Croatia Employment Guide

Navigating Employment Termination in Croatia: A Guide for International HR

Terminating an employment relationship in Croatia requires careful adherence to a complex legal framework. Unlike some jurisdictions, employers cannot terminate contracts at will, except during the probationary period. Valid grounds for termination must always be established.

Legally Compliant Termination Methods

There are several pathways to legally end an employment contract in Croatia:

• Voluntary Resignation: Initiated by the employee.
• Mutual Agreement: A consensual decision between employer and employee.
• Employer-Initiated Termination: Permissible only under specific circumstances:
  • Economic, technological, or organizational reasons rendering the position redundant.
  • The employee's inability to perform job duties due to capability or conduct issues.
  • A material breach of employment obligations by the employee.
• Contract Expiry: Conclusion of a fixed-term contract.

Understanding Notice Periods

The statutory notice period in Croatia starts at a minimum of two weeks and increases with the employee's length of service. The table below outlines the standard requirements.

• Notice periods are halved in cases of termination due to employee misconduct.
• When an employee resigns, a standard one-month notice period applies.

*For employees aged 50 or over, add 2 weeks; for those aged 55 or over, add 1 month.

Severance Pay Entitlements

Employees in Croatia are entitled to severance pay under specific conditions:

• The termination is initiated by the employer.
• The dismissal is not a result of the employee's misconduct.
• The employee has completed at least two consecutive years of service with the employer.

The calculation is based on the employee's length of service. The minimum statutory severance is one-third of the average monthly salary (calculated from the last three months) for each year of employment. The maximum payout is generally capped at six months' salary, unless superseded by a collective bargaining agreement or individual contract.

Practical Considerations for Global HR

Managing terminations in Croatia demands precision. For instance, a company like SailGlobal, when downsizing its Zagreb office due to market conditions, must ensure the termination letters clearly cite the economic reasons, provide the correct notice based on each employee's tenure, and calculate severance accurately to avoid legal challenges. Proactive consultation with local labor experts is highly recommended to navigate these requirements seamlessly.