Labour law in Croatia

1.1. The Employment Contract

Employment contract in writing or written record

An employment relationship is created by an employment contract made in writing. A failure by the parties to sign a written employment contract does not however affect the existence and validity of such a contract. If an employment contract is not made in writing, the employer must issue and deliver to the employee a written record of the employment contract (a written certificate) and its essential provisions (see below). 

Presumption in the absence of a written contract and record

If the employer fails either to sign a written agreement between him and the employee or to issue the employee with a written certificate to confirm that an employment contract has been concluded, it shall be deemed that the employment contract was made for an indefinite period of time. 

Issues to be specified in the contract

An employment contract must specify at least the following :

• names of the parties,  their residence addresses and their Croatian personal identification numbers (OIB); 
• place of work and, if due to the nature of the work there is no permanent or main place of work or it is variable, information about the different places where the work is or could be performed; 
• work position (i.e. the nature or type of work for which the employee is employed, or a short list or job description); 
• date of the commencement of work and the date of entering into the employment contract; 
• whether the contract is concluded for an indefinite or definite term and the termination date or expected duration of the contract; 
• duration of paid leave (or the method of assessment); 
• procedure in case of termination and notice periods (or method of assessment); 
• gross salary, including the gross amount of the basic or contracted salary, allowances and other payments and payment periods, and other payments to which the employee is entitled;  
• whether the contract is for full-time or part-time employment; 
• daily and weekly working hours; 
•  right to education, training, and professional development, if available; 
• duration and conditions of the probation period, if such a policy exists. 

Fixed-term employment requires justification

An employment contract shall, in principle, be entered into for an indefinite period of time. Hence, a fixed-term contract is only lawful if it is justified by a material and important reason (e.g. a time limit, performance of a specific task, occurrence of a particular event, the replacement of a temporarily absent employee). In this case, the reason needs to be specified in the contract.  The cumulative duration of all successive fixed-term employment contracts, including the first employment contract, may not exceed three consecutive years, unless this is necessary for the purpose of replacing a temporarily absent employee or where it is on objective grounds which are allowed by law or a collective agreement. The maximum number of consecutive fixed-term employment contracts is three. Any change or amendment to the fixed-term employment contract which affects its prolongation shall be regarded as a successive fixed-term employment contract. An interruption of less than three months shall not be regarded as an interruption of the three-year period. 

Probationary period

When entering into an employment contract, a probationary period for a maximum of six months, with a termination notice period of at least one week during such probationary period, may be agreed upon. In exceptional cases, the probationary period may be extended beyond six months, if the employee was temporarily absent during the notice period (e.g. due to sick leave, maternity and parental leave, etc.). In such instances, the probationary period may be prolonged for the period of absence whereby the total duration of the probationary period, both before and after its interruption, must not exceed six months.  The employee’s failure to satisfy during the probationary period represents the specifically justified reason for the termination of the employment contract. 

Choice of law

The choice of law in employment contracts is possible only where the employment relationship involves a foreign element (e.g. in an employment contract between the employee and the employer, either of which is a foreign person). The only requirement when choosing a foreign law is that the principle of the ordre public is complied with. The ordre public principle requires the selected foreign law not to be contrary to the law and order of the Republic of Croatia. Also, mandatory provisions of the Croatian employment law will be applicable, regardless of the chosen law.

Jurisdiction clause

The parties to an employment contract may choose a foreign court for solving a possible dispute; however, they cannot exclude the jurisdiction of Croatian courts for claims filed by the employee.

1.2. Contracts for services

Not a substitute for employment contracts

Other than under an employment contract, services may also be rendered under a contract for services, whereby the service provider undertakes to perform a specific “service” (e.g. to manufacture or repair something) and the principal undertakes to reimburse him for such service. It is important that the purpose of such an agreement is not to evade the obligations under employment law. Therefore, if a service provider is being integrated into the other party’s business and is subject to its control, he is most likely to be considered as an employee and the service contract an employment contract, regardless of its label.

1.3. Employment of foreigners

Immigration law and labour market rules

When hiring foreign citizens, in addition to the general conditions required under the Labour Act, special conditions required under the Foreigners Act must also be fulfilled. Above all, this means that such foreign citizens must obtain an appropriate residence and work permit (Croatian: dozvola za boravak i rad) or work registration certificate (Croatian: potvrda o prijavi rada). EEA citizens are allowed to work in Croatia without the obligation to obtain any type of permit. (However, EEA citizens still have certain obligations regarding registration of residence). In any event, each individual case should be verified as it stands. 

Work permit

A residence and work permit is issued for employees, as well as for – in certain cases – directors of a Croatian company.  

When employing people from third (non-EEA) countries, employers must observe rules and conditions, depending on the circumstances of each individual case.  

As a rule, a labour market test (in cooperation with the Croatian Employment Service) will need to be conducted before employing people from third countries in order to determine if there are any Croatian employees available for the job. 

A labour market test will not be required in certain cases (e.g. in the case of occupations in which there are shortages or when employing key personnel). 

1.4. Special rules for executives?

Senior Staff

The rules on fixed-term employment contracts, termination of employment contracts, notice periods and severance pay do not apply to board members (directors) that have been appointed as such and are authorised to conduct the business of the employer. 

“Mixed-contract“ for directors

Directors (management board members) may act under an employment contract or a contract for services. In the latter case, the director’s contractual relationship is determined by the general civil law. However, directors may also have a “mixed-contract” comprising elements from both the employment contract and the contract for services. 

2.1. Minimum wage

Statutory minimum wage

The parties are free to agree on the gross amounts of wages, bonuses and further privileges and incentives (with some exceptions, when the amounts are legally prescribed). However, when doing so, the parties must comply with the legal minimum which is, depending on the educational level of the employee and the complexity of his job, defined by law (specific act or labour law regulations) and other regulations (such as collective bargaining agreements). The minimum wage is also determined by a special Minimum Wage Act. The minimum wage depends on different factors and is determined once a year for the following year. (For the period 1 January 2023 to 31 December 2023, the minimum wage amounts to gross EUR 700). 

Collective agreements and staff rules

If the employer is covered by a collective bargaining agreement, then the minimum levels of wage set out by such an agreement must also be observed. Employers with at least 20 employees who are not bound by any collective agreements must determine minimum levels of wage and the frequency of payments by means of internal staff rules (“staff rules” or “employment by-law”).  

2.2. Pay increases

Legal basis

Pay increases are usually agreed upon individually by the parties or come about as a result of collective bargaining. Moreover, they can also be provided for by staff rules. It should be noted that there is no general point of reference for pay increases.

2.3. Reduction of wages

Only with the employee’s consent

If the employer wishes to pay the employee a lower wage, or to amend any other part of the employment contract, he must obtain the consent of the employee. 

Termination of employment and offer of a new employment contract

However, if the employee withholds such consent, the only way for the employer to amend the present employment contract (e.g. the employee's wage) would be to unilaterally terminate the employment contract of that employee. The employer could then concurrently offer the employee another employment contract containing the amended terms and conditions (e.g. the lower wage). It is necessary to stress that the employer may not propose any terms and conditions, including with respect to wages, which are below the minimum as defined by the Labour Act, the respective collective bargaining agreement or the staff rules. Should the employee decline the proposal for the execution of a new employment contract containing the amended terms and conditions (e.g. wages), the employer's proposal should be treated as a termination of employment to which the rules governing ordinary termination apply (see section 6.). 

3.1. Standard working hours and breaks

Daily and weekly standard working hours

A regular working week consists of 40 working hours, which when distributed evenly, amounts to 8 hours per day (provided that the working week consists of 5 days).

Paid breaks

An employee working at least 6 hours per day is entitled to a minimum 30 minutes break each day. The break time is included in the working hours.

3.2. Minimum rest periods

Daily minimum rest period

An employee is entitled to a daily rest between two successive working days of at least 12 consecutive hours. Where an employee is of full age and works on a seasonal job, the daily rest may be shortened to 8 consecutive hours.

Weekly minimum rest period

An employee is entitled to a weekly rest period of at least 24 consecutive hours (to which a daily rest is added), which generally means that they do not work on Sundays. If an employee cannot use weekly rest as prescribed, he must be afforded equivalent periods of compensatory weekly rest right after the working time in which he had no weekly rest or had a shorter period of rest. 

3.3. Maximum working hours

40 hours per week (48 in case of rescheduled working hours) 

In case of rescheduled working hours, which must be justified by special business needs, the working week may be extended to 48 hours. Exceptionally, the working week may be extended to 56 hours per week, but only if the employee gave his consent and if that possibility was envisaged by the collective bargaining agreement. 

Seasonal jobs

Extension of the working week also applies to seasonal jobs subject to the collective bargaining agreement or consent by the employee. Under certain circumstances the working week may amount to a maximum of 60 hours.

3.4. Overtime work

General principle

Overtime work is only allowed in the following circumstances (and at the employer's written request):

• in force majeure cases;
• if there is an extraordinary rise in the volume of business; and
• in other cases where an urgent business need exists.

In any event the employer may not request more than 10 hours of overtime work per week and 180 hours per year (unless otherwise provided for in collective agreement, in which case it may not exceed 250 hours a year).

Limits to overtime work

Under-age employees are absolutely barred from working overtime.

Written consent of the employees’ required

The following employees may be ordered to work overtime only with their explicit written consent (except in the case of force majeure): 

• pregnant women; 
• a parent with a child of up to 8 years of age; 
•  and employees working part-time with more than one employer. 

Compensation of overtime work

Overtime work is to be compensated for. The amount of the compensation is stipulated in the collective agreement, the employment contract or the staff rules. There are no statutory rules on the amount of compensation for overtime work. 

3.5. Working on weekends and public holidays

Requires special business needs

Work on Sundays and on public holidays must be justified by a special business need in order to be lawful. Employees working on such days are entitled to an increased payment (in cases of work on Sundays, the minimum increase is 50%). 

3.6. Premiums for night work and heavy-duty work

Apart from overtime work and working on Sundays or public holidays, an employee is also entitled to an increased payment for heavy-duty work and night-shift work. The amount of the premium may be specified in collective bargaining agreements, in the employment contract or in the staff rules.

Minimum holiday entitlement

Each calendar year an employee is entitled to receive paid annual leave for the duration of at least 4 weeks. Public holidays and statutory non-working days are not accounted for in the calculation of annual leave. The exact number of working days that will be accounted as annual leave has to be determined in a collective bargaining agreement, staff rules or an employment contract.
Employees working on jobs affecting them harmfully and under-age employees are entitled to 5 weeks of paid annual leave.

Enhanced entitlement to paid leave

An enhanced entitlement to annual leave may also be provided for in collective bargaining agreements, staff rules or employment contracts.

Accrual of holiday entitlement

When employed for the first time, or after a period between jobs lasting longer than 8 days, an employee will acquire his leave entitlement after 6 months of continuous work.

Consumption of holiday

If the employee uses his annual leave in portions, he must use at least two consecutive weeks of annual leave in the calendar year for which he exercises the right to annual leave, unless otherwise agreed upon by the employee and the employer (provided of course that the employee has acquired the entitlement to annual leave exceeding two weeks).

Compensation

During his annual leave, the employee shall be entitled to receive compensation of wages to an amount specified in the employment contract, collective bargaining agreement and the staff rules. However, this must be an amount equal to at least his average monthly wage during the past 3 months. 

If the employment contract is terminated, the employee is entitled to compensation for the unused part of his annual leave.

An agreement, whereby the employee waives his right to take annual leave or agrees to accept payment of a compensation instead of taking annual leave, shall be null and void. 

Transferral of unused holiday to the next year

If the holiday is not consumed in full for one year, the second portion may be taken at the latest by the thirtieth day of June (inclusive) in the next calendar year (with some exceptions). 

Notification and medical certificate

In case of temporary inability to work due to illness or injury, employees are obliged to notify their employer immediately. The employee also has to provide a medical certificate within a period of 3 days that confirms his inability to work and the expected duration. If the employee cannot comply with these obligations without being at fault, he must do so as soon as possible.

Sick pay

During the period of sick leave the employee is entitled to receive sick pay on the basis of his average salary for the preceding 6 months, but this may not be less than 70% [of the prescribed basis] (depending on the type of sickness). In Croatia, however, it is common practice for the employee to receive the full (net) salary throughout the whole period of sickness. 

Reimbursement

If the employee´s sick leave lasts longer than 42 days, then sick pay is to be paid by the Croatian Health Institute.

Duty to inform at the outset of employment

When negotiating an employment contract, the employee is obliged to inform the employer of any health problems that might influence his ability to work or endanger the health of other employees or other people that the employee will have contact with during the course of his employment. 

General background

An employment contract may be terminated: 

• by the death of the employee; 

• by the death of the employer who is a natural person; 
• by the death of the employer who is a craftsman (Croatian: obrtnik), if in accordance with a special regulation the trade (Croatian: obrt) was not transferred; 
• by cessation of a trade by force of law, in accordance with a special regulation; 
• at the end of the period for which the fixed-term employment contract was entered into; 
• when the employee reaches 65 years of age and 15 years of pensionable service, unless the employer and the employee agree otherwise; 

• by mutual agreement between the employee and the employer; 
• on the day notification of the validity of the decision on the recognition of the right to a disability pension due to a complete loss of working ability was delivered to the employer; 
• by dismissal (termination); 
• by decision of a competent court. 

6.1. Formal requirements to be observed by the employer

Written form and information on reasons and payments required

If the employer wishes to terminate an employment contract, the declaration shall be made in writing and should state the reason for the termination of the contract. Furthermore, the employer must specify the payments that are to be made to the employee upon the termination of the employment. Non-compliance with these requirements may result in the termination being null and void.  

Employees’ representatives

As to the involvement of the employees’ representatives, see section 6.7. 

6.2. Notice periods

Varying notice periods

Notice periods are proportional to the employee's duration of service with the same employer and amount to at least two weeks for one year of employment. After the first year the employer must observe a notice period of one month. After two (five, 10, 20) years of service the statutory notice period will then amount to one month and two weeks (two months, two months and two weeks, three months). After 20 years of service, the notice period increases by two weeks for employees aged at least 50 years and by one month for employees aged at least 55 years.  During the notice period the employee is entitled to receive his salary and all other entitlements under statute. However, employees are not entitled to a notice period who, at the time of termination of the employment contract, have reached the age of 65 and have 15 years of pensionable service. 

6.3. Termination without notice (summary dismissal)

Serious breach of the employee’s duties

Termination without notice (summary dismissal) is only lawful if there is a serious breach of the employee’s/employer’s duties or another important reason that renders the continuance of the employment relationship no longer possible. 

Forfeiture after 15 days

If there is a valid reason for a summary dismissal the employer should not wait for longer than 15 days after the breach to declare the dismissal, otherwise he will have forfeited his right to do so. 

6.4. Requirement of a valid reason to terminate the employment

General rule and exceptions

Unlike the employee, the employer must generally have a lawful reason for terminating an employment contract. 

Reasons of dismissal

The following valid reasons for dismissing an employee are set out exhaustively in the Labour Act:

• redundancy situations due to economic, technical or organisational reasons (dismissal for redundancy);
• inability of the employee to duly perform his duties under the employment contract (dismissal based on the employee’s abilities or state of health);
• violation by the employee of his obligations arising from the employment contract (dismissal for misconduct); and
• the employee did not provide satisfaction during the probationary period (dismissal due to incompetence during probationary period)

Criteria for the selection process

With respect to the first categories, the employer is obliged to take account of the length of employment, support obligations and age of the employee. 

Exemptions for small businesses 

Businesses with less than 20 employees are exempted from this requirement. The employer only must prove a valid reason for the dismissal.  

Re-engagement

If the employer, wants to recruit a new employee for the same job within a 6-month period following the dismissal for redundancy, he must first offer the employment contract to the employee whose contract was previously terminated.

6.5. Collective Redundancies

Definition

An employer who expects to terminate at least 20 employees – five of which due to business related reasons – all within a 90-day period, shall be obliged to conduct consultations with the workers’ council, with a view to reaching an agreement aimed at avoiding redundancies or reducing the number of employees affected. The redundancies include the employees whose employment contract are to be terminated for business reasons and by means of an agreement between the employer and the employee, as proposed by the employer. 

Information and consultation 

In such a case, the employer must consult with the workers’ council. In addition, the employer has to inform the Croatian Employment Agency. If there is no workers’ council, the employer has to consult with the trade union commissioner (i.e. employee representing the trade union).  

Sanctions for failure to consult

If the employer fails to consult with the workers’ council any dismissals are null and void. In addition, the authorities can impose a fine upon the employer that can amount to EUR 7,960. 

6.6. Severance payments

Two-year qualifying period 

If an employee with at least two years’ service is dismissed due to business reasons or for reasons relating to the employee’s non-ability and state of health (i.e. first two categories of dismissal), he is entitled to a severance payment. The minimum amount of the severance payment is calculated by multiplying one third of the average salary paid in the last three months with the number of years of continuous employment. Furthermore, the severance payment is capped at the amount of six times the average monthly salary unless otherwise stipulated in law, staff rules, collective agreements or employment contracts. 

6.7. Involvement of the workers’ council (trade union)

Requirement to inform the trade union

Prior to declaring a termination of employment, the employer must inform the workers’ council (or trade union commissioner, if there is no workers’ council) and consult with it. In case of a termination with notice the workers’ council must comment on the proposed dismissal within the following 8 days (summary dismissal: five days). 

Workers’ council may oppose the proposed dismissal

The workers’ council may oppose the termination if it deems it to be unjustified or if the employer has violated any formal requirements.  

Collective redundancies

Special rules apply for collective redundancies (see section 6.5.).

6.8. Employees with special protection against termination of employment

Protected groups with high standard of protection against dismissal

In Croatia, employers may not terminate the employment contract of the following persons:

• pregnant women during their pregnancy and maternity leave, parents and adoptive parents when exercising their right to work part-time, adoptive parents during the adoption leave, parents/adoptive parents during leave for the purpose of nursing a child with severe disabilities (the foregoing bars will remain in force 15 days after the end of pregnancy or cessation of exercising the above rights); and
• employees who have suffered an injury at work or have become ill with a work-related illness and are temporarily unfit to work due to treatment or recovery;

Dismissal requires the prior consent of the workers’ council (trade union)

The employment of the following persons may be terminated only with the prior consent of the workers’ council (trade union): 

• members of the workers’ council; 
• candidates for the workers' council and members of the election committee, for 3 months after the results of the elections have been established; 
• employees with diminished working capacity or employees under direct threat of physical disability; 
• employees over 60 years of age, except for employees who have reached the age of 65 and have 15 years of pensionable service; 
• workers' representatives in the supervisory board of the company; and 

• trade union commissioner during their term of office as trade union commissioner and six months thereafter. 

Remedies for the employer

If the workers’ council (the trade union representative) does not provide their approval in relation to the dismissal within eight days, the dismissal shall be deemed to have been approved. If the approval is explicitly denied, the employer may bring the matter before a court or may seek an arbitration award. 

6.9. Changing terms and conditions of the employment contract

It was mentioned above (see section 2.3.) that the employer may terminate the employment contract and at the same time offer the employee a new employment contract with changed terms and conditions. 

Rejection of the new contract

If the employee declines the new contract, the employer's proposal shall be treated (and shall serve), as a notice of termination to which the rules governing an ordinary termination apply (specifically with a view to the valid reasons for termination, which must exist and be stated). The sole fact that the employee declined the employer's offer to enter into a contract under the different conditions is not a valid reason for termination.

Automatic transfer of contracts of employment

If a business (or a part thereof) – a so called “commercial unit” – is being transferred to another natural or legal person, the employment contracts of the employees working for the business will also be transferred ex lege. That is to say that all the rights (arising under the employment relation that existed up to the day of such transfer) of the employees whose employment contracts are being transferred shall survive the transfer. The employer to whom employment contracts are so transferred shall assume, as of the day of such transfer, all the rights and obligations (unchanged in form or extent) arising under the transferring contract. 

Collective bargaining agreement

If a collective bargaining agreement has been made, it will also be transferred and remains valid until the execution of a new one, but no longer than for a period of one year after the transfer. 

Duty to inform employees

The former employer must inform the employees in writing on the transfer of their contracts to the new employer.

The employer is also obliged to consult with the workers’ council on the expected legal, economic and social consequences that may arise for the employees as a consequence of their contracts being transferred to a new employer.

Liability of the employers

If the business is transferred to the new employer, both the former and the new employer become jointly liable for those employment obligations towards the employees which arose before the transfer.

8.1. Trade unions and the management of the business 

Freedom to establish and join a trade union

In Croatia, the employees have the right, without difference, to freely establish a trade union and join it under the conditions prescribed only by its by-laws or rules. Moreover, a trade union is guaranteed the right to represent its members in labour disputes against the employer, before the court, arbitration or governmental authorities, provided that it is organised as an association and registered in accordance with the Labour Act.

Trade union representatives within the undertaking

Trade unions may independently decide on the form of their representation within an employer’s company. Trade unions which have at least five members employed by an employer may appoint or elect one or more trade union commissioner (Croatian: sindikalni povjerenik). Trade unions whose members are employed by a particular employer may appoint or elect one or more trade union representatives (Croatian: sindikalni predstavnik).

Trade unions and their representatives within the undertaking have various statutory rights, including:

• staff rules: right to comment and right to challenge such rules before the court (in the absence of a workers’ council);
• election of workers’ councils: right to initiate the election process, to propose a list of candidates and, in case of illegality or irregularity of the elections, to demand that the court annul the elections;
• in the absence of a workers’ council: certain rights that are otherwise given to the workers’ council;
• dismissal or exclusion of workers’ council members: right to demand a judicial review of such a decision;
• extension of the scope of a collective agreement by decree of the Labour Minister: right to comment;
• lock-out: right to challenge such a measure before the courts and claim damages;
• inspection by the labour inspectorate: right to initiate such inspections;
• strike: right to initiate a strike; and
• trade unions are parties to the collective agreements in which they represent the interests of employees.

Collective agreements

Apart from these statutory rights the influence of trade unions is partly reflected in collective agreements. 

Strikes

Globally speaking, the Republic of Croatia does not suffer from major social unrest, strikes or other forms of interference in company operations by workers, trade unions and workers’ councils, unless such operations jeopardise the employees' rights under the collective bargaining agreements, staff rules, etc.

8.2. Workers’ councils

Workers' councils

In larger companies (of at least 20 employees), the employees´ interests are represented by a workers’ council, which is elected for a 4 year term. The right to elect and to be elected accrues to all employees of the same employer.

Number of workers' council members

The number of workers’ council members depends on the size of the workforce:

Employees' representatives in the supervisory board

If, in accordance with specific provisions, a body (supervisory board, management board or another appropriate body) that supervises business management is established in a company or a cooperative society, then one member of said body that supervises business management shall be a workers’ representative. If the same body is set up in a public institution, one member of said public institution’s body shall be an employees’ representative. 

Rights of information

The statutory rights of the workers’ council concern information, consultation and co-determination.  

The employer has to inform the workers’ council every 3 months in relation to the following issues: 

• business situation, results and work organisation; 
• expected business developments and their impact on the workers’ economic and social status; 

• trends and changes in salaries; 
• the extent of and the reasons for the introduction of overtime work; 
• the number and type of employees employed, employment structure (the number of fixed-term employees, employees at alternative workplaces, employees assigned by temporary employment agencies, employees temporarily posted to/from an associated company, etc.) as well as the employment structure by gender and the employment development and policy; 
• the number and type of employees who, before starting work for another employer, informed the parent employer about the concluded contract on additional work with another employer;  
• health protection and safety at work policy and measures taken in order to improve working conditions; 

• outcomes of work inspections and safety at work conditions; and 
• other issues with particular importance for the economic and social position of employees. 

Rights of consultation

The employer has to consult the workers’ council on the following issues: 

• staff rules; 
• recruitment plan, transfer and termination of employment; 
• expected legal, economic and social consequences that might arise for the employees from the transfer of employment contracts to a new employer; 
• measures in connection with the protection of health and safety at work; 
• introduction of new technologies and changes in the organisation and modes of work; 

• annual leave plan; 
• working hours schedule, including night-shift work;  
• collective redundancies and all other decisions that must be rendered in consultation with the workers’ council; and 
• appointing a person who is authorised to receive and resolve complaints related to the protection of employee dignity. 

Finally, the employer may not pass a decision without the prior consent of the workers' council on: 

• terminating the employment of a member of (or a candidate for) the workers’ council; 
• terminating the employment of an employee with diminished ability to work and of an employee under direct threat of physical disability; 
• terminating the employment of an employee who is older than 60, except for the employee who has reached the age of 65 and has 15 years of pensionable service; 

• terminating the employment of an employees´ representative on the supervisory board; 
• selecting persons for collective redundancy, except in cases when the employer has initiated or is conducting liquidation proceedings in accordance with specific provisions; 
• collecting, processing, using and forwarding personal information about workers to third parties; and 
• appointing a person authorised to supervise the administration of the personal information about the workers. 

Sanctions

Whereas failure of the employer to inform the workers’ council as required under the law is considered a misdemeanour, the failure to consult with the workers’ council results in the nullity of any action taken in this regard. 

Remedies for the employer

Whenever the consent of the workers’ council is required it can be supplemented by a decision of an arbitration body. 

8.3. Release from work to conduct workers’ council activities

6 hours per week

Each workers’ council member is entitled to receive 6 hours per week paid leave for workers’ council activities. This entitlement to paid leave can be transferred to other council members, so that in larger companies single workers’ council members may be entitled to be completely released from work. The workers’ council usually holds meetings during working hours.

8.4. Financial and/or technical assistance for workers’ council’s activities?

It is the employer´s obligation to secure the necessary room, staff, funds and other work conditions for the workers' council. However, the employer is not obliged to pay overtime for workers’ council activities after the regular working hours. 

8.5. Collective agreements and works agreements

Collective agreements and works agreements

Collective agreements are concluded between trade unions and the employer or an employers´ organisation. Apart from agreements with the trade unions the employer may also enter into agreements with the workers’ council (“works agreements”).

Duty to incorporate into employment agreements

In either case the agreement is only binding on the parties thereto, but the employer has the duty to incorporate the provisions of collective and works agreements, in so far as individual rights of employees are concerned.  

9.1. Employment disputes in general

Ordinary courts

Employment disputes are primarily tried by the ordinary courts. No special labour courts have existed up until now (except for in Zagreb). Some matters may be referred to special authorities (e.g. to the Administrative Court).

Arbitration

Arbitration is another possible way of resolving a labour dispute, but it is only available where the parties have agreed to this. 

9.2. Disputes related to collective agreements

Conciliation committee

Disputes which could result in a strike have to be resolved before a conciliation committee (“peace council”) unless the parties agree to an alternative method of dispute resolution. 

The conciliation procedure is conducted by a person chosen with the consent of both parties from a list established by the Economic and Social Council.

Economic and Social Council

The Economic and Social Council has been established pursuant to an agreement between the government, trade unions and employers' associations. Among other duties, this body prepares a list of conciliators and arbitrators. 

General background

The Croatian system of social security covers the following risks: maternity, age, sickness, invalidity and unemployment. 

10.1. Contributions for social insurance and taxes

Social security

Contributions for social insurance are calculated on the basis of the employee’s monthly wage and consist of the following amounts: 

• pension insurance:    20%  

• health insurance:     16.5%  

Taxes

In Croatia, taxes on income amount to 20% or 30% of the employee´s monthly wage. Additionally, a communal tax may be levied in some communities. 

10.2. Health insurance

Basic and supplementary health coverage

In Croatia, the state system consists of (compulsory) basic health coverage and an (optional) supplementary insurance coverage. The basic coverage provides for medical treatment as well as for monetary benefits. 

Private insurance companies

Apart from the state system, private insurance companies cover a variety of health services as set out in the individual insurance contract. 

10.3. State pensions

3-pillars system

The Croatian pension system consists of three pillars. The first pillar is based on the so-called “generational solidarity”, the second one on the individual savings. Both systems are compulsory in their nature (with some exceptions). The third pillar is based on voluntary savings.  

Regular pension

In Croatia, the required age for the regular pension is age 65 for men and is currently 63 years and 3 months for women (the prescribed age for women is being progressively increased at a rate of four months per year, and it will reach 65 years by 2027). The prescribed age for both sexes is being progressively increased at a rate of four months per year starting from 2028 and it will reach 67 years by 2033. Furthermore, the employee must have accumulated at least 15 years of service.

Early retirement

After 35 years of service men can claim an early retirement pension (women: currently 33 years and three months) provided they are at least 60 years (women: currently 58 years and three months) of age. The prescribed years of service and years of age are being progressively increased at a rate of four months per year, and this will reach 35 years of service and 62 years of age by 2033.  

Calculation of the pension

Basically, the key factors for the calculation of the pension (either ordinary or early) are the person's age, the duration of his pension scheme status, and his salary during his working life. 

Private pension funds

Since the pension reform in 2002 several private pension funds have been established in Croatia.

10.4. Unemployment benefits

Unemployment benefit

The state supports the unemployed through various employment incentive programs and monetary benefits. 

Unemployed persons must have done at least nine months of work within 24 months to be entitled to financial support. The amounts of unemployment benefit differ depending on the duration of entitlement to receive it as well as the employee’s average gross salary paid during the last three months of employment. 

The duration of the unemployment benefit depends on the time spent in work and ranges between 90 and 450 days. Unemployment benefits are not limited in time for persons with at least 32 years of service and who will become eligible for a regular pension within five years.