Long-service (Jubilee) award

The topic is equally relevant for both parties to the employment relationship:

• for employees — to know whether they are entitled to this right and under which conditions they may exercise it;
• for employers — to understand whether and when the obligation to pay arises, how the right is exercised and what the tax treatment of this benefit is.

In this article, we answer four practical questions most frequently raised in relation to long-service awards:

1. What is a long-service award and on what basis does the entitlement arise?
2. Which conditions must be met for an employee to acquire the right?
3. How much is the award, when is it paid and when does the claim become time-barred?
4. What is the tax treatment of a long-service award?

1. Basis for the entitlement to a long-service award

Unlike the public sector, where the right to a long-service award is most often governed by special regulations and collective agreements, in the private sector it is not prescribed by law as a mandatory employee right. The Labour Law grants the employer the option, but not the obligation, to provide for the right to a long-service award in a collective agreement, labour rulebook or employment contract. Accordingly, the employer independently decides, in line with its business and financial capabilities, whether to grant this right to its employees.

Should the employer decide to establish the right to a long-service award, it shall regulate in its general act or employment contract, in particular:

• the conditions and criteria for acquiring the right to a long-service award;
• the amount of the award and the method of its determination;
• the manner and deadlines for payment;
• other matters relevant to the exercise of this right.

2. Conditions for acquiring the right

2.1. The conditions are set by the employer

The conditions for acquiring the right to a long-service award are not uniformly regulated but differ from one employer to another. Given that the law does not prescribe uniform criteria for acquiring this right, the employer determines, through its general acts, the conditions under which employees acquire the right to a long-service award. Naturally, such conditions must not be discriminatory.

2.2. Completed years of service as the basic condition

Bearing in mind the purpose of this right, the basic condition for acquiring it is most often linked to the completion of a certain number of years of service with the employer. In practice, service with the particular employer is most commonly taken as the criterion, although the general act may also provide for the right to be acquired on the basis of the employee’s total length of service. A long-service award is most frequently paid upon the completion of 5, 10, 15, 20 or more years of service.

In addition, the employer may regulate in more detail the manner of establishing the relevant length of service, define what is considered continuous service, as well as regulate the possibility of acquiring the right during the suspension of employment and other matters relevant to its application.

IMPORTANT — the right must exist at the moment it is acquired

Since the conditions for acquiring the right to a long-service award are regulated by the acts of the particular employer, it is of particular importance that employees be familiar with the provisions governing this right. At the same time, for the sake of legal certainty and the prevention of disputes, it is advisable that employers regulate the conditions and the manner of exercising this right clearly and precisely.

3. Amount of the award, manner of payment and statute of limitations

3.1. Amount of the long-service award

Given that the law does not prescribe the amount of the long-service award, the employer independently regulates its amount and the method of calculation in its general act.

In practice, a long-service award is most often paid in cash, whereby its amount may be determined as a fixed monetary amount or as a percentage of the average salary at the employer, or of the average monthly salary in the Republic of Serbia.

The amount of the award may be the same for all anniversaries or may differ, depending on the number of years of service with the employer, i.e. the employee’s completed length of service.

3.2. Manner and deadlines for payment

The manner and deadlines for payment of a long-service award are regulated by the employer’s general act. In practice, the award is most often paid as a one-off payment, in the year in which the employee meets the conditions for acquiring it, i.e. by the end of the month in which the right was acquired. However, the employer may also provide for a different manner of payment, so that long-service awards may be paid at the beginning or at the end of the year to all employees who acquire the right to this benefit during that year.

3.3. Statute of limitations and termination of employment

The right to payment of a long-service award becomes time-barred in the same manner as all other monetary claims arising from employment — within 3 years from the day the obligation arose.

If the employee acquired the right to a long-service award prior to the termination of employment, the employer is obliged to make the payment in accordance with the general act or the employment contract governing that right.

4. Tax treatment of a long-service award

As regards the tax treatment of a long-service award, the law provides that salary tax is not payable on employee income received on this basis up to the non-taxable amount. The said amount is adjusted annually.

Non-taxable amount of a long-service award at the moment of publication of this text, i.e. for payments made from 1 February 2026 to 31 January 2027 is RSD 28,912.00/per year.

If a long-service award is paid to an employee in an amount exceeding the prescribed non-taxable amount, salary tax is payable on the portion of the income exceeding the non-taxable amount, in accordance with the Personal Income Tax Law.

RECOMMENDATION FOR EMPLOYERS:

Conclusion

A long-service award is not a right guaranteed by law to employees in the private sector, but it is one of the simplest ways for an employer to recognise the long-standing service and contribution of its people. Three points are key:

• The right arises from the employer’s act — until it is provided for in a general act or employment contract, it does not exist.
• Once established, it becomes binding — the employer is obliged to apply it consistently and under equal conditions for all employees.
• Clear regulation pays off twice over — it contributes to legal certainty and transparency and reduces the scope for disputes, while at the same time encouraging employee motivation and loyalty and the development of stable, high-quality employment relationships.

In other words, a long-service award is a voluntary decision of the employer — but the manner in which it is regulated is not a matter of form; it is a question that directly affects its application in practice.