Hire in Croatia

A trial period may be specified upon the signing of the employment contract, with a maximum duration of six months.

In case both parties agree to a trial period, the mandated notice period should not be less than seven days.

If an employee is absent from work due to legitimate reasons, such as illness or parental leave, during the probationary period, the probation period may be extended.

When the nature of the work necessitates it, regular working hours can be rearranged within one calendar year. This might result in periods of longer or shorter working hours than the standard, but the average must not exceed the regular hours.

As per the Labor Act, employers are restricted from contacting employees outside of working hours unless there is an emergency, the nature of the work necessitates such contact, or the collective agreement or employment contract explicitly permits it.

Employees with at least six months of continuous employment have the right to request part-time work or schedule adjustments if they have a child under eight years old or are caring for a close family member. The employer must consider the request, and if denied, provide a written response within 15 days.

Rest breaks

The following regulations pertain to rest breaks:
 

• An employee working a minimum of six hours each working day is entitled to a rest period of at least 30 minutes, which is to be included in the total working hours.
• If the unique nature of the job prevents the interruption of work for a rest break, the breaks can be governed by a Collective Bargaining Agreement (CBA), an agreement between the works council, or specific terms outlined in the employment contract.
• Within each 24-hour period, an employee has the right to a daily rest period lasting at least 12 consecutive hours. Additionally, the employee is entitled to a weekly rest period of at least 24 consecutive hours, to which the daily rest period shall be added.

Employees engaged in overtime work are entitled to an increased salary. The specific details of overtime pay are not stipulated in the Employment Act and should be expressly outlined in the Collective Bargaining Agreement, employment agreement, or determined by the employer.

Important considerations
 

• Upon the employer’s request, an employee may be obliged to work overtime, not exceeding ten hours per week, in situations of force majeure, an unexpected surge in workload, or similar instances of immediate necessity.
• Notification to the labor inspector is mandatory if overtime work extends beyond four consecutive weeks or exceeds twelve weeks within a calendar year. Furthermore, notice is required if the cumulative overtime work for all employees of a specific employer surpasses 10% of the total working hours in a particular month.
• The labor inspector has the authority to prohibit overtime work if it adversely affects the health and work capability of employees. Additionally, excessive use of overtime that hinders the employment of unemployed individuals will be restricted.
• Special considerations apply to pregnant women, mothers of children under age 3, and single parents of children under age 6. They may engage in overtime work only if they willingly provide written consent to undertake such tasks.

Employers must furnish employees with comprehensive training on health and safety regulations. This training is to be initiated at the commencement of employment and reiterated periodically throughout their tenure. Through this approach, employers can guarantee that their workforce possesses the essential qualifications and competencies for safe work practices, reducing the risk of workplace accidents or injuries. This encompasses equipping employees with ample knowledge of the pertinent regulations and guidelines for health and safety in the workplace.

Each employee is required to undergo an initial medical examination before commencing work, followed by subsequent periodic examinations every five years before the age of 45, and thereafter, every three years.

In 2019, the European Court of Justice emphasized the obligation for companies to establish a system for recording the working hours of their employees. Consequently, employers must institute an objective, dependable, and easily accessible system that facilitates the tracking of the daily work hours completed by each employee.

While not legally required, it is customary in Croatia for employers to provide a Christmas bonus, often in the form of a 13th-month salary.

An employer is required to have a valid reason for terminating an employment relationship. According to the Croatian Labor Law Act, there are two legal methods for an employer to terminate the employment relationship:

Regular notice of termination: 

• Termination based on business conditions arising from economic, technological, or organizational reasons.
• Termination on personal grounds, applicable when an employee’s work performance is unsatisfactory due to permanent characteristics or limited capacities.
• Termination resulting from the worker’s misconduct.
• Termination due to incompetence observed during the probationary period.

Extraordinary notice of termination: 

• The employer is justified in terminating permanent or temporary employment contracts without observing the notice period when there is a severe breach of obligations in the employment relationship, rendering its continuation impossible.

The termination notice must be provided in writing with a clear explanation and served to the worker. If a works council is in place, it must be informed of the termination intent, and the council is obligated to provide its standpoint within eight days, or five days in cases of extraordinary termination. The effectiveness of the termination process hinges on the specific reason for termination.

Failure by the employer to adhere to the termination procedure renders the termination null and void.

Protected Groups of Employees

• Temporary contracts may only be terminated if such an option is explicitly stipulated in the contract.
• During a person’s pregnancy, maternity, parental, or adoption leave, an employment contract must not be terminated. Similarly, termination is prohibited during periods of part-time employment due to intensified childcare, the leave of pregnant women, or the leave of breastfeeding mothers. If an employee is working part-time to care for a child with serious developmental disabilities, termination is also not permissible. This protective period extends for fifteen days after the conclusion of such rights, and any termination during this time is considered null and void.
• Additionally, it is not permissible 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 professional illness. Any such termination under these circumstances will be deemed null and void.

Payment in lieu

Croatian law does not acknowledge the possibility of providing compensation to terminate the employment relationship instead of issuing notice.

However, an employer may opt for placing an employee on “garden leave.”

In such instances, the employer is obligated to compensate the worker at their full wage and acknowledge all other employment rights as if the worker had actively worked through the entire notice period. The arrangement for “garden leave” must be mutually agreed upon in writing, either within the notice of termination or through a separate decision.

The Labor Act prescribes minimum notice periods based on the duration of the employment relationship with the same employer:

• 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
• Ten years of employment: two months and two weeks’ notice
• Twenty years of employment: three months’ notice

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

In cases of termination due to a breach of obligations arising from the employment relationship (termination due to worker’s misconduct), the resulting notice period is halved.

The notice period is suspended if the employee is absent due to illness. However, if the notice was given to the employee before the commencement of sick leave and the employee was placed on garden leave, the notice period will continue during the employee’s sick leave.

A non-compete clause must be mutually agreed upon and documented in writing by both the employer and the employee. Typically, such a provision stipulates that, upon termination of the contract, the employee is prohibited from engaging in employment with any competitors of the employer or participating in business activities considered competitive. This includes transactions conducted on the individual’s behalf or on behalf of third parties.

This clause remains effective for a maximum period of two years following the termination of the employment relationship and must be formally incorporated into the employment contract in written form.

The employee is bound by the non-compete clause only if the employer commits, in the contract, to compensate the worker for the duration of the restricted period. The compensation should be at least half of the average salary paid to the worker in the three months preceding the termination of the employment contract.

The non-compete clause is rendered void if the employee terminates the contract due to the employer’s serious breach of contractual obligations, provided the employee submits a written statement within one month of termination expressing non-binding agreement to the clause.

Additionally, if the employer terminates the employment contract without just cause, the non-compete clause becomes void. However, the clause can be upheld if the employer notifies the employee within 15 days of termination about the intent to compensate the worker for the duration of the contractual non-compete period.

Employers are advised to exercise caution in drafting non-compete clauses to avoid potential invalidation by the court. For instance, a non-compete agreement may be deemed null and void if it involves an employee receiving a salary less than the average wage in Croatia at the time of contract signing.

The severance pay is determined based on the regulations outlined in the Employment Act, employment contract, or Collective Bargaining Agreement (CBA), following these principles:
 

• Dismissal after two years of continuous service entitles the employee to statutory severance payment, dependent on the duration of service.
• The severance pay for each year of employment with the same employer must not be less than one-third of the average monthly salary earned by the employee in the three months preceding termination.
• Unless otherwise specified by law, CBA, or employment contract, the employer’s obligation to provide severance pay is capped at an amount equivalent to six times the average monthly salaries earned by the employee in the last three months before termination.

Union membership in Croatia approximates the EU average, encompassing about a quarter of the workforce. Nevertheless, union representation is dispersed, featuring three major nationally representative union confederations, along with numerous independent unions.

Collective bargaining occurs at both industry and organizational levels, without overarching agreements for the entire economy. Typically, agreements predominantly extend to public service employees, leaving only an estimated one-third of private sector employees covered by a Collective Bargaining Agreement (CBA).

A payslip is regarded as a official document that needs to be generated and provided to the employee following each payroll cycle. The preferred format for this procedure is digital. The payslip must encompass all legally stipulated payroll details.

The following rules additionally apply:
 

• An employee is granted a minimum of four weeks of annual paid leave each year.
• The duration of leave beyond this minimum can be stipulated by the employment contract, employment law, or collective bargaining agreement.
• National holidays are not considered part of the annual paid leave entitlement.
• Employees cannot waive their right to annual paid leave or opt for compensation in lieu of unused annual paid leave.
• A first-time employee or an employee with an interruption of work exceeding eight days between two consecutive employments becomes eligible for annual paid leave after six months of uninterrupted service.
• An employee is entitled to one-twelfth of the annual paid leave for each full month of service under certain conditions, such as:
• In the calendar year of employment initiation, if the duration is less than six months, and no entitlement to annual paid leave has been acquired.
• Termination of employment before completing six months of service.
• Termination of employment before July 1.
• Engagement by several different employers during the calendar year.
• During annual paid leave, the employee is entitled to full compensation equivalent to the average salary received in the last three months before the leave period.
• In case of employment termination, the employee must be compensated for any unused holiday.

In case of illness or injury, employees are entitled to sick leave, typically fully compensated by the employer for a specified period. The maximum duration of paid compensation for illness or injury depends on the employee’s years of service and the cause of their inability to work.

Employers generally provide income-replacement benefits for the first 42 days of sickness, or 7 days for a disabled worker. The payment amount is determined by the collective agreement or employment contract, but it must not be lower than 70% of the employee’s average wage in the six months preceding the sick leave.

Starting from the 43rd day of sick leave, or the eighth day for a disabled employee, the sickness benefit is calculated and disbursed by the employer, with reimbursement sought from the Medical Committee of the Croatian Health Insurance Fund (HZZO).

Employers can seek reimbursement for sick pay from HZZO from the initial day of incapacity to work due to caring for a sick child, as well as for a recognized injury at work or a professional disease.

Employees are entitled to the sickness benefit until their recovery, up to a maximum of 18 consecutive months for the same diagnosis. Beyond this period, the benefit is halved.

Entitlement to unpaid time off

Upon the employee’s request, the employer may authorize unpaid leave, during which, unless specified otherwise by law, the rights and obligations pertaining to employment will be temporarily suspended.

Within a calendar year, an employee is eligible for paid leave, not exceeding seven days, to address significant personal matters such as marriage, the birth of a spouse, severe illness, or the death of an immediate family member. Longer durations of paid leave may be established by a Collective Bargaining Agreement (CBA), labor ordinance, or employment contract. Upon the employee’s request, the employer has the discretion to approve unpaid leave.

In Croatia, assistance for parents is governed through various mechanisms. Principal social benefits include maternity and parental leave, along with an income-replacement benefit. Additional rights further support the role of parenting.

Income-earning parents are eligible for maternity and parental support. Certain situations extend this entitlement to individuals outside the workforce, such as retirees or students. The right to maternity and parental assistance is consistent for adoptive parents, caregivers of minor children, and foster parents. Foreign nationals with permanent residency in Croatia have equivalent rights to those of Croatian nationals.

Maternity leave

Expectant mothers have the right to commence maternity leave 28 days prior to the anticipated date of childbirth. If there are medical complications, this leave may be initiated 45 days before the expected delivery date. Following the birth of the child, pregnant women are entitled to a mandatory leave of up to 70 days, primarily intended for use by the mother. However, under special circumstances, the father may also utilize this leave. Supplementary maternity leave extends until the infant reaches six months of age. During this period, the mother has the option to return to work and transfer the remaining time, either in full or partially, to the father.

Paternity leave

Employed fathers are eligible for 10 working days of paternity leave (or 15 working days in the case of twins or multiple births), which can be taken from the day of the child’s birth until the child (or children) reaches six months of age. This leave is granted under the condition that the father does not simultaneously utilize one of the rights within the maternity and parental benefits system for the same child.

During paternity leave, salary compensation is set at 100% of the salary compensation base, funded by the state budget of Croatia.

To avail paternity leave, an employed father must inform the employer in writing at least 15 days before the expected birth date or before intending to exercise this right.

Parental leave

An employed or self-employed parent is additionally granted parental leave once their child reaches the age of six months, and this entitlement extends until the child turns eight. This provision applies to both the first and second children, constituting a personal right for both parents, who may utilize it for a duration of eight months (for the first and second child) or 30 months (for twins, the third child, and each subsequent child).

Following the utilization of parental leave, either parent has the option to work half of their regular working hours to provide increased care for their child until the child turns three, especially if additional care is required due to health or developmental reasons.

Moreover, one of the parents is entitled to take leave to care for a child with severe developmental disabilities, and this right continues until the child reaches eight years of age. However, both parents must have been employed or self-employed before asserting this right, and this employment status should be maintained throughout the entire leave period.

Parents, both mothers and fathers, are also afforded other statutory rights such as breastfeeding breaks, leave in the event of the child’s death, and the option to suspend employment until the child turns three years old.

Employees have the right to receive one day of paid leave annually for pressing family issues that require immediate attention. Additionally, they are eligible for up to five days of unpaid leave per year to attend to the needs of close family members.

Croatia observes 14 nationally recognized holidays, several of which are rooted in Catholicism or commemorate significant milestones in the nation’s history. On these days, government agencies and the majority of private businesses throughout the country are closed.