What does termination of employment mean?
The termination of the employment relationship represents the moment when the employment relationship between the employee and the employer is terminated, regardless of the reason – whether it is a dismissal by the employee or the employer, mutual termination, expiration of the contract or some other legal reason.
However, what many employers overlook is that termination of employment does not mean the end of obligations. On the contrary, then a whole series of legal duties comes into play which, if not properly fulfilled, can lead to disputes, fines and additional costs.
Content
- What are the employer’s key obligations upon termination of employment
- Payment of wages and other claims
- Issuance of mandatory documentation
- Obligations towards state bodies
- Special situations (mutual termination, dismissal, redundancy)
- The most common mistakes of employers
- FAQ – most frequently asked questions
- Conclusion
1. Key obligations of the employer upon termination of employment
The employer’s obligations can be classified into several categories:
- financial obligations
- administrative duties
- tax and registration obligations
- obligations to the employee (documentation)
In practice, it is the combination of these obligations that often creates a problem because employers fulfill one but forget the others.
2. Payment of wages and other claims
1. Unpaid wages
The employer is obliged to pay the employee:
- earnings until the day of termination of employment
- possible back wages
- salary allowances
- allowances (night work, overtime, etc.)
Deadline: no later than the next accounting period, but in practice it is recommended immediately after termination.
2. Compensation for unused vacation
If the employee did not take annual leave, the employer must pay compensation. According to the Labor Law, this compensation has the character of damages and is paid in the amount of the average salary in the previous 12 months, in proportion to the number of unused days.
All employees have this right, as well as employees in the public sector, regardless of which law their employer applies when calculating wages.
In order to exercise the right to monetary compensation for unused annual leave, it does not matter on what basis the employee was terminated.
Employees who, for any reason, have not used annual leave, and their employment relationship has not ended, are not entitled to compensation for unused annual leave.
This is a common mistake – many employers think that the right “fails”.
It does not perish – it turns into a monetary claim.
3. Severance pay (if there is an obligation)
Severance pay is paid in cases such as:
- technological redundancy
- retirement
The employee has the right to severance pay if his employment has ended based on the termination of the employment contract in cases where the employee has been declared technologically, economically or organizationally redundant. The employer is obliged to pay the employee severance pay before terminating the employment contract in accordance with the Labor Law.
The amount of severance pay can be determined in accordance with e.g. By the labor regulations or the labor contract, with the proviso that it cannot be less than a third of the employee’s salary for each completed year of work at the employer where he exercises the right to severance pay.
Regarding retirement, the Employer is obliged, regardless of whether the contract is for an indefinite or fixed term and regardless of how much time the employee spent working for that employer, to pay the employee at least two average salaries in the Republic of Serbia upon retirement.
Pension can be old-age, disability, family pension.
4. Compensation for damages or other claims
If there are mutual claims:
- the employer can claim damages
- the employee can claim unpaid amounts
Important: everything must be legally based and documented.
3. Issuance of mandatory documentation to the employee
This is the part that employers often underestimate, and it is precisely this part that often leads to disputes.
1. Employment Certificate
Contains:
- period of work
- workplace
- grounds for termination of employment
This is a key document for future employment.
2. Earnings calculation
The employer is obliged to submit the calculation to the employee:
- wages paid
- taxes and contributions
3. Work book (if it exists in the record system)
Although electronic records are kept today, in practice there is still an obligation to properly record the termination of employment.
4. Obligations towards state bodies
1. Deregistration of the employee (CROSO)
The employer must deregister the employee from the mandatory social insurance system.
Deadline: within 3 days at the latest
2. Tax returns
Includes:
- payroll tax calculation
- social insurance contributions
3. Records and archiving
The employer is obliged to keep the documentation in accordance with the law.
5. Special situations – different obligations depending on the way of termination
Termination by agreement
- more flexible conditions
- additional fees can be negotiated
- important: clearly define all obligations in the agreement
Termination by employer
- there must be a legal basis
- compliance with the procedure
- potential risk of dispute
Expiration of fixed-term contract
- there are no special procedures
- making a decision on the termination of the employment relationship
- but all financial and administrative obligations remain
Technological excess
- mandatory severance pay
- additional procedures and documentation
6. The most common mistakes of employers
In practice, these are the most common problems:
- non-payment of annual leave
- delay in deregistration of the employee
- incomplete documentation
- wrong calculation of earnings
- oral agreements without a written record
These mistakes often lead to:
- court cases
- inspection fines
- additional costs
Practical examples from practice
Example 1 – Unpaid annual leave
The employee leaves the company and has not used 10 days of vacation.
The employer does not pay the compensation.
Result: court case + costs of the procedure + interest
Example 2 – Checkout delay
The employer is late with deregistering from the CROSO system.
Consequence: penalty + administrative problems for the employee
Example 3 – Unclear Termination by Consensus
The parties “agree orally”.
Later, the employee claims additional rights
7. FAQ – most frequently asked questions
Does the employer have to pay all obligations immediately?
Not necessarily immediately on the same day, but without delay and within the legal deadline.
What if the employer does not fulfill its obligations?
An employee can initiate:
- labor dispute
- procedure before labor inspection
Can the employee sign that there are no claims?
It can, but such a statement is not always sufficient to exclude the employer’s responsibility.
Can everything be resolved by agreement?
To a large extent yes – but it has to be put together properly.
What is the biggest risk for the employer?
Improper procedure + non-payment of obligations = almost certain dispute.
8. Conclusion – how to avoid problems
The termination of the employment relationship is not only the formal end of an engagement, but a legally sensitive moment in which mistakes are most often made that later cost dearly. That’s when you see the difference between an employer who just “closes the story” and one who understands the bigger picture – legal security, reputation and long-term stability of business.
In practice, most disputes do not arise due to complex legal issues, but due to omissions in basic obligations – unpaid claims, incomplete documentation or non-compliance with deadlines. That is why it is crucial that the termination of the employment relationship is carried out carefully, systematically and in accordance with the law.
For all additional information and legal support, the Dvornić law office is at your disposal.
Note: This blog is for informational purposes only and does not constitute legal advice. For specific questions and legal support, please contact the Dvornić law office.
