Hiring guide in Croatia

What you should know about hiring in Croatia?

Legal framework

Types of employment contracts

In the private sector, there are two main types of employment contracts, indefinite-term and fixed-term contracts. The indefinite-term contract is the most common form in Croatia.

• Indefinite-term contract. If an employment contract doesn’t specify the duration of the employment relationship, it’s considered to have been concluded for an indefinite period. 
• Fixed-term contract. As the name suggests, a fixed-term employment contract is used to establish an employment relationship for a pre-determined period of time. In such cases, the contract must specify the reason for its termination in advance. These fixed-term contracts can last a maximum of 3 years.
• Consecutive contracts. These employment contracts don’t have a break between one contract and another or are concluded in a period that does not exceed 3 months.

Content of an employment contract

The employment contract is called “ugovor o radu” in Croatian, which translates as employment contract or contract on work. Below, we’ll dive into the information the employment contract must contain.

• Names and addresses of contracting parties;
• Workplace location or notation if work is at various places;
• Brief job description or nature of work;
• Start date of employment;
• Duration for fixed-term contracts;
• Entitlement to annual leave and calculation method;
• Notice periods for termination;
• Salary details, including supplements and payment frequency;
• Duration of regular working hours or week.

Download a free Croatian employment contract template.

Oral, written or electronic employment contracts

According to Croatian labour regulations, employers must draft a written employment contract before work commences. The contract can be bilingual (Croatian or English). 

If the employment contract isn’t in written form, the employer must provide written confirmation before work begins. For electronic employment contracts, a qualified electronic signature (“QES”) is equivalent to a paper form signed by hand.

Probationary period

Probationary work may not last longer than 6 months but may last longer if, during its duration, the worker was temporarily absent, especially due to temporary incapacity for work, use of maternity and parental rights according to a special regulation and use of the right to paid leave.

Working hours

There are 3 basic categories of working time: full-time work, part-time work, and part-time work for jobs where it is not possible to protect workers from harmful influences even when applying occupational safety measures. An employee’s full-time work cannot surpass 40 hours weekly. 

Part-time work entails fewer hours than full-time. When signing a part-time contract, the worker must inform the employer about any other part-time contracts they have with other employers.

Breaks and night work

Every employee who works for at least 6 hours per day has the right to a daily 30-minute break. This break is included in the daily working time and is paid. 

Night workers must not work more than 8 hours during the night within a 24-hour period, which is defined as between 10 PM and 6 AM. In agriculture, night work is considered between 10 PM and 5 AM, but this can vary based on other laws, regulations, agreements, or collective agreements.

Annual leave

Employees are entitled to four weeks (20 days) of paid vacation yearly after 6 months of employment, which cannot be carried over past June 30th of the following year.

Holidays

Public holidays in Croatia are regulated by the Holidays, Memorial Days and Non-Working Days Act. Employees are entitled to 14 paid national holidays per year. Here are the national (non-working) holidays in Croatia:

1. New Year’s Day
2. Epiphany
3. Easter Sunday
4. Easter Monday
5. Labour Day / May Day
6. Statehood Day
7. Corpus Christi
8. Day of Anti-Fascist Struggle
9. Victory Day
10. Assumption of Mary
11. All Saints’ Day
12. Remembrance Day
13. Christmas Day
14. St Stephen’s Day

Wages and contributions

The minimum wage in Croatia for 2024 is a gross of EUR 840, and the minimal net salary is approximately EUR 677.

Employers hiring young people under 30 for indefinite contracts have reduced contributions for up to 5 years:

• Pension insurance contribution at a rate of 20% or 15% for insured pension insurance based on individual capitalised savings;
• Contribution for pension insurance based on individual capitalised savings at a rate of 5%.

Additionally, workers up to 25 years of age are fully exempt from income tax, while those aged 26 to 30 receive a 50% tax reduction for earnings up to EUR 47,780.28 annually.

Click here to calculate the salary and taxes in Croatia.

Sick leave

An employee is entitled to up to 42 days of sick leave per year, paid at 70% of a regular wage. The health insurance fund of Croatia will reimburse the employer for any sick leave that lasts more than 42 days.

Parental and maternity leave

Women are eligible for 28 days of paid maternity leave before the due date, with the possibility of an increase to 45 days, depending on a medical evaluation. There is a maternity leave policy in place that guarantees the woman 70 days of full pay after the birth of her kid. 

Mothers can take an additional 70 days of unpaid leave once their child is born or split the time with their partners.

Parental leave is a personal right for both employed and self-employed parents, and its duration varies:

• 8 months per child (for the first and second child)
• 30 months per child (for twins, third child, and each subsequent child).

Termination of the employment relationship

Here are the circumstances and methods through which an employer can terminate contracts:

1. Worker’s death
2. Employer’s death
3. Death of a trading employer if the trade isn’t transferred according to regulations
4. Cessation of trade by law
5. End of fixed-term contract
6. Worker reaching age 65 with 15 years of pensionable service, unless agreed otherwise
7. Mutual agreement between worker and employer
8. Notification to the employer of disability pension eligibility due to total work incapacity
9. Termination by dismissal
10. Court decision

There’s also an extraordinary termination, which occurs when there is a severe breach of employment obligations or another significant circumstance that renders the continuation of employment impossible, considering all relevant factors.

In such cases, neither party is obligated to observe the notice period, but they must demonstrate a valid reason for dismissal. For this type of termination, both parties must provide evidence of a valid reason and the contract may only be terminated within 15 days of acknowledging the grounds.

Ordinary dismissal by employer

The employer may terminate the employment contract subject to a stipulated or agreed notice period (ordinary dismissal), if there is a justified reason and for the following cases:

1. Economic, technical or organisational reasons (business-related dismissal);
2. On personal grounds;
3. Misconduct by the worker;
4. Dissatisfaction with probation work.

Notice period and challenging the dismissal

For regular dismissals, the notice period varies based on the duration of employment with the same employer:

• 2 weeks: if the worker has worked for less than one year continuously;
• 1 month: if the worker has spent a continuous year in employment;
• 1 month and 2 weeks: if the worker has spent two continuous years in employment;
• 2 months: if the worker has spent five continuous years in employment;
• 2 months and 2 weeks: if the worker has spent ten continuous years in employment;
• 3 months: if the worker has spent twenty years continuously in employment.

The notice period for a worker with twenty years of continuous employment increases by two weeks at age fifty and by one month at age fifty-five.

If an employee believes that their employer has unlawfully dismissed them, they may, within 15 days from the date on which they received the decision on the dismissal, file a complaint with the employer and request that they reconsider their decision to dismiss.

Rights and obligations of unemployed individuals

Unemployed individuals have key responsibilities, including actively seeking employment and taking steps to enhance job prospects. These include attending counselling sessions, creating job-seeking plans with advisors, and completing agreed-upon activities promptly.

The Labour Market Act offers several rights and opportunities for the unemployed. These include financial assistance for active employment measures, one-time financial aid and compensation for travel and relocation expenses, eligibility for a pension scheme under certain criteria, and entitlement to unemployment benefits.

Severance pay

Severance pay is calculated based on the length of the continuous employment with the employer and cannot be lower than one-third of the worker’s average monthly salary earned in the three months before termination for each year of service. 

Prohibition of competition

The worker cannot engage in any business related to the employer’s activities without the employer’s consent (statutory prohibition of competition). If the worker violates this prohibition, the employer can demand compensation for damages or consider the employment terminated and request the worker to hand over earnings from such activities.

The legal prohibition of competition applies regardless of whether it’s specified in the contract. Employer and employee can agree that after the contract ends, the employee won’t work for a competitor or engage in competitive business (contractual prohibition of competition).

Remote working policy

Employees working remotely are eligible for reimbursement of work-related expenses if their remote work exceeds seven days per month. Moreover, the employer can enter the employee’s home or other premises for equipment maintenance and supervision if agreed upon in the contract.

In addition, the right to disconnect in Croatian law suggests employers refrain from contacting employees outside of working hours except for urgent matters.

Health and safety at home

Employers are responsible for ensuring safe working conditions, providing ergonomic workstations, and educating employees on health and safety, especially concerning computer use. 

Moreover, employers are obligated to offer and cover the cost of eye exams before employment and every two years thereafter, and they should promote activities away from screens and provide breaks and exercises to alleviate eye strain.

What are the advantages of hiring employees from Croatia vs other countries?

Hiring employees from Croatia can offer several advantages compared to hiring from other countries. Firstly, Croatia is a member of the European Union (EU), which can simplify hiring processes for employers based in other EU countries. This membership also ensures compliance with EU regulations and standards, which can be advantageous for companies operating across multiple EU markets.

In addition, Croatia’s thriving tourism industry has cultivated a pool of talent with expertise in hospitality, tourism management, and related fields. This can be particularly advantageous for companies operating in the tourism, travel, and hospitality sectors.

The cultural similarities with other European countries, particularly those in Central and Eastern Europe, ensure a smooth integration of Croatian employees into multinational teams.

Why use Native Teams for hiring in Croatia?

Native Teams lets you employ team members ‘like a local’ meaning you get all the benefits of a global team, wherever you are based. Here are the reasons why you should use Native Teams for hiring:

• No paperwork: We will handle all the necessary paperwork for you.
• Save on taxes: We help you handle your taxes.
• No company set up: You can expand your business using our company entitles.
• Online onboarding: We’re here to ensure your onboarding process is trouble-free.
• No accounting: We will handle all of your accounting needs, including invoicing, payroll, and more.
• Increase your profit: We assist you in growing your business and maximizing your profits.
• 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.