North Macedonia

North Macedonia, a landlocked country in the central Balkan Peninsula, is bordered by Greece, Albania, Bulgaria, Kosovo, and Serbia. It has a mountainous landscape with the Vardar River as a significant feature and experiences a continental and Mediterranean climate. Historically, the region has been inhabited since ancient times, transitioning through Roman rule, Middle Ages dominions, Ottoman rule, and being part of Yugoslavia before declaring independence in 1991. The Prespa Agreement in 2018 resolved a naming dispute with Greece, allowing its accession to NATO in 2020 and advancing its EU candidacy.

The population of approximately 2 million is predominantly ethnic Macedonians with Albanians as the largest minority. Classified as an upper-middle-income country, North Macedonia has a service-oriented economy with growing industrial and agricultural sectors. Challenges include unemployment, emigration, and regional disparities. The country aims for EU membership, with a workforce characterized by a gender participation gap and a trend towards an aging population.

Education has improved, but aligning skills with labor market demands remains a challenge. The service sector is the largest employer, followed by significant contributions from industry, particularly in textiles, food processing, and chemicals. Agriculture, though smaller in GDP contribution, is vital in rural employment.

Cultural norms influence work-life balance, communication, and organizational hierarchies, emphasizing family, direct communication, and respect for authority. The economy is bolstered by traditional sectors like agriculture and industry, with emerging sectors such as ICT, tourism, and renewable energy showing growth potential.

• Employer Tax Responsibilities: In North Macedonia, employers must withhold and pay social security contributions for their employees, including 18.8% for Pension and Disability Insurance, 7.5% for Health Insurance, and 1.2% for Employment Insurance, capped at 16 times the national average salary. They also withhold a flat 10% Personal Income Tax (PIT).

• Payment Deadlines: Social insurance contributions and PIT must be calculated, withheld, and submitted monthly, with a payment deadline of the 15th of the following month.

• Corporate Income Tax (CIT): Companies pay a flat CIT rate of 10% on profits. Property tax is also levied based on property value.

• VAT Regulations: The standard VAT rate is 18%, with reduced rates of 10% for certain food and beverage services and 5% for specific accommodation and transport services. Financial, medical, educational, and cultural services are VAT exempt. VAT registration is mandatory for businesses with an annual turnover exceeding MKD 1,000,000, and filings are generally due monthly by the 15th.

• Free Zones and TIDZs: Companies in Free Zones or Technological and Industrial Development Zones (TIDZs) enjoy a 10-year CIT holiday and other tax benefits, aimed at encouraging investment in manufacturing, IT, and logistics.

• Reinvested Profits: Businesses can reduce taxable income by reinvesting profits into development activities, with no specific limitations on the type of business eligible for this benefit.

• In North Macedonia, employees are guaranteed a minimum of 20 days of paid annual leave, which increases with seniority, up to a maximum of 26 days for those with 30 or more years of service.
• Vacation days are not impacted by public holidays, weekends, sick leave, or other valid absences, and must be used by June 30th of the following year.
• Employees receive their average salary during vacation, calculated from the previous 12 months.
• The country celebrates various national and religious holidays, including New Year's Day, Orthodox Christmas, Labour Day, and Independence Day, among others.
• Different religious communities in North Macedonia observe their specific holidays, such as Orthodox Easter for Christians and Eid celebrations for Muslims.
• Other types of leave include unlimited sick leave (with employer coverage for the first 30 days), 9 months of maternity leave, 7 days of paternity leave, and bereavement leave, which varies depending on the relation to the deceased.
• Additional paid leaves are provided for personal events like marriage and professional exams, with unpaid leave available for mandatory military service and voting in elections.

Mandatory Employee Benefits in North Macedonia

In North Macedonia, employees are entitled to several mandatory benefits, including paid annual leave, sick leave, and public holidays. Full-time employees receive 20 to 26 working days of paid annual leave, while part-time employees get a minimum of 10 days. Sick leave is compensated up to 30 days, with varying percentages of the regular salary paid based on the duration of the illness.

Social Security Contributions

Employers are required to contribute to social security on behalf of their employees, covering pensions, health insurance, and unemployment insurance. Specifically, contributions include 18.8% for pensions, 7.5% for health insurance, and 1.2% for unemployment insurance.

Optional Employee Benefits

Some employers offer additional perks such as educational assistance, private health insurance, retirement savings plans, and flexible work arrangements to enhance employee satisfaction and competitiveness.

Health Insurance Contributions

Both employers and employees contribute to the national health insurance system, with employees contributing 7.5% of their gross salary. Family coverage can be extended by paying an additional 0.5%.

Pension Schemes

North Macedonia operates a multi-pillar pension system, including a mandatory public pension scheme and optional private pension plans. The public scheme is funded by current workers and provides benefits based on salary, contribution years, and gender. Private plans, both fully funded and supplementary, offer opportunities for additional retirement savings.

Overall, North Macedonia provides a comprehensive framework of mandatory benefits and optional perks to support the financial security and well-being of employees.

In North Macedonia, employment contracts can be terminated based on employee-related reasons such as failure to fulfill duties, serious disciplinary violations, misuse of sick leave, and breach of confidentiality. Employer-related termination reasons include economic, technological, or organizational changes, and cessation of business operations. The law mandates specific notice periods for terminations initiated by both employers and employees, with variations based on the number of affected employees and the nature of employment, such as seasonal work.

Employees are entitled to severance pay if terminated by the employer for organizational reasons, with the amount based on their length of service. Additionally, North Macedonia's Law on Prevention and Protection from Discrimination (2019) provides robust protections against discrimination on various grounds and outlines mechanisms for redress through the Commission for Protection from Discrimination, the Ombudsman, or legal action.

Employers have significant responsibilities under this law to prevent discrimination and ensure a safe and healthy workplace, including developing anti-discrimination policies, providing training, and implementing safety measures as per the Occupational Safety and Health Act of 2007. This act emphasizes risk assessment, control measures, and employee training to maintain workplace safety. The Ministry of Labour and Social Policy enforces these regulations through inspections and orders to rectify violations.

In North Macedonia, employment agreements are categorized into Individual Employment Agreements and Collective Agreements. Individual agreements are contracts between an employer and an employee, detailing terms such as duration of employment, job responsibilities, compensation, and termination conditions. These can be fixed-term, unlimited, or part-time. Collective agreements, negotiated between employers or employer organizations and trade unions, set general working conditions for a sector or company, including wages, working hours, and benefits.

Key aspects of employment agreements include:

• Identification of Parties: Full names and details of both parties.
• Job Details: Job title, duties, and workplace location.
• Employment Terms: Type of employment, working hours, and overtime details.
• Compensation and Benefits: Salary, benefits, and allowances.
• Termination: Notice periods and valid reasons for termination.
• Additional Clauses: Confidentiality and intellectual property rights.

The Labour Law of North Macedonia governs these agreements, ensuring any contradicting individual agreement terms are null and void. Probationary periods are permissible, typically up to six months, with specific conditions for termination during this period. Non-compete clauses are restricted to protect employees' rights to employment post-termination but can be enforceable under certain conditions. Legal expertise is recommended to navigate the complexities of these clauses.

• Remote Work Regulations in North Macedonia: There is no specific law for remote work, but the Labour Law requires a written agreement between employer and employee, which must be registered with labor authorities within three days. Standard labor protections apply to remote workers.

• Technological Infrastructure: Employers must provide secure communication tools and necessary hardware and software for remote work. Implementing strong cybersecurity measures is essential to protect company data.

• Employer Responsibilities: Employers should provide necessary equipment, establish work-life balance guidelines, set clear performance metrics, and educate remote employees on data security.

• Flexible Work Arrangements: The Labour Law supports part-time work and allows employers to consider requests for reduced schedules. Flexitime and job sharing are also practiced, with agreements needed to outline specific working hours and responsibilities.

• Data Protection Act (DPA) of 2020: Aligns with the EU's GDPR, emphasizing lawfulness, transparency, data minimization, and security in data handling. Employers must ensure secure equipment, provide data security training, implement access controls, and adhere to breach notification protocols.

• Employee Data Protection Rights: Employees have rights to access, rectify, or erase their personal data under the DPA. Employers and employees should follow best practices like using strong passwords, being cautious of phishing, and encrypting data to ensure a secure remote work environment.

Overview of Labor Law Regulations in North Macedonia

• Weekly Working Hours: Standard workweek is 40 hours, typically spread over five days.
• Daily Working Hours: Maximum of eight hours per day.
• Overtime Regulations:
  • Overtime is limited to eight hours per week and 190 hours annually, with exceptions for certain urgent tasks.
  • Compensation for overtime must be at least 135% of the regular hourly rate.
  • Employees working over 150 overtime hours annually with less than 21 days of absence qualify for a bonus equivalent to one month's average national salary.
• Rest Periods and Breaks:
  • Employees are entitled to a 30-minute break after six hours of work (15 minutes for a four-hour workday).
  • Mandatory 12-hour rest period between workdays.
  • At least 24 hours of uninterrupted rest per week, typically on Sundays, providing a total of at least 36 consecutive hours off.
• Night and Weekend Work:
  • Night work includes a 35% pay increase and provisions for meals and medical care.
  • Weekend work entails a 50% pay increase.
  • Specifics can vary based on collective bargaining agreements or individual contracts.

These regulations aim to balance productivity with employee well-being and safety, allowing for deviations through collective agreements or contracts that offer more favorable conditions.

Understanding market competitive salaries in North Macedonia is essential for both employers and employees. Employers need to offer competitive compensation to attract and retain talent, while employees should receive fair wages that reflect their skills and experience.

Key Factors Influencing Salaries:

• Job Title & Responsibilities: Salary varies with the role's complexity.
• Experience & Qualifications: Higher experience and qualifications often lead to better pay.
• Company Size & Industry: Larger and high-demand industries tend to pay more.
• Location: Urban areas like Skopje generally offer higher salaries than rural regions.

Resources for Determining Salaries:

• Salary Surveys: Provide detailed salary breakdowns by industry and role.
• Job Boards: Useful for current salary offerings in similar positions.
• Government Resources: Offer general wage data, including average salaries.
• Recruitment Agencies: Have up-to-date knowledge of salary trends.

Minimum Wage and Legal Framework:

• As of March 1, 2023, the net national minimum wage is MKD 20,175.00 per month.
• Governed by the Law on Minimum Wage, which outlines the process for revisions and applicability across various employment contracts.

Additional Compensation Elements:

• Performance-Based Bonuses: Including a 13th-month salary and bonuses for achieving specific targets.
• Overtime Compensation: Mandated pay for work beyond regular hours, with specific bonuses for extensive overtime work.
• Allowances: Such as meal, transportation, and mobile phone allowances to cover work-related expenses.

Payroll Practices:

• Frequency: Most commonly monthly.
• Components: Includes gross salary, social security contributions, and personal income tax.
• Legal Requirements: Employers must ensure timely payment, provide payslips, and keep accurate payroll records.

Overall, a comprehensive understanding of these factors and practices helps ensure fair and competitive compensation in North Macedonia.

In North Macedonia, the Law on Labor Relations governs the notice periods and severance pay requirements for employment termination. Here are the key points:

• Employer-Initiated Termination: Employers must provide a minimum of one month's notice, extendable to two months for mass layoffs (over 150 employees or 5% of the workforce). The maximum notice period, as per contract or collective agreement, is three months.

• Employee-Initiated Termination: Employees are required to give one month's notice, with the possibility of extending this period to three months through agreements.

• Summary Dismissal: Employers can terminate employment immediately without notice in cases of severe misconduct, such as prolonged unjustified absence or safety regulation violations.

• Severance Pay: Mandatory for terminations due to business reasons, calculated based on the employee's tenure and average monthly salary, with a minimum of 50% of the average net salary in North Macedonia. Severance scales up from one net salary for up to five years of service to seven net salaries for over 25 years.

• Types of Termination: Includes termination with notice, summary dismissal, and mutual agreement. Each type requires specific procedures and justifications.

• Rights During Notice Period: Both parties must fulfill their obligations; employees must work, and employers must provide proper conditions and pay. Employees are entitled to time off to seek new employment.

• Additional Considerations: Employers may need to consult with labor unions or representatives, especially during mass layoffs, and certain employees, like those pregnant or on parental leave, have additional protections.

Understanding these regulations ensures legal compliance in the termination process in North Macedonia.

In North Macedonia, distinguishing between employees and independent contractors is crucial for legal and tax purposes, with misclassification potentially leading to fines and claims for unpaid benefits. Employees are under significant employer control, financially dependent on their employer, and integrated into the organizational structure, receiving benefits like minimum wage and paid leave. In contrast, independent contractors have more autonomy, are not financially dependent on one entity, and handle their own taxes and social security contributions.

Contract structures for independent contractors include fixed-price, hourly rate, and retainer agreements. Effective negotiation of these contracts should clearly define the scope of work, payment terms, and termination clauses. Key industries for independent contracting include IT, creative industries, and marketing.

Intellectual property rights are vital, with freelancers generally owning the copyrights to their work unless otherwise specified in a contract. The distinction between "work made for hire" and independent creations should be clearly stated to avoid copyright ownership issues.

Freelancers in North Macedonia benefit from a simple tax regime with a flat 10% tax rate on income below 7,500 MKD per month, above which VAT registration is required. They can opt for voluntary public health insurance or choose private health and pension plans for broader coverage.

Summary of Health and Safety Laws in North Macedonia

• Legislation: North Macedonia's health and safety laws include the Occupational Safety and Health Law, the Law on Health Protection, and the Law on Protection from Chemical Substances, which cover employer and employee responsibilities, risk assessments, safety measures, and incident reporting.

• Employer Responsibilities: Employers are required to conduct risk assessments, implement safety measures, provide training, supply personal protective equipment (PPE), and maintain machinery.

• Employee Rights: Employees are entitled to a safe work environment, adequate training, and the right to refuse unsafe work without repercussions. They also have the right to participate in safety consultations.

• Workplace Hazards: Laws address physical hazards, chemical safety, infectious agents, and psychosocial issues like workplace violence and stress.

• Vulnerable Groups: There are additional protections for young workers, pregnant and breastfeeding women, and disabled workers, including specific risk assessments and workplace accommodations.

• Enforcement and Compliance: The State Labor Inspectorate enforces health and safety regulations through inspections, with the authority to issue fines and corrective actions. Compliance is aligned with EU Directives, particularly Framework Directive 89/391/EEC.

• Risk Assessment and Management: Employers must perform thorough risk assessments and manage risks using a hierarchical approach from elimination to PPE.

• Occupational Health Services: Employers must provide health services including health surveillance, preventive measures, and health advice related to workplace risks.

• Workplace Safety Practices: Regulations cover common hazards and mandate the establishment of safety committees in larger workplaces, emphasizing training and emergency procedures.

• Incident Reporting and Investigation: Employers must report accidents and occupational diseases, with investigations focusing on prevention rather than blame.

• Inspection and Compliance: Inspections assess risk management, safety equipment, and compliance with health and safety laws, with a frequency determined by risk levels.

Despite comprehensive legislation, enforcement challenges persist, especially in smaller businesses and the informal sector, highlighting the need for improved safety culture and consistent monitoring.

North Macedonia has specialized labor courts that handle first-instance labor disputes, integrated within the existing court structure. These courts deal with issues arising from employment contracts, collective bargaining agreements, and other work-related disputes. The process involves initial conciliation or mediation attempts, followed by a formal trial if necessary, with the possibility of appealing judgments.

Additionally, parties can opt for arbitration panels, often facilitated by the Ministry of Labor, where impartial arbitrators help reach a resolution in a less formal setting. These panels can issue either non-binding recommendations or binding awards.

The country also conducts compliance audits and inspections to ensure businesses adhere to legal and regulatory frameworks, involving planning, fieldwork, reporting, and corrective actions. Various government agencies are responsible for these audits, which are crucial for maintaining rule of law and fair business practices.

Whistleblowing is supported by the Law on Protection of Whistleblowers, providing confidentiality and protection against retaliation for those reporting wrongdoing. North Macedonia's labor laws, influenced by its ratification of core International Labour Organization conventions, include protections against discrimination, regulations on working conditions, and enforcement challenges, particularly in the informal economy.

Communication and Business Culture in North Macedonia

• Indirect Communication: In North Macedonia, communication tends to be indirect to maintain group harmony and respect, especially in a collectivistic society. Directness increases with familiarity and necessity.

• Formality in Professional Settings: Initial interactions are formal, using titles and last names. Conservative business attire is expected, and a well-groomed appearance is valued.

• Non-Verbal Cues: Understanding body language is crucial, including appropriate eye contact, reserved facial expressions, personal space considerations, and controlled gestures.

• Relationship-Oriented Negotiations: Building trust and rapport is essential before business dealings. Negotiations focus on long-term relationships rather than quick deals, requiring patience and flexibility.

• Hierarchical and Centralized Decision-Making: North Macedonia features a high power distance with centralized authority. Decisions are typically made by top management with limited lower-level input.

• Directive Leadership: Leadership is generally directive, expecting leaders to provide clear directions and decisions. However, there is a trend towards more participative styles in modern and Western-influenced companies.

• Statutory and Regional Holidays: Awareness of national and local holidays is important as they can significantly affect business operations. Major holidays include New Year's Day, Saints Cyril and Methodius Day, Ilinden Uprising, Independence Day, and Republic Day.

• Impact on Business Operations: Holidays may lead to closures or reduced business hours. Companies usually provide advance notice of holiday schedules, and critical operations may continue with a skeleton staff.

Understanding these cultural nuances is key to successful interactions and negotiations in North Macedonia.