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Country Introduction – Macedonia:
Capital – Skopje
Currency – Macedonian Dinar (MKD)
GDP – $14.80 Billion (estimated for 2022)
Language – Macedonian, Albanian
Major Religions – Macedonian Orthodox Christianity and Islam
Population – estimated 2.5 Million as of 2022
Macedonia is a humble, landlocked country located in the central Balkan Peninsula in Southeast Europe. It is bordered by Albania, Bulgaria, Greece, Kosovo, and Serbia. It’s a major transportation corridor from Western and Central Europe to the Aegean Sea and Southern Europe to Western Europe. Macedonia has a small, open economy that is vulnerable to economic developments in Europe and dependent on regional integration for continued economic growth.
In terms of economy, the World Bank continuously recognised Macedonia as one of the top reformers in its Ease in Doing Business ranking. In the 2020 World Bank ‘Doing Business’ report, North Macedonia was ranked 17th out of 190 countries, ahead of many EU member state countries and well ahead its neighbours.
North Macedonia has made some progress and is moderately prepared to cope with competitive pressures and market forces within Europe. Integration with the EU in trade and investment deepened further. Exports and manufacturing output diversified further towards higher-value products. Macedonia shows a good level of preparation in areas such as company law, customs union, trans-European networks, science and research. Macedonians also put a collaborative effort and more focus on administrative capacity and effective implementation. Over the years, this country has also continued to improve its alignment with the EU common foreign and security policy giving businesses a wider opportunity to flourish in this location.
Contract of Employment
Legally, the only way to engage an individual to work for a business in Macedonia is to enter a specified and formally determined employment agreement. Any deed or freelance agreement is contrary to the law. The employment agreement must be written on paper and signed by both parties.
This document must contain information of the contracting parties such as their place of residence, head office, duration of employment, title and nature of the job, qualifications and knowledge necessary for the job, medical coverage, perks and benefits, salary, company provisions. The agreement can contain additional specifications, but any provision that is contrary to the law shall be considered null and void.
This agreement is latter registered to the employment agency and the employer is obligated to timely pay the employee salary and benefits.
When entering the employment contract, the parties may agree to a probationary period. The employment contract, in addition to all rights and obligations arising from employment, should also state the salary and the duration of the probationary period. Usually, the probationary period in Macedonia lasts up to 4 months.
According to the Labour Law of the Republic of North Macedonia, the employment contract can be cancelled by both the employee and the employer. The employment contract or the collective agreement may provide for a longer notice period, which should not exceed three months. The employer may terminate the employment contract of the employee due to a breach of the workplace code of conduct or failure to perform the obligations laid down by law, collective agreement, an act of the employer, and the employment contract, without a notice period, in certain prescribed conditions.
Below are the notice periods practiced on different cases:
– Termination of seasonal employees: 7 working days notice period
– Termination initiated by the full time employee or employer: 1 month notice period
The standard work week in Macedonia consists of 8 hours a day and a total of 40 hours a week. Sunday has been declared as a non-working day for most of the working population in accordance with the 2022 amendments to the labour law.
Overtime work should not exceed 8 hours accumulated in one week and 190 hours annually. Exceptions to this are jobs that are successive by nature or require higher demands such as the medical industry. The employer must provide the employee’s overtime pay with the rate of not less than 135% of the employee’s standard hourly rate.
13th Month Pay
Giving out 13th-month pay is common practice in Macedonia. Eligible employees, those that have worked more than 150 hours over regular hours and have not been absent from work for more than 21 days during the year, are entitled to an additional salary supplement/bonus payment. This is calculated at the rate of 1 month regular salary and is usually paid at the end of the year.
Employees who have worked for an uninterrupted period of 6 months with the same employer are entitled to 20 days of paid annual leave. The employer is obligated to ensure that the employee use up the exact number of days by the end of the current calendar year, and the remainder until June 30 of the following year.
There is no annual limit on the number of sick days an employee can take for as long as a medical certificate is presented. The employer also pays a salary compensation in the event of an employee’s incapacity for work due to illness or injury for a period of up to 30 days, and if the absence lasts more than 30 days, the salary compensation is paid through the health insurance.
Maternity and Paternity Leave
Female employees are entitled to 9 uninterrupted months of paid maternity leave, or 15 months in the case of twins or multiple births during pregnancy, childbirth, and parenting. Besides the right to salary, they are also entitled to salary compensation amounting to 50% of the determined amount of the salary compensation for the maternity leave.
On the other hand, working fathers are entitled to 7 days paid paternity leave.
VAT / GST:
The standard VAT rate is 18%. This rate applies to overall turnover and imports of goods and services. In addition to the standard VAT of 18%, preferential rates of 5% and 10% are applied for turnover of certain goods and services.
The standard income tax rate in Macedonia is 10%, a higher income tax may apply to individuals with more than MKD 90,000 monthly salary.
Employers do not cover any social security contributions. However, they are obligated to calculate, withhold for the employee, and pay compulsory social contributions on gross salary based on the below:
– Pension and Disability Insurance 18.8%
– Health Insurance 1.2%
– Employment Insurance 7.5%
– Added Health Insurance contribution in case of injury or illness acquired at work 0.5%
– New Year’s Day
– Orthodox Christmas Day
– Orthodox Easter Monday
– Eid Al-Fitr
– Labour Day
– Ramazan Bajram
– St. Cyril and St. Methodius Day
– Republic Day/ Ilinden Day
– Independence Day
– People’s Uprising against Fascism Day
– Day of the Macedonian Revolution
– St. Clement of Ohrid Day
Severance payment differs depending on the employee’s length of service in the same company.
0-5 years = 1 month of salary
5-10 years = 2.5 months of salary
10-15 years = 3.5 months of salary
15-20 years = 4.5 months of salary
20-25 years = 6 months of salary
25+ years = 7 months of salary
Work and Residence Permits (Expatriates)
Should you need assistance on onboarding your expat employees to legally work in Macedonia, our team will gladly assist you as quick as a time frame of 48 hours. Our local team will support in immigration needs, work permits and visa processing.
To obtain a work permit in Macedonia, below is the usual process:
– The employer applies for the work permit on behalf of the employee.
– An original copy of the work permit will be provided then the employee must submit it together with the visa and temporary resident permit application at the Macedonian consulate.
– The employee must have a long-term residence visa (Type D) before traveling to Macedonia.
– Within 5 days of arriving in Macedonia with a Type D visa, the employee must complete the temporary residence permit issuance process at the Macedonian consulate.
– The Ministry of Interior should issue a National Temporary Residence Identity Card within 25 days from the application date.