What Severance Pay Rules Must Employers Follow in Kosovo?

Which Employees Qualify for Severance Pay?

• Employees with an open-ended employment contract whose employment is terminated by the employer for economic, organizational, or technological reasons.
• Employees who have completed at least two years of continuous service with your company, unless a collective agreement grants severance earlier.
• Employees who are not dismissed for serious misconduct or other justified reasons related to their personal fault under the Labour Law.
• Employees whose positions are made redundant as part of restructuring, downsizing, or closure of part of your business operations.
• Employees covered by a collective agreement or individual contract that expressly provides for severance on termination by the employer.
• Employees who are not retiring and who do not resign voluntarily without an agreed severance arrangement.

What Are the Legal Timelines for Paying Severance?

In Kosovo, the Labour Law requires you to settle all outstanding employment-related payments, including any severance owed, at the end of the employment relationship or within the final payroll cycle. In practice, employers usually pay severance together with the last salary and unused annual leave compensation. You should document the calculation in the termination decision and provide a written breakdown to the employee. Where collective agreements or internal policies set a shorter deadline, you must follow the stricter standard. To avoid disputes, aim to transfer severance within a few working days of the employee’s final working day and obtain written acknowledgment of receipt.

What Penalties Apply if Severance Is Not Paid Correctly?

If your company fails to pay severance correctly in Kosovo, you risk labour inspectorate action, administrative fines, and potential court claims from former employees. Non-compliance can also trigger back payments with interest and reputational damage that complicates future hiring and union relations.

• Labour inspectors may order you to correct underpayments and comply within a set deadline.
• Administrative fines can be imposed on the company and, in some cases, responsible managers.
• Courts can award unpaid severance, statutory interest, and legal costs to the employee.
• Persistent or serious breaches can increase scrutiny of all your employment practices.
• Disputes over severance can delay restructurings and increase the cost of terminations.

Does Outsourcing Employment via an EOR Change Severance Liability?

Using an Employer of Record (EOR) such as https://www.playroll.com/employer-of-record does not remove the need to follow Kosovo’s severance rules, but it can shift day-to-day compliance tasks. In a typical EOR model, the EOR is the legal employer on paper and is responsible for calculating and paying any statutory severance. Your company, however, usually bears the economic cost through the commercial agreement with the EOR and remains exposed if you instruct terminations that breach local law. You should ensure the EOR’s contract clearly allocates severance funding, documentation, and dispute-handling responsibilities. Regular audits and clear approval workflows for terminations help keep both you and the EOR aligned with Kosovo labour requirements.

Be 100 Percent Compliant in Offering Severance with Playroll

Kosovo’s severance rules can feel complex when you are juggling redundancy decisions, notice periods, and final-pay calculations across multiple employees. Playroll helps your team translate the Labour Law and any applicable collective agreements into clear, repeatable workflows, so every termination is documented and costed correctly. You get localised guidance on who qualifies, how to calculate service, and how to align severance with notice and unused leave payments.

With Playroll, you can also centralise approvals and keep a clear audit trail for each Kosovo termination, whether staff are hired directly or via an Employer of Record. Our platform standardises timelines, automates reminders for final payments, and syncs with your finance team so severance is paid in full and on time. That way, you reduce the risk of disputes, inspections, and unexpected liabilities while treating departing employees fairly.