Flexible work arrangements have become an integral part of almost every organization due to various internal and external challenges, which further create new opportunities and serve as a means through which organizations can reduce job stress among employees. The subject of the research is focused on determining the effects that flexible work arrangements have on job stress among highly educated millennials in the service sector of Serbia. The research was conducted on a sample of 448 highly educated millennials in the service sector of Serbia. To test the effects, the PLS-SEM method was used. The results of the research indicate that flexible work arrangements significantly reduce stress among employees, allowing them greater control over working hours, establishing a work-life balance, and having a positive impact on employees' work attitudes and behaviors, which leads to improved organizational performance. Service organizations should consider the possibilities of implementing such work arrangements according to their capabilities, which would contribute to mutual satisfaction, in line with social exchange theory. Research on the effects of flexible work arrangements in reducing job stress provides answers regarding the situation in developing economies, with a special focus on Serbia, and fills a gap in the literature. Future research will focus on a larger number of respondents, comparisons with other generations, with an emphasis on Generation Z, which differs in characteristics from Generation Y, and on investigating the establishment of work-life balance, etc.

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