Situated in the Northwestern region of the Balkan Peninsula, Croatia boasts unique distinctions, including being home to “”Hum,”” the world’s smallest town with just 30 residents. Renowned for its wine-making industry, petroleum production, and refining, the country’s diversity extends beyond its charming 100m x 30m town.
Within the confines of this small wonder, Croatia harbors a wealth of resources and a highly skilled population. For organizations seeking to engage local talent in Croatia, the need for a physical entity or local provider to manage payroll is not always mandatory.
In Croatia, there are no special provisions that further highlight the definition of permanent employment. However, employment contracts are concluded for an indefinite period of time unless otherwise stipulated by the labor law and binds the parties until it is terminated. If an employment contract does not specify the time for which it was concluded, it is considered to have been concluded for an indefinite period.
The labor code of Croatia mandates that employment contracts be concluded in writing. However, the failure to conclude an employment contract in writing does not impact the existence or validity of the employment contract. If the employer does not put an employment contract in writing, it is considered to be a contract for an indefinite period.
Employers who conclude contracts with seasonal employees, employees sent abroad for work, or employees working from home must include additional mandatory terms in writing.
Employers can include a non-compete clause in employment contracts, which must be agreed upon in writing, either within the employment contract or in a separate document. These restrictions cannot exceed 2 years. The clause is not binding if the employer does not agree to pay the employee at least 50% of their average monthly salary from the last 3 months of employment, for the duration of the restriction. If the employee violates the non-compete clause, the employer can seek compensation for any damages incurred.
According to the labor code of Croatia, an employer can conclude a temporary employment agreement for a fixed or indefinite term. This contract must include the following information:
Specify that the contract is for a temporary position
Specify the nature of the job assigned to the employee
Place of work
Start date and end date for fixed-term contracts
Salary, wages
In 2014, Croatia amended its labor code to improve the working conditions of employees who seek temporary employment through agencies by ensuring equality for temporary employees and other employees doing the same job at the same organization.
In Croatia, the parties to an employment contract may agree to a probationary period of up to 6 months. The probationary period may last longer than 6 months if the employee is temporarily absent due to temporary incapacity, maternity and parental rights, or the use of paid leave. It may be extended in proportion to the duration of the absence. If a probationary period is agreed upon, the employee must be given 7 days' notice before termination. An employer has the right to terminate an employee during the probationary period if the employee's performance is not satisfactory.
Per the labor law of Croatia, the standard workweek is 40 hours, unless otherwise stated in a collective bargaining agreement. Employees who work over this number of hours are eligible for overtime. Overtime must not exceed 180 hours a year unless contractually agreed, in which case it must not exceed 250 hours. An employee may not work for more than one employer with a total working time of more than 40 hours per week except when the employee is working abroad.
Part-time work is any working time below the standard 40 hours per week. An employee whose total working time is 40 hours per week, may enter into an employment contract with another employer for a maximum of 8 hours per week, or up to 180 hours per year. The existing employer with whom the employee has already concluded a contract must give written consent for such work.
The labor code of Croatia provides paid annual leave of at least 4 weeks to all employees. The employee is entitled to annual leave after they have worked for at least 6 months with the employer. Employees who work in harmful jobs, and minors, are entitled to 5 weeks' leave. The law does not allow compensation in lieu of annual leave.
During annual leave, employees are entitled to salary compensation in the amount determined by the collective agreement, labor regulations, or employment contract, and at least in the amount of their average monthly salary in the previous 3 months. In the event of termination of employment, employers must pay compensation to the employee who has not used their annual leave in lieu of taking it.
The labor code of Croatia provides employees with 7 working days of employee-paid leave in case of serious illness. Additionally, employees are entitled to wage replacement benefits through the Medical Committee of the Croatian Health Insurance Fund (Hrvatskog Zavoda za Zdravstveno Osiguranje or HZZO) for the first 42 days of sickness, typically paid by the employer. From the 43rd day onward, the employer continues to pay out the benefits but is reimbursed by the HZZO.
In Croatia, an employed mother is entitled to maternity leave during pregnancy, childbirth, and care of a newborn child until the child reaches the age of 6 months. The employee is entitled to 100% of their salary compensation for the duration of maternity leave, which is paid from the funds of the Croatian Health Institute.
Croatian law dictates that the mother must use maternity leave 28 days before the expected date of delivery and use it continuously until 70 days after birth (compulsory maternity leave). An employed mother may start taking maternity leave 45 days before the day of the expected birth.
Per the labor laws of Croatia, after the expiration of the compulsory maternity leave period, the remaining maternity leave, which lasts until the child reaches the age of 6 months, may be transferred to the child's father.
An employed father is also entitled to parental leave separate from maternal leave. An employed father can use paternity leave in the period from the day of the child's birth up to the sixth month of the child's life. Effective March 1, 2025, fathers can take 20 working days for one child and 30 working days in the case of multiple births (i.e., twins, triplets, etc.). This leave is also available in case of a stillbirth, provided they take it from the day after the stillbirth. The compensation for paternity leave is 100% of the employee's salary.
The Croatian Labor Code provides that, in the case of dismissal, the employer must give prior notice to the employee in writing.
The duration of the notice period depends on how long the employee has been working for the same employer:
2 weeks' notice: employed for less than 1 year
1 month: employed for 1 year
1.5 half months: employed for 2 years
2 months: employed for 5 years
2.5 months: employed for 10 years
3 months: employed for 20 years
An employee whose employment contract is terminated due to employee misconduct is entitled to a notice period in the amount of half of the notice periods listed above.
An employee who is dismissed by the employer after 2 years of uninterrupted work (unless dismissed due to misconduct) is entitled to severance pay in the amount determined by the length of their previous continuous service with that employer.
The severance pay may not be less than one-third of the average monthly salary earned by the employee in the 3 months before the termination of the employment contract, multiplied by each completed year of service with the same employer.
