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Labor Law contracts in day-to-day business

Labour Law contracts regulate mutual rights and obligations of the contracting parties related to the work and labour relation. Each of those contracts should precisely define the type of rights and obligations arising therefrom.

For an Employment Contract it is relevant to define the following: salary amount, concrete work post and related work duties, working hours, daily, weekly and yearly rest, termination of labour relation, duration of maternity leave and other relevant issues.

In the text below you can find the analysis of the most significant Labour Law contracts used in practice, with a special emphasis on the content and provisions that every employer should be familiar with when creating these contracts.

1. Employment Contract 

Employment Contract is a basic and most commonly used contract in Labour Law. This contract regulates a relation between the two parties – employer and employee, whereby the employee commits to performing certain tasks for the employer against a salary to be paid by the employer.

After the Employment Contract is concluded, the employer is obliged to register the employee for mandatory contributions – for old-age pension and disability insurance, health insurance and unemployment insurance.

Employment Contract may be concluded to an indefinite or definite period of time. If the Employment Contract does not contain information on duration, it is considered to be concluded to indefinite period of time. Employment Contracts to definite period of time may be concluded to maximum of three years.

2. Internship Contract
An intern is a person who is employed for the first time in the specific profession after having successfully completed the education for that profession.

The employer and the intern sign a special type of contract to a definite period of time (usually to a period of one year).

Unless agreed differently by the parties, during the internship the employer shall pay to the intern 70% of the total salary defined for the specific job.
After completing the internship successfully, the intern sits for the examination of vocational ability, if it is prescribed by the legislation, cantonal regulation or the company labour relations by-law. 

3. Contract on vocational training without employment  

The main purpose of this contract is the same as for the internship contract – acquiring internship and the required work experience. However, these two contracts have a substantial difference related to employment. Unlike the intern, the person accepted by the employer for vocational training only is not employed by the subject company and does not have the employment status.

In practice, persons entering into this type of contract usually volunteer for vocational training and are not entitled to a salary as interns, who sign the employment contract.

4. Employment Contract in case of international assignment  

In practice, international assignment of employees is typically regulated by concrete provisions of the employment contract or by an annex (appendix) to the employment contract, if international assignment was not envisaged at the moment of employment contract conclusion.

Considering that employees working abroad are subject to regulations of the country of assignment both in terms of the stay and the work, employers are obliged to get themselves familiar with the details of the regulations applicable in the country of international assignment related to the status of foreign workers, particularly having in mind that illicit work of foreign citizens is subject to severe punishment in most countries. 

5. Manager Contract 

Manager contracts have a nature of employment contract if the manager is employed by the subject company. However, if a manager (for example, a director or a member of the company’s Management Board) is not employed by the subject company, the manager contract has in that case a nature of temporary service contract.

The Labour Law of the Federation of BiH allows corporate managers to perform the managing function in both cases - if employed by the company and also if not employed, in accordance with the company labour relations by-law.

Each of those contracts should precisely define the type of rights and obligations arising therefrom.

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