Republika Srpska Workers Lose Annual Leave Rights

Goran Stanković, president of the RS trade union confederation, said workers have reported manipulation around annual leave and warned that some employers promise to compensate unused days with cash, something he said is not legal under labor law. He added that in some cases workers are told they have taken two weeks of vacation, but that Saturdays and Sundays are counted as part of that leave, effectively cutting the lawful entitlement in half.

That arithmetic is what makes the problem economically significant. Two weeks away from work equals only 10 working days, leaving half of the statutory minimum unused. For businesses, the temptation is obvious in a tight labor market: fewer days off can mean more staff on the floor and lower near-term costs. For the economy, the longer-term risk is different — weaker enforcement of labor standards can depress morale, raise turnover and encourage more off-the-books pay arrangements, which reduce tax and social-contribution transparency.

The unions’ warning also highlights a familiar catch-22 in parts of the Western Balkans labor market. Where employers pay part of wages in envelopes, workers may accept illegal arrangements because formal pay is low and jobs are scarce. But once that happens, Stanković said, it becomes much harder to seek protection from labor inspectors or courts because employees themselves have stepped outside the legal framework.

For investors and employers, the story is a reminder that labor scarcity is not just a wage story. It can also show up in compliance risk, reputational damage and a less predictable operating environment, particularly in sectors already strained by staffing shortages. Companies with stronger governance may benefit if enforcement improves, while those relying on informal practices face higher risk of fines, disputes and higher attrition.

The immediate test is whether labor inspectors or unions can turn repeated complaints into enforcement. If they cannot, annual leave in practice may remain less a statutory right than a bargaining chip — one that leaves workers weaker and keeps pressure on the formalization of the labor market.