Hiring guide in Bosnia and Herzegovina

What should I know about hiring in Bosnia and Herzegovina?

Legal framework

Types of employment contracts

The most common types of employment contracts in Bosnia and Herzegovina are permanent employment contracts. These contracts are open-ended, continuing indefinitely unless terminated by either party in accordance with applicable labour laws. They form the standard framework for employment in the country.

In contrast, fixed-term employment contracts are designed for a limited duration. Under the labour laws, these contracts are subject to specific restrictions: in the Republic of Srpska, they can’t exceed 3 years, while in the Federation of Bosnia and Herzegovina, the maximum duration is 24 months. Fixed-term contracts aren’t the norm and are permissible only under particular conditions, such as seasonal work, project-based tasks, or temporary increases in workload.

Certain roles or situations allow for flexibility in the duration of fixed-term employment. For example, managerial positions may be tied to the duration of the manager’s mandate, enabling the contract to align with the terms of their appointment. Similarly, employees undergoing compulsory apprenticeship programs can be engaged for the full duration of their apprenticeship.

Content of an employment contract

The content of an employment agreement in Bosnia and Herzegovina must include several essential details to ensure compliance and clarity for both parties.

First, the agreement should identify the employer, including the official name and registered office address of the company or entity. Similarly, the employee’s full name and residence or temporary address must be stated. 

The contract must specify the duration of employment, indicating whether it’s for a fixed term or an indefinite period. The exact start and end dates need to be clearly outlined if it is a fixed-term contract. Plus, the date of commencement of work should be included to establish when the employee’s rights and obligations begin, including social security and insurance coverage.

The agreement must also detail the place of work, whether it’s a single location or involves multiple sites, depending on the nature of the job. Alongside this, the job position and a brief description of duties must be clearly defined, providing a mutual understanding of the role and responsibilities to avoid ambiguity.

Working hours are another crucial component. The contract should specify the standard working day or week length, noting whether hours are fixed or flexible and addressing any shift work, overtime, or part-time arrangements. In terms of compensation, the agreement must outline the base salary, any additional allowances for special circumstances such as overtime or hazardous work, and the monthly, bi-weekly, or otherwise frequency of payments. 

It should also describe salary compensation for situations where the employee can’t work due to illness, injury, or maternity leave, detailing the calculation and payment processes for such cases.

Annual leave entitlement is an essential provision, specifying the number of days the employee is entitled to in compliance with legal requirements or collective agreements. The contract must also address the notice period for termination, defining the amount of notice required from both employer and employee based on the type of employment.

Finally, any additional conditions related to employment, as determined by applicable collective bargaining agreements, should be included or referenced in the contract. These conditions may address working conditions, disciplinary measures, or social benefits, ensuring that all relevant aspects of the employment relationship are properly documented.

Download a free employment contract for Bosnia and Herzegovina through Native Teams.

Oral, written or electronic employment contracts

An employment relationship is formally established by signing an employment contract, which follows the recruitment process outlined in the employer’s workplace regulations. This relationship officially begins when the employee starts working under the terms of the signed contract.

Employers are strictly prohibited from requesting personal information from job candidates that isn’t directly related to the position. This includes inquiries about marital or family status, family planning, or any other documents and details that aren’t immediately relevant to the job’s requirements.

After the employment contract is signed, the employer must register the employee for mandatory insurance in compliance with legal requirements. This includes pension and disability insurance, health insurance, and unemployment insurance. These registrations must be completed promptly, and any changes to the employee’s insurance status must be properly documented and communicated to the employee.

Working hours

Employment contracts in Bosnia and Herzegovina can be established for full-time or part-time work.

Full-time employment typically includes a standard workweek of 40 hours, though this can be adjusted. For workers under 18, the law limits their workweek to 35 hours. The distribution of full-time working hours can span 5 or 6 days per week, depending on the terms set out in collective agreements and workplace rules. Part-time positions entail fewer working hours than those of a full-time position.

Night work

Work performed between 10 PM and 6 AM (or between 10 PM and 5 AM in agriculture) is classified as night work.

Shifts must rotate for shift schedules that include night work to prevent employees from working consecutive night shifts for more than 1 week. Employers must carefully plan night and shift work, prioritising workers’ safety, health, and specific needs. Night workers are entitled to the same safety and health protections as other employees. This includes access to preventive measures and protective equipment at all times.

Types of leaves and breaks

Employees working more than 6 hours per day are entitled to a rest period of at least 30 minutes. They must also be granted a 1-hour rest period on 1 workday per week. This time isn’t considered part of their working hours. 

The daily rest period consists of at least 12 continuous hours between consecutive workdays. This minimum rest period for seasonal work is reduced to 10 continuous hours. Juvenile workers must always receive at least 12 continuous hours of rest.

When it comes to the weekly rest period, employees receive no less than 24 continuous hours. If work is required on a designated rest day, the employer must provide a compensatory rest day within an agreed-upon timeframe, which cannot exceed 2 weeks.

Working on a weekly rest day is only permitted in exceptional circumstances, such as force majeure, an extraordinary workload that can’t be addressed otherwise, or to prevent the loss of perishable goods.

Annual leave

Employees are entitled to paid annual leave, ranging from a minimum of 20 working days to 30 working days per calendar year. In exceptional circumstances, where job nature or working conditions require it, annual leave may exceed 30 working days. Minor employees (those under the legal working age) are entitled to at least 24 working days of annual leave.

Public holidays

According to the Constitution of the Federation of Bosnia and Herzegovina, which serves as federal law, the following international holidays are observed in the Federation: New Year (Nova Godina), Labour Day (Prvi maj), and Victory Day over Fascism (Dan pobjede nad fašizmom). New Year’s Holiday is celebrated on January 1st and 2nd. If either of these days falls on a Sunday, the holiday extends to the following Monday. Labour Day is observed on May 1st and 2nd, with the holiday extended to the following Monday if either of these days falls on a Sunday. 

Victory Day over Fascism is observed on May 9th as a working day. Independence Day, as recognised by the Law on the Declaration of March 1st as Independence Day of Bosnia and Herzegovina, is celebrated on March 1st. On this day, state institutions, companies, and other legal entities do not operate. Statehood Day, defined by the Law on the Declaration of November 25th as Statehood Day of Bosnia and Herzegovina, is observed on November 25th, with state institutions, companies, and other legal entities ceasing operations for the day.

In the Republic of Srpska, the Law on Public Holidays establishes the public holidays recognised in the region. The public holidays in the Republic of Srpska include New Year (Nova godina) on January 1st and 2nd, International Workers’ Day (Međunarodni praznik rada) on May 1st and 2nd, Victory Day over Fascism (Dan pobjede nad fašizmom) on May 9th, and the Day of the Establishment of the General Framework Agreement for Peace in Bosnia and Herzegovina (Dan uspostavljanja Opšteg okvirnog sporazuma za mir u Bosni i Hercegovini) on November 21st. If the second day of a public holiday falls on a Sunday, the holiday is extended to the following Monday.

Salary

The salary structure in Bosnia and Herzegovina includes several components. First, there’s the mandatory salary, which represents the minimum amount an employee receives based on their role and work hours. Performance-based salary, which is optional, adjusts the basic salary based on the employee’s performance and can either increase or decrease the total amount. Increased salary, which is mandatory, includes additional payments for situations like overtime or night work.

Salary based on an employee’s contribution to business success is optional and consists of awards, bonuses, and other performance incentives that reward employees for contributing to the employer’s success.

Other payments include a mandatory meal allowance to cover daily meals, compensation for commuting costs equal to the cost of a public transportation ticket for travel to and from work, and a mandatory annual vacation allowance for employees during their vacation. Other optional payments may include any additional compensation provided by the employer.

In addition to salary, employers must make certain non-salary payments that compensate for expenses. These payments aren’t included in the salary and typically aren’t subject to taxes or social contributions unless they exceed specific non-taxable limits. 

These payments include per diem allowances for business travel within the country or abroad, accommodation and food compensation if employees are on fieldwork (either provided by the employer or reimbursed), retirement severance payment equivalent to three average salaries in the Republic of Srpska payable upon an employee’s retirement, funeral expenses for the employee or an immediate family member, and work-related injury compensation in case of injury or professional illness.

To calculate the salary and taxes in Bosnia and Herzegovina, click here.

Sick leave

The employee must inform the employer in writing of their temporary incapacity for work within 3 days of its onset. The employee must also provide a certificate from an authorised medical doctor within the same 3-day period. In cases of severe illness, close family members or others living in the same household with the employee may submit the certificate on their behalf instead of the employee.

If the employee lives alone, they must submit the certificate within 3 days after the reason for the delay in submission has ended. Suppose the employer has doubts regarding the validity of the employee’s absence. In that case, they may request an assessment of the employee’s health status from the relevant authority.

Parental leave

One parent is entitled to take leave from work until the child reaches 3 years of age. During this leave, the rights and obligations arising from the employment relationship are suspended.

For parents of children with severe developmental disabilities (a significantly handicapped child), one parent has the right to work half-time. This also applies to single parents or both parents who are employed and if the child isn’t placed in a social healthcare institution.

Paternity and maternity leave

Women are entitled to continuous maternity leave for 1 year, covering pregnancy, childbirth, and childcare. Based on a medical certificate, a woman can begin maternity leave up to 28 days before the expected delivery date. She may choose a shorter maternity leave, which can’t be less than 42 days after childbirth.

The child’s father is entitled to paid paternity leave as specified in the employer’s internal regulations following the child’s birth. After the first 42 days postpartum, the father may take maternity leave if both parents agree to this arrangement. The father can also take the leave if the mother passes away, abandons the child, or for other justified reasons preventing her from taking maternity leave.

After maternity leave ends, a woman with a child under 1-year-old has the right to work half-time. This right extends to working half-time until the child reaches 2 years of age if the woman has twins, triplets, or additional children unless cantonal regulations specify otherwise. The father may also exercise the right to reduced working hours if the mother works full-time.

Methods of employment termination

An employment contract may be terminated in several ways. It can be terminated upon the employee’s death, by mutual agreement between the employer and the employee, or when the employee reaches age 65 with 15 years of insurance coverage unless otherwise agreed by both parties. 

The contract can also end when the employee accumulates 40 years of insurance coverage, regardless of age, unless otherwise agreed by the employer and the employee. Termination occurs when a final decision recognises the right to an invalidity pension due to loss of work capability or if the employment contract is terminated.

In addition, the contract may end upon the expiration of a fixed-term employment contract. It can also be terminated if the employee is sentenced to serve a prison term longer than 3 months, starting from the day the sentence is served, or if the employee is subjected to a security, educational, or protective measure lasting more than 3 months, starting from the commencement of that measure. Finally, a final decision from a competent court may result in the termination of the employment relationship.

Ordinary dismissal by employer

In the Federation of Bosnia and Herzegovina, employers have specific grounds to terminate an employee’s contract. One of these is the intentional breach of work duties, which refers to a deliberate failure to meet the obligations in the employment agreement. The employment contract, collective agreements, or established work rules must clearly outline such breaches. 

Another ground is a breach of work discipline, which involves violating company policies or behavioural expectations that disrupt the workplace. These violations should also be clearly defined in relevant agreements or workplace rules to ensure fairness. Employers may also terminate employees due to technological, economic, or organisational changes, such as redundancy caused by automation, economic downturns, or restructuring.

In the Republic of Srpska, termination grounds include severe breaches of employment duties, which are significant violations that affect the employment relationship. Employers must thoroughly document these breaches to justify termination. Organisational changes, like those seen in the Federation, can also lead to terminations when there is a surplus of staff. 

Employers must conduct a fair assessment of the situation and may need to provide severance or assistance in finding new employment. Inadequate performance of job obligations is another grounds for termination, where persistent underperformance or failure to meet expectations as outlined in the employment agreement can justify ending the contract. 

Employers must provide evidence of inadequate performance, such as performance reviews or documentation of missed targets. Failure to return to work after paid leave, or a period of dormant employment, within 5 days may also result in termination, emphasising the importance of clear communication regarding leave and return dates.

Notice period and challenging the dismissal

In the Federation of Bosnia and Herzegovina, the law mandates that the notice period can’t be shorter than 7 days when an employee resigns, and it can’t be shorter than 14 days when the employer terminates the employment contract. In the Republic of Srpska, the notice period is longer, with a minimum of 15 days for employee resignation and at least 30 days when the employer terminates the contract. 

The notice period begins on the day the notice is delivered to either the employee or employer, providing a clear and definite start for the termination process. While collective agreements, work regulations, and individual contracts may establish longer notice periods, these cannot exceed 1 month for employee resignations and 3 months for employer-initiated terminations. 

Employees who wish to contest their dismissal have the right to request a court-issued temporary measure for reinstatement until the legal proceedings are concluded. This provision ensures employees can protect their employment status while the legality of their termination is resolved.

Rights and obligations of unemployed individuals

Unemployed individuals are entitled to material and social security benefits, which include monetary compensation, health insurance, and pension insurance. These benefits are primarily provided through unemployment insurance.

To qualify for monetary compensation, individuals must have worked for at least 8 consecutive months, or a total of 8 months, within the 18 months preceding the termination of employment. A whole year of work is 12 months, with part-time work adjusted proportionally to full-time equivalents. 

The compensation is calculated at 40% of the average net salary in the Federation of Bosnia and Herzegovina over the 3 months.

Severance pay

To be eligible for severance pay, several conditions must be met. First, the employee must have a permanent (indefinite) employment contract. Severance is only payable if the employer initiates the termination of the contract. 

Moreover, the employee must have worked for the employer for at least 2 years of continuous service before the termination. Severance isn’t applicable if the termination occurs due to misconduct or failure to fulfil contractual obligations.

Probationary period

In the Federation of Bosnia and Herzegovina, the probationary period can’t exceed 6 months. If an employee fails to meet the required performance standards, the employment relationship is terminated on the last day of the probationary period, as stated in the probationary contract.

In the Republic of Srpska, the probationary period can be agreed upon in the employment contract or a separate probationary work agreement, lasting up to 3 months. In exceptional cases, mutual agreement may extend this period for an additional 3 months.

Intellectual property rights

Employees must inform their employer about any inventions created during their employment. The employee must maintain confidentiality regarding any such inventions or industrial designs and is prohibited from sharing this information with third parties without the employer’s consent.

Inventions and industrial designs developed during employment or related to the job are the employer’s property. The employee is only entitled to compensation.

Employee data privacy

In Bosnia and Herzegovina, personal data protection is regulated by the Law on Personal Data Protection. However, although Bosnia and Herzegovina’s existing laws address personal data protection, the GDPR takes a broader, more rigorous approach to improving data protection effectiveness.

Prohibition of competition

The non-compete clause can be incorporated into the employment contract or outlined in a separate agreement. Employees are prohibited from engaging in business within the same industry as their former employer without explicit permission. This includes working for a competitor or starting a competing business.

The duration of the non-compete clause can extend up to 2 years following the termination of the employment contract. Its purpose is to protect the employer’s business interests and proprietary information from direct competition by former employees.

Remote working policy

General employment laws govern remote working in Bosnia but include specific provisions tailored to remote work arrangements. Although remote work is permitted, it must comply with certain legal requirements, such as formal agreements and adherence to labour standards.

The remote work contract can only be established for tasks that aren’t hazardous or detrimental to the health of the employee or others and don’t compromise the work environment.

Responsibilities within a remote work arrangement

Health and safety at work in Bosnia are regulated by 2 primary laws: the Law on Health and Safety at Work of the Republic of Bosnia and Herzegovina and the Law on Health and Safety at Work of the Republic of Srpska.

Employers must adopt a risk evaluation document outlining the work processes and assessing the risks associated with each job position. They also need to have a general provision addressing key health and safety matters. Providing insurance for all employees against work-related injuries and professional illnesses is also essential.

Health and safety at home

Remote work policies in Bosnia must align with the country’s stringent working hours and employee rights regulations, which restrict overtime and mandate sufficient rest periods. Employees working remotely are entitled to disconnect outside of the agreed working hours following European labour standards.

However, flexible working hours can be negotiated based on the nature of the job, allowing for adjustments to the start and end times.

What are the advantages of hiring employees from Bosnia and Herzegovina vs other countries?

One of the primary benefits lies in competitive labour costs. Compared to Western Europe or North America, salaries and associated employment costs in Bosnia and Herzegovina are significantly lower. This makes it an attractive destination for companies looking to optimise budgets without compromising on quality. 

Cultural adaptability further enhances Bosnia and Herzegovina’s appeal. The country shares strong historical and cultural ties with Europe, ensuring smoother integration with Western work practices and business norms. 

Finally, Bosnia and Herzegovina is becoming increasingly recognised for its growing tech hubs and entrepreneurial spirit, positioning it as a competitive choice against neighbouring countries such as Serbia or Croatia.

Why use Native Teams for hiring in Bosnia and Herzegovina?

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• Compliance expertise: we can assist your company in navigating the regulatory environments and ensure you meet all relevant requirements.

Local support: We can assist you in understanding and complying with the relevant local laws.