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Croatia

January 15, 2021

By Hrvoje Vidan and Petra Lustica

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Croatia

KEY DEVELOPMENTS FOR 2021


 

Tax reforms affecting employees' wages

The Croatian Government passed a new package of laws reducing the costs of labour by adjusting the tax rates applicable to wages from 24% to 20% for "medium wages" and 36% to 30% for "high wages." The amount of the monthly minimum wage for the full time work in 2021 increased from HRK 4,062.51 to HRK 4,250 and the basic personal deduction released from taxation has also increased from HRK 3,800 to HRK 4,000.


 

Sunday work found to be legal even during the epidemic

Despite the fact that the topic of non-working Sundays has been considered in Croatia for many years, the Government's proposal to ban or at least restrict work on Sundays has not been adopted as an epidemiological measure for the purposes of preventing the expansion of COVID-19. Namely, the decision rendered by the Constitutional Court of the Republic of Croatia in September 2020 confirms the Court's standpoint expressed in earlier decisions that the ban on Sunday work is unconstitutional. Therefore, the abolition of the Sunday work ban has been extended during the exceptional circumstances caused by the COVID-19 pandemic.


 

Abolition of the annual stay and work permits quota

According to the new Aliens Act which was due to enter into force on 1 January 2021, the Government will no longer be rendering a decision determining the annual quota of stay and work permits for an "alien" (being a person who is not a Croatian citizen). The new legislation prescribes that an employer must request the Croatian Employment Service to carry out a "labour market test" prior to submitting the application for an alien's stay and their work permit. If this test shows that there are no available workers meeting the employer's criteria, an employer shall be entitled to submit the application for the alien's stay and work permit to the Ministry of the Interior, who will, ex officio, request an opinion from the office of the Croatian Employment Service regarding the employment of the alien concerned with a Croatian employer.


 

Expected changes to remote work

An increased demand for remote work has urged the Government to make the possibility of contracting such a work on short notice more flexible and at the same time protect employees from potential misuses by the employer while ensuring just compensation primarily with regard to costs the employees will have to bear by using their own equipment and resources.

With thanks to Hrvoje Vidan and Petra Lustica of Vidan Law Office for their invaluable collaboration on this update.

 

KEY DEVELOPMENTS FOR 2020


 

Protection of whistleblowers codified in a single law

The Whistleblower Protection Act (commonly known as the Whistleblowers Act) is a new law that was passed with the aim of raising awareness and encouraging employees to report irregularities relating to their employers' business activities. The enactment of the Whistleblowers Act systematises and regulates in detail (for the first time) issues relating exclusively to whistleblowers and protects them from sanctions. The law applies to all public authorities at the central and local level, legal entities with public authority, companies that are majority-owned by the state or local unit and all private-sector employers. The Whistleblowers Act imposes an obligation on employers to adopt policies dealing with internal procedures for reporting irregularities and requires them to appoint a confidentiality person and a deputy.


 

Minimum wage for 2020

The Government has fixed the minimum wage for 2020 to be HRK 4,062.51 (EUR 541.60) (gross). This is the lowest monthly gross amount payable to an employee for full-time work and does not take into account any additional pay for overtime, night work or work carried out on typical non-working days (such as Sundays, during holidays, etc.).


 

Recent amendments to Trade Act aimed at restricting work on Sundays

The recent changes to the Trade Act granted the Civil Protection Headquarters an authority to restrict working time in certain special circumstances (i.e., due to an event or situation that could not have been foreseen or avoided, which endangers the life and health of citizens, endangers property of greater value, significantly impairs the environment, disrupts economic activity or causes significant economic damage). The Civil Protection Headquarters subsequently adopted a resolution banning work on Sundays. Although this resolution was later abolished, restricted work on Sundays continues to be a popular concept in Croatia. So much so that the Minister of Economy has recently announced amendments to the Trade Act permitting only 14 working Sundays a year, on such dates to be determined by the employer.

With thanks to Hrvoje Vidan of Vidan Law for his invaluable collaboration on this update.

Contributors

Image: Suzanne Horne
Suzanne Horne
Partner, Employment Law Department

Image: Kirsty Devine
Kirsty Devine
Associate, Employment Law Department

Image: Aashna Parekh
Aashna Parekh
Associate, Employment Law Department

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