Written by: PhD Vesna Simović Zvicer, Professor of Labor Law and Coordinator of the Working Group
At the last meeting, the current parliamentary majority adopted amendments to the Labor Law, which apply, among other things, to termination of employment under the law, which ensure that the employee will terminate employment under the law when he reaches 66 years of age and at least 15 years of insurance. In addition, the employment relationship will end with the implementation of the law and employees whose length of service is calculated with an increased duration, depending on the degree of increase in the length of insurance – the age limit for termination of employment under the law is reduced.
The new legal solutions set a precedent both in terms of their adoption and in terms of content. Namely, the amendments to the Labor Law carried out a type of legal violence, because the amendments to the law were made without consultations and any notification to the social partners. There has been a social dialogue – in which Montenegro is obliged to ratify the International Labor Organization Convention No. 144 in tripartite consultations. I would like to mention that the new Labor Law was adopted at the end of December 2019, that the three-part working group worked on the draft Labor Law for more than three years and that the adopted solution (valid for termination of employment under the law) is endangered…
The procedure for adopting amendments to the Law had to be preceded by a financial analysis – to what extent the new solutions will affect the sustainability of the existing pension system. To emphasize, our pension insurance system is based on a system of generational solidarity or distribution in progress. This means that the payment of pensions to current pensioners is based on the payment of contributions by employers for current employees. With such a financial system, in order for the pension and disability insurance fund to be self-sustaining, it is necessary to have a 3:1 ratio between employees and pensioners, so three employees are against one pensioner.
The seriousness of the problem with the application of such a solution facing the retired system in Montenegro is best confirmed by the number of employees and retirees in Montenegro. Namely, the number of employees before the crisis was about 200,000, so the latest data from May 2021 indicate that the total number of employees in Montenegro fell by almost 50,000, so now it is 153,171. If we keep in mind that the total number of pensioners in Montenegro is 121,148, we can conclude the ratio of employees and pensioners in Montenegro is 1.26 : 1. It is clear that in such a situation, our Pension fund PIO is not self-sustaining, and for the regular pension service, support from the budget of Montenegro is necessary. Thus, the adoption of the controversial solutions was not preceded by a financial analysis of the number of persons who will stop working under the force of law and who will then become beneficiaries of the right to an old-age pension.
In addition, a precedent has been set in terms of content – because the new solution implies that employment will be terminated by law, not only those who have reached 66 years of age and 15 years of insurance, but also employees who have the right to seniority with increased duration! In this way, employees whose length of service has been calculated due to work in a workplace that is particularly difficult, dangerous and harmful to health are put in a situation where their employment would stop going through the will much earlier than the general age limit, which is intended as a condition for termination of employment. Such a solution confirms that legislators do not distinguish between basic legal institutions, such as: “termination of work by force of law” and “exercise of the right to an old-age pension”.
The right to an old-age pension is one of the rights from the right to pension and disability insurance, which is related to the risk of old age. To exercise this right, states within their legal system create more or less stricter conditions, depending on the level of self-sustainability of the funds from which old-age pensions are financed.
Article 17 of the Law on Pension and Disability Insurance provides conditions for exercising the right to an old-age pension, and one of those conditions is when the insured is 66 years of age (male), i.e. 64 years of age (female) and at least 15 years of age (female) and at least 15 years of insurance experience, while Article 18 provides the conditions under which the age limit is for employees working in jobs with increased duration. Here, it is important to point out that the Law on Pension and Disability Insurance provides the conditions for exercising the right to an old-age pension, and the procedure for exercising this right was initiated at the request of the insured. Therefore, he/she will be entitled to an old-age pension if he/she wishes, because in these cases it is not a matter of termination of employment by law – the employer has no legal basis to issue a decision to terminate the employment relationship unless the employer applies for termination of employment (yes whether he/she agrees or resigns).
In addition to establishing legal uncertainties in the country that is the most serious candidate for EU membership, I believe that the right to work for employees who are on the number of increased duration, because this category of employees will be in an unequal position since it enjoys for decades special protection at work and their employment now will end by law at 66 years age. I remind you that in the spirit of European standards, there is a legal restriction of all rights, even the right to work enables the protection of public order, public health, public safety and public morals. None of the above reasons exist. I remind you that in the spirit of European standards concerning the prohibition of discrimination, restriction of rights or unequal treatment, it is permissible if a provision is objectively and reasonably justified by a legal object, which it was not in this case.