A modern, future-driven economy, low wages and a high ease of doing business index are just some of the reasons why international companies should keep Croatia on their radar for future expansion plans. But Croatia is also very attractive in terms of talent availability and international recruitment.
Every year, tens of thousands of students graduate from the country’s many universities and colleges. With a degree in their pocket, they are ready to kick off their career with an international employer. As English proficiency levels among young workers are high, there should be no problem integrating your new recruit into your remote team.
Although there are no legal requirements for employment contracts to be in writing, it is best practice to put a written employment agreement in place which should outline the basic terms of employment such as:
- Identification of both parties
- Date of commencement (and employment duration for temporary contracts)
- Job description, duties and responsibilities
- Basic salary as well as other compensation or benefits and payment details
- Working hours
- Total number of holidays
- Notice periods for employment termination
In case there is no employment agreement, the employer is obligated to provide the new employee with a written statement containing the basic information as outlined above. Unless specified otherwise – e.g. in case of a fixed-term contract – employment contracts in Croatia are considered to be permanent. Fixed-term contracts may be concluded in cases where the nature of the job justifies it. However, they can only be extended to a maximum of three years.
Probationary periods should not exceed six months.
Working Hours and Breaks
A normal working week in Croatia is 40 hours, usually split into five eight-hour days. However, an employee’s working hours may be distributed unevenly over the course of his or her working week.
After six hours of consecutive work, employees must take a rest break of at least 30 minutes. Daily rest periods should not be shorter than twelve hours and each employee has to be granted at least 36 hours of uninterrupted rest each week. It is compulsory for weekly rest periods to fall either on a Saturday, Sunday or Monday.
Overtime work is only permitted where justified by business needs and should generally not exceed 180 hours per year. Employers have to officially request overtime from their employees in writing. Employees with a standard working week of 40 hours are not allowed to work more than ten additional hours per week, bringing weekly working time to a total of 50 hours.
Employees in Croatia are paid once a month. Payments should be issued no later than the 15th of the following month.
As of 2021, Croatia’s national minimum wage is set at HRK 4,250 per month.
Employers are obligated to provide sick pay for employees who are unable to work because of sickness or injury. Sick pay should be at least 70% of the employee’s usual wages. In cases where the employee’s absence from work exceeds 42 days, sick pay is provided by the Croatian Health Institute. It is the employee’s duty to notify his or her employers without delay. Furthermore, they have to provide a medical certificate.
Bonuses are not required by law but fairly common in certain industries.
Taxes and Social Security Contribution
Employees and employers in Croatia are subject to the following tax and social security contribution rates (as of 2021):
10% / 18% corporate tax rate
25% VAT (standard rate)
up to HRK 360,000: 20% *
above HRK 360,000: 30% *
16.5% of employee’s gross salary to health and unemployment fund
20% of employee’s gross salary to pension fund
* Depending on their place of residence, employees may be subject to an additional municipal tax ranging from 0% to 18%.
The minimum annual leave entitlement in Croatia is four weeks – five weeks for certain professions such as miners. However, collective agreements may provide for longer annual leave periods. In order to be able to claim annual leave, the employee must have completed at least six months of service with the employer.
Public holidays are not included in the calculation. Croatia observes 14 public holidays each year – including Easter Sunday – on which employees are not required to work.
Maternity Leave and Paternity Leave
Maternity leave in Croatia is 98 days – 28 days before and 70 days after birth – during which the mother receives maternity benefits from the Croatian social security fund. After this first compulsory maternity leave period, mothers can claim additional maternity leave until the child is six months old.
Currently, there are no legal provisions for paternity leave. However, upon completion of the 70-day period after the child’s birth, fathers are allowed to take any unused additional maternity leave – with the mother’s consent.
Starting from the moment the child reaches the age of six months, mothers and fathers can claim eight months of parental leave – 30 months in case of multiple births or if they already have at least two children. Parental leave is a family right, i.e. both parents are entitled to the sum of eight months which can be split between them.
If parental leave is taken by only one parent, the leave duration is shortened to six months. Benefits equal to the parents’ usual wages are paid by social security. The leave must be taken before the child turns eight.
Additional Leave and Benefits
Each year, employees are entitled to additional paid days off which can be used in the following situations:
- seven days of personal leave, e.g. for marriage or death of a family member
In addition to employment termination by default – i.e. in case of a fixed-term contract – resignation and mutual agreement, Croatian law establishes the following grounds for termination (non-exhaustive list):
- redundancy or any other reason relating to the business’ economic situation
- summary dismissal due to gross misconduct or breach of employment contract
- employee’s underperformance or incapability
- unsatisfying probation period
Statutory notice periods range from seven days to four months, depending on the employee’s length of service:
- seven days during probation period
- two weeks during first year of employment
- one month during second year of employment
- one and a half months after two years of employment
- two months after five years of employment
- two and a half months after ten years of employment
- three months after 20 years of employment
- after 20 years: three and a half months for employees aged over 50 and four months for employees over 55
Severance payments only have to be made to employees whose length of service exceeds two years and who are dismissed due to reasons other than misconduct. Payments amount to one third of the employee’s average monthly salary multiplied with the years of service.
Hire in Croatia?
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