Review of the Amendments of the Labour Act

The beginning of 2023 brought the expected changes related to the Labour Act. Namely, the mentioned Act brings numerous changes to a modern legal framework that guarantees dignified labour conditions.

The Act regulates labour relations in the Republic of Croatia unless otherwise stipulated by another act or international agreement. The Act entered into force on January 1, 2023.

Experts from BD Group highlight the following as the most significant legal changes:

• Preventing the unjustified conclusion of fixed-term employment contracts
• New ways of performing permanent seasonal jobs
• More complete and precise work arrangement at a separate workplace and remote work.

You can find out more about the mentioned changes in the following article, and our weekly announcements you can follow in the News section. 

Prevention of unjustified conclusion of employment contracts for an indefinite period

A change in Article 12 of the Labour Act prescribes a limit of a maximum of three years for the duration of an indefinite-term employment contract, as well as the term of consecutively concluded contracts.

Objective reasons justifying the conclusion of a fixed-term employment contract are defined, and employers must that state in the contract. A maximum of three consecutive fixed-term employment contracts may employers conclude with the same employees, the total duration of which (including the first contract) does not exceed three years. The mentioned will prevent the unjustified conclusion of employment contracts.

The possibility of re-entering into an employment contract between the employees and the same employer requires the passage of at least six months after the termination of the employment contract, which the employer concludes after three years.

New ways of performing permanent seasonal jobs

Article 16, which defines seasonal jobs, is also being changed. Seasonal work is considered work whose scope and intensity temporarily increase by the increase in the business activities intensity of certain activities that depend on the change of seasons.

Thus, the employment contract for permanent seasonal jobs can conclude for an indefinite period or some period.

If an indefinite-term employment contract is both sides concludes for permanent seasonal jobs, then they can agree on mutual rights and obligations during the temporary suspension of seasonal jobs:  

1. Due to the temporary interruption, the employee is not obliged to perform the contracted work, and the employer is not obliged to pay the salary (the salary compensation), whereby the employee didn’t deregister from the mandatory insurance, who remains liable for the calculation and payment of contributions,
2. During the temporary interruption of a seasonal job, the employment relationship of a permanent seasonal employee is suspended, whereby the employer deregisters the employee from mandatory insurance, and he can enter into an employment contract with another employer.

If the employer concludes an employment contract for some period, he is obliged to offer the employees a work contract for the next season.

The more complete and precise arrangement of work at a separate workplace and remote work

Article 17 precisely regulates work at a separate workplace and remote work.

Work at a separate workplace is work the worker performs the contracted work from home or in another area of similar purpose. Employer everything must determine based on the agreement between the employees and the employer.

In contrast, remote work employees perform through information and communication technology. In doing so, the employer and the employee agree on the right to independently determine work location, which can be variable and depend on the employee’s will.

Both types of work employees can perform as permanent, temporary or casual jobs. It is important to emphasize that jobs determined by this or another act as jobs with special working conditions, i.e. jobs where it is not possible to protect employees from harmful influences, may not be performed by working in a separate workplace or remote work.

Wages in the gross amount

One of the novelties refers to additional costs for employers. Namely, the New Labour Act regulates the obligation of employers and employees to pay contracts in the gross amount. Until now – there was no prescribed obligation to contract salary in the gross amount. Now, all wages (not only the minimum wage) employers agree on the gross amount.

Basics for plugins

The law expands the provisions on mandatory wage supplements. The employer must pay the employee an increased wage for overtime work, night work, work on Sundays, work on holidays and non-working days, and work performed in heavy conditions. Employers calculate allowances but do not count on a basis lower than the minimum wage. For the year 2023, the minimum wage is 700 euros gross per month. The mentioned supplements employers do not include in that amount.

The act prescribes a higher amount of allowance for working on Sundays than it was until now. The working allowance on Sundays was the amounts of 30 or 35% of the employer’s basic salary. Now, the employer does not calculate work on Sundays as an additional amount lower than 50%.  

Wages payment to a transaction account and prohibition of wages waivers

At the beginning of 2023, a new act introduces the obligation to pay wages to the employee’s transaction account. Only receipts permitted according to tax regulations employers can pay in cash. The ban on waiving the right to pay wages is also a novelty – such an agreement between employees and employers is no longer allowed.

The changes were necessary to define, regulate and implement labour relations, and you can find all the details in the new Labour Act.