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Notice periods in Croatia
Termination of employment in Croatia
Post-termination restraints in Croatia
Employment waivers in Croatia
What is a transfer of undertakings in Croatia?
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Ending employment contract in Croatia
Whether you are handling regular terminations, transfers of undertakings, or employee offboarding, it’s essential to understand the legal frameworks that govern these processes. Ending an employment contract in Croatia requires careful attention to local labour laws to ensure compliance and minimise potential risks.
Employers must consider notice periods, severance pay, and post-termination restrictions, as well as the automatic transfer of employee contracts when a business is transferred. Being well-versed in these regulations helps protect your organisation and maintain positive relationships with your workforce.
Employment contracts without end date in Croatia
Companies should also be mindful of the implications when addressing either fixed-term contracts or employment contract without end dates. In Croatia, employment contracts are often open-ended, meaning they do not have a specific end date. These contracts require special attention when it comes to termination. Employment contracts without end dates offer employees significant legal protections, so employers must have valid and justifiable reasons for termination, such as serious misconduct, redundancy, or an employee’s inability to meet job requirements. Terminating such contracts involves legally defined procedures, including providing a written explanation for termination, adhering to mandatory notice periods, and ensuring any owed severance pay is properly calculated and delivered.
Employers must also respect all employee rights throughout the termination process to avoid legal penalties, disputes, or damage to the company’s reputation. Open-ended contracts often have broader implications for businesses, and failing to comply with labour laws can create unnecessary risks.
Notice periods in Croatia
Handling notice periods in Croatia is an important aspect of managing employment relationships while ensuring legal compliance. Employers and employees can mutually agree to modify notice periods or severance terms. Such agreements should be documented in writing to avoid misunderstandings.
In cases of severe misconduct, employers may terminate employment without notice. However, this must be substantiated with evidence and align with labour laws to avoid disputes.
Notice period for regular employees in Croatia
The length of a notice period for employees in Croatia depends on the employee’s length of service and is regulated by the Labour Act. Here is a breakdown of notice periods based on tenure:
- Up to 1 year of service: Two weeks of notice period.
- 2 years of service: Six weeks of notice period.
- 5 years of service: Eight weeks of notice period.
- 10 years of service: Ten weeks of notice period.
- Over 20 years of service: Twelve weeks of notice period.
Additional notice is required for older employees:
- Employees over 50 years of age: Two additional weeks of notice period.
- Employees over 55 years of age: Four additional weeks of notice period.
These provisions ensure that longer serving and older employees have sufficient time to transition to new roles or make alternative arrangements. Employers must provide written notice, clearly outlining the employee’s last working day and other relevant details. Failure to adhere to these notice period requirements can result in legal disputes or penalties.
Notice period for probationary employees in Croatia
During the probation period, the notice period is shorter to reflect the temporary nature of the arrangement. Employers must provide seven days’ notice if they wish to terminate an employee during probation.
Probation periods in Croatia are typically agreed upon in the employment contract and cannot exceed six months. If an employee is absent during probation due to reasons such as sick leave or maternity leave, the probation period may be extended accordingly. This flexibility ensures fair assessment of an employee’s performance.
Severance pay in Croatia
Severance pay is mandatory for employees who have worked for an employer for at least two years. The severance amount is calculated as 33% of the employee’s regular monthly salary for each year of service, with a cap of six months’ salary.
For example, if an employee has worked for five years and their monthly salary is 2,000 EUR, their severance pay would be approximately 3,300 EUR (33% of 2,000 EUR multiplied by five years). Employers must include this payment in the employee’s final settlement to comply with Croatian law.
Annual leave during the notice period
Employees are entitled to use any accrued but unused annual leave during their notice period, reducing the total working days required. Alternatively, employers can compensate the employee for unused leave credits.
Termination of employment in Croatia
The termination of employment process in Croatia follows clear and established guidelines that all employers must adhere to. By understanding the grounds for termination, adhering to proper notice periods, and ensuring compliance with severance pay requirements, employers can manage terminations in a way that protects both their business and their employees. It is essential to document all steps in the process and seek legal advice if needed to ensure that terminations are handled smoothly and lawfully.
Grounds for termination of employment in Croatia
In Croatia, there are several grounds for termination of employment that employers must be aware of. The most common reasons include redundancy, employee misconduct, lack of skills, and neglect of duties. However, it is important to note that in cases of dismissal due to misconduct or other serious infractions, employers need to follow strict procedures.
For instance, if an employee is dismissed due to misconduct or disobedience, the termination of employment must be preceded by a written notice. Moreover, documented meetings and discussions should be held to ensure transparency and fairness. The documentation should outline the employee’s failure to comply with workplace policies, as a dismissal without notice requires sufficient evidence to justify the action. This process is crucial in protecting your organisation from potential legal challenges.
Notice period during employee termination in Croatia
In Croatia, the notice period is a fundamental part of the termination process unless there is a valid cause for immediate dismissal. If an employer does not have sufficient grounds for dismissal without notice, a notice period is required by law. The length of this period varies based on the employee’s duration of employment.
For employees with less than two years of service, the notice period is at least two weeks. For employees with more than two years of service but less than five, the notice period extends to one month. Employees who have been with the company for five years or more are entitled to a notice period of two months.
Employers should be mindful that the notice period applies regardless of the reason for termination unless the employee’s actions justify an immediate dismissal. The termination of employment process must be handled with care to avoid any legal complications.
Post-termination restraints in Croatia
When an employee leaves your company, you might want to protect your business interests by imposing certain post-termination restraints. In Croatia, these restrictions, such as non-compete clauses and non-solicitation agreements, are often included in employment contracts to prevent employees from engaging in activities that could harm your business after the termination of their employment.
Non-compete clause in Croatia
A non-compete clause is a standard provision in many Croatian employment contracts, especially for senior employees or those with access to sensitive company information. In essence, this clause prohibits an employee from working for competitors or engaging in business activities that directly compete with their former employer’s business for a defined period after leaving the company.
Any non-compete clause must be explicitly agreed upon in writing by both the employer and the employee. It typically restricts the employee from working for a competitor or conducting competing business for up to two years after the termination of their employment.
For the clause to be enforceable, the employer is required to offer compensation during the restricted period, at a minimum of 50% of the employee’s average salary from the last three months before termination. If the employer does not provide this compensation, the non-compete clause may be considered invalid. Additionally, the clause becomes void if the employee terminates the contract due to the employer’s serious breach of obligations or if the employer dismisses the employee without just cause.
Employers should be cautious when drafting Croatia trade restraints to ensure they comply with legal requirements, including the employee’s compensation during the restricted period.
Non-solicitation of employees’ clause in Croatia
A non-solicitation of employees’ clause is another common post-termination restraint in Croatia. This clause prevents former employees from recruiting or attempting to recruit your staff for their new company or for a competitor after leaving your organisation.
This clause can be important for protecting your workforce from poaching, especially in industries where skilled employees are in high demand. However, like other post-termination restraints, a non-solicitation of employees’ clause must be reasonable in its scope and duration to be enforceable. Typically, these clauses are limited to one or two years after the employee’s departure from the company.
While there is no fixed compensation requirement for this type of clause, it is vital for employers to ensure it is not overly restrictive and aligns with Croatian labour law to avoid potential disputes.
Non-solicitation of clients’ clause in Croatia
The non-solicitation of clients’ clause is designed to prevent former employees from approaching your existing clients or customers with the intention of diverting business away from your company. This clause is particularly important in industries where customer relationships are crucial to business success.
In Croatia, this clause must also be clearly stated in the employment contract and must be reasonable in its duration and territorial scope. Like the non-compete clause, the non-solicitation of clients’ agreement can only be enforceable if it is agreed upon in writing. Additionally, it should be clear that the clause serves to protect legitimate business interests, such as client confidentiality or proprietary business relationships.
For this type of restraint to be valid, employers must ensure that the clause is not overly broad or disproportionate to the employee’s role or responsibilities. Courts in Croatia may invalidate clauses that are considered too restrictive or unfair.
Employment waivers in Croatia
Employment waivers and settlement agreements are common tools used to resolve disputes or clarify employment terms. However, employers need to understand the legal boundaries when asking employees to waive their rights. While waivers can be legally enforceable in many cases, there are important limitations and guidelines to ensure that these agreements are valid and comply with Croatian labour law.
To waive one’s rights in the context of an employment contract is defined by voluntarily giving up or relinquishing certain entitlements, such as claims for severance pay or unpaid bonuses. A common example is when an employee signs a settlement agreement to resolve a dispute with the employer, potentially agreeing not to pursue further legal action regarding a specific issue. However, waiving rights is not as simple as it may seem—employers must ensure that the waiver is fair and meets legal requirements.
In Croatia, waivers are generally enforceable, but there are key limitations. Employees may sign settlement agreements that address acquired rights, such as compensation for past wages or benefits. However, waiving rights related to future entitlements is typically not allowed. For example, an employee cannot waive their right to statutory holiday pay or minimum severance pay for potential future claims. These rights are protected under Croatian labour laws and cannot be relinquished through waivers.
One important consideration is the scope and enforceability of employment waivers in Croatia. While such agreements are legal, they must comply with specific provisions in Croatian employment regulations. For instance, any waiver must be voluntary, and the employee must have full knowledge of the rights they are relinquishing. Additionally, the waiver cannot be a means for employers to bypass statutory employment rights or obligations.
Employers should be cautious when drafting waiver agreements to avoid any legal disputes or challenges. It is essential to provide clear explanations to employees about what rights they are waiving and to ensure that the agreement does not violate their legal protections. Additionally, such agreements must be signed voluntarily, without coercion, and with appropriate legal advice to ensure their enforceability.
What is a transfer of undertakings in Croatia?
A transfer of undertaking refers to a situation where a business, or part of it, is transferred from one employer to another. This process can raise significant questions regarding employee rights, responsibilities, and the continuity of employment relationships.
The closure and transfer of undertaking are governed by the Labour Act. When a transfer occurs, all employment contracts are automatically transferred to the new employer, effective on the date of the transfer’s legal effect (Article 137, Labour Act). This means that employees continue their employment under the same terms and conditions, but with the new employer assuming the rights and obligations of the previous employer regarding those contracts.
This automatic transfer of employment contracts protects employees, ensuring that their jobs are not lost as a result of the business change. However, employers should be aware that certain conditions need to be met for the transfer to be legally recognised. The new employer is required to uphold the terms of the employment contracts, including salary, benefits, and other rights, unless both the employer and employee mutually agree to changes.
The legal framework around transfer of undertakings aims to protect employees’ job security during transitions, but it also places responsibilities on the new employer. Employers must be prepared for the practical implications of transferring staff, such as informing employees about the transfer and ensuring their rights are maintained.
Employers considering a transfer of undertaking in Croatia should also be aware of the potential for legal disputes. While the automatic transfer of employment contracts is a clear protection for employees, employers must manage communication with staff carefully to avoid misunderstandings or claims of unfair treatment. Additionally, employers need to be mindful of the collective agreements, if any, that apply to the transferring employees.
Minimise risk with our end-to-end employment solutions
There are many different ways an employment contract can come to an end. But whatever the situation, you need to understand the rules that cover the end of employment in Croatia — or you could end up facing legal issues.
Our solutions ensure your business is protected from risk when a relationship with a worker ends — whatever the reason. We can also help you to avoid missed opportunities by re-deploying talent where possible.
FAQ's
What are the ways employment can be terminated in Croatia?
Employment in Croatia can end by mutual agreement, when a fixed-term contract expires, through resignation or dismissal, or through extraordinary termination in serious circumstances. A mutual termination agreement must be concluded in writing.
An employer can dismiss an employee for business reasons, such as redundancy, if the employee is no longer able to perform the role, for misconduct or following an unsuccessful probation period where the legal requirements are met. Employees can also resign by giving the required notice.
Extraordinary termination may be used for serious misconduct or other circumstances where continuing the employment relationship is no longer reasonable. In these cases, different rules apply to notice and timing. Extraordinary termination takes effect without a notice period and must generally give within 15 days after the party seeking termination becomes aware of the fact on which it is based.
The reason employment is ending affects the steps the employer needs to follow, including whether notice, warnings, consultation or severance pay are required. Employers should therefore check the requirements for the specific type of termination before dismissing an employee.
What procedural rules govern termination of employment in Croatia?
When terminating an employee in Croatia, employers generally need to have a lawful reason, follow any required warning and consultation process, give the termination in writing and provide the correct notice and final payments.
For misconduct, the employee should normally receive a written warning and an opportunity to respond before dismissal, unless the circumstances justify a different approach. Employers may also need to consult the works council before making certain termination decisions. Additional requirements can apply to protected employees and collective redundancies.
The written termination should state the reason for dismissal where required and be properly delivered to the employee. An employer´s dismissal notice must generally explain the reasons for termination in writing. Employers also need to calculate the applicable notice period, payment for unused annual leave and any severance pay due.
The exact steps vary based on why the employee is being dismissed, so employers should check the requirements before communicating the termination.
What is the notice period for termination of employment in Croatia?
The statutory notice period in Croatia generally ranges from two weeks to three months, based mainly on how long the employee has worked for the employer.
The minimum notice periods are:
- Less than one year: two weeks.
- At least one year: one month.
- At least two years: six weeks.
- At least five years: two months.
- At least 10 years: two and a half months.
- At least 20 years: three months.
For employees with at least 20 years of service, the notice period increases by two weeks if they are aged 50 or over and by one month if they are aged 55 or over.
Different notice rules can apply during probation and in some misconduct cases. The minimum notice period for termination during an agreed probationary period is one week. Where an employee is dismissed through ordinary termination because of misconduct, the statutory notice period is generally reduced by half. An employment contract or collective agreement may also provide better notice terms for the employee.
What are the severance pay rules in Croatia?
Statutory severance is generally due when an employer terminates an employee after at least two years of continuous service, unless the dismissal is because of the employee’s conduct or another statutory exclusion applies. The minimum severance pay in Croatia is one third of the employee´s average monthly salary earned during the three months preceding termination for each completed year of service with that employer.
Unless a more favourable source provides otherwise, statutory severance is generally capped at six of those average monthly salaries. Employees meeting the statutory age and pension-service condition at 65 are among those for whom ordinary severance does not apply. Collective agreements, contracts or negotiated exits may provide more.
The severance calculation should be kept separate from notice pay, unused annual-leave compensation and ordinary outstanding earnings. For compliant termination of employment in Croatia, payroll should show what each payment represents. That prevents a lumpsum exit figure from obscuring whether the employee has received every statutory and contractual amount due.
What payments and documents are due to an employee at the end of employment in Croatia?
When employment ends in Croatia, the employee should receive any outstanding salary, compensation for unused annual leave, approved expenses or other amounts owed, and severance pay where applicable.
The employer must also complete the employee’s deregistration from compulsory pension and health insurance. Within 15 days after employment ends, the employer must return the employee’s documents, provide a copy of the social insurance deregistration and issue a certificate confirming the type of work performed and the length of employment. The certificate must not contain information that could make it more difficult for the employee to enter into a new employment relationship.
Any bonuses or other payments due under the employment contract, collective agreement or company policy should also be included in the final calculation where applicable. Employers should make sure the final pay, unused leave, severance and required documents are completed based on the employee’s termination date.
How do fixed-term employment contracts end in Croatia?
A fixed-term employment contract in Croatia usually ends automatically on the agreed end date or when the event specified in the contract occurs. The employer does not normally need to dismiss the employee when a valid fixed-term contract simply reaches its agreed end date. However, the employer still needs to complete final pay, compensate any unused annual leave and provide the required employment documents.
Ending a fixed-term contract before its agreed expiry date is different. Ordinary termination before the end date is generally possible only if the contract allows it and the requirements for termination are met. Extraordinary termination may still be available where its separate statutory conditions are satisfied. Employers should also be careful with extensions and renewals. If an employee continues working after the contract expires, or the fixed-term arrangement does not meet Croatian legal requirements, the employment may be treated as indefinite.
Are non-compete clauses enforceable in Croatia?
Yes. Post-employment non-compete clauses can be enforceable in Croatia, but they must meet specific legal requirements and generally cannot last longer than two years after employment ends.
The agreement must be in writing and should protect a legitimate business interest. The employer generally needs to pay the former employee compensation of at least 50% of their average salary from the three months before employment ended for the period covered by the restriction. However, a statutory exception to the compensation requirement may apply where the agreement contains only a contractual penalty and the employee was earning more than Croatia’s average salary when the agreement was concluded.
A non-compete is generally not binding on a minor or an employee who was earning less than the average salary in Croatia when the agreement was made.
Employers can waive the non-compete in writing if the restriction is no longer needed. The employer’s obligation to pay the agreed compensation generally ends three months after the written withdrawal is delivered to the employee. Before relying on a clause, employers should check that it meets the legal requirements and that the required compensation will be paid.
What is the written warning requirement before dismissal in Croatia?
Before dismissing an employee for misconduct through ordinary termination, the employer normally has to give a written warning about the breach and the possibility of dismissal if the behaviour continues. This warning is a procedural step in termination of employment in Croatia, unless circumstances make it unreasonable to expect the employer to issue one.
The employer should also normally give the employee an opportunity to present a defence before dismissal. A warning identifies the conduct, explains why it breaches employment obligations, states what improvement is required and makes the possible consequence clear. Vague criticism or an old warning about unrelated conduct may not support the later decision well.
The warning requirement is not a mandatory waiting period for every dismissal. Business redundancy and extraordinary termination follow different legal tests. Before relying on misconduct at the end of contract in Croatia, HR should confirm that the warning, evidence and employee response relate to the reason actually stated in the dismissal notice.
What enhanced protection do older workers have against dismissal in Croatia?
Older workers in Croatia can have longer notice periods and additional protection from dismissal, particularly if they are over 60 or have worked for the employer for 20 years or more.
Where a works council exists, an employer generally needs its prior consent before dismissing an employee over 60, although exceptions can apply. If the works council refuses consent, the employer may seek a court or arbitral decision replacing that consent in accordance with the statutory procedure.
Notice periods can also be longer for older employees with at least 20 years of service. The standard three-month notice period increases by two weeks for employees aged 50 or over and by one month for employees aged 55 or over.
Different rules apply once an employee reaches age 65 and has at least 15 years of pensionable service. Unless the employer and employee agree otherwise, the employment relationship generally ends when both conditions are met. Employers considering dismissal of an older employee should therefore check the employee’s age and length of service, as well as whether works council involvement is required.
What makes CXC the ideal partner for employment termination in Croatia?
CXC gives international employers local support to manage employee terminations in Croatia, from checking the requirements to handling final pay and employment documentation.
For employees engaged through CXC, our local team can help manage notice periods, final pay, unused annual leave, severance where applicable and the documents employees must receive when employment ends.
We can also support cases that need additional steps, including misconduct, works council involvement and employees with additional dismissal protections. Your HR team still manages the business or performance decision, while CXC helps with the local employment requirements.
With more than 30 years of workforce management experience and support across 100+ countries, CXC can also help businesses managing employees and terminations across multiple markets.
Speak to our team to learn more about managing employee terminations in Croatia with CXC.
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