When looking into the labor market in Croatia, the first step that employers must take is to be acquainted with the country’s employment laws and regulations. Below are some of the policies that Croatia observes for their local employees.
Employee Contract
Public and Provincial Holidays
Leave Information
Basic
Contracts for employees must be in writing and should contain the complete details of the employment. Preferably, employment contracts must be in the Croatian language. In some cases where contracts are bilingual, one of the languages used must be Croatian.
Probation Period
The Probation period for employees in Croatia is up to one month.
13th Month Pay
A 13th-month pay is not statutory in Croatia.
Employee Benefits
Employees in Croatia participate in the country’s pension scheme, while employers contribute to the government’s health insurance on their behalf. Moreover, employers may choose to offer supplementary benefits for their workers:
- Unemployment benefits.
- Life Insurance.
- Accident Insurance.
Salaries in Croatia are paid monthly. The pay for the previous month must be released no later than the 15th day of the following month.
The minimum wage in Croatia is HRK 5,274.17 per month.
A full-time employee has to work a maximum of 42 hours per week in Croatia. The overtime rate is mandatory and can be stipulated by a collective bargaining agreement, employment agreement or decided by the employer.
Employer Payroll Cost:
| Type of Contribution |
Rate |
| Health Insurance |
16.5% |
Employee Payroll Cost:
| Type of Contribution |
Rate |
| Pillar 1 : Intergenerational Solidarity |
15% |
| Pillar 2: Individual Capitalised Savings |
5% |
Employee Income Tax
| Annual Income Bracket |
Rate |
| 0 – 360,000 HRK |
20% |
| 360,000 HRK and over |
30% |
VAT
The Croatia sales tax rate is at 25%.
In compliance with Croatia's labor laws, employment termination transpires under various circumstances, including the employee's demise, the conclusion of a fixed-term employment contract, attainment of the age of 65 with 20 years of pension-insured service, a valid decision on retirement due to work disability, mutual agreement between the employee and employer, issuance of notice, or a decision from a competent court. Regardless of the reason, both parties are obligated to document the termination in writing.
The Notice Period in Croatia varies depending on whether an employee is under probation or not. Generally, a notice period of 2 weeks is observed but probationary employees are given only up to 7 days.
Severance pay
Employees in Croatia are entitled to severance pay as long as their reason for termination is not due to misconduct. They will be paid for each year of service, and the amount shall be agreed upon by the employer, provided that it should not be less than the computation: ⅓ x average monthly salary of 3 months before termination = Severance pay
Foreigners seeking to be employed in Croatia shall apply for a work and residence permit. However, European Union members may be exempted from these documents. Employers will be responsible in applying for their employee’s work permits. Before doing so, they must reach out to the Croatian Employment Service for a labor market test. This is to justify the foreign nationals’ employment with a company against the country’s labor market.