Global PEO Services (GPS) helps companies hire employees in Croatia without establishing a legal entity. All human resources, benefits, payroll, and tax needs for the employees are managed by the Global PEO, while the new hires and headquarter teams focus on your business goals.
When hiring employees in Croatia, establishing a subsidiary or branch office is not always the best route, as it’s often a lengthy and expensive process. Hiring via a Professional Employer Organization (PEO), or Employer of Record (EOR), is a faster and often more effective option – especially when starting up in a new country.
Global PEO Services hires the employees on your behalf, legally contracting them through our subsidiary in accordance with Croatia labor laws. As a result, the burden of compliance is on us and the employees can begin work for your company in a matter of days. PEOs/EORs provide you with a streamlined option for hiring employees, testing markets, and responding to growing business needs in Croatia. With Global PEO Services, you get control without taking on legal entity liabilities, contractor risks, or sacrificing on talent or speed to market.
Croatia - Country Overview
The economy of Croatia is service-driven where services account for 70% of the total GDP while the industrial sector is facilitated by shipbuilding that constitutes more than 10% of export goods. The chemical industry and food processing also form a significant part of industrial output and exports. The industrial sector in Croatia accounts for 27% of total economic output while agriculture, fishing, and forestry account for 6%.
Parliamentary, Representative Democratic Republic
Split, Rijeka, Osijek, Zadar
Employment Contracts in Croatia
Employment contracts must be in writing and include at least the following information:
- Names and addresses of the parties
- Work position and job description
- Place of work
- Expected duration of an agreement (provided it is being entered into for a definite period)
- First day of work
- Notice periods
- Duration of paid annual leave
- Duration of basic work day or work week
- Basic wage, wage increments and time of payment
Employees can be hired on probation but for not longer than 6 months. The minimum notice period during the probationary period is 7 days.
Working Hours in Croatia
Regular work schedule is limited to 40 hours a week. It can exceed 40 hours in a week if a full-time employee enters into an employment contract with another employer for extra work of up to 8 hours a week or 180 hours annually with the written consent from both employers. Employees who work for at least 6 hours per day or minor employees who work for 4.5 hours a day are entitled to a 30 minute rest period in a day. If the nature of work requires no interruption, the time and procedure for using a rest period are regulated by the employment contract.
Employers can ask employees to do overtime only when absolutely necessary and must provide a prior written request to employees for overtime. In case objective circumstances prevent employers from providing a written request, they are required to confirm the verbal request in writing within 7 days after overtime is announced. Overtime cannot exceed 50 hours a week or 180 hours a year unless specified in a collective agreement. Even if mentioned in a collective agreement, overtime work cannot be more than 250 hours annually.
Employee Leave in Croatia
In Croatia, the following 14 national holidays are observed:
- Jan. 1: New Year’s Day
- Jan. 6: Epiphany
- Easter Monday
- May 1: International Workers’ Day
- Corpus Christi (60 days after Easter)
- June 22: Fascist Resistance Day
- June 25: National Day
- Aug. 5: Homeland Thanksgiving Day
- Aug. 15: Assumption
- Oct. 8: Independence Day
- Nov. 1: All Saints’ Day
- Dec. 25: Christmas
- Dec. 26: St. Stephen’s Day
Various unofficial holidays are observed across Croatia such as carnival celebrations held on the day before the Lent starts, which is also called “Shrove Tuesday.” Employees who work on a national holiday receive extra pay as negotiated in the bargaining agreement.
Employees who work for 5 days a week are entitled to a minimum of 20 days of annual leave while those who work for 6 days a week are entitled to a minimum of 24 days of vacation. Employees and employers can agree to longer vacation periods through collective bargaining agreements, employment agreements, or agreements between a works council and an employer.
Employees are entitled to vacation pay equal to average monthly salary earned during the last 3 months. They are entitled to full vacation pay if they have been working for a minimum of 6 months, don’t waive their vacation rights or agree to compensation instead of taking the vacation. The unused vacation can be carried over to the next year but should be used by June 30. Exceptions are permitted in cases such as maternity or sick leave. In case of termination, employees are entitled to compensation in exchange for unused vacation.
Employees are required to notify their employees about the timing and duration of vacation at least 15 days in advance. Employees can take 1 vacation day whenever they want but should notify the employer at least 3 days in advance and provided that the employer doesn’t deny the request citing a valid reason.
Pregnant employees are entitled to 28 days of maternity leave before the date of childbirth. If any complications arise due to pregnancy, maternity leave can be taken 45 days before the childbirth.
After childbirth, mothers can take a postnatal leave until the child reaches the age of 6 months. Postnatal leave is split into mandatory and additional leave. Mandatory leave is for 70 days after childbirth and must be used by mothers. Additional leave starts on the 71st day after birth and extends up to 6 months. The father of the child can also use the remainder of maternity leave if the mother agrees. The maternity benefit is paid at the rate of 100% of the average salaries earned during last 6 months before the maternity leave commences, by the Croatian Institute for Health Insurance. Employers don’t bear any cost.
Fathers of newborn children can use additional maternity leave, starting on the 71st day after birth and lasting up to 6 months that mothers do not use and transfer to them.
Employees can take a paid sick leave for no more than 3 years for a single illness. After taking sick leave for 6 months, employees are subject to sick leave review conducted by the Institute for Health Insurance. For the first 42 days of sick leave, employers pay compensation equal to 70% of the employee’s average salary over the last 6 months. After 42 days, compensation is paid by the Institute for Health Insurance.
Parental leave starts after maternity leave ends and can be taken for 4 months for the first and second child or 15 months for twins, the third and every subsequent child by each parent.
Parental leave can be used:
- In one period
- In two periods of at least 30 days each
The leave can be taken until the child reaches the age of 8. During vacation, parents receive 80% of the budget base for the initial 6 months and 50% after that. The benefit is paid from the state budget.
Employee Benefits in Croatia
Pension and Social Security
Croatian social security benefits include health insurance, unemployment insurance, pension insurance, work injuries, and professional disease insurance.
The pension system in Croatia has three parts: the compulsory individual pension insurance, the generational solidarity system, and voluntary pension insurance. Insured employees are required to make contributions equal to 15% of their salaries to the generational solidarity system and 5% to the individual pension insurance system. The Croatian Institute for Pension Insurance organizes and incorporates the pension insurance system.
Even though employees in Croatia have access to public healthcare, employers often provide additional health care coverage through private plans for optimal coverage. Employers contribute 15% for health insurance.
Employers contribute 1.7% for unemployment insurance.
Employer contribution for accident insurance is 0.5%.
Employees, under their employment agreements, are entitled to compensation for injuries and illnesses that occur in connection with or during the performance of work. The workers’ compensation also covers injuries that occur while commuting between workplace and home. Employers are required to pay 0.5% of covered payroll toward workers’ compensation benefits.