The Republic of Croatia, located in Southeast Europe, is home to just over 4 million people and holds great potential for business investment, expansion and hiring. Key economic sectors include the automobile industry, information and communications technology (ICT), pharmaceuticals, the food industry, metals, energy, agriculture and tourism. Other features luring in investors include the country’s abundance of natural resources, sophisticated financial services and high-quality telecommunications infrastructure.
- Croatia offers appealing tax incentives, double taxation agreements with many nations and is conveniently located within the EU’s single customs area – all appealing factors that make the country attractive to global investors and multinational companies.
- The country continues to experience economic growth, despite the COVID-19 pandemic, two recent earthquakes and nearby unrest in Ukraine. The country’s real GDP expanded by 10.2% in 2021 and is projected to grow another 3.4% in 2022.
- Investment activity is being bolstered by the execution of the National Recovery and Resilience Plan (NRRP), which aims to eliminate administrative constraints and promote green and digital transitions, private investment and innovation.
- Croatia has become a popular location for hiring remote workers due to its highly educated workforce, strong social security system, universal healthcare and free education.
- According to the Global Innovation Index, Croatia’s infrastructure performs above average compared to other high-income countries as well as neighboring countries in the EU.
What are some key principles multinational companies (MNCs) should be aware of when hiring in Croatia for the first time?
Croatia’s employment laws include stringent provisions against discrimination. Both the Anti-Discrimination Act and the Employment Act strictly prohibit discrimination based on race, gender, language, religion, politics, property ownership, trade union membership, education, marital status, family circumstances and sexual orientation. For this reason, employers need to practice caution in the hiring practice and avoid asking any questions that might lead to discrimination charges.
Employers with more than 20 employees must also adhere to certain obligations when it comes to the number of disabled individuals employed. The required number will depend on the total number of employees. However, this amount cannot be lower than 3% of the total number of employees. Employers who fail to comply with the prescribed requirements will have to pay a monthly fee totaling 30% of the minimal salary for each disabled individual the employer is supposed to employ. This can become quite costly.
The country’s bureaucratic system, marked by bureaucracy and a lot of paperwork, is another hurdle businesses face in Croatia. Depending on the industry and geography of business activities, it will be necessary to obtain various approvals, permits and consent documents to establish a business and hire in Croatia. Wait times are relatively longer than similar procedures in other countries.
Employers should also be mindful of the statutory benefits workers in Croatia are entitled to. The basic health insurance scheme covers the costs of general and urgent healthcare services, examinations, primary healthcare, treatment in case of workplace injury, profession-related illness, compensation for loss of pay during sick leave, parental leave and transportations costs linked to the use of health services. While this is robust, many companies choose to offer additional private healthcare coverage as well as other supplementary benefits. These perks include travel insurance plans, voluntary pension insurance contributions, professional training, company phones and company cars.
Why is demand growing in Croatia for Employer of Record (EOR) services?
Croatia is making its way to the top of the list for MNCs looking to hire, expand or simply test out the region. While businesses want to capitalize on the favorable economic conditions in Croatia, there are numerous challenges that come along with directly hiring employers in the country. For example, the country offers strict protections against discrimination and employers can easily find themselves in hot water if they do not conduct the recruitment and hiring process in a certain way.
There is also a list of other requirements employers must comply with in order to avoid fines and legal issues. These requirements can place administrative burdens on global HR teams who hire in Croatia for the first time. This burden is all the more onerous if the team lacks experience managing a workforce in Croatia or in the EU.
For these reasons, MNCs often find the EOR model a suitable alternative to setting up a local entity and hiring locally. Effectively, the MNC can eliminate the burdensome risks, requirements and restrictions that usually come along with hiring in Croatia – while still tapping into the country’s innovative talent pool. Working with an EOR – whether as a permanent solution or just temporarily to get started in the market – offers agility and efficiency. At the same time, it helps MNCS avoid compliance errors and potential headaches in the near and far term.
How can partnering with GoGlobal help MNCs hire and build a team in Croatia?
GoGlobal, in response to rising demand from clients and partners, recently expanded into Croatia to offer our premier EOR services. With our EOR solution in place, our clients are able to focus on their core business activities so they can drive success in Croatia – without being weighed down by bureaucracy and compliance blunders.
While we may be new in Croatia, our innovative EOR solution has a proven track record of success in building fully compliant workforces in EU markets. Our team has deep expertise on the region’s complex regulatory compliance frameworks, such as the General Data Protection Regulation (GDPR). While we take pride in promoting a global mindset, we also maintain teams of local experts on the ground in each market we serve. Therefore, our dedicated team members in Croatia know the “ins and outs” of the regulatory environment and stay ahead of any shifts in legislation. At the same time, they are also fully practiced in Croatia’s business practices and local culture. This helps us offer a comfortable experience for both clients and client-employees.
If a company offers a great employee experience in their home country, GoGlobal will help them bring it to Croatia. Before onboarding a worker, our onshore team in Croatia works directly with the newly hired team members to go over the specifics of the EOR arrangement. Throughout the arrangement, that same dedicated team remains the point of contact for the client and the client-employee. We are committed to addressing questions that emerge in the areas of payroll, taxation or benefits. In serving our clients and client-employees, we hope to infuse the end-to-end global HR process with agility, efficiency and peace of mind.