Employment issues in M&A transactions in Croatia

• any circumstances of the deal may trigger a requirement for a transfer of undertakings (‘prenošenje ugovora o radu na novog poslodavca’) pursuant to Council Directive 2001/23/EC and the Croatian Employment Act. Generally, this will not be the case in the event of a share deal, as mere changes to the ownership structure of an enterprise do not change the identity of the employer. Croatian law does not contain significant requirements relating to labour law in such share deal arrangements. See Section B. for important rules relating to asset deals.

• any circumstances of the deal may trigger a requirement for a transfer of undertakings (‘prenošenje ugovora o radu na novog poslodavca’) pursuant to Council Directive 2001/23/EC and the Croatian Employment Act. Generally, this will not be the case in the event of a share deal, as mere changes to the ownership structure of an enterprise do not change the identity of the employer. Croatian law does not contain significant requirements relating to labour law in such share deal arrangements. See Section B. for important rules relating to asset deals.

• a collective agreement exists;
• a works council exists;
• a shop steward has been nominated (if a works council does not exist).

• comprehensive and accurate information in written form for the attention of the new employer regarding the rights of employees whose employment contracts are being transferred;
• information regarding the transfer in written form for the attention of the works council and any affected employees (this should include information about the date of transfer of the employment contract, the reasons for the transfer of the employment contract, the legal,
  economic and social implications of the transfer for the employees, and any measures being taken in relation to employees whose employment contracts are being transferred);
• information for the Croatian Pension Insurance Institute regarding the end of the obligation;
• information for the Croatian Institute for Health Insurance regarding the end of the obligation.

• Forward the information drafted for the attention of the respective addressees ‘in good time’ (in cases such as those described in the second paragraph of section 2, above, before the date of the transfer; in cases such as those described in the third paragraph of section 2, above, within 24 hours of the obligation having been terminated; in cases such as those prescribed fourth paragraph of section 2 above, within eight days after the obligation has terminated).

• The employer must consult the works council regarding the transaction under consideration and provide the works council with key information to understand its impact on the position of employees. The works council must then forward its observations regarding the proposed transaction for the attention of the employer within eight days (if a works council has not been established, all its rights and obligations are to be assumed by a shop steward).

• In accordance with paragraphs 1– 4.

• the transfer is taking place during bankruptcy or rehabilitation proceedings (in this case, the rights being transferred to the new employer may be reduced pursuant to a special law, a collective agreement concluded, or an agreement between the works council and the employer);
• a collective agreement has been concluded (if so, a collective agreement applied to employees before the change of employer continues to apply until a new collective agreement is concluded, but for no longer than one year);
• a works council has been established (if so, the works council shall continue its activities, but for no longer than the duration of the term for which it was elected);
• obligations exist towards employees which arose before the date of transfer (if so, the new employer shall hold joint and several liability together with the previous employer regarding those obligations towards employees which arose before the date of transfer).

• information for the Croatian Pension Insurance Institute about the beginning of the obligation;
• information for the Croatian Institute for Health Insurance about the beginning of the obligation.

• Forward the information drafted for the attention of the respective addressees ‘in good time’ (within eight days to the Croatian Health Insurance Institute and within 24 hours to the Croatian Pension Insurance Institute, after the obligation occurred).

• No consultation requirement.

• In accordance with sections 1– 4, above.

The regulations applicable to a share deal are also applicable to a merger. As such, a merger comes into effect when entered in the relevant public register.

• the identity of the employer changes for the employees (this will always be the case for all employees in the event of a merger under which a newco is created); or
• the identity of the employer remains the same for certain employees (this may be the case in the event of a merger by means of absorption);
•  in the event of a merger under which the employer changes for the employees, all pre-merger companies are subject to the obligations of the seller in an asset deal (see point B. I.), whereas the post-merger company is subject to the obligations of the purchaser in an asset deal (see point B. II, above);
• in the event of a merger under which the employer remains the same, the company acting as the employer of any such employees does not need to meet the requirements of an asset deal described in point B. II above.