Following the publication in the Official Gazette of the City of Belgrade on December 30, 2024, of the decision stipulating that public transport services within the territory of the City of Belgrade shall be free of charge as of January 1, 2025, a pertinent legal question arises regarding whether employers remain obligated to reimburse employees for transport costs, and under which conditions.
Within a short period, numerous interpretations and various viewpoints on this matter have emerged. It is, therefore, essential for the relevant authorities and ministries to adopt an official stance and issue precise guidelines and clarifications concerning the reimbursement of transport costs.
While the definitive regulatory framework regarding this matter has yet to be established, the purpose of this text is to provide a brief overview and analysis of the current legal provisions in relation to the decision on free public transport, as well as propose possible courses of action for employers pending the issuance of an official stance that will address all contentious issues.
Specifically, Article 118, Paragraph 1 of the Labour Law of the Republic of Serbia stipulates that an employee is entitled to reimbursement for transport costs in accordance with the general act and employment contract, for commuting to and from work, in the amount of the public transport fare, where the employer has not provided transport. The legal provisions clearly establish the employer’s responsibility and obligation regarding the reimbursement of transport costs, as well as specify that such reimbursement is linked to public transport only in terms of determining the amount of reimbursement, and not in terms of its mandatory nature. The highest judicial instances have clarified this matter, with the Supreme Court of Serbia, in its opinion from 2022, holding that the right to transport cost reimbursement applies to all employees, regardless of whether they use public transport, their own vehicle, or commute on foot. Additionally, the right to reimbursement is not contingent upon proving the actual costs incurred.
Moreover, it is crucial to highlight that Article 8, Paragraph 2 of the Labour Law enables the employer to specify additional benefits, including transport allowances, through the employment contract, which are not necessarily mandated by law. This provision grants the employer the discretion to define the terms under which transport cost reimbursements are to be provided, either in the employment contract or in the employer’s general acts.
Although at first glance, and as some practitioners contend, it may appear that in a situation where transport is free, as in Belgrade, employees incur no transport costs, and therefore the employer is not obliged to reimburse transport expenses because they no longer exist, the factual situation is more nuanced.
When reviewing the aforementioned legal provisions and judicial practice, it is evident that employees have not, by default, lost their entitlement to reimbursement for transport costs in Belgrade. Instead, the amount and manner of reimbursement should be determined in accordance with the employer’s general acts and employment contracts, where the amount of reimbursement for employees working within the territory of the City of Belgrade may be autonomously determined.
It is also important to recall that Article 18, Paragraph 1, Item 1 of the Law on Personal Income Tax provides that no income tax is due on employee reimbursements by the employer for documented transport costs related to commuting to and from work, up to the cost of a monthly public transport ticket or the actual transport costs, with a maximum of 5,398 RSD per month. This could serve as a useful guideline for employers in determining the reimbursement amount.
The conclusion is that employees who have documented expenses (such as fuel costs and similar) still have the right to reimbursement for those expenses, and the decision regarding free public transportation does not affect their position. Therefore, the dilemma pertains to employees who exclusively used public transportation, as their complete exclusion from reimbursement could be interpreted as potential discrimination compared to employees in other cities in Serbia, as well as compared to employees who are entitled to reimbursement based on documented expenses.
In closing, the author emphasizes that the status of employees who have used public transport and the reimbursement of transport costs remains an unresolved issue. At this stage, there is no unequivocal answer. It is the responsibility of employers to regulate the issue of transport cost reimbursement for their employees in accordance with applicable law, considering the decision on free public transport. Employers may opt not to reimburse transport costs, arguing that actual costs no longer exist, or continue reimbursing transport costs in a manner more precisely defined in their general acts, pending an official position from the competent authorities.
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