When is a Salary Compensation Received? [A Detailed Guide]

In certain situations, employees may be entitled to receive salary compensation for a period in which they did not work or were not engaged in work. Below is more information on this topic – when salary compensation is granted and how much.

An employee absent from work during a period in which they were officially engaged with the employer has the right to receive salary compensation for that period. The company must pay them appropriate salary compensation from its own funds.

When Does an Employee Receive Salary Compensation?

An employee is entitled to receive salary compensation in the following situations:

1. During public holidays (when absent from work on a non-working public holiday).
2. During annual leave.
3. During paid leave.
4. During military exercises and response to the call of a state authority.
5. During sick leave.
6. During work interruption or reduction due to reasons not caused by the employee.
7. During work interruption ordered by the competent state authority or the employer’s competent authority due to failure to ensure safety and protection of life and health at work.

The amount of salary compensation must be equal to the average salary for the preceding 12 months.

1. Compensation for Holiday Time Off

The Labor Law defines that an employee absent from work due to a non-working day recognized as a holiday is considered on paid leave. The Law on State and Other Holidays in the Republic of Serbia stipulates that no work is performed during certain state and religious holidays.

State holidays include:

• Sretenje – Statehood Day of Serbia (February 15 and 16),
• New Year (January 1 and 2),
• Labor Day (May 1 and 2),
• Armistice Day in World War I (November 11).

Religious holidays include:

• The first day of Christmas (January 7),
• Easter holidays, from Good Friday to the second day of Easter, which falls on Monday.

These holidays are considered non-working days; during this time, employees are entitled to full compensation for their wages. On the other hand, if they work during holidays, they can receive an increased salary for that day.

2. Earnings Compensation During Annual Leave

Every employee is entitled to take annual leave within the calendar year. The right to annual leave is acquired after one month of continuous work, starting from the date of employment. In this regard, an employee, during the use of annual leave, also has the right to the calculation and compensation of earnings.

The legal minimum duration of annual leave is 20 working days, and the length of leave may be extended depending on criteria established by the employer’s general regulations, collective agreement, employment contract, or other general legal act. Additionally, the employee has the right to use a proportional part of annual leave, i.e., one-twelfth of annual leave for each month of work in the calendar year in which the employment relationship is established or terminated.

Annual leave can be taken for the entire duration or in proportionate days, depending on when the employment relationship is established and when the leave will be taken. In both cases mentioned, the employee is entitled to compensation for earnings during that absence. We have written in detail on this topic – calculation and compensation for annual leave.

3. Compensation for Paid Leave

Employees granted paid leave are entitled to compensation, also known as leave with pay. The company is obligated to allow the employee to use paid leave for the following reasons:

• Weading,
• Childbirth,
• Serious illness of an immediate family member.

The duration of paid leave can be up to a maximum of five working days per calendar year for each case. Employees may also be granted leave for other reasons, such as:

• Voluntary blood donation (two consecutive days – one day for the blood donation date and the next day),
• Death of an immediate family member,
• Other circumstances or reasons specified through the employer’s legal act or employment contract (professional development, relocation, birthday, natural disaster, or an accident damaging the home, among others).

We provided a detailed explanation of how paid leave is approved and the amount of salary compensation for that period in the text – employee rights during paid leave.

4. Compensation for Military Exercise and Responding to State Authorities’ Calls

An employee who receives a call from a state authority for a military exercise or any other call to which they are bound to respond has the right to be absent from work. The company is obliged to grant them leave and simultaneously pay the full amount of earnings compensation from its funds for the duration of the absence. An alleviating factor for employers is that they have the right to reimbursement of the paid earnings compensation on this basis.

It is important to distinguish between the rights of employees during military exercises or responding to the call of a state authority and the rights during military service, i.e. serving military service:

• In the first case, the employee has the right to receive earnings compensation during the absence;
• In the second case, during military service or the completion of military service, the employee’s employment relationship is suspended, leading to unpaid leave.

5. Earnings Compensation During Sick Leave

Employees can receive earnings compensation if they are absent from work due to temporary incapacity. Temporary incapacity can result from illness, i.e., their health condition and the illness of immediate family members, causing them to be temporarily unable to work.

Following the Health Insurance Law, the company must pay the employee earnings compensation when temporary incapacity for work occurs in the following situations:

• Due to illness or injury outside of work;
• Due to an occupational illness or injury at work;
• During maternity leave (in case of illness or complications related to pregnancy);
• Due to isolation or the occurrence of infectious diseases in the employee’s vicinity;
• For the care of a sick or injured immediate family member;
• Due to voluntary donation of organs, cells, and tissues;
• Due to the employee’s assignment as a companion to a sick insured person referred for treatment or a medical examination elsewhere, or while staying as a companion in a stationary healthcare facility.

The amount of wage compensation that the employer must pay is as follows:

• At least 65% of the average wage for the previous 12 months if the inability to work is due to illness or injury outside of work.
• 100% of the average wage for the previous 12 months if the inability to work is due to a work-related injury or professional illness.

In cases of temporary incapacity and sick leave, the compensation is borne by the employer, and the payment covers the first 30 days. After that (from the 31st day), the wage compensation is paid by the Health Insurance Fund. Exceptions to this rule include sick leave for voluntary organ, cell, and tissue donation, as well as sick leave for caring for a sick child under three years old, where wage compensation is paid from mandatory health insurance funds from the first day.

6. Earnings Compensation for Work Disruption or Reduced Workload Without the Employee’s Fault

In the mentioned scenario, when there is a disruption or reduced workload without the employee’s fault, lasting up to 45 working days in a calendar year, the employee has the right to receive compensation. The employer is obligated to pay it from their funds. Prior approval from the minister is necessary for a work disruption or reduced workload that requires employees to be absent from work for more than 45 working days and receive earnings compensation during that time.

The compensation amount is at least 60% of the average earnings over the previous 12 months. During the temporary disruption, earnings cannot be less than the minimum.

7. Earnings Compensation During Work Interruption Due to Order of Competent Authority for Failure to Ensure Safety and Health Protection at Work

Employees are entitled to a specific earnings compensation during the period of work interruption ordered by the competent state authority or the employer’s competent authority due to the failure to ensure safety and health protection at work. The employer determines the amount independently and then establishes it through general legal regulations or the employment contract.

HLB T&M Consulting Belgrade, an agency specializing in accounting services in Belgrade, can offer consultations in employment relationships, providing individual advice on salaries, expenses, and other work-related compensations. As part of our services, we provide payroll services in Belgrade, including the calculation of salary compensations. Contact us for more information.