Directors in Serbia must have an agreed remuneration

Is it possible to conclude a director contract without providing for the director's right to remuneration?

The Ministry of Labour and Social Policy holds that the contract of rights and obligations concluded with a director without establishing a labour relation must contain provisions about the remuneration.

The basis for this interpretation is found in Article 60, Paragraph 4 of the Constitution of the Republic of Serbia, providing that everyone has the right to a fair remuneration and that no one can give up that right.

Under Article 48, Paragraph 4 of the Labour Law, the rights and obligations of a person performing the duties of the director are determined by the contract, and this presents grounds to object to the above position, since it is the matter of the autonomy of wills of the contracting parties.

The Labour Law does not stipulate a direct penalty for failing to provide for remuneration.

If the Employer and the Director fail to provide for remuneration, this raises the issue of tax risks of such contracts, as well as potential court actions for establishing the nullity of the contractual provisions concluded with the director without providing for remuneration.