Hire in Croatia
Here’s where you get started with human resources best practices and hiring in Croatia.
Key Country Facts
The Republic of Croatia (‘Republika Hrvatska’) is a sovereign state with a parliamentary system of governance. The President of the Republic is the directly elected head of state, while the government is led by a prime minister. A member of the European Union, Croatia is home to just over 4 million people. Notably, the country ranks among the world’s top 20 countries as a tourism destination.
Croatia benefits from a moderately warm and slightly rainy continental climate. The warmest areas being mostly just inland from the Adriatic Sea and its Mediterranean influence.
Geography places Croatia at a crossroads of cultural influences from both east and west particularly from the times of the Western Roman Empire and the Byzantine Empire. Nowadays classified by the World Bank as a high-income economy, Croatia also ranks high on the Human Development Index.
Freedom and equality of religion are rights defined by the Constitution. According to the latest surveys over 90% of Croatians identify as Christian, and of those the vast majority are Catholic. Approximately 5% describe themselves as non-religious.
The official language is Croatian. Minority languages are officially used in areas of high minority populations, Czech, Hungarian, Italian, Serbian, and Slovak being fairly in common use.
Croatia HR at a Glance
Employment in Croatia is regulated by several sources, in this order of prevalence:
- The Croatian Labor Act
- The Constitution
- Collective bargaining agreements (CBAs) and individual employment agreements
- Conventions and treaties set by the EU (and other international bodies)
As the main source for labor law in Croatia, the Labor Act regulates leaves, wages, strikes and discrimination (among other subjects).
If the contract is not concluded in written form, the employee is still protected by the Law. Failure on the part of the contractual parties to conclude an employment agreement in written form does not affect the existence and validity of this contract.
Although either the employee and employer may negotiate certain terms of the employment agreement, many provisions are mandatory. The key mandatory provisions in Croatia are:
- In most circumstances, the working week may not exceed 40 hours. Overtime can only be performed under special circumstances. Overtime can only total up to eight additional hours per week.
- Employees in “harmful” workplaces may work less than 40 hours per week.
- Women are generally not permitted to perform night work and may not work underground, underwater or in very physically demanding jobs.
- Salary must be paid at regular intervals and not less than once per month.
- Employees are entitled to four weeks of vacation each year.
- Employees who work six or more hours per day have the right to take at least one 30-minute break.
- Employers with at least 20 employees must permit employees to participate in decisions that affect their “economic and social rights and interests.”
Contracts concluded for a definitive period must be determined by objective terms (e.g. by a specific time limit, completion of a specific task or work related to a specific event). The employer must not conclude one or more consecutive fixed-duration employment agreements on the basis of which employment commences with respect to the same work for a continuous period exceeding three years. Exceptions to this rule do exist, such as substituting a temporarily absent worker or if this practice is permitted by the law or applicable CBA.
Probation Period / Trial Period
A trial period may be stipulated Upon execution of the contract of employment. Such trial period cannot last more than six months.
If a trial period is agreed upon, the notice period shall be no less than seven days.
Full-time employment is standard practice in Croatia. Regular working hours are considered to be 40 hours a week. Part-time work is any working time that is shorter than 40 hours a week. The employer and the employee are entitled to agree flexible working hours. This is usually agreed in cases when the employee performs work remotely (for example, at home).
Where the nature of work so requires, regular working hours may be rescheduled so that during one calendar year there may be a period where working hours are longer and another period where working hours that are shorter than the regular hours, provided that the average working hours in the course of rescheduling do not exceed the regular hours.
The following apply:
An employee who works at least six hours a day each working day is entitled to a rest period of at least 30 minutes, to be included in the working hours.
If the special nature of the job does not allow interruption of work for taking a rest, breaks can be regulated by a collective bargaining agreement, agreement between the works council and the employer or the employment contract.
During each 24-hour period, an employee is entitled to a daily rest period of at least 12 consecutive hours. An employee has the right to a weekly rest period lasting at least 24 consecutive hours, to which the daily rest period shall be added.
The overtime work of an individual employee must not exceed 180 hours per year unless the overtime work has been regulated in the collective bargaining agreement, in which case it must not exceed 250 hours per year.
For performed overtime work an employee is entitled to an increased salary. Overtime pay is not defined in the Employment Act but should be defined either in the collective bargaining agreement, employment agreement or by the employer.
In the case of force majeure, an irregular increase in the scope of work and in other similar circumstances of immediate necessity, the employee must, at the employer’s request, work overtime for up to ten hours a week.
If overtime work extends over more than four consecutive weeks or more than twelve weeks during one calendar year, or if the overtime work of all employees of a certain employer exceeds ten percent of the total working hours in one particular month, notice must be given about such overtime work to the labour inspector.
The labour inspector shall prohibit overtime work if it has a harmful impact on the health and working ability of employees or if by means of excessive usage, it impedes the employment of unemployed persons.
A pregnant woman, a mother of a child under three years of age, and a single parent of a child under six years old, may work overtime only if he or she freely gives his or her consent in writing to perform such work.
In 2019, the European Court of Justice stated that companies must set up a system to record the working time of their employees. Thus, employers are obliged to implement an objective, reliable and accessible system that allows recording of the daily workday performed by each employee.
Although not mandated by law, a Christmas bonus (by way of a 13th month salary) is quite common.
An employer always needs to have a lawful reason to terminate an employment relationship. Under the Croatian Labour Law Act (LLA), there are two ways for an employer to lawfully terminate the employment relationship:
1. Regular notice of termination
Business-conditioned termination due to economic, technological or organizational reasons
Termination on personal grounds when the worker is unable to offer satisfactory work performance due to his specific permanent characteristics or capacities
Termination due to worker’s misconduct
Termination due to incompetence during probationary period
2. Extraordinary notice of termination.
- The employer has a just cause to terminate permanent or temporal employment contracts without observing the notice period if due to a severe breach of obligations from the employment relationship the continuation of the employment relationship is not possible.
The notice of termination must be in writing and explained, as well as served to the worker. If there is an established works council, it must be informed about the intent of termination. The works council is obliged to issue a standpoint regarding the employer’s decision of termination within 8 days, or 5 days in case of extraordinary termination. All other procedures for achieving effective termination of the employment relationship depend on the reason of termination.
If the employer does not follow the procedure regarding termination, the termination will be considered null and void.
Protected Groups of Employees
Temporary contracts may be terminated only if that option is provided by the contract.
An employment contract may not be terminated during a person’s pregnancy, maternity, parental or adoption leave, periods of part-time work, periods of short-time work due to intensified childcare, the leave of pregnant women or breastfeeding mothers, and the periods of leave or short-time work for reasons of caring for a child with serious developmental disabilities, and within fifteen days after the end of such rights. Such termination is considered null and void.
It is not possible to terminate the contract of a worker who is temporarily incapacitated for work due to medical treatment or recovery from a work-related injury or a professional illness. Such termination is considered null and void.
Payment in lieu
Croatian law does not recognize the possibility of payment of monies to a worker to end the employment relationship instead of giving notice.
The employer may require a worker to be on “garden leave”.
In such cases, the employer must pay wage compensation to the worker and recognize all other employment rights as if the worker worked until the end of the notice period. The “garden leave” must be agreed upon in writing, either in the notice of termination or in a separate decision.
Minimum notice periods are strictly prescribed by the Labour Act and depends on the duration of the employment relationship with the same employer as follows:
for less than one year of employment – two weeks’ notice
for one year of employment – one-month notice
for two years of employment – one month and two weeks’ notice
for five years of employment – two months’ notice
for ten years of employment – two months and two weeks’ notice
for twenty years of employment – three months’ notice
For a worker with twenty years of employment with the same employer, the aforementioned period of notice is increased by two weeks if the worker has reached the age of 50 or by one month if the worker has reached the age of 55.
If the employment contract is terminated for breach of obligations arising from the employment relationship (termination due to worker’s misconduct) the respective notice period is two times shorter.
Post-Termination Restraints / Restrictive Covenants
Any non-compete clause must be contractually agreed, in writing, by both the employer and the employee. Typically, it will establish that, following termination of the contract, the employee is not allowed to take employment with any of the employer’s market competitors or to enter into business transactions regarded as competition to the employer, either on their own account or on behalf of third parties.
This clause is valid only for a period of up to two years after the date of termination of the employment relationship. It may be an integral part of the employment contract and it must be concluded in writing.
Such a clause is binding on the employee only when the employer is contractually committed to compensate the worker for the duration of the restricted period. This compensation must be at least a half of average salary paid to the worker in the three-month period preceding the termination of the employment contract.
If the employee terminates the employment contract by means of extraordinary notice for reasons of employer’s serious breach of contractual obligations, the non-compete clause ceases to apply, so long as the employee provides a written statement that he does not consider himself bound by this contract within a month of the termination.
Additionally, the non-compete clause ceases to apply if the employer terminates the employment contract without just cause, unless the employer notifies the employee within 15 days of the termination that they will compensate the worker for the duration of the contractual ban of competition.
Employers should especially be cautious not to contract non-compete clauses that the court may find invalid. For example, a non-compete contract will be considered null and void if it is concluded by an employee who, at the time the contract is concluded, is receiving a salary of less than the average wage in Croatia.
Redundancy / Severance Pay
Employees have the right to severance pay except when the contract is terminated due to the worker’s breach of contractual obligation.
Severance is paid in accordance with the provision set out by eithers the Employment Act, employment contract or collective bargaining agreement as follows:
If the employee is dismissed after two years of continuous service, the employee is entitled to statutory severance pay of an amount dependent on the length of service.
The amount of severance pay for each year of employment with the same employer cannot be lower than one-third of the average monthly salary earned by the employee in the three months before the termination of employment.
Unless otherwise speciﬁed by the law, collective bargaining agreement or employment contract, the employer’s liability to pay severance pay is limited to the amount that equals six average monthly salaries earned by the employee within the last three months before termination of employment.
Trade Unions / Collective Agreements
Union density in Croatia is close to the EU average with around a quarter of employees in unions. However, union organization is quite fragmented with three nationally representative union confederations and many unions outside these larger bodies.
Collective bargaining takes place at both industry and company or organization level. There are no economy-wide agreements, and agreements mostly cover employees in public services. It is estimated only one third of employees in private businesses are covered by a collective bargaining agreement.
Tax and Social Security
PERSONAL INCOME TAX
Croatia has progressive tax rates that are applicable to the taxable base of annual income. The following types of income are considered for the so-called ‘annual income’:
Other income that is not deemed ‘final other income’.
Taxable base is calculated by applying prescribed tax deductions and tax allowances (i.e., non-taxable parts of income) to the total amount of annual income.
The following types of income form part of the so-called ‘final income’ and therefore not subject to the annual assessment of tax liability:
Income from property and proprietary rights.
Income from capital.
Other income relating to the refund of social contributions.
Other income relating to the difference between taxpayer’s assets and reported sources for financing acquisition of assets.
Other income in relation to temporary and occasional seasonal work in agriculture.
|From HRK||To HRK||Tax Rate %|
A resident taxpayer is an individual who has in Croatia:
residence (if an individual owns/rents accommodation without interruption for at least 183 days over 2 consecutive calendar years; permanent stay in the accommodation is not necessary); or
habitual abode (if the circumstances suggest that an individual permanently resides in a place or region for a period of at least 183 days over 2 consecutive calendar years).
If an individual simultaneously has residence in Croatia and abroad (owns/rents accommodation without interruption for at least 183 days over 2 consecutive calendar years in Croatia and a second state), the individual will be tax resident in the state where their family reside. If the individual is single, it is considered that the individual has permanent residence (and accordingly tax residence) in the state from which she/he mostly travels to work or in which she/he mostly stays.
A non-resident taxpayer has neither residence nor habitual abode in Croatia, but sources income subject to Croatian personal income tax.
The Croatian social security system covers pension and health insurance provision. Social security contributions are calculated in respect of gross income. In the case of dependently employed individuals, social security charges are borne by the employee and employer.
Employee’s social security contributions are pension contributions levied at the rate of 20% (15% I. Pillar payments, 5% II. Pillar payments). The basis for their payment is gross salary, which is capped at the following values for 2020:
HRK 57,222 monthly cap (applicable for both I. and II. Pillar payments in case of salary).
HRK 686,664 annual cap (applicable for I. Pillar payments irrespective of whether the payment is salary or other types of remuneration).
Additionally, employers make social contributions for the following social security benefits:
- Health insurance: 16.5%
The basis for payment of employer’s social security contributions is again gross salary, which however is not capped.
|Type of Insurance||Employer Percent||Employee Percent|
|Pension – Generation solidarity (Pillar 1)||N/A||15.0|
|Pension – Individual capital savings (Pillar 2)||N/A||5.0|
According to Section 83 of the Croatian Labour Act:
A salary shall be paid after the corresponding work has been performed.
The periods for which salaries shall be paid shall be established by the collective agreement or by the employment contract.
A collective agreement or an employment contract shall not provide for payment of salaries at intervals longer than one month.
A payslip is considered a legal report that should be printed and handed (preferably through an online service) to the employee after each payroll run. It has to contain all legally defined payroll information.
For every calendar year, a worker shall have the right to paid vacation in the amount of no less than four weeks (for minors and persons working in difficult conditions no less than five weeks); the worker shall have the right to exercise this right after six months from the beginning of work.
The following rules additionally apply:
- An employee is entitled to four weeks’ minimum annual paid leave every year.
- The duration of annual leave for a period that is longer than the minimum period can be regulated by the employment contract, employment byelaw or collective bargaining agreement.
- National holidays are not included in annual paid leave entitlement.
- Employees are not allowed to waive their right to annual paid leave or accept payment of compensation in lieu of any unused annual paid leave.
- A ﬁrst-time employee or an employee whose interruption of work between two consecutive employments is longer than eight days, acquires the right to annual paid leave after six months of uninterrupted work.
- An employee is entitled to one-twelfth of the annual paid leave for each full month of service if:
- in the calendar year in which the employment has been established, no entitlement to annual paid leave has been acquired because the work lasted less than six-months;
- employment has been terminated before the expiry of the six months of service;
- the employment is terminated before 1 July; or
- during the calendar year the employee has been employed by several employers.
- During the annual paid leave, the employee is entitled to full compensation equal to the amount of the average salary that has been paid to them within the last three months before the annual paid leave.
- In the case of termination of employment, the employee must receive compensation for any unused holiday.
In the event of illness or injury, employees are entitled to sick leave which is normally to be fully compensated by the employer for a specified period. The maximum period of paid compensation for illness or injury is dependent on the years of service with the employer and on the cause of the inability to work. Depending on the reasons for sickness/injury, sick pay is paid as follows:
During the first 42 days of sick leave, from the employer’s own funds.
After the 42nd day, after advancing the funds the employer is entitled to recover payment from the Croatian Government or the Croatian Health Insurance.
Depending on reasons for sickness/injury, an employer can recover sick pay from the Croatian Health Insurance either from the first day or after the 42nd day of the employee’s inability to work.
Entitlement to unpaid time off
At the employee’s request, the employer can grant the employee unpaid leave in which case unless otherwise specified by the law, the rights and obligations from employment or related to employment will be suspended.
Compassionate & Bereavement Leave
During a calendar year, an employee is entitled to paid leave of no more than seven days for important personal needs (marriage, wife’s birth, severe illness or death of a member of the immediate family). A collective agreement, a labour ordinance or an employment contract may also define longer periods of paid leave. At the request of a worker, the employer may grant the worker unpaid leave.
Maternity & Parental Leave
Support for parents is regulated in several ways in Croatia. The key social benefits are maternity and parental leave and income-replacement benefit, while parenting is supported by a range of other rights. Parents who earn an income are entitled to maternity and parental support. In some circumstances you are also entitled if you are outside the labour system, e.g. retired or a student. Entitlement to maternity and parental assistance is the same for adoptive parents, caregivers of a minor child and foster parents as it is for parents of a child. Foreign nationals permanently resident in Croatia have the same rights as Croatian nationals.
Pregnant women are entitled to maternity leave 28 days prior to the expected date of birth (in case of medical complications, it may be taken 45 days prior to the expected date of birth) and up to 70 days after the birth of the child. This is mandatory leave generally to be used by the mother, in special circumstances it may also be used by the father. Additional maternity leave continues until the baby is 6 months old. The mother can return to work in this period and transfer it, in full or partially, to the father.
An employed or self-employed parent is additionally entitled to parental leave after the child reaches the age of 6 months, and until the child turns 8 (for the first and second child). This is the personal right of both parents and they may take it for 8 (for the first and second child) or 30 months (for twins, third and every subsequent child).
After using the parental leave, either one of the parents may work half their working hours in order to provide their child with more care until the child turns 3 years old. This right is exercised if the child requires more care and nursing due to its health or development.
Leave for caring for a child with severe developmental disabilities may also be taken by one of the parents. This right continues until the child turns 8 years old on condition that both parents were employed or self-employed before claiming and for the entire duration of the leave.
Compensation (calculations per month)
Maternity leave: for an employed or self-employed mother who meets the insurance period conditions, it stands at 100% of the base of her wage. If these conditions are not met, the cash benefit is HRK 2,328.20 (EUR 310.00).
Parental leave: the income-replacement benefit is limited by the calculation base. The rate is 100% of the remuneration base with a ceiling of HRK 3,991.20 (EUR 531.00) for parental leave of 6 or 8 months and a minimum of HRK 2,328.20 (EUR 310).
For the remaining parental leave, the income-replacement benefit is HRK 2,328.20 (EUR 310.00).
Maternity and parental exemption from work: the lower cash benefit is HRK 2,328.20 (EUR 310.00).
Maternity and parental childcare: the cash benefit is HRK 2,328.20 (EUR 310.00).
Right to work half your working hours in order to provide more care for your child: the cash benefit to which the parent is entitled stands at HRK 2.328,00 (EUR 310.00).
Leave for taking care of a child with severe developmental disabilities: the cash benefit for the parent is HRK 2,328.20 (EUR 310.00).
Adoptive parent leave: The cash benefit paid during adoptive leave is 100% of the base of the adoptive parent’s wage (with no ceiling). During parental leave, it is limited to 120% of the budget base, i.e. HRK 3,991.20 (€ 531)
Parents, mothers and fathers may also exercise other rights such as breastfeeding breaks, leave for death of the child and suspension of employment until the child turns 3 years old.
Croatia has 14 national publicly recognized holidays, many of which are based in Catholicism or are associated with a notable milestone in national history. On these days, government agencies and most businesses across are closed.
Benefits to the Employee in Croatia
The social insurance in Croatia consists of health, pension, unemployment and work accident insurance, as well as maternity and family benefits. and it is implemented by the state through contributions made on the principle of solidarity.
Pension reform in Croatia was initiated in 1998, and in 2002, the system of three pension pillars was created. The first pillar is the generational solidarity system, the second pillar is compulsory individual pension insurance, and the third pillar is voluntary pension insurance.
Basic health insurance in Croatia is compulsory for all citizens with a permanent residence in Croatia and foreign nationals with permanent residence status. Compulsory primary health insurance ensures rights and obligations arising from basic health insurance according to the principle of mutuality and solidarity and is administered and carried by the Croatian Institute for Health Insurance (HZZO). Employers pay contributions towards this basic state health insurance.
Basic health insurance covers costs of general and urgent healthcare services and examinations, primary healthcare, treatment in case of workplace injury and profession-related illness, compensation for loss of pay during sick leave, maternity or paternity leave, and transport costs linked to the use of health services. Services which are not covered by basic health insurance are borne by the individual or are covered by voluntary health insurance.
The most common supplementary benefits for employees in the Croatia are:
Supplementary health and travel insurance plans
Voluntary pension insurance (third pillar) contributions
Company car (for management and executives)
Visas and Foreign Workers
In most cases, foreigners from EU, Switzerland and EEA and their family members do not need an Employment permit nor a Residence permit.
Foreigners from third countries (except for some special categories of employees) require:
Work Permit – should be applied for at a local Croatian diplomatic mission. Most Croatia work permits are issue for a maximum of 12 months. However, it is quite typical that applications for renewal are approved. Renewal should be applied for at least 60 days before the expiry of the current permit.
Work Registration Certificate – allows for certain categories of workers (e.g. consultants and journalists) to be employed in Croatia without the regular residence and work permit.
EU Blue Card – for a long-term stay involving the performance of a highly skilled job. Acts as both residence and work permit. Abiding offer of employment or proof of a current employment contract are required.
It should be noted that Croatia operates a quota system for work visas.
GETTING A TAX NUMBER
Upon arrival in Croatia, as soon as possible an application for an OIB (osobni identifikacijski broj) number should be made. The OIB is a personal identification number given to all residents and citizens in Croatia. The OIB consists of eleven random numbers that do not correlate in any way to personal identity.
The OID is required when registering for state health insurance, applying for residency, for opening a bank account and for paying taxes amongst others.
Public Holidays in 2022
|1.||New Year’s Day||January 1st|
|3.||Easter Sunday||April 17th|
|4.||Easter Monday||April 18th|
|5.||Labor Day||May 1st|
|6.||Statehood Day||May 30th|
|7.||Corpus Christi||June 16th|
|8.||Anti-Fascist Resistance Day||June 22nd|
|9.||Victory and Homeland Thanksgiving Day||August 5th|
|10.||Assumption Day||August 15th|
|11.||Independence Day||October 8th|
|12.||All Saints Day||November 1st|
|13.||Remembrance Day||November 18th|
|14.||Christmas Day||December 25th|
|15.||St Stephen’s Day||December 26th|
Several other holidays are observed, either unofficially at a national level or by official local public observance.