6 December 2021
Even though the Law on Electronic Document, Electronic Identification and Trust Services in Electronic Business was adopted in 2017 (the “E-Law“), in certain cases there are still doubts about e-signing of contracts and other documents in lieu of a traditional wet signature. This makes e-signing still somewhat controversial in business practice, despite of all of its advantages.
Pursuant to the E-Law, most documents can be executed electronically (save for those which per law require special form). A qualified e-signature (essentially a qualified personal electronic certificate issued by certified bodies) is equal to wet signature in legal effect. An ordinary (not-qualified) e-signature is also valid in terms of legal form, but the integrity and authenticity of the document is not guaranteed and can be brought into question (while documents signed by qualified e-signature can only be challenged in specific and very limited circumstances). According to the E-Law, validity, probationary value and written form of an electronic document cannot be challenged merely due to such document having been made in electronic form.
The legal uncertainty that exists in Serbia is caused by different interpretations (by the authorities and expert public alike) of the existing legal framework. In particular, there is disagreement on whether individual laws, regulating particular areas of law, need to introduce the possibility of e-signing in such areas directly (such as commercial contracts, employment documents etc.), or if general provisions of the E-Law are sufficient to allow e-signing in all cases (save for those expressly excluded by individual laws).
While everyone agrees that e-signing has many advantages in terms of efficiency, for the E-Law to achieve its goal and for e-signing to become a fully accepted alternative to wet signature, any lingering ambiguities and doubts need to be resolved. This is especially important in a situation when many companies are still resorting to remote work due to the Covid-19 pandemic and travel restrictions are common around the globe.
E-signing of employment-related documents is especially important in practice given that management (i.e., authorized signatories) of many Serbian companies is physically located abroad. Since the employer is responsible for ensuring legal compliance, it bears the risk of formal irregularities. For companies with many employees this can be a huge liability.
Regulations in the area of employment do not clearly regulate e-signing. While the Labour Law is clear that certain types of documents must be delivered in person, in hardcopy (such as dismissal paperwork) the situation is not so clear-cut when it comes to employment contracts (fundamental document based on which employment is established).
Interested parties referred this issue to the Ministry of Labour, but the Ministry failed to provide a complete and meaningful answer. Specifically, the Ministry only confirmed that salary calculation and decision on annual leave can be delivered electronically (which is specifically provided by Labour Law), without explicitly addressing the issue of e-signing and delivery of other documents, such as employment contracts, annexes, employer’s decisions etc. (the Ministry did not even acknowledge the existence of the E-Law). Although this is not explicitly stated, the wording of the Ministry’s opinion indicates the Ministry’s position to be that employment contracts (and other documents save those mentioned above) must be signed on paper.
The Ministry’s opinion is in direct contradiction to the practice of other parts of the executive in non-employment matters (such as the Ministry of Finance, which issued several opinions, directly citing the E-Law, and confirming that it views that e-documents are simultaneously documents “in written form” as required by the law). Moreover, even state institutions are entering into employment agreements in electronic form, in presence of the Prime Minister, as reported by the media since 2018 (link).
We believe the existing legal framework in Serbia allows electronic execution of employment documents, save for those which need to be personally delivered to employees. Specifically, under employment regulations, an employment contract must be signed by the employee and an authorized representative of the employer. Pursuant to the E-Law, this form would be satisfied by signing the contract via a qualified e-signature issued in accordance with the E-Law (which per the E-Law has the same legal relevance as a wet signature).
In addition, employment contract signed by any other certificate which satisfies basic technical requirements (especially if it is used and recognized in the EU or other jurisdictions which maintain similar standards – such as DocuSign, Hallo Sign etc.) would also be valid. The difference is that in this case there is a possibility for interested parties to challenge the integrity of the document and/or claim that it was not signed by an authorized person. The actual risk would depend on the circumstances, and in particular on technical features and safeguard mechanisms inherent to the e-certificate in question.
Same principle would apply to other employment documents, including general acts such as Employment Rulebook and Rulebook on Organization and Systematization of Work Positions (note however that general acts also need to be properly announced and made available to employees).
Nevertheless, the Ministry’s opinion, although not legally binding, cannot be overlooked. Considering labour inspections are part of the Ministry’s structure, it is possible that inspectors could find that employment contracts signed electronically are invalid, and fine employers for not having signed proper employment contracts with employees.
Considering that the executive branch of Serbian authorities appears to be of different views when it comes to the relationship between “written” and “electronic” form, and in absence of amendments to the Labour Law (which would clearly regulate e-signing of contracts and other documents), it will be up to Serbian courts and judges to determine if electronically signed employment contracts are valid or not, i.e., if the E-Law applies or not.
In the meantime, there are companies (especially small and medium-sized companies with foreign management) which use e-signing for their employment contracts, and we are not aware that there were any problems in practice thus far.
In any case, for those companies which use e-signing, it is always our recommendation to use the qualified electronic signature or at least one of the alternative certificates with higher security standards which are recognized in the EU and similar jurisdictions, as it is in the employer’s interest to ensure that existence and authenticity of employment contract is beyond dispute.
This text is for informational purposes only and is not legal advice. Feel free to contact us if you need additional information.
Damjan Despotović, partner
Srećko Vujaković, partner