Hiring workers in Bosnia and Herzegovina usually means setting up a local entity. While this approach can reduce risk exposure, it can also be costly and time-consuming. That means it may not be practical for companies seeking quick and flexible hiring solutions.
Another option is to engage workers as independent contractors. This is a flexible and less costly alternative to entity setup, but it does come with a significant risk of misclassification, which could cause problems for your business. There is a simpler solution: engage employees through an employer of record, or EoR.
An employer of record (EoR) is a third-party entity set up to engage workers on behalf of other organisations. EoRs act as the legal employer of the workers they engage. That means they’re responsible for hiring and paying the workers, as well as ensuring compliance with local labour laws and regulations. Since working with an employer of record doesn’t require setting up a local legal entity, it’s a popular option for foreign companies wanting to hire in Bosnia and Herzegovina.
When you engage an employer of record in Bosnia and Herzegovina, it will become your workers’ official employer for tax and legal purposes. However, you’ll still retain full control of their day-to-day management. The EoR will take on key responsibilities to ensure compliance with local labour laws, including the proper classification of employees.
An employer of record in Bosnia and Herzegovina will also be responsible for drafting compliant, localised contracts for your employees in the local language. These will detail each employee’s salary, benefits, working hours and termination terms, in line with the local legal requirements. The EoR will also handle tax filing and contributions on your behalf.
Put simply, when you work with an employer of record in Bosnia and Herzegovina, they’ll take on the administrative burden of hiring employees so you can focus on growing your business.
Whether or not you choose to use an employer of record to hire employees in Bosnia and Herzegovina, you’ll need a thorough understanding of the rules and regulations that apply there. This will enable you to ensure compliance, protecting your business from risk while giving your Bosnian workers the smooth HR experience they expect. Read on to learn everything you need to know about hiring workers in Bosnia and Herzegovina.
With a highly educated workforce and lower labour costs than its Western European neighbours, Bosnia and Herzegovina is emerging as an exciting destination for business expansion. The country also boasts skilled professionals in IT and engineering and growing English fluency, particularly among younger workers. In addition, the country may soon be granted EU membership status, providing extensive opportunities for trade and cooperation.
However, hiring in Bosnia and Herzegovina also requires a solid understanding of some complex labour laws. To begin with, the country is divided into two main entities, the Federation of Bosnia and Herzegovina (FBiH) and Republika Srpska (RS), plus the Brčko District (BD), all of which have their own unique rules and regulations. Read on to learn more about hiring in Bosnia and Herzegovina.
Like many countries, Bosnia and Herzegovina has specific requirements for employment contracts. These must be concluded in writing and must usually be written in one of the country’s official languages. Salary information must be stated in the local currency, the Bosnia-Herzegovina Convertible Marka (BAM).
Employers hiring in Bosnia must deduct taxes from their employees’ salaries. Bosnian employees are also expected to pay taxes and social security contributions. Payroll taxes (including social security) typically amount to between 30.5% and 31% depending on the region. Employee income tax is charged at a flat rate of 10% across all regions.
Full-time working hours in Bosnia and Herzegovina are typically 40 hours per week, worked over five or six days. Each region of the country has its own specific rules governing things like overtime and rest days. Collective bargaining agreements may also have an impact on employees’ rights.
Employers in Bosnia and Herzegovina may want to conduct background checks on potential employees to confirm their suitability and verify information gathered during the recruitment process. There are certain rules and restrictions to be aware of — read on to find out what you need to know.
Employers in Bosnia and Herzegovina are required to check that the people they employ have the legal right to work in the country. Nationals from the European Economic Area (EEA) and Switzerland are entitled to work in Bosnia and Herzegovina but likely need a work permit or visa.
Other types of background checks that you may want to conduct as an employer in Bosnia and Herzegovina include criminal record checks, credit checks, and reference and education checks. Of these, the latter is by far the most common and is fully permissible in Bosnia and Herzegovina. However, it’s best practice to get consent from the candidate before proceeding.
While it’s also possible to conduct criminal record checks and credit checks in Bosnia and Herzegovina, they are typically only permitted for certain roles, such as those involving a high level of financial responsibility (for credit checks). Employers should ensure any background checks in Bosnia and Herzegovina are proportional and relevant and that the candidate has given their informed consent.
Before you hire employees in Bosnia and Herzegovina, you’ll need to assess whether that’s actually the best solution for your business. That means considering different options like engaging workers as independent contractors or even taking on agency workers to work on temporary projects. Here’s what you need to know about the main hiring options in Bosnia and Herzegovina.
Here are the main options available if you want to engage a worker in Bosnia and Herzegovina:
Misclassifying employees as independent contractors carries serious consequences in many countries, and Bosnia and Herzegovina is no exception. That’s because independent contractors are typically not entitled to the same employment rights and protections as employees. The tax authorities may also miss out on tax revenue when employees are disguised as independent contractors.
Whether a worker is counted as an employee or an independent contractor doesn’t just depend on the agreement they have signed. Instead, the distinction is based on a number of factors, such as the degree of control and direction the employer has over the worker. Other elements that may be considered include the workers’ level of integration into the employing organisation and their ability to manage their own workload independently.
Bosnia and Herzegovina has three official languages: Bosnian, Croatian, and Serbian. These are very similar and are often used interchangeably. Minority languages spoken in Bosnia and Herzegovina include Bulgarian, Italian, Ukrainian, Turkish, and German. These days, English is often used in business and legal contexts.
There are no statutory language requirements for employment documents such as contracts in Bosnia and Herzegovina. That means it’s possible to conclude them in English or another language as long as it’s understood by both the employer and the employee. However, Bosnian courts may require translations of official documents to ensure a clear understanding; You may want to consider providing bilingual contracts to your Bosnian employees to ensure the terms and conditions of employment are clear to all involved.
Foreign entities are technically able to engage workers in Bosnia and Herzegovina. However, they must meet certain employment and tax requirements, including registering with the relevant authorities. In some cases, it may be necessary to open a local legal entity for tax and legal reasons. Read on to learn more about the process of setting up payroll in Bosnia and Herzegovina.
Here are the steps to follow to set up payroll in Bosnia and Herzegovina:
It is necessary to establish a local bank account to process payroll and manage payments in Bosnia and Herzegovina. This ensures compliance with local financial regulations. Companies that want to avoid the hassle of opening a local bank account and managing payroll in Bosnia and Herzegovina should consider partnering with an employer of record (EoR) for payroll processing, tax compliance, and employee payments.
Hiring employees in Bosnia and Herzegovina usually means setting up a legal entity, which can be costly and time-consuming. Employers can avoid this hassle by working with an Employer of Record (EoR), like CXC.
Through our EoR solution, you can confidently hire employees in Bosnia and Herzegovina, without worrying about compliance issues. We’ll handle everything from payroll to benefits to employment contracts on your behalf — so all you have to think about is finding the right person for the job.
With our EoR solution, you can engage workers anywhere in the world, without putting your business at risk. No more worrying about local labour laws, tax legislation or payroll customs — we’ve got you covered.
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