Termination of Employment in Croatia: Types of Dismissal, Notice Periods, Severance and Deadlines (2026)

In short: Termination of employment in Croatia is a strictly formalised procedure. The employer needs a justified reason, which the employer must prove, and has to follow the prescribed steps: a written warning and the right to be heard in misconduct cases, consultation with the works council, and a written, reasoned decision properly served. An employee who considers the dismissal unlawful has only 15 days to file a request for protection of rights and a further 15 days to sue — missing a deadline extinguishes the right to court protection. Most dismissals that fail in court fail on procedure, not on the reason.

Dismissal is the moment when both sides make their easiest mistakes: the employer because it is in a hurry, the employee because they do not realise the clock started the day they received the envelope. This guide explains the types of dismissal, what an employer must do before giving one, how notice periods and severance work, who is protected from dismissal and how a dismissal is challenged in court — from both the employee’s and the employer’s perspective in every section.

How an employment contract ends — dismissal is only one route

The Croatian Labour Act (Zakon o radu) lists exhaustively how an employment contract ends (Article 112): death of the employee, death of an employer who is a natural person or closure of a trade, expiry of a fixed-term contract, the employee reaching 65 years of age with 15 years of pensionable service, mutual agreement, a final decision granting a disability pension for complete loss of working capacity, dismissal, and a court decision.

The distinction matters in practice. Dismissal (otkaz) is a unilateral decision by one party. Mutual agreement (sporazum) is bilateral — which is why an employee who signs a mutual termination generally loses both severance pay and unemployment benefit, since both are tied to dismissal by the employer. Expiry of a fixed-term contract is not a dismissal at all: employment ends by operation of law, the employer need not even notify the employee, and there is no severance.

The employee’s perspective. When your employer offers you an “agreement” instead of a dismissal, ask why. An agreement relieves the employer of the notice period, severance and the entire procedure; it leaves you without unemployment benefit. Courts consistently reject later claims that an agreement “was really a dismissal”. The exception is an agreement proposed by the employer as part of collective redundancies, which is treated as redundancy.

The employer’s perspective. A mutual agreement is legitimate and the cleanest way to end employment — but only if the employee understands what they are signing. An agreement signed under pressure or in error can be challenged under the general rules on defects of consent.

Types of dismissal

Ordinary dismissal by the employer (Article 115)

The employer may dismiss with notice only for a justified reason, and the Act recognises four:

1. Dismissal for business reasons (poslovno uvjetovani otkaz) — the need for the work has ceased for economic, technological or organisational reasons. The employer must prove the need has genuinely ceased and that it could not offer the employee other work. When choosing whom to dismiss, it must take into account length of service, age and dependants — unless it employs fewer than 20 people. For six months after such a dismissal it may not hire someone else for the same work.
2. Dismissal for personal reasons — the employee, through no fault of their own, cannot properly perform their duties because of permanent characteristics or abilities.
3. Dismissal for misconduct — the employee is in breach of their obligations. This requires a prior written warning (see below), and the notice period is halved.
4. Dismissal for failing probation — a separate ground since the 2022 amendments; notice period at least 7 days.

Ordinary termination by the employee

An employee may terminate the contract without stating a reason, but must work the notice period. If they have a particularly important reason, their notice period may not exceed one month (Article 122(7)). A contract or collective agreement may set a shorter notice period for the employee than for the employer.

Extraordinary dismissal (Article 116)

Both employer and employee may terminate without notice if, because of a particularly serious breach of obligations or some other particularly important fact, continuation of the employment relationship is not possible. Employment ends on the day the decision is served.

Two rules decide most disputes about extraordinary dismissal:

• The 15-day deadline from learning of the fact on which the dismissal is based (Article 116(2)). It is preclusive: a dismissal given on day sixteen is unlawful however serious the breach. For continuing breaches the deadline runs from the last one.
• The ground is not only a “serious breach” but also any other particularly important fact. The Supreme Court has held that it is sufficient to establish that the employer, because of the employee’s conduct, has justifiably lost trust in them — an employer is not obliged to keep an employee it can no longer reasonably trust.

The party at fault for an extraordinary dismissal is liable to the other for damages. Where the employee gives extraordinary notice, the burden of proving the reason lies on the employee — the only situation in which the burden is not on the employer (Article 135(3)).

Dismissal with an offer of an amended contract (Article 123)

The employer terminates the existing contract and simultaneously offers a new one on amended terms — typically lower pay, a different position or place of work. The employee has at least 8 days to respond. Crucially, the employee may accept the new contract and at the same time challenge the lawfulness of the dismissal in court. Acceptance is not a waiver. This dismissal must be as well founded and follow the same procedure as any other.

What the employer must do before dismissing

This is where most cases are lost. A justified reason does not help if the procedure was not followed.

Written warning and the right to be heard (Article 119)

Before dismissing for misconduct, the employer must warn the employee in writing of the obligation being breached and point out that continued breach may lead to dismissal. Before any dismissal based on conduct or performance, and before extraordinary dismissal, the employer must give the employee an opportunity to respond — unless circumstances make that unreasonable to expect, which courts interpret narrowly.

The employer’s perspective. The warning must unmistakably be a pre-dismissal warning — an email saying “please be on time in future” is not a warning within the meaning of Article 119. The invitation to respond should be in writing, with a reasonable deadline, and minuted.

The employee’s perspective. If you were dismissed for conduct without a prior written warning or without being invited to respond, that alone makes the dismissal unlawful, regardless of whether the breach occurred.

Consultation with the works council (Article 150)

Where a works council (radničko vijeće) exists — or a union representative stands in for it — the employer must consult it before deciding on a dismissal and provide the information needed for its opinion. Failure to consult renders the dismissal void regardless of whether the reason was justified — in practice one of the most common grounds for annulment. Consultation is also required for dismissal during probation.

Prior consent for protected categories (Articles 151 and 188)

For some employees consultation is not enough — the works council’s prior consent is required: council members and unsuccessful candidates for 3 months after the election, employees whose working capacity is reduced due to a workplace injury or occupational disease, persons with disabilities, employees aged 60 or over, and employee representatives on the employer’s governing body. A union representative may not be dismissed without the union’s consent during their term and for 6 months afterwards.

Silence from the council or union for 8 days counts as consent. A refusal must be reasoned in writing, and the employer may within 15 days seek to have the consent replaced by a decision of the competent body. In those proceedings, according to appellate case law, the employer need only show reasonable suspicion that a ground for dismissal exists — the lawfulness of the dismissal itself is decided only in any later dispute.

Form and service of the dismissal decision (Article 120)

A dismissal must be in writing, reasoned and served on the employee. All three. An unreasoned decision is unlawful, and defective service does not start the deadlines running.

The employer’s perspective. The reasoning must be specific — which posts were abolished and why, which obligations were breached and when. Wording copied from the Act is not reasoning. Service should be provable: in person against signature, or by registered post with return receipt; the civil procedure rules on service apply unless a collective agreement or work rules provide otherwise. Breach of Article 120 is also the most serious category of misdemeanour.

The employee’s perspective. Record the exact date you received the decision and keep the envelope or return receipt — the deadline for your request for protection of rights runs from that day. Refusing to accept the letter does not stop the clock.

Notice periods (Articles 121–122)

The notice period starts on the day the decision is served. For ordinary dismissal it is at least:

Continuous service with the employer	Notice period
less than 1 year	2 weeks
1 year	1 month
2 years	1 month and 2 weeks
5 years	2 months
10 years	2 months and 2 weeks
20 years	3 months

An employee who has reached 50 gets an extra 2 weeks, one who has reached 55 an extra month. For misconduct dismissals the periods are halved; during probation the minimum is 7 days; extraordinary dismissal has no notice period. Longer periods may be agreed in the contract or a collective agreement.

The notice period does not run during sick leave, pregnancy, maternity or parental leave — it is suspended and resumes afterwards. If the employee is on sick leave when the decision is served, the period does not begin at all until the sick leave ends. During annual leave the period does run.

An employee released from the duty to work during the notice period is entitled to salary compensation and all rights as if working, plus time off to look for a new job.

Severance pay (Article 126)

Severance (otpremnina) is due to an employee dismissed by the employer after at least 2 years of continuous service, unless the dismissal is based on the employee’s conduct. It amounts to at least one third of the average monthly salary of the last three months for each completed year of service with that employer, capped at six average monthly salaries — unless the contract, work rules or a collective agreement provide more.

There is no severance for dismissal for misconduct, extraordinary dismissal for serious breach, expiry of a fixed-term contract, mutual agreement, or termination by the employee.

Severance is tax-free up to a statutory amount per year of service; above that threshold it is taxed as employment income. The thresholds change with tax regulations and should be checked at the time of payment.

The employee’s perspective. Severance is due no later than the end of employment. If you receive it and later win a claim that the dismissal was unlawful, it is generally repaid or set off — accepting severance is not an admission that the dismissal was lawful.

The employer’s perspective. Alongside severance, all outstanding pay and compensation for unused annual leave (Article 82) must be paid on termination, a certificate of employment issued, and the employee deregistered from social insurance.

Who is protected from dismissal

Pregnant employees and parents (Article 34) — absolute protection

During pregnancy, maternity, parental, adoptive and paternity leave, part-time work to care for a child and related rights — and for 15 days after those circumstances end — the employer may not dismiss, whether ordinarily, extraordinarily or during probation. The dismissal is void if the employer knew of the circumstance or if the employee notifies the employer within 15 days of service, with supporting evidence.

The protection has two limits: it lasts 15 days after the right ends, and it does not prevent a fixed-term contract from expiring.

Employees on sick leave

The Act does not prohibit dismissing an employee on sick leave — illness in itself is not protection. What protects them is the notice period: it does not start while sick leave lasts, or is suspended if it had already started. Dismissal because of the illness itself could be challenged as a personal-reasons dismissal unless the incapacity is permanent.

Employees requiring consent

Works council members, employees with reduced working capacity after a workplace injury, persons with disabilities, employees over 60 and union representatives — see the section on prior consent. Dismissal without consent or its replacement is void.

How an employee challenges a dismissal: request for protection of rights and court claim (Article 133)

The procedure has two steps and three deadlines of 15 days each:

1. Request for protection of rights (zahtjev za zaštitu prava) — within 15 days of service the employee demands in writing that the employer withdraw the dismissal. Without this request a court claim is inadmissible — it is a procedural precondition.
2. The employer’s deadline — the employer has 15 days to comply. It need not reply; silence counts as refusal.
3. Court claim — within a further 15 days of refusal or expiry of the employer’s deadline, the employee files a claim with the municipal court (in Zagreb, the Municipal Labour Court). If a collective agreement provides for mediation, the deadline runs from the end of mediation.

The deadlines are preclusive and the court applies them of its own motion. The Supreme Court’s settled practice leaves no room: a claim filed a day late is dismissed without examining whether the termination was lawful. The request for protection of rights is not required only for monetary claims and damages.

For a dismissal with an offer of an amended contract, the deadline runs from rejection of the offer or expiry of the time to respond.

What the employee can claim

• a declaration that the dismissal is unlawful and reinstatement, with salary compensation from dismissal until return (Article 124);
• instead of reinstatement — judicial termination of the contract and damages (Article 125);
• damages under the general rules.

Judicial termination (Article 125)

Where the court finds the dismissal unlawful but the employee cannot reasonably be expected to return to an employer who dismissed them unlawfully, at the employee’s request the court sets the date employment ends and awards compensation of at least 3 and at most 8 monthly salaries, depending on length of service, age and dependants. The 2022 amendments lowered the cap from 18 to 8 salaries — a significant change for employees who previously chose termination over reinstatement.

The request may be made until the close of the main hearing. The employee makes it instead of reinstatement; the employer may make it in the alternative if it proves continuation is not possible. The court does not order termination of its own motion — if the employee seeks only reinstatement, that is all the court decides. Compensation under Article 125 presupposes that the dismissal has first been found unlawful; if the main claim fails, so does the termination claim.

The employer’s perspective. The exposure from an unlawful dismissal is not only the Article 125 award but salary for the entire period from dismissal until the judgment becomes final — which in labour disputes takes years. A properly prepared dismissal is cheaper than any lawsuit.

Unemployment benefit after dismissal

Unemployment benefit from the Croatian Employment Service (HZZ) is available to a person with at least 9 months of work in the last 24 months (a lighter requirement applies under 30), who registers within 30 days of the end of employment. The benefit is a percentage of average salary that decreases after the first 90 days; amounts and caps change with implementing regulations and are best checked on the HZZ website.

The manner of termination decides entitlement: benefit is not available where employment ended by the person’s own will or fault — termination by the employee (except extraordinary termination caused by the employer’s conduct), mutual agreement (except one proposed by the employer in collective redundancies), dismissal for misconduct, extraordinary dismissal for serious breach, and dismissal for failing probation. A person whose employment ended by court decision registers within 60 days of the judgment becoming final.

Collective redundancies (Articles 127–128)

Where within 90 days the need for the work of at least 20 employees may cease, at least 5 of them by dismissal for business reasons, the employer must consult the works council in good time on avoiding or reducing the redundancies and notify HZZ in writing. Employment of the affected employees may not end within 30 days of that notification, and HZZ may order a further postponement of up to 30 days. Agreements proposed by the employer count towards the threshold. The 2022 amendments abolished the separate redundancy programme and shortened the deadlines.

Special situations

• Fixed-term contracts end on expiry without dismissal or severance, but may be terminated ordinarily or extraordinarily during their term under the same rules.
• Probation — dismissal for failing probation is a separate ground with a minimum 7-day notice period; works council consultation still applies.
• Transfer of undertakings — on transfer of a business or part of it, employment contracts pass to the new employer; the transfer itself is not a justified reason for dismissal.
• Executive contracts — the procedural rules on dismissal may be contractually excluded for persons authorised to manage the employer’s business (e.g. company directors).
• Foreign nationals — the Foreigners Act applies alongside the Labour Act; termination affects the residence and work permit.

The most common mistakes

Employers: misconduct dismissal without a prior written warning or without inviting a response; failure to consult the works council; dismissing a protected employee without consent; extraordinary dismissal after the 15-day deadline; a decision without specific reasons or with unprovable service; dismissing a pregnant employee; hiring someone else for abolished posts within 6 months.

Employees: missing the 15-day deadline for the request for protection of rights or the further 15 days for the claim — the most common reason for losing; suing without first making the request to the employer; signing a mutual agreement instead of a dismissal without understanding the consequences for severance and unemployment benefit; late registration with HZZ; refusing to accept the decision in the belief that it stops the deadlines.

Dismissal step by step

For the employer:

1. Identify the type of dismissal and the justified reason; gather evidence.
2. For misconduct — written warning, then invitation to respond.
3. Consult the works council; obtain prior consent for protected categories.
4. Written, specifically reasoned decision; provable service; for extraordinary dismissal within 15 days of learning of the fact.
5. Calculate the notice period (with age increments), severance and unused leave; deregister and issue the certificate of employment.

For the employee:

1. Record the date of service; keep the decision and the envelope.
2. Within 15 days — written request for protection of rights to the employer.
3. After refusal or silence — within a further 15 days, a court claim; decide between reinstatement and judicial termination.
4. Within 30 days — register with HZZ.

Three rules for every dismissal

1. A reason without procedure is worthless. Warning, hearing, consultation, consent, written form, reasons, service — each step missed is an independent ground of unlawfulness.
2. The deadlines are preclusive on both sides. The employer has 15 days for extraordinary dismissal; the employee 15 + 15 to protect their rights. Nobody can extend them.
3. An agreement is not a dismissal. Whoever signs a mutual agreement has generally given up severance and unemployment benefit — and needs to know that before signing, not after.

---

This article is for general information only and does not constitute legal advice for any specific case. The Labour Act and its implementing regulations change; check the current text or consult a lawyer before giving or challenging a dismissal.