Employer of Record Guide in 

Croatia

Vacation Leave

Croatian employees are entitled to a minimum of 20 working days of paid annual leave. Additional leave may be granted based on:

• Age: +1 day for employees over 30, +2 days for employees over 40, +3 days for employees over 50
• Years of service: +1 day for every 5 years of service
• Working conditions: Additional days for hazardous or strenuous work
• Education level: +1-4 days based on qualifications

Vacation pay calculation:

• Based on average salary from the previous 12 months
• Must be paid before leave is taken
• Unused vacation must be paid out upon termination

Sick Leave

Croatian sick leave provisions include:

• Duration: Up to 42 consecutive days per illness
• Compensation: 70% of average salary for the first 42 days
• Extended sick leave: Beyond 42 days, paid by health insurance at reduced rates
• Medical certification: Required from the first day of absence
• Employer coverage: First 42 days paid by employer, subsequent days by health insurance

Maternity Leave

Maternity leave entitlements:

• Duration: 98 days (14 weeks) - 45 days before birth, 53 days after
• Compensation: 100% of average salary from the previous 6 months
• Funding: Paid by Croatian Health Insurance Fund
• Job protection: Position guaranteed upon return
• Flexible arrangements: Can be extended or shortened with medical approval

Parental Leave

Croatia offers generous parental leave options:

• Duration: Up to 8 months after maternity leave ends
• Sharing: Can be shared between parents or taken by either parent
• Compensation:
  • First 6 months: 100% of average salary
  • Months 7-8: 70% of average salary
• Part-time option: Can work part-time while receiving partial parental benefits

Bereavement Leave

• Duration: 3-7 days depending on relationship to deceased
• Immediate family: 7 days (spouse, children, parents)
• Extended family: 3 days (siblings, grandparents, in-laws)
• Compensation: Full salary paid by employer

Personal & Family Leave

Additional leave entitlements:

• Marriage leave: 3 days
• Moving house: 1 day
• Blood donation: 1 day
• Care for sick family member: Up to 60 days per year (unpaid after first few days)
• Force majeure: Reasonable time off for urgent family matters

Summary

Termination Types

Termination with Cause (Extraordinary Termination):

• Immediate dismissal without notice or severance
• Requires serious breach of duties or misconduct
• Examples: theft, fraud, violence, serious insubordination
• Must be initiated within 30 days of discovering the cause

Termination without Cause (Ordinary Termination):

• Requires valid business reasons (redundancy, poor performance, economic reasons)
• Must follow proper notice periods and consultation procedures
• Severance pay may be required

Mutual Agreement:

• Both parties agree to end the employment relationship
• Terms negotiated between employer and employee
• Can include enhanced severance packages

Notice Period Requirements

Notice periods in Croatia depend on length of service:

During notice period:

• Employee continues to work and receive full salary
• Either party can waive the notice period by mutual agreement
• Payment in lieu of notice is permitted

Severance Pay

Croatian law requires severance pay in specific circumstances:

Redundancy/Economic reasons:

• Amount: 1/3 of average monthly salary for each year of service
• Minimum: 3 months' salary
• Maximum: No legal maximum
• Calculation: Based on average salary from previous 3 months

Other terminations:

• Generally no severance required unless specified in employment contract
• Collective agreements may provide enhanced severance terms

Probationary Periods

• Maximum duration: 6 months for indefinite contracts, 1 month for fixed-term contracts
• Termination during probation: 7 days' notice required from either party
• No severance: Not required during probationary period
• Full rights: Employees retain all other employment rights during probation

Final Pay Requirements

Employers must provide final payment within 8 days of termination, including:

• Outstanding salary and overtime
• Accrued but unused vacation pay
• Any bonuses or allowances owed
• Severance pay (if applicable)

Termination Documents & Process

Required documentation:

• Written termination notice stating reasons
• Certificate of employment (potvrda o radu)
• Final payslip and tax documents
• Return of company property acknowledgment

Consultation requirements:

• Works council consultation for redundancies
• Trade union notification where applicable
• Individual consultation with affected employees

Anti-Discrimination & Retaliation Laws

Croatian employment law prohibits termination based on:

• Gender, age, race, religion, or nationality
• Pregnancy or family status
• Disability or health condition
• Trade union membership or activities
• Filing complaints or exercising legal rights

Violations can result in reinstatement orders and compensation awards.

National Public Holidays

Croatia observes 13 national public holidays annually:

Regional Variations

Some regions and municipalities may observe additional local holidays, but these are not mandatory for private employers unless specified in collective agreements.

Holiday Pay Rules

Eligibility requirements:

• All employees are entitled to public holiday pay
• No minimum service period required
• Applies to both full-time and part-time employees (pro-rated)

Compensation rates:

• Not working: Regular daily wage
• Working on holiday: 200% of regular wage plus substitute day off
• Substitute day: If holiday falls on weekend, Monday becomes non-working day

Holiday Scheduling

• Employers cannot require employees to work on public holidays without consent
• Essential services (healthcare, security, hospitality) may have different arrangements
• Collective agreements may specify industry-specific holiday working arrangements

Required Documents for Employment

Employment Contract Requirements:

• Job title and description
• Salary and benefits
• Working hours and location
• Start date and contract duration
• Notice periods and termination clauses
• Must be in Croatian language

Employee Documentation:

• Personal ID (OIB): Croatian tax identification number
• Work permit: For non-EU citizens
• Health insurance card: Proof of health coverage
• Bank account details: For salary payments
• Educational certificates: Relevant qualifications
• Criminal background check: For certain positions

Language Requirements

• Official language: Croatian
• Contract language: Must be provided in Croatian
• Workplace communication: Croatian is standard, though English may be used in international companies
• Documentation: All official employment documents must be in Croatian

Background Checks & References

Permitted checks:

• Criminal background check (for positions requiring it by law)
• Employment history verification
• Educational qualification verification
• Professional licence verification

Restrictions:

• Must be relevant to the position
• Requires written employee consent
• Cannot discriminate based on protected characteristics
• Must comply with GDPR data protection requirements

Data Protection & Privacy

Croatian employers must comply with:

• GDPR: European data protection regulation
• Croatian Personal Data Protection Act
• Employee consent: Required for data collection and processing
• Data retention: Limited to employment duration plus legal requirements
• Cross-border transfers: Restricted outside EU without adequate protection

IP Assignment & Confidentiality

Intellectual Property:

• Work-related inventions belong to employer by default
• Must be specified in employment contract
• Employee may be entitled to additional compensation for valuable inventions

Confidentiality:

• Non-disclosure clauses are enforceable
• Must be reasonable in scope and duration
• Cannot prevent employee from working in their profession
• Trade secrets protection under Croatian law

Probation Period Setup

• Standard period: 6 months maximum
• Contract specification: Must be clearly stated in employment contract
• Evaluation process: Regular performance reviews recommended
• Termination rights: 7 days' notice from either party
• Benefits: Full employment rights apply during probation

Onboarding Timeline

What the EOR Handles

Borderless AI manages:

• Employment contract preparation in Croatian
• Tax and social security registration
• Health insurance enrolment
• Payroll setup and processing
• Compliance with Croatian labour law
• Local HR support and guidance

Worker Classification: Employee vs Contractor

Croatian law strictly distinguishes between employees and independent contractors, with significant penalties for misclassification.

Employee characteristics:

• Works under employer's direction and control
• Uses employer's equipment and facilities
• Integrated into business operations
• Receives regular salary and benefits
• Subject to disciplinary procedures

Contractor characteristics:

• Operates independently with own business registration
• Uses own equipment and bears business risks
• Invoices for services provided
• Responsible for own taxes and social contributions
• Not entitled to employment protections

Misclassification risks:

• Back payment of taxes and contributions
• Penalties and interest charges
• Automatic conversion to employee status
• Legal liability for unpaid benefits

Collective Agreements & Trade Unions

Croatia has a strong tradition of collective bargaining:

Coverage:

• Approximately 60% of employees covered by collective agreements
• Sector-level agreements common in manufacturing, construction, public services
• Company-level agreements in larger organisations

Key provisions:

• Often provide better terms than legal minimums
• May include additional leave entitlements
• Enhanced severance and notice periods
• Specific overtime and shift work arrangements

Union consultation:

• Required for collective redundancies (20+ employees)
• Works councils in companies with 20+ employees
• Information and consultation rights on business changes

Cultural Norms & Workplace Expectations

Croatian workplace culture emphasises:

Communication style:

• Direct but polite communication
• Formal address (Vi) initially, becoming informal over time
• Punctuality highly valued
• Meetings tend to be structured and agenda-driven

Work-life balance:

• Standard business hours: 8:00 AM - 4:00 PM
• Long lunch breaks common (1-2 hours)
• August vacation period widely observed
• Family time highly prioritised

Professional relationships:

• Hierarchy respected but not rigid
• Team collaboration valued
• Personal relationships important for business success
• Networking through professional and social connections

Remote Work Considerations

Remote work in Croatia is governed by specific regulations:

Legal framework:

• Amendments to Labour Act in 2020 formalised remote work rights
• Written agreement required specifying remote work conditions
• Same employment rights as office-based employees

Employer obligations:

• Provide necessary equipment or reimburse costs
• Ensure health and safety standards
• Maintain regular communication and supervision
• Respect right to disconnect outside working hours

Tax implications:

• No change to tax treatment for Croatian residents
• Cross-border remote work may create tax complications
• Social security coordination agreements apply for EU workers

Practical considerations:

• Strong internet infrastructure in urban areas
• Growing acceptance of flexible working arrangements
• Co-working spaces available in major cities
• Digital nomad visa available for non-EU remote workers