1 Legal framework

1.1 Are there statutory sources of labour and employment law?

The most important statutory sources are as follows:

  • the Constitution of the Republic of Croatia (Official Gazette 56/90, 135/97, 08/98, 113/00, 124/00, 28/01, 41/01, 55/01, 76/10, 85/10, 05/14);
  • EU regulations on employment law, which are directly applicable in Croatia;
  • the Labour Act (Official Gazette 93/14, 122/17, 98/19);
  • the Act on the Minimum Wage (Official Gazette 118/18);
  • the Act on Safety at Work (Official Gazette 71/14, 118/14, 154/14, 94/18, 96/18);
  • the Anti-Discrimination Act (Official Gazette 85/08, 112/12);
  • the Protection of Whistleblowers Act (Official Gazette 17/19); and
  • the Immigration Act (Official Gazette 133/20).

1.2 Is there a contractual system that operates in parallel, or in addition to, the statutory sources?

The sources of employment law can also include autonomous legal sources, such as collective agreements, bylaws, workers; council agreements and similar.

1.3 Are employment contracts commonly used at all levels? If so, what types of contracts are used and how are they created? Must they be in writing must they include specific information? Are implied clauses allowed?

Yes, employment contracts are commonly used at all levels. There are two basic types of employment contracts, based on duration: open-ended and fixed-term employment contracts.

Open-ended employment contracts should be the norm and fixed-term employment contracts the exception. In practice, however, this is not the case. It is common practice for Croatian employers to conclude fixed-term contracts with employees initially and then offer an open-ended contract after a few years of employment.

Contracts must be executed in writing and include the following information:

  • the parties and their place of residence or registered seat;
  • the place of work or, if there is no permanent or main place of work, a note that the work is to be performed in different locations;
  • the job title, the nature or type of work for which the employee is employed, or a short list or description of tasks;
  • the date of commencement of work;
  • the expected duration of the contract, for fixed-term employment contracts;
  • the duration of paid annual leave to which the employee is entitled or, if such information cannot be given at the time the contract is concluded, the method by which the duration of leave will be determined;
  • notice periods or, if such information cannot be given at the time the contract is concluded, the method by which the notice periods will be determined;
  • the basic salary, salary supplements and periods of income payments to which the employee is entitled; and
  • the duration of a regular working day or week.

Implied clauses are allowed. If a certain aspect of the employment relationship is not regulated by the contract, the following will apply:

  • the employer's rulebook;
  • an agreement between the workers' council and the employer;
  • a collective agreement; and
  • the relevant law.

If these are in contradiction, the right which is most favourable to the employee will apply, unless otherwise provided by the Labour Act or another act.

2 Employment rights and representations

2.1 What, if any, are the rights to parental leave, at either a national or local level?

The right to parental leave exists at a national level. The Act on Maternity and Parental Benefits (Official Gazette 85/08, 110/08, 34/11, 54/13, 152/14, 59/17 and 37/20) distinguishes between maternity leave (mandatory and additional maternity leave) and parental leave.

2.2 How long does it last and what benefits are given during this time?

Maternity leave: Generally, the mother is entitled to maternity leave from 28 days before the pregnancy due date until the child is six months of age. If a specialist obstetrician/gynaecologist decides that there are justified health reasons, maternity leave may start 45 days before the pregnancy due date at the earliest. Before the commencement of maternity leave, a pregnant employee can be found temporarily unfit to work due to complications in pregnancy, during which time she has the right to full salary compensation according to domestic health insurance regulation.

Mandatory maternity leave lasts from 28 days before the pregnancy due date until the 70th day after the baby's birth. Thereafter, the mother has the right to additional maternity leave until the child reaches six months of age.

During maternity leave, the mother receives full salary compensation, without limitation.

Parental leave: Parental leave can be used by both parents while the child is between six months and eight years of age. The duration of parental leave is eight months for the first and second child and 30 months for twins, a third child and every subsequent child. Generally, both parents use parental leave equally (four or 15 months each); but one parent can also use the entire parental leave for a duration of six or 30 months, subject to the parents' personal agreement.

Parental leave can be used twice a year at most, for a duration of at least 30 days.

During the first six or eight months of parental leave, the parent has the right to full salary compensation in an amount of up to 170% of the ‘monthly budgetary base' (HRK 5,654.20). The minimum compensation is 70% of the monthly budgetary base (HRK 2,328.20).

For the remaining duration of parental leave, the salary compensation amounts to 70% of the monthly budgetary base (HRK 2,328.20).

2.3 Are trade unions recognised and what rights do they have?

Yes, trade unions are recognised. Unions can be established by at least 10 natural persons who are of age and have the capacity to exercise their rights. Unions are registered as legal entities upon registration in the Association Registry. They can form alliances and other types of associations in order to align their interests at a higher level. Unions can be parties to collective bargaining agreements, and can represent their members in labour disputes before the courts and public authorities and in arbitration and mediation procedures. Before an employer, unions are represented by one or more union representatives or by a union commissioner (if the union has five or more members employed with the same employer), who has the right to protect and promote the rights and interests of the union's members.

2.4 How are data protection rules applied in the workforce and how does this affect employees' privacy rights?

According to the General Data Protection Regulation (GDPR), the employee must give consent for the employer to process his or her personal data. The employer must protect the personal data of employees in accordance with the GDPR. It is now standard practice to request an employee's consent to the processing of his or her personal data when concluding the employment agreement.

2.5 Are contingent worker arrangements specifically regulated?

Croatian law recognises part-time and full-time employment contracts. Full-time employment is 40 hours per week.

The Labour Act also recognises employment contracts for permanent seasonal work, performed by seasonal workers. These are used by employees who mostly work seasonally (eg, in the tourism sector).

The Labour Act provides for the possibility of employing temporary workers via agencies that hire out workers. Temp workers enter into employment contracts for temporary work with temp agencies. The agencies then conclude contracts for the assignment of workers. Temp agencies must be registered with the competent ministry.

3 Employment benefits

3.1 Is there a national minimum wage that must be adhered to?

The minimum wage is prescribed by the Law on the Minimum Wage. The minimum wage is determined as a gross minimum wage, determined by government regulation on a yearly basis. For 2021, the minimum gross wage is HRK 4,250.

3.2 Is there an entitlement to payment for overtime?

An employee has the right to a pay increase for working overtime, up to 10 hours of overtime work per week. Overtime pay is not prescribed by law.

3.3 Is there an entitlement to annual leave? If so, what is the minimum that employees are entitled to receive?

Yes. The minimum annual leave is four weeks.

3.4 Is there a requirement to provide sick leave? If so, what is the minimum that employees are entitled to receive?

An employee is entitled to receive full salary compensation during a period of sick leave due to temporary unfitness for work because of illness. According to the Obligatory Health Insurance Act, the salary compensation will be covered by the employer for the first 42 days of sick leave and the Croatian Health Insurance Fund from the 43rd day onwards.

3.5 Is there a statutory retirement age? If so, what is it?

The statutory age for retirement is 65, with 15 years of past service, upon which the employment contract will end by law unless otherwise agreed by the employer and the employee.

4 Discrimination and harassment

4.1 What actions are classified as unlawfully discriminatory?

All actions that place an employee in an unfavourable position based on any one of the following criteria are considered unlawfully discriminatory:

  • race, ethnicity or colour;
  • sex;
  • language;
  • religion;
  • political or other beliefs;
  • national or social origin;
  • financial situation;
  • trade union membership;
  • education;
  • social position;
  • marital or family status;
  • age;
  • health status;
  • disability;
  • genetic inheritance;
  • gender identity or expression; or
  • sexual orientation.

It is also considered discriminatory if a person is placed in an unfavourable position based on misconceptions about the existence of the above grounds for discrimination.

4.2 Are there specified groups or classifications entitled to protection?

The grounds for discrimination are set out in question 4.1.

4.3 What protections are employed against discrimination in the workforce?

Direct or indirect discrimination in the field of labour and working conditions – including in relation to selection criteria or conditions for employment, promotion, vocational guidance, vocational training or retraining – is prohibited.

The employer must protect each employee's dignity from the actions of superiors, associates and persons with whom the employee regularly comes into contact in his or her line of work, if such conduct is undesirable and contrary to the Labour Act and special laws.

The procedure and measures for the protection of workers' dignity from harassment and sexual harassment are regulated by:

  • the Anti-Discrimination Act;
  • collective bargaining agreements;
  • agreement concluded between the workers' council and the employer; or
  • the employer's rulebook.

An employer with at least 20 employees must appoint a person who is authorised to receive and resolve complaints relating to the protection of workers' dignity.

4.4 How is a discrimination claim processed?

The employer must, within eight days of delivery of the claim, examine the claim and take all necessary measures appropriate to prevent the continuation of harassment or sexual harassment if such is found to exist.

All information ascertained in the process of protecting workers' dignity is classified.

By law, any behaviour of an employee that constitutes harassment or sexual harassment is considered a violation of the obligations arising from the employment contract.

4.5 What remedies are available?

If the employer does not take measures to prevent harassment or sexual harassment within eight days of delivery of the claim, or if the measures it has taken are clearly inappropriate, the harassed or sexually harassed worker has the right to stop work until protection is provided, on condition that the employee has sought protection before a competent court within an additional period of eight days.

Also, if there are circumstances in which it is not justified to expect that the employer will protect the employee's dignity, the employee is not obliged to file a claim with the employer and has the right to terminate his or her work, provided that he or she requests protection from a competent court and notifies the employer thereof within eight days of the date of termination of work.

If the claim is dismissed, the employee has the right to request protection from a competent court.

The employee may file a claim for:

  • determination of discriminatory action;
  • proscription of such action in the future;
  • compensation for damages; and
  • publication of the judgment in the media at the employer's expense.

4.6 What protections and remedies are available against harassment, bullying and retaliation/victimisation?

The available protections and remedies are set out in questions 4.3 to 4.5.

5 Dismissals and terminations

5.1 Must a valid reason be given to lawfully terminate an employment contract?

The employer must provide a valid reason in writing in order to terminate the employment contract. If the contract is terminated by the employee, no reason need be given.

5.2 Is a minimum notice period required?

In the case of regular termination, the minimum notice period is prescribed or determined by agreement and depends on the duration of the employee's employment with the particular employer.

5.3 What rights do employees have when arguing unfair dismissal?

An employee who considers that his or her employer has unlawfully terminated his or her employment may, within 15 days of delivery of the termination decision, request that the employer annul the decision. If the employer does not comply with the employee's request within 15 days of receipt of the decision, the employee has an additional 15 days to file a claim with the competent court for:

  • annulment of the termination decision;
  • payment of gross back-pay; and
  • compensation for damages.

5.4 What rights, if any, are there to statutory severance pay?

An employee is entitled to severance pay if his or her employment contract is terminated by the employer after two years of uninterrupted work, unless the termination was caused by employee's behaviour. The amount of severance pay is determined according to the length of uninterrupted employment with the employer. The minimum agreed or determined severance pay should be no less than one-third of the average monthly salary earned by the employee in the three months before termination of the employment contract, for each year of work with that employer. Unless otherwise provided by law, collective agreement, company bylaws or the employment contract, the total amount of severance pay may not exceed six average monthly salaries earned by the employee in the three months before termination of the employment contract.

6 Employment tribunals

6.1 How are employment-related complaints dealt with?

Croatia does not have employment tribunals in the sense of non-governmental bodies that handle employee claims. Such claims are handled internally by employers, according to their internal procedures and the Labour Act, and by the competent court.

6.2 What are the procedures and timeframes for employment-related tribunals actions?

An employee who considers that his or her employer has violated his or her employment-related rights may, within 15 days of delivery of the decision that has caused the violation, request the employer to exercise the relevant right. If the employer does not comply with this request within 15 days of receipt, the employee may request protection of the violated right from a competent court within 15 days.

7 Trends and predictions

7.1 How would you describe the current employment landscape and prevailing trends in your jurisdiction? Are any new developments anticipated in the next 12 months, including any proposed legislative reforms?

Employment relationships were put to the test during the COVID-19 pandemic, as employers struggled to save their businesses and employees. Government packages of measures to support the economy and preserve employment were introduced through amendments to different acts, regulations and bylaws. Further proposed legislative reforms should take the form of changes to the Labour Act. These amendments were initially announced for September 2020; however, as yet the Labour Act has not been amended. The next 12 months should see the amendments come into force.

One interesting development on the Croatian employment landscape in 2020 was the introduction of digital nomad visas. The COVID-19 pandemic revealed that much work can now be performed remotely, increasing the popularity of the digital nomad lifestyle. Croatia seized the opportunity to create a strategy to position itself as a preferred destination for digital nomads. On 1 January 2021, the new Act on Foreign Nationals entered into force, with the aim of making Croatia one of the few countries in the world to offer digital nomads regulated status, and the possibility of a temporary extended stay while working for a foreign employer.

8 Tips and traps

8.1 What are your top tips for navigating the employment regime and what potential sticking points would you highlight?

The Croatian employment regime is very formal. An employment contract must be executed in writing and must contain precisely defined legal elements. Termination of the employment contract is also formal, because there are legally prescribed deadlines and reasons for termination.

In many aspects of employment law, the legislation sets out general guidelines, which are then further regulated by collective agreements and employer rulebooks; if disputes arise, their interpretation is left to the courts.

Generally, solid knowledge of material and procedural employment law is required to navigate the Croatian employment regime. Changes in legislation occur relatively frequently, which may cause insecurity for both employers and employees. Employers should be well acquainted with employment law regulations and always keep an eye out for new legal developments.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.