Supplementary work contract in Serbia (ugovor o dopunskom radu): rules and tax
Supplementary work contract in Serbia (ugovor o dopunskom radu) under Art. 202 of the Labour Act: who may sign, the one-third cap, tax and contributions, insurance record and employer consent.
What a supplementary work contract is
The supplementary work contract is governed by Art. 202 of the Labour Act (Zakon o radu, Sl. glasnik RS Nos. 24/2005 ... 109/2025 - other law), in the chapter on work outside employment. An employee who works full time for an employer may conclude a supplementary work contract with another employer, for at most one third of full-time hours. The contract sets the right to a fee and other rights and duties arising from the work. It is concluded in writing.
The key words are "another employer" and "full time". Supplementary work is designed for an employee who has a main job and, alongside it and within limits, works for someone else. At that other employer the person is not an employee: there is no annual leave, notice period, protection against dismissal or minimum wage under the Labour Act, only the rights written into the contract.
Who may conclude it and within what limits
The condition on the worker's side is a single one: full-time employment with some employer. A part-time employee, an unemployed person, a pensioner or a sole trader cannot conclude a supplementary work contract. The law provides other contracts for them.
The condition on the employer's side is that it must be a different employer. A person's own employer uses overtime or an amendment to the employment contract for extra work, not a supplementary work contract.
The scope is at most one third of full-time hours. On a 40-hour week that is at most 13 hours 20 minutes a week, or around 57 hours a month. The law does not say whether the third is measured weekly or over a longer period, so it is sensible to write a weekly or monthly number of hours into the contract and keep to it. If a person has several supplementary work contracts with different employers, the law does not prohibit this, but each must individually stay within the third.
The main employer's consent and non-compete clauses
The Labour Act does not require the consent of the employer where the person is employed. Restrictions can come from three sources.
The first is a non-compete clause in the employment contract. Under Art. 161 the employment contract may list work the employee may not do in their own name and for their own account, or for another legal or natural person, without the employer's consent. Such a clause may be agreed only if the employee acquires new, especially important technological knowledge, a wide circle of business partners or knowledge of important business information and secrets at that employer, and it must have a territorial scope. If the employee breaches it, the employer may claim damages. Under Art. 162 a non-compete may also be agreed for up to two years after employment ends, but only against monetary compensation.
The second source is confidentiality and trade secret provisions in the employment contract or the employer's general act. Supplementary work for a competitor, even without a formal non-compete clause, can raise the question of a breach of work duties.
The third source is special legislation for particular occupations, for example civil servants or public sector employees, which may make additional work conditional on consent. Anyone working in the public sector should check their specific statute.
What the contract must contain
The law requires written form and provides that the contract sets the fee and other rights and duties. The rest is left to the contract, and since the protective provisions of the Labour Act do not apply, what is not written usually does not exist. The contract should contain:
- the parties, stating that the person works full time for another employer,
- a description of the work and the place of work,
- the scope of work in hours, within one third of full-time hours,
- duration,
- the fee, gross or net, the unit of calculation and the payment deadline,
- work equipment, costs, health and safety at work, confidentiality,
- termination and the notice period,
- what happens if the person stops working full time for the main employer.
The employer must keep the contract at the place of work and register the person for insurance in the way that applies to persons receiving a contract fee (Art. 35 of the Labour Act).
Tax and contributions on a supplementary work contract
Income from supplementary work is other income under Art. 85(1)(3) of the Personal Income Tax Act (Zakon o porezu na dohodak građana, Sl. glasnik RS Nos. 24/2001 ... 80/2026). The calculation runs in this order:
- The gross fee is reduced by 20% standardised costs (Art. 85(3)). The remainder is the base.
- Tax on other income: 20% of the base (Art. 86(1)).
- Pension (PIO) contribution: 24% of the base. A person receiving a contract fee is liable for the pension contribution (Art. 7(1)(9) of the Contributions Law, Zakon o doprinosima za obavezno socijalno osiguranje), and the law's definition of a contract fee expressly names the supplementary work contract (Art. 6(17)). The base is the taxable income (Art. 28) and the rate is 24% (Art. 44).
- No health contribution is paid. A person doing supplementary work is already health-insured as an employee, and insured status is acquired on one basis only, with employment taking priority (Art. 11 and 15 of the Health Insurance Act, Zakon o zdravstvenom osiguranju).
- No unemployment contribution is paid on a contract fee (Art. 9 of the Contributions Law).
Example for a gross fee of RSD 100,000: base 80,000, tax 16,000, pension 19,200, net RSD 64,800. In short, net is 64.8% of gross, and gross is net divided by 0.648. If the contract states a net amount, the employer adds the tax and contribution on top.
When the payer is a legal entity or a sole trader, tax and the contribution are withheld at payment and reported on the PPP-PD return (Art. 99(1)(9) of the Personal Income Tax Act and Art. 57 of the Contributions Law). When the payer is a private individual, the recipient files the tax return (Art. 100a). Income from supplementary work also counts towards the annual personal income tax, if total annual income exceeds the statutory threshold.
The question of whether supplementary work is cheaper than a PP contract comes up often. The overall burden is similar, but the structure differs: under a PP contract the fee is salary with 10% tax and full contributions, including health and the employer's share, while under supplementary work the tax is 20% on a base reduced by standardised costs and only the pension contribution is paid.
Insurance record and pension
Supplementary work does not create employment, so there is no employment record under the Labour Act. The person already earns an insurance record through full-time employment, and the Pension and Disability Insurance Act (Zakon o penzijskom i invalidskom osiguranju) credits a proportional record for contract fees only to insured persons not insured on another basis (Art. 12(1)(3) and Art. 50). A full-time employee doing supplementary work therefore gains no additional record.
The contribution paid is not lost, though. The Pension Fund records the contract fee paid and the contribution in its register (Art. 132), and the fee enters the annual personal coefficient, which compares the person's total salary, insurance base and contract fees with the average salary in Serbia (Art. 63). A higher coefficient means a higher pension.
How it differs from a contract for services and a PP contract
A contract for services (ugovor o delu, Art. 199 of the Labour Act) is concluded for work outside the employer's business activity, for the independent making or repair of an item or the independent performance of physical or intellectual work. A result is owed, not working time, and anyone may conclude it. Supplementary work, by contrast, may be work within the employer's business activity, is measured in working hours, and is reserved for full-time employees.
A PP contract (Art. 197) is for unemployed persons, part-time employees and pensioners, for work of up to 120 working days a year, and is taxed as salary. A full-time employee cannot be on a PP contract, just as an unemployed person cannot do supplementary work.
An employer choosing between these three contracts for the same person should start from the person's status and the nature of the work, not from the tax calculation. The wrong contract does not change the tax treatment in the employer's favour, and it can lead the inspectorate or a court to find that an employment relationship exists.
Common mistakes
- A supplementary work contract is concluded with an unemployed person or a pensioner, who do not meet the Art. 202 condition.
- The scope of work is not stated or in practice exceeds one third of full-time hours.
- The fee is not marked as gross or net, so the parties dispute who bears the tax and contribution.
- The employee does not check the non-compete clause in their employment contract before starting work for a competitor.
- The contract does not deal with termination, so it is unclear what happens when the main job ends.
- Payment in cash, without a calculation and a tax return.
A short overview of the clauses usually found in the contract: parties and the person's status, description of the work, scope and schedule, duration, fee and payment deadline, equipment and costs, confidentiality, termination. This is an overview of content, not a ready-made contract text.
Sources
- Labour Act (Zakon o radu, Sl. glasnik RS Nos. 24/2005 ... 109/2025 - other law), Art. 35, 161, 162, 197, 199 and 202
- Personal Income Tax Act (Zakon o porezu na dohodak građana, Sl. glasnik RS Nos. 24/2001 ... 80/2026), Art. 85, 86, 99 and 100a
- Law on Mandatory Social Insurance Contributions (Zakon o doprinosima za obavezno socijalno osiguranje, Sl. glasnik RS Nos. 84/2004 ... 80/2026), Art. 6, 7, 9, 28, 44 and 57
- Pension and Disability Insurance Act (Zakon o penzijskom i invalidskom osiguranju, Sl. glasnik RS Nos. 34/2003 ... 94/2024), Art. 12, 50, 63 and 132
- Health Insurance Act (Zakon o zdravstvenom osiguranju, Sl. glasnik RS Nos. 25/2019, 92/2023 and 109/2025 - other law), Art. 11 and 15
- Pension and Disability Insurance Fund: insurance record, frequently asked questions
- Tax Administration: Personal Income Tax Act
What to do
- Details of the employer and of the person doing the supplementary work, stating that the person works full time for another employer, which is the condition in Art. 202(1).
- A description of the work and the place of work. The law does not restrict the type of work, but it must not be covered by a non-compete clause in the employment contract with the main employer (Art. 161).
- Scope of work: hours per week or month, not exceeding one third of full-time hours, that is at most 13 hours 20 minutes a week on a 40-hour week.
- Duration, with start and end dates or a statement that it runs until a specific job is completed.
- The fee, stated expressly as gross or net, the unit of calculation and the payment deadline (Art. 202(2)).
- Other rights and duties arising from the work: schedule, work equipment, reimbursement of costs, health and safety at work, confidentiality.
- How the contract may end early and the notice period, since the Labour Act rules on dismissal do not apply.
- Written form and both signatures (Art. 202(3)), one copy for each side.
What it costs
A supplementary work contract is not certified and carries no notary costs. The cost is the tax burden on the fee. Income from supplementary work is other income (Art. 85(1)(3) of the Personal Income Tax Act, Zakon o porezu na dohodak građana). The base is the gross fee reduced by 20% standardised costs (Art. 85(3)), the tax is 20% (Art. 86), and the pension (PIO) contribution is 24% on the same base (Art. 28 and 44 of the Law on Mandatory Social Insurance Contributions). No health contribution is paid, because a person doing supplementary work is by definition employed full time and insured on that basis. No unemployment contribution is paid on a contract fee. Example: on a gross fee of RSD 100,000 the base is 80,000, tax 16,000, pension 19,200 and the net RSD 64,800, that is 64.8% of gross. A payer that is a company or sole trader withholds everything and files the PPP-PD return. Check the rates on purs.gov.rs.
FAQ
Who can conclude a supplementary work contract?
Only an employee who works full time for some employer, and only with a different employer (Art. 202(1) of the Labour Act). An unemployed person, a pensioner, a sole trader or a part-time employee cannot be a party to a supplementary work contract; for them there are the temporary and occasional work contract, the contract for services (ugovor o delu) or a part-time employment contract. It cannot be concluded with one's own employer either, because the law expressly requires another employer. If the person stops working full time during the contract, the basis for supplementary work falls away.
Do I need my employer's consent?
The Labour Act does not require the main employer's consent for a supplementary work contract. A restriction may come from your employment contract. Under Art. 161 the employment contract may list work the employee may not do in their own name or for others without the employer's consent, but only if the employee acquires especially important technological knowledge, a wide circle of business partners or important business information at that employer. If such a clause exists and covers the work you would do, consent is needed, and a breach entitles the employer to damages. Read your employment contract and the rulebook before signing.
How are tax and contributions calculated on a supplementary work contract?
The fee is taxed as other income. The gross fee is reduced by 20% standardised costs to give the base. The base bears 20% tax (Art. 85 and 86 of the Personal Income Tax Act) and a 24% pension contribution (Art. 44 of the Contributions Law). No health contribution is paid, because the person is already insured as a full-time employee, and no unemployment contribution is paid on a contract fee. The net is 64.8% of gross: from RSD 100,000 gross the person receives 64,800. When the payer is a company or sole trader, it withholds and pays everything (Art. 99); when the payer is a private individual, the recipient files the return (Art. 100a).
Does supplementary work count towards my insurance record?
Not as employment record under the Labour Act, because supplementary work does not create employment. The pension contribution is paid, but the person already has a full insurance record from full-time employment, and the record cannot exceed 12 months in a year. The fee paid is, however, recorded by the Pension Fund and enters the annual personal coefficient, which is the ratio of total salary, insurance base and contract fees to the average salary in Serbia (Art. 63 of the Pension and Disability Insurance Act). Supplementary work therefore does not lengthen the record, but it can raise the pension.
What is the difference between supplementary work, a contract for services and a PP contract?
All three are work outside employment, but for different people and jobs. A supplementary work contract (Art. 202) is concluded only by a full-time employee, with another employer, for up to one third of full-time hours, for any kind of work. A temporary and occasional work contract (Art. 197) is concluded with unemployed persons, part-time employees and pensioners, for work of up to 120 working days a year, and the fee is taxed as salary. A contract for services (Art. 199) can be concluded with anyone, but only for work outside the employer's business activity, for a result rather than working time. Supplementary work and the contract for services are taxed the same way, as other income with 20% standardised costs.
How long can supplementary work last and how does it end?
The Labour Act does not limit the duration of a supplementary work contract, only its scope: at most one third of full-time hours (Art. 202(1)). The contract may be for a fixed period or until a job is completed. The Labour Act rules on dismissal, notice and protection against dismissal do not apply, so the way the contract ends should be written into it. If the person loses their full-time job, they also lose the condition for supplementary work, so the parties should provide for what happens to the contract then.