Dismissing an Employee in Croatia: A Guide

Valid Reasons for Termination

In Croatia, employers can terminate an employee’s contract under certain circumstances. The following are the valid reasons for termination:

Redundancy situations due to economic, technical, or organizational reasons: Employers can terminate employees due to circumstances beyond their control.
Inability of the employee to duly perform his duties under the employment contract: If an employee is unable to perform their job duties, the employer may terminate their contract.
Violation by the employee of his obligations arising from the employment contract: Employees who breach their employment contract can be terminated.
The employee did not provide satisfaction during the probationary period: Employers can terminate employees who do not meet expectations during their probationary period.

Process for Dismissing an Employee

When terminating an employee’s contract, employers must follow a specific process:

Written statement explaining the reasons for termination: The employer must provide a written statement to the employee explaining the reason for termination.
Severance pay: If the employee has completed at least two years of continuous employment, they are entitled to severance pay.
Notice period: During the notice period (which varies depending on the length of service), the employee is entitled to receive their salary and all other entitlements under statute.
Employee’s right to seek new employment: Employees can be absent from work for at least four hours per week during the notice period for the purpose of seeking new employment.

Notice Periods

The notice period varies depending on the length of service:

Two weeks, if the employee has continuously worked for less than one year
One month, if the employee has continuously worked for one year
One month and two weeks, if the employee has continuously worked for two years
Two months, if the employee has continuously worked for five years
Two months and two weeks, if the employee has continuously worked for ten years
Three months, if the employee has continuously worked for twenty years

Additional Rules

Special rules apply to employees who have worked for 20 years or more:

If the worker has reached 50 years of age, the notice period of three months is extended by two weeks.
If the worker has reached 55 years of age, the notice period of three months is extended by one month.

Statutory Redundancy Payment

When an employer dismisses an employee after a two-year period of continuous employment (unless dismissal is given for reasons related to the employee’s conduct), the employee is entitled to receive severance pay in an amount determined on the basis of the length of prior continuous employment with that employer.

Collective Dismissals

If an employer wants to terminate contracts of employment of five or more employees within a period of 30 days, it must:

Notify the Croatian Employment Agency
Notify the relevant trade union (if any)
Provide a written statement explaining the reasons for termination and the procedure for selecting employees to be dismissed

Associated Costs

The associated costs of dismissing an employee in Croatia may include:

Severance pay
Notice period pay
Any other entitlements under statute (such as holiday pay or sick leave)
Potential legal fees if the employee disputes the dismissal