Public Transportation in Belgrade is Free of Charge – What Does It Mean for Employers?

As of 1 January 2025, public transportation in Belgrade is completely free, following the Decision of the City Mayor issued on 30 December 2024. This significant change raises an important question for many companies in Belgrade: How does the introduction of free public transportation affect employer obligations towards their employees?

Under the Labor Law, employees are entitled to reimbursement of transportation costs for commuting to and from work, equivalent to the price of a public transportation ticket, unless the employer provides its own transport. The Labor Law allows employers to define more favorable work conditions and benefits, including transportation cost reimbursements, through their general acts (such as the Collective Agreement or Employment Rulebook) and/or employment contracts.

So, does the availability of free public transport in Belgrade mean that employers are no longer obligated to reimburse transportation costs? Not necessarily.

If the employer agreed to reimburse employees for actual commuting costs, such as fuel costs for commuting with their own vehicles, introduction of free public transport in Belgrade produced no effect to the previous compensation routine. Of course, no change applies to those employers that provided their own transport service for employees commuting to and from work, as there was no payment to employees in this regard.

Under the Labor Law, compensation of commuting costs should be regulated under the employer’s general act and employment contract. If reimbursement amounts are based on the price of a transportation ticket, introduction of free public transport in Belgrade means that employers are not required to reimburse transportation costs for employees using public transport for their commutes. This aligns with the court practice, which asserts that if no costs are incurred, there are no costs to reimburse.

However, if the employer’s general act or employment contract grants employees a specific lump-sum amount for commuting costs, such provisions will continue to be binding for the employers.

This recent change in public transportation policy in the City of Belgrade may represent a significant adjustment for employers and employees, and understanding legal and tax implications will be crucial in ensuring compliance and maintaining partner relation with employees. For that reason, all Belgrade-based employers are advised to reconsider their general acts, employment contracts and routines in respect to compensation of commuting costs.