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Employment contracts in Croatia
The general rule in Croatia is that employment contracts are concluded for an indefinite duration on a full time or part time basis. Under exceptional circumstances, the contract may be made for a definite period if it is for seasonal work, replacement of a temporarily absent employee, or a temporary project.
The laws in Croatia require that contracts be provided in writing and must be in the local language or bilingual. The contract must clearly state the mandatory basic information relating to the contracting parties such as addresses, salary (noted in the local currency), working hours, place of work, job title, nature or category of work, start date, annual leave, and notice periods.
Working hours in Croatia
The standard work week in Croatia consists of up to 40 hours per week spread out over 5 or 6 days for full-time employees. Employees can work overtime, with overtime not exceeding 10 additional working hours per week. An employee who works at least 6 hours per day is entitled to a minimum 30-minute break, which is included in the working hours. Employees are entitled to a minimum 12 hours of continuous daily rest between 2 working days and a weekly rest period of at least 24 consecutive hours.
Employers are required to keep records of employees and their working hours. Employers are also required to keep information relating to the categories of working hours such as night work or overtime as they may affect certain employment rights.
Holidays in Croatia
Croatia celebrates 14 public holidays for which employees are given the day off, including:
- New Year’s Day
- Easter Monday
- Labor Day
- National Day
- Corpus Christi
- Anti-Fascist Struggle Day
- Victory Day
- Assumption Day
- All Saints’ Day
- Day of Remembrance
- Christmas Day
- Saint Stephen’s Day
Vacation days in Croatia
Employees are entitled to a statutory minimum annual leave of 4 weeks per calendar year. Therefore, full-time employees are entitled to a minimum of 20 days per year.
Employees are also entitled to up to 7 days leave per calendar year for important personal events such as marriage or the death of a close family member.
Croatia sick leave
The first 42 days of “regular” sickness is paid by the employer. Additional sick leave is covered by the Croatian Health Fund Insurance. The amount that is paid during sick leave depends on the employment agreement and the salary of the employee. However, sickness pay cannot be less than 70% of the employees’ average daily wage in the 6 months preceding the sick leave.
Parental leave in Croatia
Croatian law provides for several types of family-related leave.
Pregnant employees are entitled to:
- Maternity leave beginning 28 days prior to the expected birth date and continuing up to 6 months after the birth of the child.
- The maternity leave from 28 days before the due date to 70 days after the birth is mandatory, and then optional until 6 months after the birth.
- After the 70-day period expires, the employee’s spouse or partner has the right to use the remaining period of maternity leave, with the consent of the birthing partner.
During maternity leave, the birth parent is entitled to 100% of their salary (including bonus, commissions, benefits, etc.) which is paid by the Croatian Health Insurance Fund.
There is no statutory requirement for paid paternity leave, but the employee has the option of using their personal leave.
Parents are entitled to parental leave of 4 months per parent, per child for the first or second child, for a total of 8 months shared between the parents. If parental leave is taken by just one of the parents (with the consent of the other parent), that parent is entitled to only 6 months of parental leave. For twins or for the third or subsequent child, parental leave is 30 months (regardless of whether it is used by one or both parents).
Parental leave can be used until the child reaches 8 years old. The leave can be taken fully, partially (no more than 2 times per year), or part time (the duration of parental leave is doubled and the compensation is reduced to 50% of what would be paid for with full-time leave). During parental leave, any salary entitlement is paid by the Croatian Health Fund which is subject to limits on payments.
Health insurance in Croatia
Croatia has a compulsory health insurance which is included within the mandatory employer social insurances. Therefore, employers may not opt to provide additional private healthcare coverage.
Croatia supplementary benefits
In Croatia, an employer is obligated to deduct income tax, local surtax (where applicable) and social security contributions from an employee’s gross salary.
Employers can offer additional benefits at their discretion. Employees in Croatia are often given the following benefits:
- Meal vouchers
- Company cars
- Mobile phones
- Performance-related bonuses
Generally there are no specific rules regarding bonuses. Employers are free to provide a bonus or implement a bonus plan with their employees as they deem fit. Bonuses are common in Croatia and usually come in the form of performance-related bonuses.
Termination and severance in Croatia
The employer can set a probationary period in the employment contract of up to 6 months. If, during the probationary period, the employer determines that the employee does not meet the criteria for the position, the employee may be dismissed without severance pay with at least 7 days’ written notice.
Laws in Croatia provide that an employer may lawfully terminate an indefinite-term employment contract on the following grounds:
- Performance or business reasons
- Incapability of the employee
- Failure to perform satisfactorily during a probationary period
Where an employer seeks to terminate for any of the above reasons, relevant processes must be followed in order to lawfully terminate an employee. Failure to follow a correct process could result in a legal challenge from an employee.
An employment relationship may also be terminated by mutual agreement of both parties.
The minimum notice periods are as follows:
- Before the first year of employment is complete: 2 weeks’ notice
- 1 year of employment: 1 month’s notice
- 2 years of employment: 1 month and 2 weeks’ notice
- After 5 years of employment: 2 months’ notice
- After 10 years of employment: 2 months and 2 weeks’ notice
- After 20 years with the same employer: 3 months’ notice
If an employee has 20 years of tenure with the same employer, the notice periods are increased by 2 weeks if an employee is over 50 years old or by 1 month if the employee is over 55 years old.
Employees who have been terminated (other than for misconduct) after 2 years of continuous employment are entitled to severance pay. Severance pay equates to 1/3 of the average monthly salary (which is calculated based on the 3 months prior to termination) for each consecutive year of employment with the employer.
Paying taxes in Croatia
Employers are required to deduct income tax, local surtax, and social security contributions from the employees gross salary.
Employees’ salary is subject to a 20% tax deduction if they earn HRK 360,000 or less. Tax deductions will increase to 30% for salaries earned above this rate.
This tax rate depends on the location within which the employee resides. Current local tax rates range from 0% to 18%.
Social security contributions
Social security contributions are paid into pension and health insurances. The contributions are split into the following:
- Health insurance is set at 16.5% – this is paid by the employer and can increase.
- Pension insurance is set at 20% – this is paid by the employee and deducted from the gross earnings.
These payments are the monthly minimums and they can be increased if agreed.
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