Analysis of Legal and Tax Regulations for Associations and Foundations, and Recommendations for Amendments

The four laws on associations and foundations in BiH do not regulate issues related to labor relations, and employment is instead governed by four labor laws that apply to all matters related to employment. The entity Labor Laws and the Labor Law of the Brčko District of BiH apply the principle of territorial implementation of their provisions, while the Law on Labor in BiH Institutions regulates the issue of the implementation of the Law by giving an exhaustive list of institutions and organizations that are obliged to apply its provisions. Associations and foundations in BiH are considered to be subject to the same labor laws as other legal entities in the country. According to the applicable labor laws, there are five basic types of contracts that can be signed, including indefinite term contracts, fixed term contracts, temporary and casual services contracts, training contracts (internship contracts), and volunteering contracts. In addition to labor laws, numerous other regulations are applied to employment, including regulations for hiring workers, provisions for payment of contributions for compulsory insurance, and income tax regulations. The Law on Labor in BiH Public Institutions stipulates that employees in public enterprises, associations, and foundations in BiH are subject to its provisions. However, this law has been criticized for its application to associations and foundations, as it is unclear whether it applies to associations established by government institutions or administrative organizations. The law also refers to the application of entity laws, depending on the employee's place of residence, which can create problems for associations. The Labour Law of the RS allows for the conclusion of temporary and casual service contracts for a period of up to 60 days within one calendar year. However, this law does not provide for the possibility of signing such contracts for employees of associations and foundations. A suggested amendment to the law would allow for the conclusion of temporary and casual service contracts for a period of up to 90 days in one calendar year for employees of associations and foundations. The Labour Laws of the RS, FBiH, and Brčko District provide for severance compensation to employees who have signed an indefinite term contract and whose employment has ceased with the termination of the employment contract by the employer, after at least two years of continuous service to the employer. However, a suggested amendment to these laws would exempt associations and foundations from providing severance compensation if the place of work is one in a citizens' association or foundation, and was established and is related to the financing requirements of a project, and if there is no other suitable replacement position within the association or foundation. The employment of employees in associations and foundations in BiH is often determined by the period of the implementation of project activities, and the project completion deadline. After the execution of project activities, the association, as an employer, incurs the obligation to pay severance compensation to employees who have signed an indefinite term contract and whose employment has ceased. However, the suggested amendment to the Labour Laws would exempt associations and foundations from providing severance compensation in certain circumstances. The Centre for Promotion of Civil Society, Sarajevo, and the Resource Centre, Secretariat of the Sporazum plus (Agreement Plus) Network, have published a report on the legal and tax regulations for associations and foundations in BiH. The report provides an analysis of the current regulations and suggests amendments to improve the legal and tax treatment of associations and foundations in BiH. The report is based on a questionnaire distributed to members of the Agreement Plus Network, which contained eight questions from the legal and tax domains for NGOs in BiH. The results of the questionnaire were included in the report, which was also expanded to include the suggestions of the participants of the Seventh Forum.