Independent Contractors & Employment Guidelines in Croatia
Contractor length allowance
There is no time limitation on contracts with independent contractors.
Fixed-term contract limitation
Three years, however consecutive fixed-term contracts with the same employee should be concluded only if there is an objective reason for employing through fixed rather than permanent employment. After this period, the employee must become a permanent employee (unless employing them through fixed employment is necessary to replace a temporarily absent employee or if a conclusion of a new fixed-term contract is permitted by law or collective agreement for some other objective reason).
What makes someone an employee
The Croatian Labour Act defines an employee as an individual who performs work for an employer under the employer’s instructions in return for a salary, but it does not define an employment relationship. Although important, (not) having the appropriate written employment contract is not a decisive element when deciding whether a person is an employee or a contractor.
The main characteristics that indicate an employment relationship are as follows:
● subordination relationship
● remuneration for the work performed
● personal performance of a job
Additional factors that may determine the employed rather than self-employed status are as follows:
● dependence of the employee on the employer regarding their workplace
● pre-agreed working hours
● ownership of working tools
● employer instruction to the employee
● defining which party bears the risks for the work performed
Penalties for misclassification in Croatia
Employers found guilty of using independent contractors as employees are in serious violation of the Croatian employment law and are to be fined EUR 2,654.92 for each misclassified employee. Moreover, the labour inspector can seal the employer’s business premises, devices, and work equipment for at least 15 days the first time a misclassification is identified and for 30 days every consecutive time. Such employers must pay the fine each time they transgress.