Employer of Record in Croatia

Hiring independent contractors has boomed in popularity because of the cost savings and flexibility they offer. It can be a great option if you require niche skills or short-term project support. Contractors allow businesses to access specialized skills quickly, without the time and cost of setting up a local entity.

However, it’s important to know the limits of this model: contractors are not a substitute for full-time employees. Relying on them for ongoing, long-term roles can create serious compliance risks, including employee misclassification, which can lead to fines, back taxes, and reputational damage.

Playroll’s contractor management solutions make it simple to compliantly engage, onboard, and pay contractors around the world. We provide clear visibility into agreements, streamline payments, and reduce compliance risks – so you can focus on getting the work done. And when you’re ready to take the next step, we can help seamlessly convert contractors into full-time employees through our global Employer of Record service.

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

Employment Contract Requirements

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

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

Onboarding Process

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

Working Hours in Croatia

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

Overtime in Croatia

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

Probation Period in Croatia

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

Hiring in Croatia means navigating local labor laws, mandatory employee benefits, payroll taxes, and strict employment regulations. These requirements aren’t always intuitive, especially if your team lacks in-country legal or HR expertise. An Employer of Record steps in as the legal employer for your hires, managing all compliance-related responsibilities. This includes issuing locally compliant contracts, registering employees with relevant authorities, processing payroll, and handling social security contributions and taxes in line with national laws.

By handing over these complexities to an EOR, your business avoids costly compliance errors and the time required to master local employment standards. You can focus on growing your team and operations while trusting that the legal and administrative foundation is solid. Whether you're making one strategic hire or building out an entire team, the EOR keeps you compliant, removes guesswork, and reduces the risk of legal or financial penalties, without requiring you to open a legal entity or maintain a local HR team.

Fiscal Year in Croatia

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

Payroll Cycle in Croatia

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

Minimum Wage in Croatia

Croatia's minimum wage is set at €970 gross per month. This increase, effective from January 1, 2025, represents a 15.5% rise from the previous year's minimum wage of €840.

It's important to note that the minimum wage is calculated on a gross basis and is intended for full-time employment, typically defined as a 40-hour workweek. Additional compensations for overtime, night shifts, or work on public holidays are not included in this minimum wage.

Bonus Payments in Croatia

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

Employer Tax Contributions

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

Employee Payroll Tax Contributions

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

Individual Income Tax Contributions

The local self-government units can choose two progressive tax rates between 15% and 32%. The actual ranges depend on the size of the municipality/city.

Pension in Croatia

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

Running payroll in Croatia is complex, especially when you're hiring without a local entity. Local laws determine everything from tax withholdings and reporting deadlines to benefit contributions and currency requirements. Missteps can lead to fines, payment delays, or unhappy employees. An Employer of Record takes this burden off your plate by handling the full payroll process. Acting as the legal employer, the EOR ensures you remain compliant with all payroll-related obligations, while still allowing you to manage your team’s day-to-day work and performance.

Key Ways an EOR Supports Payroll in Croatia:

• Compliance Assurance: Ensures payroll aligns with local tax laws, labor regulations, and statutory deadlines.
• Payroll Processing & Tax Management: Calculates salaries, applies correct tax withholdings, and submits required reports.
• Benefits & Social Security Contributions: Manages employer obligations for pensions, health insurance, and other legal entitlements.
• Contract Generation & HR Administration: Drafts compliant employment contracts and supports onboarding, terminations, and HR tasks.
• Currency Payments: Issues timely salary payments in local currency, ensuring employees are paid accurately and on time.

In Croatia, work permits and visas are crucial for employers looking to hire foreign workers. Non-EU/EEA nationals must obtain specific permits to work legally. The key types of work permits and visas include the Temporary Residence Permit with Work Authorization for standard employment lasting up to one year, the EU Blue Card designed for highly skilled professionals valid for up to four years, and the Work Registration Certificate for short-term work assignments up to 90 days.

Employers must complete the labor market test, submit the required documentation, and comply with Croatian labor regulations to sponsor and integrate foreign employees successfully.

Mandatory Leave Entitlement in Croatia

The annual leave entitlement in Croatia is at least 4 weeks (20 working days) for a full time worker. Public holidays and statutory non-working days are not included in the annual leave.

Public Holidays In Croatia

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

Paid Time Off in Croatia

Employees in Croatia are entitled to a minimum of 4 weeks (20 working days) of paid vacation annually after six months of employment. Compensation during annual leave is based on the average salary from the last three months, and certain individuals, such as minors and those exposed to harmful impacts, qualify for an extended annual leave of 5 weeks (25 days). Any unused part of leave must be utilized within 30 June of the following year.

Maternity Leave In Croatia

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

Paternity Leave In Croatia

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

Sick Leave In Croatia

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

Parental Leave In Croatia

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

Administering employee benefits in Croatia requires more than just offering a standard package. Local labor laws often mandate specific entitlements, from health insurance to paid leave, and the rules can change without warning. Croatia also has unique standards for what an attractive, competitive benefits package looks like. For businesses without in-country expertise, meeting these obligations and expectations can quickly become risky and expensive. An Employer of Record acts as your compliance partner, ensuring all benefits are provided according to the latest legal requirements and without administrative strain on your internal team.

Beyond compliance, an EOR brings clarity and consistency to a process that’s often complex and fragmented. They handle enrollments, ensure accurate employer contributions, manage communications with local providers, and keep everything properly documented. This means employees get what they’re entitled to, and you avoid the headache of navigating benefits systems in a foreign market. Whether you're hiring one person or building a larger team, an EOR provides a clear, dependable structure that lets you offer competitive benefits without taking on unnecessary risk or workload.

Termination Process in Croatia

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

Notice Period in Croatia

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

• During probation: 7 days notice
• Less than 1 year of service: 2 weeks notice
• 1 year: 1 month notice
• 2 years of service: 1 month and 2 weeks notice
• 5 years of service: 2 months notice
• 10 years of service: 2 months and 2 weeks notice
• 20 years of service: 3 months notice
• Employees over 50 years: additional 2 weeks
• Employees over 55 years: additional 4 weeks

Severance in Croatia

In Croatia, the amount of severance pay depends on the duration of the employee's service. Individuals with two or more years of employment receive compensation equivalent to 1/3 of their average monthly salary in the last three months before termination for each year of service, capped at a maximum of six months' salary.