New legislation on foreign nationals working and staying in Croatia

Three new legislative acts have recently been introduced in Croatia, greatly influencing the framework for foreign nationals working and staying in Croatia, which are all applicable as of 1 January 2021:

• The Posting of Workers Act;
• The Foreign Nationals Act; and
• Amendments to the Act on EEA Member State Nationals and their Family Members.

The Posting of Workers Act, implementing the corresponding EU Directive and its revision, regulates the work of employees posted to Croatia by imposing various obligations on their foreign employers to ensure their rights are appropriately protected.

The Act introduces several noteworthy innovations:

• Broadened scope of guaranteed working conditions: previously, posted workers were guaranteed the minimum rates of pay paid to workers in Croatia. With the new amendment, all mandatory elements of remuneration in Croatia will have to be paid to posted workers. This remuneration does not include compensation for overtime work, difficult work conditions, night work, work on Sundays, public holidays or other non-working days. Travel, food and accommodation costs are likely to also be excluded from this calculation. To ensure compliance with this provision, the applicable remuneration amount must be published online by the competent authorities and made easily accessible to foreign employers.
• Introduction of long-term posting, exceeding 12 months (or a maximum of 18 months, if the posting term is extended). In cases of long-term posting, Croatian labour law legislation will apply fully if more favourable for the posted employee.
• Foreign agency employees may be posted to Croatia by the foreign user of their services. The foreign agency is generally deemed the employer in such cases, with all related obligations towards the posted worker.
• Universally applicable national collective bargaining agreements will apply to posted employees as well.

The Foreign Nationals Act introduces new solutions for the regulation of third-country nationals working and staying in Croatia:

• Digital nomads, third-country nationals performing work remotely for a company, which is not registered and does not operate in Croatia, are now eligible to register their temporary stay for up to one year in Croatia.
• Labour market tests are envisaged as a prerequisite for issuing work and residence permits for third-country nationals (the quota system has thereby been abandoned). The labour market test reviews the local unemployment records and takes into account the relevant economic factors in order to assess the need for foreign employees (with the primary aim of increasing local employment rates, where possible). The Croatian Employment Agency, as the competent authority, will also adopt a list of occupations with insufficient workers on the Croatian labour market, for which the labour market test will not be required. Exceptions are envisaged for seasonal activities in the agriculture, hospitality and tourism sectors performed for a maximum of 90 days annually. Highly qualified employees, professional sportspeople, researchers, etc. may also be exempted from the labour market test requirement.
• The prerequisites for approving a permanent stay in Croatia have been amended for certain categories of persons (family members of Croatian nationals, members of the Croatian people, minority age children of parents with approved permanent stay): the mandatory length of stay in Croatia has been decreased; proof that one has sufficient funds and is proficient in the Croatian language is no longer required.

Amendments to the Act on EEA Member State Nationals and their Family Members are focused specifically on regulation of the status of UK nationals post-Brexit, following the end of the transition period envisaged in the UK-EU Withdrawal Agreement (31 December 2020).

UK nationals who have resided in Croatia prior to 31 December 2020 will retain their acquired rights of residence (temporary or permanent). However, they will need to apply for new residence permits by 30 June 2021, confirming their status based on the Withdrawal Agreement. Family members of UK nationals can also regulate their residence status in Croatia and apply for the new residence permit until the same deadline, irrespective of their nationality and whether they resided in Croatia prior to 31 December 2020.