Employer of Record in Croatia

Guide to Hiring Employees in Croatia

Your guide to hiring employees in Croatia, covering the employment landscape, employer of record responsibilities, working customs, and local labor laws.

Hiring Employees In Croatia
Employer Of Record In Croatia

Capital City

Zagreb

Currency

Euro

 (

)

Timezone

GMT +1

Payroll Frequency

monthly

Tax Year

1 January - 31 December

Employer Tax

16.50%

Languages

Croatian

How to Hire Employees In Croatia

Hiring in Croatia for the first time can be overwhelming, especially when navigating unfamiliar employment laws.  Whether you hire independent contractors, set up a legal entity, or use an EOR service, understanding the local employment landscape is crucial for success.  Playroll’s comprehensive guide can help you get started if you're hiring locally or relocating a team member.

Companies can hire employees in Croatia in the following three ways:

  • Setting up a local entity. Entity establishment reduces risk exposure and enables direct hiring, but can be costly and time-consuming – making it less practical for companies seeking quick and flexible solutions for hiring in Croatia.
  • Partnering with an Employer Of Record. An EOR, like Playroll, is a third-party entity that serves as the legal employer of your international workforce which hires, pays, and manages compliance with Croatia’s labor laws and tax regulations.
  • Hiring independent contractors. Hiring contractors gives companies a flexible, affordable alternative to hiring local employees, though it involves unique misclassification risks.

Good To Know

As per the U.S. News and World Report, Croatia stands out as one of the most politically stable nations globally, ensuring a secure environment for foreign investors and businesses. The country boasts a simplified business registration process, minimising formalities and bureaucratic hurdles.

Croatia possesses a robust workforce, characterised by skilled professionals and a sizable English-speaking population. The education system places a significant emphasis on technical skills, equipping individuals for diverse roles across various industries.

The cost of living in Croatia is notably lower compared to other European countries, presenting a cost-effective option for companies. The country offers an advantageous labour market with dedicated and hardworking employees.

Croatia's strategic location benefits businesses, serving as an efficient gateway to key markets in Western and Eastern Europe and Asia. The country is well-connected through land, air, and sea routes, enhancing accessibility for businesses.

Employment and Labor Laws in Croatia

Businesses can only operate smoothly in Croatia if they comply with local labor laws including drafting compliant employment contract agreements and meeting taxation and payroll obligations. Learn more about the employment laws and regulations in Croatia below, to avoid any compliance issues.

Employment Contract Requirements

While not legally obligatory, it is recommended to provide employees with a written contract in Croatia. Unless stated otherwise, contracts are generally considered permanent. Essential terms of employment must include:

  • Identification of both parties
  • Starting date (and employment duration for temporary contracts)
  • Job description, duties, and responsibilities
  • Workplace and working hours
  • Basic salary (including compensation, benefits, and payment details)
  • Total number of holidays
  • Notice period for employment termination

Onboarding Process

We can help you get a new employee started in Croatia quickly, with a minimum onboarding time of just 1-2 working days. The timeline starts once the employee submits all required information onto the Playroll platform and completes any necessary local authority registrations. For non-nationals, the Right to Work assessment (if applicable) may add up to three extra days. Additional time may be needed for follow-ups on this assessment. Please note, payroll cut-off dates can impact the actual start date. Playroll's payroll cut-off date is the 10th of each month unless otherwise specified.

Working Hours in Croatia

In Croatia, the typical workweek consists of 40 hours spread over 5 days. Employees must obtain written permission from their employer to exceed these standard working hours.

Overtime in Croatia

In Croatia, overtime is limited to 10 hours per week and 180 hours per year, unless specified differently in a collective bargaining agreement. It requires the employer's written request and is permissible in cases of force majeure, extraordinary business increases, or urgent business needs.

Probation Period in Croatia

The probation period, not exceeding 6 months, is determined by the role and employment agreement. If the employee is absent due to reasons such as sick leave or maternity leave, the probation period may be extended.

Employer of Record in Croatia

An Employer of Record (EOR) acts as the legal employer for workers in Croatia, taking on key responsibilities to ensure compliance with local labor laws and regulations. The EOR facilitates the hiring process for businesses that want to employ workers without establishing a legal entity in the country.

The employer of record in Croatia is responsible for:

  • Employment Compliance: Ensure all employment contracts comply with Croatia's labor laws and regulations, including proper classification of employees.
  • Payroll Management: Calculate, process, and distribute employee salaries in accordance with Croatia's payroll laws, including deductions for taxes and social security contributions.
  • Tax Filing and Contributions: Handle the registration, filing, and payment of employer taxes and social security contributions to the relevant authorities.
  • Employment Contracts: Draft and maintain compliant employment agreements, detailing salary, benefits, working hours, and termination terms in line with Croatia's legal requirements.
  • Benefits Administration: Provide mandatory employee benefits as required by Croatia's labor laws, such as health insurance, pension contributions, and statutory leave.
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Payroll Management in Croatia

Fiscal Year in Croatia

1 January - 31 December is the 12-month accounting period that businesses in Croatia use for financial and tax reporting purposes.

Payroll Cycle in Croatia

The payroll cycle in Croatia is usually monthly, with employees being paid by the 15th of the following month.

Minimum Wage in Croatia

The minimum wage for employees in Croatia is typically 5.25 EUR per hour, amounting to ~840 EUR per month for a typical 40 hour work week.

Bonus Payments in Croatia

Croatian law does not include any regulations concerning 13th salaries.

Employment Taxes in Croatia

Employer Tax Contributions

Employer payroll contributions are generally estimated at an additional 16.5% on top of the employee salary in Croatia.

Tax TypeTax Rate
Health insurance16.50%

Employee Payroll Tax Contributions

In Croatia , the typical estimation for employee payroll contributions cost is around 20%.

Tax TypeTax Rate
Generation Solidarity including pension (Pillar I) " capped at EUR 112 320 yearly 15.00%
Individual Capital including pension (Pillar II) " capped at EUR 9 360 monthly for both Pillar I and Pillar II payments5.00%

Individual Income Tax Contributions

The local self-government units can choose two progressive tax rates between 15% and 35.4%. The actual ranges depend on the size of the municipality/city.

Income BracketTax Rate
0 - 50 400 EUR15% - 23.6%
50 400.01 EUR And above25% - 35.4%

Pension in Croatia

In Croatia, the old-age pension age is 65 for men and 64 years and 4 months for women, each requiring at least 15 years of service. Men can choose early retirement at 60 with 35 years of service, and women at 57 with 32 years and 4 months of service. Pension calculations consider age, duration of pension scheme status, and salary contributions during the employee's career.

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The tax-related information provided in this guide is intended for general guidance and informational purposes only. Reach out to our dedicated team for insights on remote hiring in Croatia tailored to your needs.

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Work Permits & Visas in Croatia

In Croatia, work permits and visas are crucial for employers looking to hire foreign workers. Non-EU/EEA nationals must obtain specific permits to work legally. The key types of work permits and visas include the Temporary Residence Permit with Work Authorization for standard employment lasting up to one year, the EU Blue Card designed for highly skilled professionals valid for up to two years, and the Work Registration Certificate for short-term work assignments up to 90 days. Employers must complete the labor market test, submit the required documentation, and comply with Croatian labor regulations to sponsor and integrate foreign employees successfully.

Annual Leave & Company Policies In Croatia

Mandatory Leave Entitlement in Croatia

The annual leave entitlement in Croatia is 20 days for a full time worker. These can include public holidays on top of that or within those days, which would otherwise be unpaid.

Public Holidays In Croatia

Croatia recognises 14 public holidays annually, separate from the minimum paid leave entitlement and are taken in addition to annual leave. The following are the national holidays in Croatia:

HolidayDate
New Years Day1 January
Three Kings Day6 January
Easter SundayApril, day changes yearly
Easter MondayApril, day changes yearly
Labor DayMay, day changes yearly
Statehood Day30 May
Corpus ChristiJune, day changes yearly
Anti-Fascist Struggle Day22 June
Victory and Homeland Thanksgiving Day5 August
Assumption of Mary15 August
All Saints Day1 November
Remembrance Day18 November
Christmas Day25 December
St. Stephens Day26 December

Paid Time Off in Croatia

Employees in Croatia are entitled to a minimum of 20 working days of paid vacation annually after six months of employment. Compensation during annual leave is based on the average salary from the last three months, and certain individuals, such as minors and those exposed to harmful impacts, qualify for an extended annual leave of 25 days.

Maternity Leave In Croatia

Expectant employees have a right to 98 days of paid leave, including 28 days before the child's birth and 70 days after. During this period, they receive 100% of their average salary from the last 6 months of employment, and the Croatian Health Insurance Fund (HZZO) covers the cost.

Paternity Leave In Croatia

Fathers and equivalent second parents receive 10 working days of paid paternity leave per child, extendable to 15 days for twins or multiples. The non-transferable leave must be taken within six months of the child's birth or adoption, with the Croatian government providing full wage coverage for second parents.

Sick Leave In Croatia

The employee is entitled to 42 days of paid sick leave, with the employer covering 70% of their regular salary. If the sick leave extends beyond 42 days, the employer pays for it initially, and reimbursement is obtained from Croatia's health insurance fund (HZZO).

Parental Leave In Croatia

Following a 6-month period post-birth, parents can opt for parental leave. Each parent is eligible for 4 months per child for the first two kids and 15 months for subsequent children or twins, up until the child reaches 8 years old.

Employment Termination and Severance Policies in Croatia

Termination Process in Croatia

In Croatia, terminations usually involve a standard notice period, except in cases of immediate dismissal for reasons such as misconduct, disobedience, lack of skill, neglect of duties, or unauthorized absence, where written notice is required following documented meetings and discussions.

Notice Period in Croatia

The duration of the notice period for both temporary and permanent employees is determined by the length of the employee's service:

  • During probation: 7 days notice
  • Less than 1 year of service: 2 weeks notice
  • 1 year - 4 weeks' notice
  • 2 years of service: 6 weeks notice
  • 5 years of service: 8 weeks notice
  • 10 years of service: 10 weeks notice
  • 20 years of service: 12 weeks notice
  • Employees over 50 years: additional 2 weeks
  • Employees over 55 years: additional 4 weeks

Severance in Croatia

In Croatia, the amount of severance pay depends on the duration of the employee's service. Individuals with two or more years of employment receive compensation equivalent to 33% of their regular monthly pay rate for each year of service, capped at a maximum of six months' salary.

Disclaimer

THIS CONTENT IS FOR INFORMATIONAL PURPOSES ONLY AND DOES NOT CONSTITUTE LEGAL OR TAX ADVICE. You should always consult with and rely on your own legal and/or tax advisor(s). Playroll does not provide legal or tax advice. The information is general and not tailored to a specific company or workforce and does not reflect Playroll’s product delivery in any given jurisdiction. Playroll makes no representations or warranties concerning the accuracy, completeness, or timeliness of this information and shall have no liability arising out of or in connection with it, including any loss caused by use of, or reliance on, the information.

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ABOUT THE AUTHOR

Jesse Weisz

Jesse is an experienced R&D Analyst at Playroll, a leading Employer of Record (EOR) provider. With a strong background in data analysis and market research, Jesse specializes in identifying emerging trends and driving innovation in global HR solutions. She is an all-rounder, critical thinker and success-seeker (often inextricably linked to being a late-night tea drinker).

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FAQS

FAQs About Hiring In Croatia

Questions and Answers

What Is an EOR in Croatia?

An Employer of Record (EOR) in Croatia is a third-party organization that legally employs workers on behalf of your company. The EOR handles all local employment tasks, including compliance with labor laws, payroll, taxes, benefits, and employment contracts. This allows businesses to easily hire talent in Croatia without the need to set up a legal entity there, saving time and ensuring compliance with local regulations.

Can I Hire in Croatia Without an Employer of Record?

Yes, you can hire in Croatia without an Employer of Record, but this typically requires setting up a legal entity in the country. Establishing a local entity involves navigating registration processes, tax systems, and employment regulations. This can be costly and time-consuming, often taking between 4-6 months to enter a new market. An EOR provides an alternative by allowing you to hire talent quickly and compliantly without the need to establish a legal presence in Croatia.

How Much Does It Cost To Employ Someone In Croatia?

The cost of employing someone in Croatia includes more than just their salary. You also need to consider mandatory contributions such as taxes, social security, insurance, and benefits. These additional costs can vary based on the role, location, and specific employment laws in Croatia. When using an Employer of Record, there are additional service fees, usually charged as a percentage of the employee's salary or as a monthly or annual fee. This ensures compliance and covers administrative tasks.

What Is the Minimum Wage In Croatia?

As of January 1, 2024, Croatia's minimum wage rates are:

  • 5.25 EUR p/h EUR per month.
  • Applies nationwide across all sectors.
  • Adjustments typically occur annually.

How Does an EOR Help You Run Payroll In Croatia?

An EOR simplifies payroll management in Croatia by handling all aspects of salary payments, tax deductions, and compliance with local labor laws for your international employees. The EOR calculates gross pay, deducts necessary taxes and contributions, and ensures employees are paid accurately and on time. They also manage year-end tax reporting and compliance filings, reducing the administrative burden on your team and minimizing the risk of errors or penalties.

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