Rivermate | Croatia flag


499 EUR per employee per month

Discover everything you need to know about Croatia

Hire in Croatia at a glance

Here ares some key facts regarding hiring in Croatia

Croatian Kuna
GDP growth
GDP world share
Payroll frequency
Working hours
40 hours/week

Overview in Croatia

Read more
  • Geography: Croatia features a diverse landscape with the Dinaric Alps, Pannonian Plain, and a stunning Adriatic coastline dotted with over a thousand islands. Notable national parks include Plitvice Lakes and Krka.

  • History: Initially settled by Illyrian tribes, followed by Greeks and Romans, Croatia has a rich history marked by various ruling empires. It became an independent nation after a war in the 1990s and joined the EU in 2013.

  • Society & Culture: Dominated by Croats, the nation has a strong Catholic influence. Croatia is known for its vibrant festivals like the Dubrovnik Summer Festival and is characterized by a welcoming populace.

  • Economy: Driven by tourism, industry, and services, Croatia's economy benefits from its EU membership and the recent adoption of the Euro. Key sectors include shipbuilding, food processing, and services, with tourism being a significant contributor to GDP.

  • Workforce and Skills: The Croatian workforce is well-educated, with many holding tertiary education and possessing multilingual skills, including English and German. There is a focus on STEM fields, indicating potential for innovation.

  • Sectoral Distribution: The service sector dominates, followed by industry. Emerging sectors with growth potential include technology and innovation, renewable energy, and logistics and transportation.

  • Workplace Culture: Croatian workplace culture is traditionally hierarchical but is evolving with younger generations favoring less rigid structures. The culture emphasizes family, with generous vacation policies and a growing acceptance of flexible work arrangements.

Rivermate | bulb icon

Get a payroll calculation for Croatia

Understand what the employment costs are that you have to consider when hiring Croatia

Employer of Record in Croatia

Rivermate is a global Employer of Record company that helps you hire employees in Croatia without the need to set up a legal entity. We act as the Employer of Record for your employees in Croatia, taking care of all the legal and compliance aspects of employment, so you can focus on growing your business.

How does it work?

When you hire employees in Croatia through Rivermate, we become the legal employer of your staff. This means that we take on all the responsibilities of an employer, while you retain the day-to-day management of your employees.

You as the company maintain the direct relationshiop with the employee, you allocate them the work and manage their performance.
Rivermate takes care of the local payrolling of the employee, the contracts, HR, benefits and compliance.

Responsibilities of an Employer of Record

As an Employer of Record in Croatia, Rivermate is responsible for:

  • Creating and managing the employment contracts
  • Running the monthly payroll
  • Providing local and global benefits
  • Ensuring 100% local compliance
  • Providing local HR support

Responsibilities of the company that hires the employee

As the company that hires the employee through the Employer of Record, you are responsible for:

  • Day-to-day management of the employee
  • Work assignments
  • Performance management
  • Training and development

Taxes in Croatia

Read more
  • Employer Contributions in Croatia: Employers contribute to pension insurance (15%), health insurance (16.5%), and unemployment insurance (1.7%) based on the employee's gross salary. The rate for employment injury and occupational disease insurance varies by industry and risk.

  • Optional Contributions: Employers can optionally contribute to the second pillar of the pension system and may need to pay fees to professional chambers or associations.

  • Employer Responsibilities: Employers must register with Croatian tax authorities and social security funds, calculate and remit taxes and contributions monthly, and maintain detailed records.

  • Employee Contributions: Employees contribute 5% to pension insurance (with a cap), 16.5% to health insurance, and 1.7% to unemployment insurance from their gross salary.

  • Tax System: Croatia employs a progressive income tax system, where higher incomes attract higher tax rates. The JOPPD form is used for combined income tax and social security reporting.

  • VAT System: The standard VAT rate is 25%, with reduced rates of 13% and 5% for specific services and goods. Foreign businesses may need to register for VAT depending on their activities in Croatia.

  • Incentives: Croatia offers various tax incentives for investments, R&D, specific sectors like technology parks and the film industry, and hiring from target groups. Businesses should consult local experts to navigate these incentives effectively.

Leave in Croatia

Read more

Croatian Labor Act and Holiday Observances

In Croatia, the Labor Act ensures that employees are entitled to a minimum of four weeks (20 working days) of paid annual leave each year. This leave accrues over time and cannot be taken immediately at the start of employment. The scheduling of annual leave requires mutual agreement between employer and employee, taking into account both company needs and employee preferences. Unused leave must be taken by June 30th of the following year.

Employees also receive their regular wages during their annual leave. Collective agreements may provide more generous leave entitlements, and employers must keep accurate records of leave accrual and usage.

Public Holidays in Croatia

Croatia celebrates various secular and religious holidays:

  • Secular: New Year's Day, Labor Day, Statehood Day, Anti-Fascist Struggle Day, Homeland Thanksgiving Day and Victory Day, and Independence Day.
  • Religious: Epiphany, Easter Monday, Corpus Christi, Assumption Day, All Saints' Day, Christmas Day, and St. Stephen's Day.

Other Types of Leave

  • Sick Leave: Up to 42 days with a valid medical certificate, partially or fully covered by the Croatian Institute for Health Insurance.
  • Maternity Leave: 48 weeks, with mandatory periods before and after childbirth, benefits provided by the Croatian Institute for Health Insurance.
  • Other Leaves: Includes paid leave for family deaths and potential unpaid or educational leave based on specific circumstances or agreements.

Benefits in Croatia

Read more

Croatia offers a robust set of employee benefits, mandated by law, to ensure social security and promote a healthy work environment. These include:

  • Social Security Benefits: Mandatory contributions to pension, health, and unemployment insurance.
  • Parental Leave: Paid maternity, paternity, and parental leave.
  • Paid Leave: Annual leave, public holidays, and sick leave.
  • Severance Pay: Entitlement based on length of service.
  • Notice Period: Required notice before termination, varying by tenure.
  • Overtime Pay: Compensation for hours worked beyond the standard.

Additional optional benefits provided by some employers include:

  • Supplementary Pension Contributions and Life Insurance for enhanced financial security.
  • Flexible Work Arrangements and Company Cars to promote work-life balance.
  • Meal Vouchers and Wellness Programs to invest in employee well-being.
  • Performance Bonuses, Employee Discounts, and Professional Development Opportunities for further employee engagement and growth.

The healthcare system is primarily supported by the Croatian Health Insurance Fund (HZZO), covering a wide range of services with options for supplementary private insurance to cover additional needs or reduce wait times.

The retirement system in Croatia is a multi-pillar system consisting of a mandatory public pension, a mandatory private pension plan, and an optional private pension plan, allowing for a tailored approach to retirement planning based on individual needs and preferences.

Workers Rights in Croatia

Read more

In Croatia, the Labor Act governs the termination of employment contracts, allowing for dismissal due to economic reasons, lack of qualifications, health issues, or gross misconduct. Notice periods for termination vary by length of employment, ranging from 2 weeks to over 3 months. Severance pay is also based on the duration of employment, with amounts increasing with longer service.

The Anti-Discrimination Act protects against discrimination on various grounds, including race, gender, age, and more. Victims can seek redress through the Ombudsman for Equality, Labor Inspectorate, civil courts, or criminal courts.

Employers are responsible for creating a non-discriminatory work environment, providing necessary training, and taking positive measures to promote equality. They must also ensure workplace safety by conducting risk assessments, implementing preventive measures, and providing a safe work environment. Employees have rights to a safe workplace, necessary information and training, and can refuse unsafe work.

Croatian law mandates a 40-hour workweek with regulations on overtime, and requires ergonomic practices to prevent work-related injuries. The Croatian Institute for Occupational Safety and the Labor Inspectorate enforce health and safety regulations, ensuring compliance and addressing violations.

Agreements in Croatia

Read more

In Croatia, employment agreements are divided into three primary types: Worker's Contract (Ugovor o Radu), Service Contract (Ugovor o Djelu), and Author's Contract (Autorski Ugovor), each with distinct characteristics and legal frameworks.

  • Worker's Contract (Ugovor o Radu): This is the standard form of employment agreement, governed by the Labour Act, which mandates inclusion of details such as personal identification, job description, salary, benefits, work hours, and termination procedures. It provides protections under Croatian labor law, including minimum wage, social security, and regulations on work hours and leave.

  • Service Contract (Ugovor o Djelu): Used when hiring a contractor for a specific task, this contract type offers more autonomy to the contractor and does not bind them with typical employment regulations like fixed work hours or mandatory leave.

  • Author's Contract (Autorski Ugovor): Specifically designed for the creation of intellectual property, this contract outlines terms related to rights ownership and compensation for authors creating works in fields like literature and art.

Additional elements commonly included in Croatian employment contracts are confidentiality and non-compete clauses, though these are subject to legal restrictions to ensure they do not overly restrict an employee's future employment opportunities. Non-compete clauses, for instance, are enforceable only under specific conditions such as being limited to two years post-employment and requiring financial compensation for the employee.

The probationary period in Croatian employment contracts can last up to six months, allowing both employer and employee to assess suitability. During this period, a shorter notice is required for termination, which can be executed without specifying a reason, provided it is not discriminatory.

Remote Work in Croatia

Read more
  • Croatian Telework Law (2022): Establishes that remote workers have the same rights as onsite employees, including minimum wage, vacation, and social security. Employment contracts must specify telework details such as work hours and data security measures. Employers are responsible for training in telework practices and ensuring occupational health and safety.

  • Technological Infrastructure: Croatia boasts a robust technological infrastructure, with widespread high-speed internet in urban areas and improving access in rural regions. Mobile coverage is extensive, and power stability is generally good, though surge protectors are recommended for remote workers.

  • Employer Responsibilities: Employers must provide clear communication tools and suitable performance evaluations for remote workers. They may also cover equipment and internet costs, promote work-life balance, and facilitate virtual team-building to combat isolation.

  • Flexitime and Job Sharing: The Labor Code allows negotiation of alternative work schedules (Article 82) and potentially job sharing under Article 8, though not explicitly mentioned in the law.

  • Equipment and Expense Reimbursements: Not mandated by law, but employers can agree to provide or reimburse these costs in employment contracts.

  • Data Protection and Privacy: Employers must adhere to GDPR guidelines, ensuring data security through technical measures and clear policies. Employees have rights to access and correct their data and expect confidentiality.

  • Best Practices for Data Security: Employers should minimize data collection, encrypt sensitive data, implement strong access controls, maintain regular backups, and have a plan for addressing data breaches.

Working Hours in Croatia

Read more
  • Standard Workweek in Croatia: Croatia's standard workweek is limited to 40 hours, typically spread over five days with 8-hour workdays.

  • Flexibility and Exceptions: Collective agreements can modify working hours, and part-time arrangements must adhere to the 40-hour limit. The Act on Labour Relations allows for working time redistribution but mandates compliance with laws protecting employee rights.

  • Overtime Regulations: Overtime is defined as work beyond 40 hours per week, with a cap of 10 hours weekly and an annual limit of 180 hours, extendable to 250 hours through collective agreements. Overtime pay must be at least 150% of the regular wage, and employers need written consent from employees for overtime, except in emergencies.

  • Rest Periods and Breaks: Employees are entitled to a 30-minute daily rest for workdays longer than 6 hours, included in the work hours. Additional 15-minute breaks are mandated for certain conditions, and flexibility in scheduling breaks is allowed.

  • Night and Weekend Work: Night shifts include work between 10 PM and 6 AM, with restrictions on average working hours and additional rest periods. Weekend work requires employee consent, mandates premium pay, and must be compensated with substitute rest days within two weeks.

Salary in Croatia

Read more

Understanding competitive salaries in Croatia is essential for attracting and retaining top talent. The average gross monthly salary nationally is around HRK 12,265, with regional variations such as higher wages in Zagreb and lower in Eastern Croatia. Salaries also vary significantly across different industries and are influenced by factors like experience and specific skills.

Resources like salary surveys, recruitment agencies, and government data help in assessing competitive salaries. The Croatian government sets a minimum wage annually, which is €840 per month as of January 1, 2024, with proportional adjustments for part-time workers. Tax-free allowances such as meal, performance bonuses, and holiday bonuses are available, enhancing take-home pay.

Employers in Croatia must comply with specific regulations regarding payment frequency, methods, and record-keeping. Salaries must be paid monthly via bank transfer, and employers are required to provide detailed payslips and maintain payroll records for at least five years post-employment. These practices ensure transparency and compliance in the payroll process.

Termination in Croatia

Read more

In Croatia, the Labour Act specifies the notice periods and severance pay conditions for terminating employment contracts. Notice periods vary based on the employee's length of service and age:

  • Notice Periods Based on Length of Service:

    • Less than 1 year: 2 weeks
    • 1 year: 4 weeks
    • 2 years: 6 weeks
    • 5 years: 8 weeks
    • 10 years: 10 weeks
    • 20 or more years: 12 weeks
  • Increased Notice Periods for Older Employees:

    • Employees aged 50 and over with 20+ years of service: Additional 2 weeks
    • Employees aged 55 and over with 20+ years of service: Additional 1 month

Severance pay eligibility requires at least two years of continuous service, and the amount is calculated based on one-third of the average monthly salary over the last three months, multiplied by the number of years of service, capped at six times the average monthly salary.

Employment can end through mutual agreement, expiration of a fixed-term contract, employee resignation, retirement, or termination by the employer (either ordinary for valid reasons or extraordinary for serious misconduct). Notice of termination must be in writing, and specific laws protect certain categories of employees, such as pregnant women and those on parental leave.

Freelancing in Croatia

Read more

Croatian labor law differentiates between employees and independent contractors, focusing on factors like subordination, working hours, and benefits to determine the nature of the working relationship. Misclassification can result in fines, back pay, and tax liabilities for employers. Independent contractors in Croatia enjoy flexibility but must handle their own taxes and benefits, and can choose between operating as freelancers or establishing a company. Key industries for freelancers include IT, creative sectors, and consulting. Intellectual property rights, such as copyrights, trademarks, and trade secrets, are crucial for freelancers to understand and manage. Tax regimes for freelancers vary, with options like self-employment with simplified taxes or regular profit tax for higher earners. Freelancers must also consider VAT obligations and additional insurance options to cover health, pension, and disability risks.

Health & Safety in Croatia

Read more

In Croatia, the Occupational Health and Safety Act governs workplace health and safety, detailing extensive responsibilities for employers and rights for employees. Employers are required to conduct risk assessments, provide safe working environments, ensure the use of Personal Protective Equipment (PPE), and engage in health monitoring and consultations with workers. Employees have the right to refuse unsafe work, access safety information, and participate in health and safety decision-making.

The Ministry of Labour, Pension System, Family and Social Policy, along with the Ministry of Health and the State Inspectorate, oversee the enforcement of these regulations. Workplace inspections are conducted based on risk assessments, and employers must address any identified violations within specified timeframes to avoid penalties.

The legislation also mandates employer responsibilities for training, emergency procedures, and the use of occupational health services. Workers are entitled to be informed about hazards, participate in safety procedures, and receive compensation for workplace injuries or illnesses through the Croatian Institute for Health Insurance (HZZO). The framework emphasizes a proactive approach to minimizing workplace hazards and ensuring a safe working environment.

Dispute Resolution in Croatia

Read more

Labor disputes in Croatia are managed through a specialized court system, including Municipal Courts, the High Commercial Court, and the Supreme Court. These courts handle a variety of employment-related disputes such as employment contracts, collective labor agreements, and workplace safety issues. The process involves filing a lawsuit, attempting conciliation, trial, judgment, and possible appeals.

Additionally, arbitration serves as an alternative dispute resolution mechanism, often preferred for its speed and flexibility. Arbitration panels, which can be ad hoc or institutional (like those under the Croatian Chamber of Economy), require a valid arbitration agreement and conclude with a binding award.

Croatia also conducts various compliance audits and inspections across sectors like labor, tax, and environmental protection to ensure adherence to laws and regulations. These inspections are crucial for maintaining fairness, protecting public interests, and promoting best practices. Non-compliance can lead to severe consequences including fines, business closures, and criminal charges.

Whistleblower protections in Croatia are robust, safeguarding individuals who report legal or regulatory violations from retaliation, and ensuring their anonymity under certain conditions.

Croatia adheres to international labor standards as a member of the EU and ILO, influencing its domestic labor laws and ensuring they align with global conventions and directives. This commitment helps protect workers' rights and fosters a fair business environment.

Cultural Considerations in Croatia

Read more
  • Communication Style: Croatians communicate in a moderately direct manner, emphasizing politeness and diplomacy to maintain group harmony. They often use indirect phrasing for negative feedback to avoid disrupting team cohesion.

  • Formality and Relationship Building: Croatian workplaces are formal, especially in initial interactions and with superiors. Building relationships and trust is crucial before progressing to business discussions, often involving social conversations or shared meals.

  • Non-Verbal Cues: Non-verbal communication is significant in Croatia. Maintaining eye contact shows respect, while open body postures indicate openness. Nodding is used to acknowledge listening, not necessarily agreement.

  • Negotiation Practices: Croatians prefer a patient and detailed approach in negotiations, valuing thorough understanding and mutual benefits. They start with reasonable offers and expect some degree of bargaining.

  • Hierarchical Business Structure: Croatian businesses have a hierarchical structure with a top-down decision-making process. Leaders combine authority with approachability, respecting the collectivistic culture that values structured authority and teamwork.

  • Statutory and Regional Holidays: Understanding national and regional holidays is essential for business operations in Croatia. National holidays often result in complete business closures, while regional celebrations might lead to partial closures or adjusted business hours.

Frequently Asked Questions for Employer of Record services in Croatia

What is the timeline for setting up a company in Croatia?

Setting up a company in Croatia involves several steps and can take anywhere from a few weeks to a couple of months, depending on the complexity of the business and the efficiency of the processes. Here is a detailed timeline for setting up a company in Croatia:

  1. Preparation and Documentation (1-2 weeks):

    • Business Plan: Develop a comprehensive business plan.
    • Legal Structure: Decide on the legal structure of the company (e.g., Limited Liability Company - d.o.o., Joint Stock Company - d.d.).
    • Name Reservation: Check the availability of the company name and reserve it.
    • Documentation: Prepare necessary documents, including the Articles of Association, identification documents, and proof of address.
  2. Notarization and Registration (1-2 weeks):

    • Notarization: Have the Articles of Association and other required documents notarized by a public notary.
    • Company Registration: Submit the notarized documents to the Commercial Court for registration. This process typically takes about 5-7 business days.
  3. Obtain a Company Identification Number (OIB) (1 week):

    • OIB Application: Apply for an OIB for the company and its directors at the Tax Administration Office. This usually takes a few days to a week.
  4. Open a Bank Account (1 week):

    • Bank Account: Open a corporate bank account in Croatia. This process can take about a week, depending on the bank's requirements and procedures.
  5. Initial Capital Deposit (1 week):

    • Deposit Capital: Deposit the initial share capital into the corporate bank account. The minimum share capital for a d.o.o. is HRK 20,000 (approximately EUR 2,600).
  6. Register for VAT and Social Contributions (1-2 weeks):

    • VAT Registration: Register for Value Added Tax (VAT) with the Tax Administration Office if the company’s annual turnover is expected to exceed HRK 300,000 (approximately EUR 40,000).
    • Social Contributions: Register the company and its employees for social security contributions with the Croatian Health Insurance Fund (HZZO) and the Croatian Pension Insurance Institute (HZMO).
  7. Obtain Business Licenses and Permits (Variable):

    • Licenses and Permits: Depending on the nature of the business, obtain any necessary licenses and permits from relevant authorities. The time required for this step can vary significantly based on the industry and specific requirements.
  8. Register with the Croatian Bureau of Statistics (1 week):

    • Statistical Registration: Register the company with the Croatian Bureau of Statistics to obtain a company identification number for statistical purposes.
  9. Commence Operations:

    • Once all the above steps are completed, the company can commence its operations in Croatia.

Overall, the timeline for setting up a company in Croatia can range from 4 to 8 weeks, assuming there are no significant delays or complications. Using an Employer of Record (EOR) service like Rivermate can significantly streamline this process by handling many of the administrative and compliance-related tasks, allowing you to focus on your core business activities.

Who handles the filing and payment of employees' taxes and social insurance contributions when using an Employer of Record in Croatia?

When using an Employer of Record (EOR) in Croatia, the EOR, such as Rivermate, handles the filing and payment of employees' taxes and social insurance contributions. This includes the calculation, withholding, and remittance of income tax, as well as contributions to the Croatian social security system, which covers health insurance, pension insurance, and unemployment insurance. The EOR ensures compliance with Croatian tax laws and regulations, thereby relieving the client company of the administrative burden and complexities associated with local payroll and tax compliance. This allows the client company to focus on its core business activities while ensuring that all legal obligations related to employee compensation are met accurately and timely.

Is it possible to hire independent contractors in Croatia?

Yes, it is possible to hire independent contractors in Croatia. However, there are several important considerations to keep in mind:

  1. Legal Framework: Independent contractors in Croatia are governed by the Croatian Civil Obligations Act, which outlines the terms and conditions under which independent contractors can operate. This includes the nature of the contract, payment terms, and the rights and obligations of both parties.

  2. Classification: It is crucial to correctly classify workers as independent contractors rather than employees. Misclassification can lead to legal issues, including fines and back payments for taxes and social security contributions. Independent contractors should have a significant degree of autonomy, control over their work, and should not be integrated into the company's regular operations in the same way as employees.

  3. Taxation: Independent contractors are responsible for their own tax filings and social security contributions. They must register with the Croatian Tax Administration and obtain a personal identification number (OIB). Contractors are required to pay income tax, which is progressive and can range from 20% to 30%, depending on their income level.

  4. Social Security: Independent contractors must also contribute to the Croatian social security system. This includes contributions to pension insurance, health insurance, and employment insurance. The rates and obligations can vary, so it is important for contractors to stay informed about their responsibilities.

  5. Contractual Agreement: A well-drafted contract is essential when hiring independent contractors in Croatia. The contract should clearly define the scope of work, payment terms, duration, confidentiality clauses, and termination conditions. This helps in avoiding disputes and ensures that both parties are clear about their obligations.

  6. Compliance: Companies hiring independent contractors in Croatia must ensure compliance with local labor laws and regulations. This includes respecting working hours, health and safety standards, and other relevant legal requirements.

Using an Employer of Record (EOR) service like Rivermate can simplify the process of hiring independent contractors in Croatia. An EOR can help with:

  • Compliance: Ensuring that all legal and regulatory requirements are met, reducing the risk of misclassification and legal issues.
  • Payroll Management: Handling payments, tax withholdings, and social security contributions, ensuring that contractors are paid accurately and on time.
  • Contract Management: Drafting and managing contracts to ensure they are legally sound and protect the interests of both parties.
  • Local Expertise: Providing insights and guidance on local labor laws and practices, helping companies navigate the complexities of the Croatian market.

By leveraging an EOR service, companies can focus on their core business activities while ensuring that their engagement with independent contractors is compliant and efficient.

What is HR compliance in Croatia, and why is it important?

HR compliance in Croatia refers to the adherence to the country's labor laws, regulations, and standards that govern employment practices. This includes a wide range of legal requirements such as employment contracts, working hours, wages, benefits, health and safety standards, termination procedures, and employee rights. Ensuring HR compliance is crucial for several reasons:

  1. Legal Requirements: Croatian labor laws are comprehensive and cover various aspects of employment. Companies must comply with these laws to avoid legal penalties, fines, and potential lawsuits. Non-compliance can result in significant financial and reputational damage.

  2. Employee Rights and Protections: Compliance ensures that employees' rights are protected. This includes fair wages, safe working conditions, and protection against unfair dismissal. Adhering to these standards helps in maintaining a motivated and productive workforce.

  3. Avoiding Disputes: Proper HR compliance helps in preventing disputes between employers and employees. Clear policies and adherence to legal standards reduce the risk of misunderstandings and conflicts, which can disrupt business operations.

  4. Reputation Management: Companies that are known for complying with labor laws and treating their employees fairly are more likely to attract and retain top talent. This enhances the company's reputation both locally and internationally.

  5. Operational Efficiency: Compliance with HR laws ensures that business operations run smoothly. It helps in standardizing processes, reducing administrative burdens, and ensuring that all employment practices are consistent and fair.

  6. Global Standards: For multinational companies operating in Croatia, HR compliance ensures that they meet both local and international standards. This is particularly important for maintaining global consistency and meeting the expectations of international stakeholders.

Using an Employer of Record (EOR) like Rivermate can significantly simplify HR compliance in Croatia. An EOR takes on the responsibility of ensuring that all employment practices adhere to local laws and regulations. This includes managing payroll, benefits, taxes, and other HR functions. By partnering with an EOR, companies can focus on their core business activities while ensuring that they remain compliant with Croatian labor laws. This not only reduces the risk of legal issues but also enhances operational efficiency and employee satisfaction.

What are the costs associated with employing someone in Croatia?

Employing someone in Croatia involves several costs that employers need to consider. These costs can be broadly categorized into direct compensation, social security contributions, and other statutory benefits. Here’s a detailed breakdown:

  1. Gross Salary: This is the primary cost and includes the employee's base salary before any deductions. The gross salary is subject to income tax and social security contributions.

  2. Social Security Contributions: Employers in Croatia are required to make social security contributions on behalf of their employees. These contributions are divided into several categories:

    • Pension Insurance: Employers contribute 15% of the gross salary to the first pillar of the pension system.
    • Health Insurance: Employers contribute 16.5% of the gross salary for health insurance.
    • Employment Fund: Employers contribute 1.7% of the gross salary to the employment fund.
    • Occupational Health and Safety: Employers contribute 0.5% of the gross salary for occupational health and safety.
  3. Income Tax: While income tax is deducted from the employee's salary, it is the employer's responsibility to withhold and remit this tax to the authorities. The income tax rates in Croatia are progressive, ranging from 20% to 30%, depending on the income bracket.

  4. Surtax: In addition to income tax, some cities in Croatia impose a local surtax on income tax. For example, Zagreb has a surtax rate of 18%. This surtax is also withheld from the employee's salary but managed by the employer.

  5. Other Mandatory Contributions: Employers may also need to contribute to other mandatory funds, such as the Croatian Employment Service and the Croatian Health Insurance Fund, depending on specific circumstances and local regulations.

  6. Additional Benefits: Employers often provide additional benefits such as meal allowances, transportation allowances, and holiday bonuses. While not always mandatory, these benefits are common and can add to the overall employment cost.

  7. Severance Pay: In the event of termination, Croatian law mandates severance pay for employees who have been with the company for at least two years. The amount depends on the length of service and the terms of the employment contract.

  8. Administrative Costs: Managing payroll, compliance, and other HR functions can incur additional administrative costs. These include costs for payroll software, HR personnel, and legal compliance services.

Using an Employer of Record (EOR) like Rivermate can help manage these costs effectively. An EOR handles all aspects of employment, including payroll, tax compliance, and benefits administration, ensuring that all statutory obligations are met. This can save time and reduce the risk of non-compliance, which can be costly for businesses unfamiliar with Croatian employment laws.

What legal responsibilities does a company have when using an Employer of Record service like Rivermate in Croatia?

When a company uses an Employer of Record (EOR) service like Rivermate in Croatia, the legal responsibilities are significantly streamlined, but there are still some key aspects to be aware of:

  1. Compliance with Local Labor Laws: The EOR ensures that all employment contracts, payroll, benefits, and terminations comply with Croatian labor laws. This includes adherence to the Croatian Labor Act, which governs employment relationships, working hours, overtime, and employee rights.

  2. Taxation and Social Contributions: The EOR is responsible for managing and remitting all necessary taxes and social contributions on behalf of the employees. This includes income tax, health insurance, pension contributions, and other mandatory social security payments as required by Croatian law.

  3. Employment Contracts: The EOR will draft and manage employment contracts in accordance with Croatian legal requirements. These contracts must include specific details such as job description, salary, working hours, and termination conditions.

  4. Employee Benefits: The EOR ensures that employees receive all mandatory benefits as per Croatian regulations, such as paid leave, maternity/paternity leave, and any other statutory benefits. They may also manage additional benefits as agreed upon in the employment contract.

  5. Work Permits and Visas: If the company is hiring foreign nationals, the EOR will handle the process of obtaining necessary work permits and visas, ensuring compliance with Croatian immigration laws.

  6. Termination and Severance: The EOR manages the termination process, ensuring that it complies with Croatian labor laws, which include specific notice periods and severance pay requirements. They handle all necessary documentation and legal procedures to mitigate the risk of wrongful termination claims.

  7. Health and Safety Compliance: The EOR ensures that the workplace complies with Croatian health and safety regulations, providing a safe working environment for employees.

  8. Data Protection: The EOR must comply with the General Data Protection Regulation (GDPR) as it applies in Croatia, ensuring that employee data is handled securely and in accordance with privacy laws.

  9. Dispute Resolution: In case of any employment disputes, the EOR will manage the resolution process, ensuring compliance with Croatian labor laws and minimizing legal risks for the company.

By using an EOR like Rivermate in Croatia, companies can focus on their core business activities while the EOR handles the complexities of local employment laws and regulations. This reduces the administrative burden and legal risks associated with international hiring.

Do employees receive all their rights and benefits when employed through an Employer of Record in Croatia?

Yes, employees in Croatia receive all their rights and benefits when employed through an Employer of Record (EOR) like Rivermate. An EOR ensures compliance with local labor laws and regulations, which is crucial in a country like Croatia where employment laws are comprehensive and protective of workers' rights.

Here are some key aspects of how an EOR ensures employees receive their rights and benefits in Croatia:

  1. Employment Contracts: Croatian labor law mandates written employment contracts that outline the terms and conditions of employment. An EOR ensures that these contracts are compliant with local laws, including details on job description, salary, working hours, and other essential terms.

  2. Minimum Wage and Salary: The EOR ensures that employees are paid at least the minimum wage as stipulated by Croatian law. They also handle payroll processing, ensuring timely and accurate payment of salaries, including any bonuses or overtime pay.

  3. Social Security Contributions: In Croatia, both employers and employees must contribute to social security. An EOR manages these contributions, ensuring that the correct amounts are deducted and paid to the relevant authorities, covering health insurance, pension, and unemployment insurance.

  4. Working Hours and Overtime: Croatian labor law regulates working hours, including maximum weekly hours and overtime. An EOR ensures compliance with these regulations, including proper compensation for overtime work.

  5. Leave Entitlements: Employees in Croatia are entitled to various types of leave, including annual leave, sick leave, maternity/paternity leave, and public holidays. An EOR ensures that employees receive their full leave entitlements as per Croatian law.

  6. Health and Safety: Croatian law requires employers to provide a safe working environment. An EOR ensures compliance with health and safety regulations, including necessary training and workplace assessments.

  7. Termination and Severance: Croatian labor law provides specific guidelines for termination of employment, including notice periods and severance pay. An EOR ensures that any termination processes are handled in compliance with these laws, protecting the rights of the employee.

  8. Dispute Resolution: In case of any employment disputes, an EOR provides support in resolving issues in accordance with Croatian labor laws, ensuring fair treatment of employees.

By using an EOR like Rivermate, companies can ensure that their employees in Croatia receive all the rights and benefits they are entitled to under local law. This not only helps in maintaining compliance but also contributes to employee satisfaction and retention.

How does Rivermate, as an Employer of Record in Croatia, ensure HR compliance?

Rivermate, as an Employer of Record (EOR) in Croatia, ensures HR compliance through a comprehensive understanding of local labor laws, regulations, and best practices. Here are the key ways Rivermate achieves this:

  1. Local Expertise and Knowledge: Rivermate employs local HR professionals who are well-versed in Croatian labor laws and regulations. This local expertise ensures that all employment practices are compliant with national standards, including contracts, benefits, and termination procedures.

  2. Employment Contracts: Rivermate ensures that all employment contracts are drafted in accordance with Croatian labor laws. This includes specifying terms of employment, job descriptions, working hours, salary, benefits, and termination conditions. They ensure that contracts are clear, legally binding, and protect both the employer and the employee.

  3. Payroll Management: Rivermate handles payroll processing in compliance with Croatian tax laws and social security regulations. They ensure accurate calculation and timely payment of salaries, taxes, and social contributions. This includes managing income tax withholdings, health insurance, pension contributions, and other statutory deductions.

  4. Tax Compliance: Rivermate ensures that all tax obligations are met, including corporate taxes, VAT, and employee income taxes. They stay updated on any changes in tax legislation and adjust their processes accordingly to maintain compliance.

  5. Benefits Administration: Rivermate manages employee benefits in line with Croatian regulations, including health insurance, pension plans, and other statutory benefits. They also offer additional benefits that may be customary or required in the local market, ensuring competitive and compliant compensation packages.

  6. Labor Law Adherence: Rivermate ensures compliance with Croatian labor laws regarding working hours, overtime, rest periods, and leave entitlements. They monitor and enforce adherence to regulations on maximum working hours, mandatory breaks, annual leave, sick leave, and parental leave.

  7. Employee Rights and Protections: Rivermate upholds employee rights as mandated by Croatian law, including anti-discrimination policies, workplace safety standards, and fair treatment practices. They provide training and resources to ensure a safe and equitable work environment.

  8. Termination and Severance: Rivermate manages the termination process in compliance with Croatian labor laws, ensuring that any dismissals are conducted fairly and legally. They handle severance payments, notice periods, and any required documentation to mitigate legal risks.

  9. Regulatory Updates: Rivermate continuously monitors changes in Croatian employment laws and regulations. They proactively update their policies and procedures to ensure ongoing compliance, reducing the risk of legal issues for their clients.

  10. Documentation and Record-Keeping: Rivermate maintains accurate and up-to-date records of all employment-related documents, including contracts, payroll records, tax filings, and compliance reports. This meticulous record-keeping ensures that all legal requirements are met and provides a clear audit trail.

By leveraging Rivermate's EOR services, companies can confidently expand their operations in Croatia, knowing that all HR and employment practices are fully compliant with local laws and regulations. This allows businesses to focus on their core activities while minimizing the risks associated with non-compliance.

What options are available for hiring a worker in Croatia?

In Croatia, employers have several options for hiring workers, each with its own set of legal requirements and administrative processes. Here are the primary methods:

  1. Direct Employment:

    • Permanent Contracts: These are open-ended contracts that provide job security and benefits as per Croatian labor laws. They are subject to strict regulations regarding termination and employee rights.
    • Fixed-Term Contracts: These contracts are for a specified period and are often used for temporary projects or seasonal work. Croatian law limits the duration and renewal of fixed-term contracts to prevent abuse.
    • Part-Time Contracts: These contracts are for employees who work fewer hours than full-time employees. They must be provided with the same rights and benefits on a pro-rata basis.
  2. Temporary Agency Work:

    • Employers can hire workers through temporary employment agencies. The agency is the legal employer, while the worker performs tasks for the client company. This can be a flexible solution for short-term needs or project-based work.
  3. Freelancers and Independent Contractors:

    • Hiring freelancers or independent contractors can be suitable for specific projects or tasks. However, it is crucial to ensure that the relationship does not resemble an employment relationship to avoid legal complications.
  4. Internships and Apprenticeships:

    • These programs are designed for students or recent graduates to gain work experience. They are often governed by specific agreements and regulations to ensure fair treatment and learning opportunities.
  5. Employer of Record (EOR) Services:

    • Using an Employer of Record (EOR) like Rivermate can simplify the hiring process in Croatia. An EOR acts as the legal employer on behalf of the client company, handling all employment-related responsibilities such as payroll, taxes, benefits, and compliance with local labor laws. This allows companies to quickly and compliantly hire workers in Croatia without establishing a legal entity in the country.

Benefits of Using an Employer of Record in Croatia:

  1. Compliance with Local Laws:

    • Croatian labor laws are complex and include specific regulations regarding contracts, working hours, termination, and employee benefits. An EOR ensures full compliance with these laws, reducing the risk of legal issues and penalties.
  2. Cost and Time Efficiency:

    • Setting up a legal entity in Croatia can be time-consuming and costly. An EOR allows companies to bypass this process, enabling faster market entry and reducing administrative burdens.
  3. Payroll and Tax Management:

    • The EOR handles all payroll processing, tax withholdings, and social security contributions, ensuring accuracy and compliance with Croatian regulations.
  4. Employee Benefits Administration:

    • An EOR manages employee benefits, including health insurance, pensions, and other statutory requirements, ensuring that employees receive their entitled benefits.
  5. Focus on Core Business Activities:

    • By outsourcing employment responsibilities to an EOR, companies can focus on their core business activities and strategic goals, rather than getting bogged down by HR and administrative tasks.
  6. Flexibility and Scalability:

    • An EOR provides the flexibility to scale the workforce up or down based on business needs without the long-term commitments and complexities associated with direct employment.

In summary, while there are various options for hiring workers in Croatia, using an Employer of Record like Rivermate offers significant advantages in terms of compliance, efficiency, and flexibility, making it an attractive option for companies looking to expand their operations in Croatia.

Rivermate | A 3d rendering of earth

Hire your employees globally with confidence

We're here to help you on your global hiring journey.