Recruiting Top Talent in Croatia

Croatian Top Talent

Locating and then recruiting top talent in an overseas territory is a major commitment for companies who have set their sights on Global Expansion – and one that encounters many obstacles.

The Republic of Croatia’s developing economy is proving an increasingly attractive option – and a tempting location for attracting top talent migrating from other countries, with its Adriatic coastline, mountains, lakes, forests, castles and rolling plains.

The Labor Ministry announced plans in April 2022 to attract recruits into the skills shortage sectors, such as Information Communications Technology, construction, health care, social welfare and highly-skilled professions such as medical practitioners, pharmacists and nurses.

So those foreign companies planning to find the right talent when they move into Croatia face concerns.

Where to begin?  This is where Bradford Jacobs’ global experience is vital for taking the smartest recruitment route into Croatia.

The Recruitment Process in Croatia

Croatia’s population of just over four million has declined over the past 20 years and includes a workforce that is also expected to drop in numbers due to an ageing workforce. However, it is a highly literate population with a skilled workforce. The recruitment drive will be focusing on boosting business services, distribution and transport, manufacturing, and utilities.

There are also gaps to be filled in computer programming, information technology, architecture and construction, and legal and accounting services.

Recruitment is the first stage of making your company operational and competitive in Croatia. There are many complications in moving staff into the country – in addition to the complexities of obtaining work visas and permits. To avoid these issues, it is vital to know where to locate the finest candidates for your company’s expansion plans.

Once recruited, companies must then consider the implications of handling payroll for their staff and dealing with the revenue and social insurance authorities. Foreign companies generally establish a limited liability subsidiary to undertake these tasks and must follow strict registration procedures. Requirements include:

• Checking with the Court Registry to choose a unique company name, which cannot include the word ‘Croatia’ or its derivatives without permission from the State authorities
• The parent company submits to the Registry its Articles of Association and declaration from its board of intention to open a subsidiary
• Applying to the Court Registry on Form Po. All IDs (in the case of foreigners, their passports) must be notarized, with all founders and signatories attending the notary in person
• The notary submits sealed documents to HITRO.HR and the National Bureau of Statistics with all necessary fees
• Completing the RPS Form to obtain registration for the relevant sector from the Bureau of Statistics
• Once registration is approved, HITRO.HR makes the incorporation documents available
• Opening a business bank account to deposit minimum initial share capital for a DOO of HRK 20,000 (€2,640, US$2,850)
• Registering with the relevant Ministry of Finance Tax Administration office, once the company is entered in the Court Register and with the National Bureau of Statistics
• Obtaining Value Added Tax ID and pin number from the Tax Administration by supplying incorporation documents and Form OIB (Personal Identification Number). Non-European Union members must have a fiscal representative to handle their VAT affairs
• Once registered, the Company Seal is issued on production of the Certificate of Incorporation

Legal Checks on Employees in Croatia

Scope: Employers cannot ask questions during the application and interview process that contravene the candidate’s rights under the Anti-Discrimination Act. This also applies to agencies carrying out checks on behalf of the employer. The applicant must advise the employer of any health condition that would compromise their ability to do the job or endanger the well-being of others.

Medical history: Employers can require applicants to undergo a medical examination at the employer’s cost, to check their health status.

References: Candidates are expected to provide verbal or written confirmation of references, previous employment, and educational qualifications.

Criminal records: Candidates cannot be asked to provide evidence of previous or pending criminal procedures unless required by specific laws attaining to certain occupations.

Required: Checks that the potential employee satisfies work permit, residency, and visa requirements

Basic Facts on Hiring in Croatia

Employment legislation in Croatia is generally covered by the Labor Act, which includes various requirements regarding hiring employees. These include:

• Employment contracts are in writing. Bi-lingual or multi-lingual contracts are allowed but must include a Croatian version
• The absence of a written contract does not invalidate the employment agreement
• Employers must provide written confirmation of the agreement before the employee starts work, or it will be assumed an indefinite contract is in place
• Employers risk a €13,300 (US$14,287) fine for non-compliance
• Minimum requirements of the contract are full details of both parties; description of the role and start date; working hours and breaks; salary and payment schedule; notice period and termination. The contract can simply reference relevant statutes to give this information
• The contract cannot diminish statutory rights or collective agreements to the detriment of the employee and must comply with the Labour Act and the Obligations Act
• Contracts are deemed to be indefinite unless a fixed-term contract is justified in specific circumstances, in which case successive fixed-term contracts cannot exceed three years, including the initial contract
• Probationary periods cannot exceed six months and can be terminated by the employer with seven days’ notice
• Employers must register employees with the Ministry of Finance’s Tax Administration to obtain their Personal Identification Number (OIB)
• Employees must also be registered with the Croatian Health Insurance Fund (HZZO) and the Croatian Pension Insurance Institute (HZMO)

After hiring and onboarding, employers must be aware of other considerations. Minimum standards apply to such as sick leave, working hours, maternity allowances, paid vacations, termination, severance, notice periods and social insurance payments. Other rules regulate workplace discrimination. Examples include:

• Working hours set by the Labor Act are generally 40 hours per week but can be adjusted if they average 40 hours over 12 months
• The Government-set minimum wage in 2022 was HRK 4,866 (€623.70, US$694) or HRK 56,640 (€7,484, US$8,082) based on 12 payments annually
• Employers withhold employee’s income tax and social insurance contributions and remit them to the authorities
• Maternity leave totals 98 days for women covered by the Croatian Health Insurance Fund (HZZO)