Hire in Croatia

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Last updated at November 07, 2022

Currency

Croatian Kuna (HRK)

Capital

Zagreb

Time Zone

GMT+1

Key Country Facts

Introduction

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.

Area

Croatia is located in Southeast Europe with a total land area of 56,000 square kilometers. It is bordered by Slovenia to the northwest, Hungary to the northeast, Serbia to the east and then Bosnia and Herzegovina and Montenegro to the southeast. The country boasts the famously beautiful Adriatic Sea coastline on its western limits.

Climate

Croatia benefits from a moderately warm and slightly rainy continental climate. With Mediterranean influence, the warmest areas are those just inland from the Adriatic Sea.

Culture

Geography places Croatia at a crossroads of cultural influences from both the East and the 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 highly on the Human Development Index.

Religion

Freedom and equality of religion are rights defined by Croatia’s Constitution. According to the latest census surveys, over 90% of Croatians identify as Christian with the vast majority of those being Catholic. Approximately 5% of Croatia’s population is non-religious.

Official Language

The official language is Croatian. Minority languages are frequently spoken in areas of high minority populations, with Czech, Hungarian, Italian, Serbian, and Slovak being fairly common.

Croatia HR at a Glance

Employment Law

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).

Employment Contract

Under Croatian law, all employment relationships are regulated by and based on employment contracts. Notably, an employment contract must be in writing. The contract should also specify an indefinite term (the most common in Croatia) or a definite term (only permitted in limited circumstances). Each contract must also include provisions identifying all of the parties to the contract, commencement date, place of work, the type of work (description of tasks), working hours, annual leave provisions, duration, salary, salary supplements and notice periods.

If the contract is not concluded in written form, the employee is still protected by Croatian 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 an employment relationship (and thus employment contract).

Contract Terms

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.”

Fixed-Term Contracts

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 periods cannot last more than six months.

If a trial period is agreed upon by both parties, the required notice period must be no less than seven days.

Working Hours

Full-time employment is standard practice in Croatia. Regular working hours are considered to be 40 hours a week. Part-time work is regarded as any schedule with working time less than 40 hours a week. The employer and the employee are entitled to agree to flexible working hours. This is usually agreed upon in situations where the employee performs their work remotely.

When the nature of work so requires, regular working hours may be rescheduled so that during one calendar year. In this case, there may be a period where working hours are longer and another period where the set working hours are shorter than the regular hours. However, the average working hours in the course of rescheduling must not exceed the regular hours. 

Rest breaks

The following apply in regards to rest breaks:

  • An employee who works at least six hours a day each working day has the right to take a rest period of at least 30 minutes. This is to be included in the total working hours. 
  • If the special nature of the job does not allow the interruption of work for taking a rest, breaks can be regulated by a CBA, an agreement between the works council or specified terms of 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.

Overtime

The overtime work of an individual employee must not exceed 180 hours per year unless the overtime work has been regulated in the CBA. In this case, overtime must not exceed 250 hours per year. 

An employee is entitled to an enhanced salary for the overtime work they perform. Overtime pay is not defined in the Employment Act. Therefore, it should be defined in the CBA, employment agreement or by the employer. 

Important considerations

  • The employee can be required, by the employer’s request, to work overtime for up to ten hours a week in the case of force majeure, an irregular increase in the scope of work and in other similar circumstances of immediate necessity. 
  • Notice must be given to the labor inspector if overtime work extends for more than four consecutive weeks or more than twelve weeks during one calendar year. Notice must also be filed if the overtime work of all employees of a certain employer exceeds 10% of the total working hours in one particular month.
  • The labor inspector will prohibit overtime work if it has a harmful impact on the health and working ability of employees. Overtime will also be prohibited if its excessive usage obstructs the employment of unemployed persons.
  • Pregnant women, mothers of children under age 3 and single parents of children under age 6 may work overtime only if he or she freely gives his or her consent in writing to perform such work.

Timesheets

In 2019, the European Court of Justice stated companies must implement a system to record the working time of their employees. Thus, employers are required to set up an objective, reliable and accessible system that allows the recording of the daily workday performed by each employee.

Bonus

Although not mandated by law, a Christmas bonus (by way of a 13th month salary) is quite common in Croatia.

Termination

An employer must have a lawful reason to terminate an employment relationship. Under the Croatian Labor Law Act, 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. This applies when an employee is not able to offer satisfactory work performance because of specific permanent characteristics or limited capacities. 
  • Termination due to the worker’s misconduct. 
  • Termination due to incompetence during probationary period. 
  1. Extraordinary notice of termination: 
  • The employer has a just cause to terminate permanent or temporary 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. This notice must be served to the worker. If an established works council exists, it must be notified about the intent of termination. The works council is obliged to issue a standpoint regarding the employer’s decision of termination within eight days. This requirement is five days in cases of extraordinary termination. All other procedures for achieving effective termination of the employment relationship depend on the reason for the termination.

If the employer does not adhere to the procedure for termination, the termination will be deemed null and void. 

Protected Groups of Employees

  • Temporary contracts may be terminated only if that option is provided by the contract. 
  • An employment contract must not be terminated during the period of a person’s pregnancy, maternity, parental or adoption leave. Termination must also not occur during periods of part-time due to intensified childcare, the leave of pregnant women nor the leave of breastfeeding mothers. If an employee is working part-time to care for a child with serious developmental disabilities, they also cannot be terminated. This protection extends to fifteen days after the end of such rights. Termination in these cases 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 is recovering from a work-related injury or a professional illness. Such termination will be deemed null and void. 

Payment in lieu

Croatian law does not recognize the option of compensating a worker to end the employment relationship instead of giving notice. 

An employer may require an employee to be on “garden leave.” 

In such cases, the employer must compensate the worker (at their full wage) and recognize all other employment rights as if the worker worked through 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.

Notice Period

Minimum notice periods are strictly prescribed by the Labor Act and will depend on the duration of the employment relationship with the same employer as follows: 

  • Less than one year of employment: two weeks’ notice
  • One year of employment: one month’s notice
  • Two years of employment: one month and two weeks’ notice
  • Five years of employment: two months’ notice
  • 10 years of employment: two months and two weeks’ notice
  • 20 years of employment: three months’ notice 

For an employee with twenty years of employment with the same employer, the period of notice is increased by two weeks if the employee has reached the age of 50. This is increased by one month if the employee has reached the age of 55. 

If the employment contract is terminated due to a breach of obligations emerging from the employment relationship (termination due to worker’s misconduct), the resulting notice period is two times shorter.

Post-Termination Restraints / Restrictive Covenants

Any non-compete clause must be contractually agreed upon, 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. This typically applies to transactions on the individual’s 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. This clause 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 half of the 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 the employer’s serious breach of contractual obligations, the non-compete clause ceases to apply. However, the employee must provide a written statement that they do not consider 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. This non-compete clause can remain valid if 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 be especially cautious not to contract non-compete clauses that the court will 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 signed, is receiving a salary less than the average wage in Croatia.

Redundancy / Severance Pay

Employees are entitled 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 the Employment Act, employment contract or CBA as follows:

  • If the employee is dismissed after two years of continuous service, the employee is entitled to a statutory severance payment dependent on the length of service. 
  • The amount of severance pay for each year of employment with the same employer must not be lower than one-third of the average monthly salary the employee earned in the three month period prior to the termination.
  • Unless otherwise specified by the law, CBA or employment contract, the employer’s liability to pay severance pay is limited to an amount that equals six average monthly salaries earned by the employee within the last three months before the termination.

Trade Unions / Collective Agreements

Union density in Croatia is close to the EU average, with around a quarter of employees belonging to unions. However, union organization is quite fragmented with three nationally representative union confederations. Plus, many unions exist outside these larger bodies.

Collective bargaining takes place at both the industry and organization levels. 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 CBA.

Tax and Social Security

Personal Income Tax

Croatia maintains progressive tax rates are applicable to the taxable base of annual income. The following types of income are considered for the so-called ‘annual income’:

  • Employment income
  • Self-employment income
  • Other income that is not deemed ‘final other income’

Taxable base is calculated by applying prescribed tax deductions and tax allowances (e.g. 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 are therefore not subject to the annual assessment of tax liability:

  • Income from property and proprietary rights
  • Income from capital
  • Other income as it relates to the refund of social contributions
  • Other income as it relates to the difference between a taxpayer’s assets and reported sources for financing the acquisition of assets
  • Other income in relation to temporary and occasional seasonal work in agriculture

 

From HRK To HRK Tax Rate %
0 360,000 20.0
360,001 over 30.0

Residence Rules

A resident taxpayer is an individual who maintains one of the following in Croatia:

  • residence (if an individual owns or rents accommodation without interruption for at least 183 days over two consecutive calendar years; permanent stay in the accommodation is not necessary)
  • habitual abode (if the circumstances suggest an individual permanently resides in a place or region for a period of at least 183 days over two consecutive calendar years)

If an individual simultaneously has residence in Croatia and abroad (owns or rents accommodation without interruption for at least 183 days over two consecutive calendar years in Croatia as well as a second country), the individual will be a tax resident in the state where their family resides. If the individual is single, the individual will be deemed a permanent residence (and accordingly tax residence) of the state from which he or she mostly travels to work or in which he or she mostly stays.

A non-resident taxpayer has neither residence nor habitual abode in Croatia but sources income subject to Croatian personal income tax.

 

Social Security

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.

Employers with more than 20 employees have certain obligations with respect to the number of disabled individuals employed. (The number depends on the total number of employees, but it cannot be lower than 3% of the total number of employees). Employers who do not comply with prescribed requirements are obligated to pay a monthly fee amounting to 30% of minimal salary for each disabled individual that employer was obligated to employ.

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
Health 16.5 0.0
Total 16.5 20.0

*The above rates serve as a broad guideline. Actual rates charged by GoGlobal will differ..

 

 

Employees

Salary Payment

According to Section 83 of the Croatian Labor Act:

  • A salary shall be paid after the corresponding work has been performed.
  • The periods for which salaries are paid will be established by the CBA or the employment contract.
  • No CBA or employment contract can provide for payment of salaries at intervals longer than one month.

Payslip

A payslip is considered a legal report that should be printed and handed to the employee after each payroll run. Digital is the preferred format for this process. The payslip must contain all legally defined payroll information.

Annual Leave

For every calendar year, a worker has the right to paid vacation in the amount of no less than four weeks. For minors and persons working in difficult conditions, this entitlement is no less than five weeks. The worker has 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 each year.
  • The duration of annual leave for a period longer than the minimum period can be regulated by the employment contract, employment law or CBA.
  • National holidays are not included in annual paid leave entitlements. 
  • 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, will enjoy 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 any of the following conditions exist
    • 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 July 1. 
    • During the calendar year, the worker has been engaged by several different employers.
  • During the annual paid leave, the employee is entitled to full compensation equal to the amount of the average salary paid to them within the last three months before the annual paid leave period. 
  • In the case of termination of employment, the employee must be compensated for any unused holiday.

Sick Leave

In the event of illness or injury, employees are entitled to sick leave. This is typically 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 or injury, sick pay is paid as follows:

  • During the first 42 days of sick leave, the compensation will come from the employer’s own funds. 
  • Beyond the 42nd day, after advancing the funds to the employee, the employer is entitled to recover payments from the Croatian Government or the Croatian Health Insurance. 

Depending on reasons for sickness or 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. Unless otherwise specified by the law, the rights and obligations from employment or related to employment will be suspended.

Compassionate & Bereavement Leave

In a calendar year, an employee is entitled to paid leave of no more than seven days to attend to important personal needs. This includes marriage, wife’s birth, severe illness or death of a member of the immediate family. A CBA, labor ordinance or employment contract may also define longer periods of paid leave. The employer may grant the worker unpaid leave following the worker’s request.

Maternity & Parental Leave

Support for parents is regulated in several ways in Croatia. The key social benefits are maternity and parental leave as well as an income-replacement benefit. Parenting is also supported by a range of other rights. 

Parents who earn an income are entitled to maternity and parental support. In some circumstances an employee is also entitled to support if they are outside the labor system (e.g. retired or a student). The entitlement to maternity and parental assistance is the same for adoptive parents, caregivers of a minor child and foster parents. Foreign nationals permanently residing in Croatia enjoy the same rights as Croatian nationals.

Maternity leave

Pregnant women are entitled to maternity leave 28 days prior to the expected date of birth. In case of medical complications, the leave may be taken 45 days prior to the expected date of birth. Pregnant women are entitled to up to 70 days of leave following the birth of the child. This is mandatory leave generally to be used by the mother. It may also be used by the father in special circumstances. Additional maternity leave continues until the baby is six months old. The mother can return to work in this period and transfer the time, in full or partially, to the father.

Paternity leave

Employed fathers are entitled to 10 working days paternity leave (or 15 working days in the case of twins or multiple births), which can be taken from the day of the birth until the child (or children) is six months old. Paternity leave is granted on the condition that the father does not use one of the rights from the system of maternity and parental benefits at the same time and for the same child.

Salary compensation during paternity leave is 100% of the salary compensation base and it is paid by the state budget of Croatia.

An employed father who intends to use paternity leave is obliged to notify the employer in writing at least 15 days before the day of the expected birth or before the intention to use that right.

Parental leave

An employed or self-employed parent is additionally entitled to parental leave once the child reaches the age of six months. This can be taken until the child turns age 8. This applies for both the first and second children. This is the personal right of both parents and they may take it for eight months (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 of 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 health or development.

Leave to care 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 the condition that both parents were employed or self-employed before claiming the right and throughout 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, the calculation 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 six or eight 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 also enjoy other statutory rights such as breastfeeding breaks, leave for death of the child and suspension of employment until the child turns 3 years old.

Public Holidays

Croatia has 14 national publicly recognized holidays, many of which are based in Catholicism or are associated with a notable milestone in national history. Government agencies and most private businesses across the country are closed on these days,

Benefits to the Employee in Croatia

Statutory Benefits

Croatia’s social insurance system consists of health, pension, unemployment and work accident insurance. It also includes maternity and family benefits. The system is implemented by the government through contributions made on the principle of solidarity.

Pension reform in Croatia was initiated in 1998. 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 while the third pillar is voluntary pension insurance. 

Basic health insurance in Croatia is mandatory for all citizens holding permanent residence status in Croatia. This means foreign nationals with permanent residence status must contribute. 

Compulsory primary health insurance covers the rights and obligations arising from basic health insurance according to Croatia’s principle of mutuality and solidarity. This is administered and executed by 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, 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. Services not covered by basic health insurance are paid by the individual or are covered by voluntary health insurance.

Other Benefits

The most common supplementary benefits for employees in the Croatia are:

  • Supplementary health and travel insurance plans
  • Voluntary pension insurance (third pillar) contributions
  • Professional training
  • Company phone
  • Company car (for management and executive level employees)

Visas and Foreign Workers

General Information

In most cases, foreigners from EU, Switzerland and EEA and their family members do not need to obtain an employment permit nor a residence permit.

Foreigners from third countries (except for some special categories of employees) require:

  • Work Permit: This should be applied for at a local Croatian diplomatic mission. Most Croatia work permits are issued 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: This 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: This is intended for a long-term stay involving the performance of a highly skilled job. The Blue Card acts as both a residence and work permit. It requires an accompanying offer of employment or proof of a current employment contract.

It should be noted Croatia operates a quota system for work visas.

Getting a Tax Number

Upon arrival in Croatia, an application for an OIB (‘osobni identifikacijski broj’) number should be made as soon as possible. The OIB is a personal identification number assigned to all residents and citizens in Croatia. The OIB consists of eleven random numbers that do not correlate in any way to the individual’s personal identity.

The OID is required when registering for state health insurance, applying for residency, opening a bank account and paying taxes, among other functions.

Public Holidays in 2022

S.No Occasion Date
1. New Year’s Day January 1st
2. Epiphany January 6th
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

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