Applicable Laws
The main laws that regulate employment in the Republic of Croatia include Labour Acts, Wage Directives, Social Security Acts and Employment Protection Acts. Employers, employees and trade unions can stipulate working conditions more favourable to the employees than the ones prescribed by the Croatian labour acts as well as less favourable if authorised to do so.
Labour wages in Croatia are regulated by laws, collective contracts, individual contracts, and by internal company bylaws. The minimum wage is determined annually by the Government each year and increases based on the real GDP growth from the previous year. According to the announcement of the Croatian Government for the period January 1st – December 31st 2017, the minimum wage is set at HRK 3,276.00 (EUR 437.00 – at the current currency rate 1 EUR:7.5 HRK).
Social Insurance Contributions
Social Security contributions payable by the employee are subject to a ceiling amount defined by law.
Employer: 17.2% calculated and paid on top of the gross salary.
Employee: 20% calculated and deducted from the gross salary.
Pension fund contributions are paid in two pillars.
The 1st pillar ( 15%) is based on generation solidartity, meaning current retirements are paid out from these funds.
The 2nd pillar ( 5%) is personal for each employee.
There is a maximum annual base for 1st pillar contribution calculation, and for 2017 this amounts to HRK 557,208.00.
If the employee’s salary exceeds this base during the year, only 5% for the 2nd pillar is calculated.
There is also a minimum monthly base for pension contributions and for 2017 it amounts to HRK 2,940.82.
Personal Income Tax
The taxable income is equal to the gross salary less 20% pension contributions. The taxable base is the difference between the taxable income and the tax releif for each employee (personal allowance).
The basic personal allowance (nonatxable part of income) amounts to HRK 3,800.00.
This can vary from employee to employee, since it is increased in case of dependent family members.
The tax scale by which the individual income is taxed is the following:
Calculated income tax is the base for additional city surtax which varies depending on the employee’s city of residence and ranges from 0% to 18%.
Employment Procedure
When employing personnel, the employer must keep records of employees and upon request from a labour inspector the records must be presented by the employer. At the commencement of the employment an employment contract must be concluded in writing. Employment contracts can be either of definite or indefinite duration. The essential elements an employment contract must include are the following:


- Contracting parties and their permanent residence;
- The place and nature of work;
- Date of commencement and termination in case of a definite duration contract;
- Duration of paid annual leave;
- Basic salary;
- Working hours; and
- Notices
- Upon death of the employee;
- Upon death, or upon liquidation or bankruptcy of the employer;
- Expiration of a fixed-duration contract;
- When the employee has reached the age of 65 years or completed 15 years of social insurance;
- Upon mutual agreement;
- Upon a legally effective decision due to inability to work;
- By cancellation; and
- By court decision when authorised.