How to Terminate an employee in Croatia?

As usual, employment termination in Croatia is subject to the local Croatian laws. It is important that the employer stays compliant in the process. Terminating an employee can sound complicated but if the employer follows the process and has the support of specialist teams like the ones at Nomad Global Hire then everything will work smoothly.

Employment contracts in Croatia can only be terminated if it has valid and just reasons.

There are several ways to terminate the employment fairly:

By mutual agreement — parties are free to decide on the termination terms
Employee retirement — when the employee turns 65
Business reasons — due to economic, technological, or organisational reasons
Personal reasons — if the employee is not capable of fulfilling duties
Misconduct — violation of the employment obligations
During the probationary period
The expiry of the contract term

We recommend this HR approach in case of Disciplinary issue or Performance:

Make sure the employee has been notified of its low performance or disciplinary issue on a regular basis before the moment the Employer decides to proceed with the termination contract
Once decided that all that could be done has been done to try to improve the situation, the Employee must be given a written notice of dismissal detailing the reasons for the termination of the employment.
The employer will have to respect the statutory notice (2 weeks to 3 months depending on the length of service), which can be either asked to be worked or the Employer could accept garden leave for the Employee.
Once Terminated, the employer must de-register employees with the Tax and Insurance Authorities and pay employees any salaries and severance that are due and for unused holidays

Not respecting this process can lead to fines from 3 to 8 months salary and/or make the whole process void, so it is worth taking the time to do things right!

The respective notice is as follow:

Length of Service with the Employer	Notice
Less than 1 year	2 weeks
Between 1 and 2 years	4 weeks
Between 2 and 5 years	6 weeks
Between 5 and 10 years	8 weeks
Between 10 and 20 years	10 weeks
Over 20 years	12 weeks

Please note that employees over the age of 50 are entitled to receive an additional 2 weeks’ notice, and employees over the age of 55 an extra 4 weeks’ notice.

In total, the notice period cannot exceed four months.

Severance pay

Severance Pay is compulsory in Croatia for any type of Dismissal (apart from disciplinary reasons) for any employee with at least 2 years in the company.

Severance is a minimum of 1/3 of their average monthly salary per every year worked (so someone with 3 years experience would receive one month salary of severance payment on top of the notice of 6 weeks, so a total of 2,5 months salary paid in lieu if the notice is not asked to be worked)