ASP: Minimum wage to be set annually, retirement at age 65

The Action for Social Justice (ASP) today submitted comments on the amendments to the Labor Law, proposing that the minimum wage in Montenegro be determined annually, that the transformation of employment contracts from fixed-term to indefinite-term contracts occurs after 18 months, and that employment terminates by force of law upon reaching the age of 65.

The public debate for the Draft Law on Amendments to the Labor Law ended today.

"In terms of determining the minimum wage, the ASP recommended that it be set on an annual basis, as it believes that the proposed two-year period would be unacceptably long and to the detriment of employees, especially in a situation where there are numerous monopolistic activities in the most important economic areas in the country (procurement of food, medicines, credit conditions, housing conditions...). All of this often leads to the creation of artificial inflation and thus the deterioration of the living conditions of employees and the general public, so in this sense, "nailing" the minimum wage to two-year periods would have a direct negative impact on employees in the country," the ASP announced.

This NGO proposed that, instead of 24 months, as is the case under the current Labor Law, the transformation of a fixed-term employment contract into a permanent contract should occur after 18 months, "which would be aimed at greater protection of employees and avoiding the widespread practice of keeping employees on this type of contract for as long as possible, thereby losing some of the opportunities in everyday life, such as obtaining loans from banking institutions."

"Instead of the current 66 years and 15 years of insurance service for termination of employment by force of law, the ASP proposed a lower age limit of 65 years of age, which it considers a significantly more optimal solution, predominantly from the aspect of the work productivity of a person at that age, but also taking into account the period of the post-transition cycle in the country, which is still ongoing and has been largely unfavorable to employees," they add.

One of the ASP's proposals is to consider the possibility of legal regulation of the inadmissibility of concluding a service contract between an employer and an employee for jobs that are determined by the act on the organization and systematization of jobs, "in order to prevent this widespread illegal practice."

The ASP also proposed that an employee who has been paid severance pay based on the agreed termination of employment in a company, public institution or other public service, whose majority owner is the state or municipality, cannot establish an employment relationship in the public sector for a period of eight years from the date of payment of severance pay.

The current deadline is five years, and the ASP is proposing a longer deadline because "numerous examples in practice have shown" that this legal solution "has become a model for employees who terminate their employment in the public sector by mutual consent to receive large severance payments, and then are re-employed in the public sector, i.e. they simply change their job position."

"Also, due to poor records of persons who have received severance pay, and in order to avoid abuse, the ASP proposed formulating an additional provision that would prescribe the obligation of this employee to submit proof to the new employer upon re-employment that the legal deadline for payment of severance pay has passed, or that he has returned the severance pay received," the statement reads.