The new Draft Labour Law, expected to enter parliamentary procedure in 2026, introduces progressive reforms aligning with EU directives and expanding worker protections. This marks a fundamental shift in the entity’s employment framework.
Indefinite-Term Contracts Become the Standard
A cornerstone of the reform is establishing the indefinite-term employment contract as the default. Fixed-term contracts are now permissible only under exceptional, objectively justified circumstances and must be explicitly reasoned within the contract. Their maximum duration is reduced to two years, with strict limits on consecutive renewals. This change harmonizes FBiH regulations with those of Republika Srpska.
Clarifying Employment vs. Service Contracts
To combat misclassification, the Draft stipulates that any contract where work performed bears the characteristics of an employment relationship will be legally deemed an employment contract, irrespective of its title. This codifies existing tax administration practices to prevent abuse.
Embracing Modern Work Arrangements
The legislation formally recognizes contemporary work models:
- Work at an Alternative Place: Regulating work from home or similar locations, with requirements for contract clauses on organization, equipment, and expense reimbursement.
- Remote Work: Introduced as a distinct concept where work is always performed via ICT. Employees may freely choose their variable work location, with simplified contractual requirements and exempted OHS rules.
- Additional Work: A new concept allowing employees to work up to 8 extra hours weekly under a separate written contract, without constituting overtime.
Enhanced Employee Protections and Flexibility
Key amendments strengthen worker rights:
- Breaks are now counted as working time.
- Employees have a right to disconnect, being unavailable during rest periods and leave.
- Annual leave minimum is set at four weeks, with accrual of two days per month worked for those not qualifying for full leave.
- Working time schedules gain flexibility and require timely employee notification.
Revised Termination Procedures and New Concepts
The Draft reclassifies termination grounds into ordinary and extraordinary categories, with extended notice periods based on seniority. It also introduces the formal possibility of contract addendums. Furthermore, the operation of temporary employment agencies is regulated for the first time, requiring ministry approval.
This Draft Labour Law represents a comprehensive modernization of FBiH’s labour market rules, emphasizing standard employment, adapting to digital work, and strengthening protections. Employers should prepare for these changes as the parliamentary debate progresses.
This document is for general informational purposes only and does not constitute legal advice. It is not exhaustive and is no substitute for specific counsel. For advice on any legal matter, please contact your usual lawyer at JPM & Partners.
