EMPLOYMENT LAW | CROATIA

Following a relatively long public and political discussion and negotiations on the possible contents of the new law, the Croatian Parliament adopted the new Employment Act, which came into force on 8 August 2014. As proclaimed by the Croatian Government – the drafter of the law – its goal is to introduce more flexibility into employment relations, preserve the existing jobs, reduce the costs of labor and prevent illegal employment.

In their first reactions the representatives of both employers and employees, however, voiced concern over the possible achievement of such goals. On the other hand, the Croatian Government officials have expressed their satisfaction with the fact both sides felt unhappy, claiming that this means the Act is drafted in a balanced way. Here is what changes the new Employment Act actually brings to the Croatian labor market.

1. TRANSFER OF EMPLOYEES TO AFFILIATED COMPANIES

The biggest novelty in relation to the conclusion of employment contracts is the possibility, prescribed by Article 10 of the Employment Act, that employees are temporarily transferred to other companies having the same owner, i.e. affiliated companies as defined by the Company Act. The employer can do this for a maximum period of six months if the following requirements are met:

1) the employer has no need for the services of the affected employees;
2) an agreement is concluded between the affiliated employers and
3) the affected employees give their written consent to the transfer.

The written consent of an employee is to be considered an annex to the employment contract, while the agreement between the affiliated employers must, at a minimum, contain the following information:

1) names and registered offices of the affiliated companies;
2) full names and addresses of residence of employees;
3) time period of the temporary transfer, specifying the from-to dates;
4) place of work and tasks which will be performed by the employee;
5) salary, salary increments and payment periods;
6) duration of a regular working day or week.

2. TRANSFER OF EMPLOYEES TO AFFILIATED COMPANIES ABROAD

The provisions related to sending employees to work abroad were supplemented in the new Employment Act by a provision introducing the possibility of transferring employees to a company having the principal place of business abroad, which is affiliated with the employer within the meaning of the Company Act. The new provision caps the duration of such transfer at two years. As with the transfer of employees to Croatian companies affiliated with the employer, there has to be an agreement between the affiliated employers and the employee must give a written consent to the transfer.

3. TIME OF ASSIGNMENT OF WORKERS TO USER COMPANIES THROUGH A TEMPORARY EMPLOYMENT AGENCY

The new Employment Act prolonged the period for which an Agency for temporary employment is allowed to assign employees to the user company. According to the new law, such Agency can assign an employee to the user company for a maximum uninterrupted period of three years for the same work, as opposed to the one-year maximum period prescribed previously. For the three-year period to be considered interrupted according to the new law, there has to be an interruption of at least two months, compared to the one month, as prescribed by the old Employment Act.

4. SUPPLEMENTARY WORK

Article 61 of the Employment Act introduces the possibility for full time employees to work additionally to their full-time job for another employer. The supplementary employment contract can be concluded for a maximum of 8 hours per week and 180 hours per year, provided that the employer (or the employees) for which the employee works full-time give a written consent.

5. OVERTIME WORK

Unlike before, when there was no such obligation, the new act prescribes in Article 65 that the employer in need of overtime work, must order such work in writing. The same Article sets the maximum weekly work hours for employees that work overtime to 50. The overtime work per employee is capped at 180 hours per year, unless an applicable collective agreement prescribes longer hours. In the latter case, the maximum is 250 hours per year.

6. WORK SCHEDULE

Significant changes were introduced by this employment reform with regard to the work schedule. The employer has to decide on the work schedule in writing and the schedule must be adopted for a period of at least one month and for a maximum period of one year. The employer can unevenly distribute work hours, so an employee works longer hours one week (or month) and shorter hours the next week (or month). In any case, the maximum work hours per week per employee is set at 50 (60, if a collective agreement mandates so), including overtime. However, an average working week for an employee in the period of 4 month can have 48 hours (the 4 month period can be prolonged to 6 months by a collective agreement). The new law also introduced the possibility of prescribing the so call “hour bank” or “hour fund” in a collective agreement. In this case, the workers can work more than 50 hours per week, but the total “hour fund” cannot exceed 45 hours per week on average, observed in a period of 4, or 6 months.

7. TRANSFER OF PAID VACATION DAYS TO THE NEXT YEAR

Persons who did not use their vacation days due to using a maternity leave or similar parenting rights envisaged by the Employment Act, have the right of using them until the end of the next calendar year, according to Article 84 of the new Employment right. Previously, the vacation days could have been used only until the 30 June of the next calendar year. This latter rule still applies to regular employees.

8. TERMINATION OF THE EMPLOYMENT CONTRACT

Unlike before, there is no more obligation on the part of the employer wishing to regularly terminate an employment contract, for business or personal reasons, to educate the affected employee for other types of jobs (Article 115 of the new Employment Act). According to Article 121 of the Employment Act, the notice period does not run while the dismissed employee is using his/her sick leave, whereas it runs in case of vacation days and paid leave. However, the employment contract in any case ceases to have effect when 6 months from the dismissal expires. In case the employment contract is terminated by the court, Article 125 of the Employment Act entitles the employee a compensation in the maximum amount of 8 salaries. The compensation is therefore lower compared to the previous Employment Act which prescribed a maximum amount of 18 salaries.

If the employer decides to regularly terminate contracts for a group of at least 20 workers, it no longer has the obligation to draw-up a program for placement of redundant employees and certain procedures for collective dismissal have been simplified.

9. STATUTE OF LIMITATIONS FOR CLAIMS ARISING FROM EMPLOYMENT RELATIONS

The statute of limitations for claims arising from employment relations was prolonged in the new Employment Act, from 3 to 5 years.

10. EMPLOYEE COUNCIL

The electory period of the employee council was prolonged from 3 to 4 years by Article 144 of the new Employment Act. Furthermore, the number of categories of employees that are protected from termination of the employment contract by a requirement that the employee council must give its consent to their dismissal was reduced in the new law. If the employee council decides not to give its consent for dismissal of such an employee, the employer can now seek that such consent is replaced by a decision of arbitration, instead of initiating court proceedings, as the case was before.

Jelena Božović

Jelena Božović is an attorney at law and founder of Božović Law Office, with headquarters in Rijeka, Croatia. Jelena mostly represents foreign citizens or companies with various business and other interests in Croatia and provides expert legal advice for clients wishing to invest in Croatia.