In Croatia, the Labour Act governs the notice periods required for terminating employment contracts. The notice period is contingent on the employee's length of service with the employer and their age.

Notice Period Based on Length of Service

According to Article 84 of the Labour Act, the minimum notice period for termination of an employment contract by either the employer or the employee is determined by the employee's continuous service with the same employer:

• 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

It's important to note that these are the minimum required notice periods. The employment contract itself can stipulate a longer notice period, but it cannot be shorter than the legal minimums outlined above.

Increased Notice Period for Older Employees

Article 84a of the Labour Act extends the minimum notice period for employees aged 50 or above who have been continuously employed with the same employer for 20 years or more:

• Employees aged 50 and over: An additional two weeks to the standard notice period (e.g., 14 weeks for someone with 20 years of service)
• Employees aged 55 and over: An additional one month to the standard notice period (e.g., 15 weeks for someone with 20 years of service)

For example, an employee who has been continuously employed with a company for 25 years and is 52 years old would be entitled to a minimum notice period of 14 weeks (12 weeks + 2 weeks for being over 50 years old).

However, the extended notice period due to age only applies in cases of regular termination and not dismissal for misconduct. This legal framework ensures that employees with longer service receive a fair period of notice to find new employment.

In Croatia, severance pay, known as "otpremnina", is a form of compensation that employees may be entitled to when their employment contract is terminated by the employer. The rules for severance pay are based on the Labour Act of the Republic of Croatia.

Eligibility for Severance Pay

To be eligible for severance pay, employees must have at least two years of continuous service with the same employer, as stated in Article 110 of the Labour Act. Severance pay generally applies when the termination is initiated by the employer for business reasons or due to the employee's inability to perform their job. It also applies in cases of retirement. However, severance pay is not required if an employee is dismissed due to serious misconduct.

Calculation of Severance Pay

The calculation of the minimum severance payment is outlined in Article 111 of the Labour Act. It involves taking one-third (1/3) of the employee's average monthly salary paid during the last three months of employment and multiplying this base amount by the number of years of continuous service with that employer. The severance payment is capped at six times the average monthly salary, unless otherwise provided by law, collective agreement, or the employment contract.

For example, an employee with 5 years of service and an average monthly salary of 10,000 HRK over the last three months would have a base amount of 3,333.33 HRK (10,000 HRK / 3). This would then be multiplied by 5 years to give a severance pay of 16,666.65 HRK. This amount would be capped at six times the average salary if applicable.

Additional Notes

Employers may provide more generous severance pay benefits through collective agreements or individual employment contracts. Severance pay rights can generally be waived by an employee only after the employment relationship has ended, as per Article 12 of the Labour Act.

In Croatia, there are several ways an employment relationship can end. These include mutual agreement, expiration of a fixed-term contract, employee resignation, retirement, and termination by the employer.

Mutual Agreement

Both the employer and employee agree to terminate the contract, specifying the terms of the termination.

Expiration of a Fixed-Term Contract

The employment contract ends automatically on the agreed-upon date.

Employee Resignation

The employee voluntarily terminates the employment relationship, typically by providing written notice.

Retirement

The employee reaches the mandatory retirement age.

Termination by the Employer

The employer terminates the contract. This can be either ordinary termination, based on valid reasons (economic, personal incapability, etc.) with a legally mandated notice period, or extraordinary termination (summary dismissal), which is immediate termination for serious misconduct or breach of obligations by the employee.

Ordinary Termination by the Employer

Ordinary termination requires valid reasons, as specified by the Croatian Labor Act. These reasons can include business/economic reasons (restructuring, technological changes, etc.), the employee's inability to perform work duties, long-term justified absence from work, or violation of workplace rules (after a formal warning procedure, if applicable).

Extraordinary Termination by the Employer (Summary Dismissal)

Extraordinary termination is permitted only in cases of serious misconduct or breach of obligations. These can include criminal offenses related to work duties, disclosing business secrets, serious violations of work discipline, or prolonged unjustified absence.

Employee Resignation

Employees must provide written notice of resignation. The notice period cannot exceed 1 month unless a longer period is justified and agreed to in the employment contract. Employees do not need to justify their reasons for resigning.

Important Considerations

Termination notices, whether from the employer or employee, must be in writing for legal validity. Specific Croatian laws provide additional protection for categories of employees, such as pregnant women, those on parental leave, and workers with disabilities. Employers should carefully document the reasons for any termination (and warnings, if applicable) to mitigate the risk of legal challenges.