Ending an employment relationship in Croatia requires careful compliance with a structured legal framework. There’s no at-will employment here: every termination must follow the rules set out in the Croatian Labour Act, and getting the process wrong can expose your business to legal challenges and financial liability. Whether you’re letting someone go for performance reasons, restructuring a team, or managing a difficult situation, this guide covers what you need to know before you act.
Termination framework in croatia
The Croatian Labour Act governs all employment terminations in the country. Employers can’t simply end a contract without a valid reason, proper notice, and a written procedure. Every termination notice must be in writing and must state the grounds for dismissal. Skipping this step or providing vague reasoning is enough to have a termination declared unlawful.
Croatia also offers employees meaningful protection against dismissal in certain circumstances, particularly during sick leave. You can’t terminate an employee who is on sick leave, except in specific business-driven situations. If the illness or injury was work-related, termination is prohibited under any circumstances.
Types of termination
Croatia recognises two main categories of employer-initiated termination, and the rules differ significantly between them.
Regular termination
Regular termination applies when you’re ending an employment contract for business or performance reasons that don’t involve serious misconduct. This includes redundancy, poor performance, or prolonged inability to meet role requirements. Regular termination triggers notice period obligations and, in many cases, severance pay entitlements.
Extraordinary termination
Extraordinary termination is used when there are serious grounds for immediate dismissal, such as gross misconduct or a fundamental breach of employment obligations. There’s no notice period required. However, you must act quickly: the law requires you to initiate extraordinary termination within 15 days of becoming aware of the grounds. Missing that window can invalidate the process entirely.
Termination during probation
Probationary periods in Croatia can last up to 6 months. Either party can end the contract during probation with a minimum of 7 days’ notice. You’ll still need to provide written notice with reasons stated, but the notice period is considerably shorter than for regular termination.
Notice periods
For regular termination, notice periods in Croatia scale with an employee’s length of service. The longer someone has worked for you, the more notice they’re entitled to.
The statutory minimums for employer-initiated termination without cause are:
- Less than 1 year of service: 2 weeks
- 1 year of service: 1 month
- 5 years of service: 2 months
- 20 years of service: 3 months
These are floor figures. An employee’s contract or a collective agreement may provide for longer notice periods, and you’re bound by whichever standard is more favourable to the employee. For extraordinary termination, no notice period applies, but the 15-day window for acting on the grounds is strict.
Severance pay
Severance pay becomes mandatory once an employee has completed at least 2 years of continuous service with your organisation. It applies to terminations without cause and isn’t triggered by extraordinary (misconduct-based) dismissals.
The minimum statutory amount is one-third of the employee’s average monthly salary for each completed year of service. There’s a cap: severance can’t exceed the equivalent of 6 months’ average salary, unless the employee’s contract or an applicable collective agreement sets a higher ceiling.
To calculate the entitlement, you’ll use the employee’s average monthly salary over the period specified in the Labour Act. Getting this calculation right matters, both for legal compliance and for avoiding disputes at the point of separation.
Final payments
When a termination takes effect, you need to settle all outstanding financial obligations promptly. Croatian law requires that all unpaid wages and accrued but untaken annual leave be paid on the employee’s last working day or, at the latest, by the end of the next regular pay cycle.
Don’t treat final payments as an afterthought. Delays can trigger additional claims and damage your standing in any subsequent dispute. It’s good practice to prepare a clear final payslip that itemises all components, including any remaining leave balance paid out in full.
Termination of non-EU/eea employees
If you’re employing someone from outside the EU or EEA in Croatia, you have an additional obligation when their employment ends before their work or residence permit expires. You’re required to notify the relevant immigration authorities of the employment termination. Failing to do so can create compliance issues and may affect the individual’s immigration status.
Make sure you have a process in place to identify affected employees and trigger the notification promptly. In practice, this means your HR or payroll team needs to track permit expiry dates and flag any terminations involving non-EU/EEA nationals before the offboarding process is complete.
How an EOR manages terminations in croatia
Managing a termination correctly in Croatia takes time, local knowledge, and careful documentation. If you’re hiring in Croatia through a global Employer of Record (EOR), the EOR handles the legal employer responsibilities, including structuring the termination correctly under Croatian law, calculating and paying severance, issuing compliant written notice, and managing any immigration notifications for non-EU/EEA employees.
This matters most when you don’t have an established local entity or a dedicated HR team on the ground. Without that local expertise, it’s easy to miss a procedural requirement or miscalculate a severance entitlement, and either mistake can turn a straightforward separation into a costly legal dispute. Working with an EOR gives you confidence that every step of the process is handled in line with what Croatian law requires.
If you’re hiring in Croatia or managing an international team and want to ensure your offboarding processes are compliant, RemotePass can help. Book a demo at remotepass.com/request-demo to see how we support compliant employment across Croatia and beyond.
