further have to make a 0.2% labor fund contribution.
Please note that the compulsory health insurance contribution for employees and employers (levied at 2.3% and 8.5% respectively) was abolished in 2022.
Please note that the social security contributions indicated above do not necessarily reflect the actual employment costs. These may differ depending on the employment contract and due to other factors (e.g. 13th and 14th salary, health insurance allowances, accrual for severance pay, etc.).
Employees are entitled to at least 20 days of paid annual leave per year. Depending on the individual employment agreement or an applicable collective agreement, an employee’s annual leave entitlement might increase with time. In addition, Montenegro observes 13 public holidays.
Maternity leave in Montenegro lasts for 98 days. It starts 28 days before the expected due date and ends 70 days after the child’s birth. In case of multiple births, both parents can take paid leave during the first 70 days following the birth.
After her return to work, the mother is allowed a two-hour break to be used for breastfeeding until the child is 1 year old. Furthermore, pregnant employees get an additional day off every month which can be used for pregnancy-related medical appointments.
There is no paternity leave as such, but fathers can go on parental leave (see next section).
Once the initial maternity leave period is over, either mother or father can go on parental leave until the child’s first birthday. Both parents have equal rights to go on parental leave. However, they cannot make use of their leave entitlement simultaneously.
In addition to the statutory benefits mentioned above, employers can offer further employee benefits such as meal and transport allowances. Additional leave must be granted on special occasions such as marriage, exams or death of a family member.
Fixed-term contracts end automatically upon expiry of the term they were concluded for. Indefinite contracts can be terminated by both parties for any of the following reasons (non-exhaustive list):
Ongoing underperformance of the employee
Breach of contract or work duties
Unexcused absence from work
Misuse of sick leave
Redundancy (i.e. dismissal due to economic reasons)
Employees must receive a written letter of termination detailing the reason for the dismissal.
The notice period for terminating an employee is 30 days - the same notice period applies to employees wishing to resign. However, there are certain exceptions such as the employee’s probationary period, during which the notice period is shortened to 5 days. No notice must be given to employees in case of a dismissal due to violent conduct, unjustified absence from work or other cases prescribed by law.
Employees who are made redundant are entitled to severance pay. Severance pay in Montenegro is equal to one third of the employee’s average monthly salary per year of service - only applies to employees whose length of service exceeds 18 months. For employees who have suffered workplace injuries, severance pay is higher.
Pregnant women and employees on maternity or parental leave are protected from dismissal.
This country guide is for informational purposes only and should not be construed as legal advice. The content of this guide contains general information, and although we update this guide regularly, it may not reflect current legal developments. Lano Software GmbH disclaims any liability for any actions you take or refrain from taking based on the content contained in this country guide.
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