As companies become remote-first, employers are increasingly hiring international employees. Often, this is because countries, like Bosnia and Herzegovina offer highly skilled talent at lower costs compared to western Europe, the United States, and Canada.
Salaries are essential when budgeting for hires in Bosnia and Herzegovina, but there are many other costs to consider. This includes everything from overtime and severance pay to social security contributions and benefits.
Employers should also keep in mind supplementary benefits like coworking passes, gym memberships, or lunch stipends. This can help with employee satisfaction and retention.
Overall, it can be challenging to determine total costs. This article will guide you through the various costs of hiring employees in Bosnia and Herzegovina.
Mandatory Costs of Hiring in Bosnia and Herzegovina
You’ll need to consider numerous mandatory costs when hiring an employee from Bosnia and Herzegovina. These include salary, taxes, benefits, overtime pay, and severance pay. Adherence to these costs will ensure that you are compliant with local labor laws and regulations.
Salary Considerations
The minimum wage in Bosnia and Herzegovina is BAM 596.00 per month, which is approximately USD 335.00. However, the average wage in the country is approximately BAM 1863.00 per month — about USD 1,045.00.
Bosnia and Herzegovina has many skilled workers in IT services, telecommunications, and software development. They often earn more than the average wage. In fact, the average salary for a software engineer in Bosnia and Herzegovina is BAM 2600.00 per month, or USD 1,460.00.
The salaries in Bosnia and Herzegovina are lower than in the rest of Europe and the United States and Canada. The cost of living in Bosnia and Herzegovina ranks 99th in the world, with an overall cost of living index being 35.1, just above Ecuador and Malaysia.
Taxes and Benefits
When hiring in Bosnia and Herzegovina, employers need to be aware of two things: the region where the employee resides and the mandatory taxes and contributions they must pay.
Taxes and contributions depend on your employee’s residence. In the Federation of Bosnia and Herzegovina (FBiH), employers are to pay 6% towards pension and invalid insurance, 4% towards health insurance, and 0.5% towards unemployment insurance, totalling 10.5%.
However, in the Brčko District, employers only need to pay 6% towards pension and invalid insurance. In Republika Srpska, there are no employer social security contributions. This makes your employee’s region a crucial cost consideration.
Paid Leave
Employees in Bosnia and Herzegovina are entitled to 20 days of paid vacation days. This number can increase to a maximum of 30 days over the course of the employee’s tenure with a company.
Bosnia and Herzegovina also has 21 public holidays. However, the holidays depend on the employee’s region and religion. Throughout the entire country, employees are entitled to take up to four days each year to meet their religious needs and obligations. It’s important to note that only two of these days are to be fully paid.
Sick days also depend on the region where the employee resides. In Republika Srpska, the employee is entitled to one month of sick leave paid by the employer. In FBiH, the first 42 days are paid by the employer. In both regions, social security takes over after the initial period of sick leave.
Employers also need to consider the cost of maternity leave, which is paid by employers. New mothers are entitled to 12 months of paid maternity leave. In FBiH and the Brčko District, maternity leave is a minimum of 42 days. In Republika Srpska, maternity leave is a minimum of 60 days. Paternity leave is available, however, it is unpaid.
Overtime Pay
The standard work week in Bosnia and Herzegovina is 40 hours per week, from Monday to Friday. Overtime pay varies by region. In FBiH, overtime is paid at 125% of an employee’s regular rate. If an employee works on a holiday, they are paid 140% of their rate.
In Republika Srpska, employees are to be paid 130% if they work overtime. If they work on a public holiday, they are paid 150%.
Severance Pay
Employees who have worked for two consecutive years are entitled to severance. The amount depends on the collective agreement by both parties. However, severance must not be less than ⅓ of the employee’s monthly salary. Severance shall not exceed more than six monthly salaries.
Supplemental Costs of Hiring in Bosnia and Herzegovina
In addition to statutory benefits, employers may also provide supplemental benefits. Offering additional benefits will help attract top talent, motivate staff, and increase retention.
Benefits
Making sure your new employees are happy and healthy is vital. You can support their health by offering a strong benefits package. Many employers choose to offer a global benefits package for their employees.
However, the price of health insurance varies significantly depending on the type and coverage. Common health insurance providers in Bosnia and Herzegovina include Cigna Global and Pacific Prime.
An EOR like Borderless will typically offer benefits packages. These will often include medical, dental, vision, and life insurance along with a retirement savings plan.
Bonuses and Extras
There are no mandatory bonuses in Bosnia and Herzegovina, but performance-based bonuses are common. Additionally, employers may want to consider offering employees a lunch or coffee stipend.
Employers need to take workspace costs into account when hiring in Bosnia and Herzegovina. Since your new hires will likely be working remotely, they’ll need to set up a home office or access a coworking membership.
Providing a home office stipend can be hugely beneficial. It can go towards a company laptop, ergonomic office chairs, or antivirus software.
Numerous coworking offices are available in major hubs like Sarajevo and Mostar. Sarajevo is home to HUB387, which offers day passes starting at BAM 20.00 (about USD 11.00) and monthly passes ranging from BAM 379.00 to 419.00 — about USD 212.00 to 235.00. Sarajevo also has many other coworking offices with competitive prices, like tershouse, CosmoHub, HomeWork HUB, and AABH Creative HUB.
The main coworking hub in Mostar is Code Hub Mostar. Membership prices range from BAM 40.00 to 150.00, about USD 22.00 to 84.00.
Work with Borderless
Hiring in Bosnia and Herzegovina may feel overwhelming, especially with so many different costs to keep in mind. Working with an Employer of Record (EOR) can help take the stress out of global hiring and budgeting.
An EOR like Borderless will do the heavy lifting, guaranteeing that you compliantly hire and pay employees in Bosnia and Herzegovina.
To get started, book a demo today.
Disclaimer
Borderless does not provide legal services or legal advice to anyone. This includes customers, contractors, employees, partners, and the general public. We are not lawyers or paralegals. Please read our full disclaimer here.
