Independent contractors or freelancers are self-employed individuals who provide services to companies as a non-employee. This is one of the most common ways companies tend to hire non-local designers, engineers, support reps, etc.
For legal and tax purposes, independent contractors are not classified as employees. They may work for multiple clients, set their own work hours, negotiate their pay rate, and decide how a job gets done.
For example, the IRS says that if an independent contractor or freelancer does work that can be controlled (what will be done and how it will be done) by an employer then they are, in fact, classified as an employee.
As you can imagine, hiring someone as an independent contractor versus an employee is a fine line to tread.
While there are benefits when you choose the contractor route, there are quite a few drawbacks to consider and you’ll need to weigh them carefully to determine the best fit for your company.
A foreign subsidiary is a company that operates overseas as part of a larger company who’s HQ is in another country.
Establishing a foreign entity is great for having an international presence and accessing new markets. Though, setting up a subsidiary in Croatia can be expensive, stressful, and time-consuming. It's not for the faint of heart.
To set up a subsidiary in Croatia, you have to:
If you're lucky, this process can take months. If you're not so lucky, it can take up to a year. And on average, it costs about $50k-$80k, all-in-all, to get setup. And that's just for Croatia.
An employer-of-record (EOR) is a company that hires and pays an employee on behalf of another company.
An EOR is typically used to overcome the financial and regulatory hurdles that often come with employing remote workers.
Each country has its own payroll, employment, and work permit requirements for non-resident companies doing business in their jurisdiction. Meeting those demands can be a huge obstacle when it comes to hiring remotely.
At Panther, we help companies employ and pay people in over 160 countries, without having to set up a foreign subsidiary. Payroll, benefits, taxes, compliance, and more are all handled by us, at a fraction of the cost.
Outside of saving you months and tens of thousands of dollars, other advantages of using Panther are:
Because you no longer have to set up your own subsidiary, you’ll save a ton of time and tens of thousands of dollars using Panther.
Paying employees in Croatia is not the same as paying workers in your own country. Employees have to be paid using Croatia’s employment and payroll standards.
This means that you have to know, understand, and keep up with 1) fluctuating currency changes, and 2) local payroll and tax laws in the countries you’re looking to hire in.
Outside of the laws and regulations around payroll, there may be different conditions surrounding leave, overtime, termination, and more. As you can imagine, maintaining this kind of regulatory knowledge can be challenging. But it is crucial and necessary to follow local legislation.
After, you’ll have to determine the best way to pay your international employees. This can be done in a number of ways, including but not limited to:
One of the most challenging (and expensive) parts of paying international employees is setting up the infrastructure to do so.
Before you start to run payroll, you have to register your company as the local employer in the country the worker resides in. As you can see in the “Set up a subsidiary” section, this is a multi-step process that can take up to a year and put you on your way to bankruptcy.
Outside of EORs acting as the full admin employer, many also provide remote payroll.
For example, at Panther, in just 1-click, you’re able to pay your entire global team, anywhere in the world. We send you an invoice each month, charge you in US Dollars, and pay your employees the same amount in their local currency.
We factor in currency fluctuations and use the mid-market rate plus any applicable fee passed on by our provider at cost at the time of billing.
Full Time employment is considered 40 hours weekly – however can be extended to 50, and if agreed to in a collective agreement up to 60.
Employees generally cannot work more than 180 hours overtime annually (unless agreed to in collective agreement in which case the maximum is 250 hours).
Overtime work is paid at a higher rate, though the government does not specify how much extra.
Salaries are paid on monthly basis, no later than the 15th of the following month.
Not mandated by law but a Christmas bonus is common.
PTO is calculated by the:
There are 14 public holidays.
The duration of sick leave entitlement provided to workers is dependent on how long they have been employed by their employer:
Mandatory paid maternity leave starts 28 days (or 45 days, if necessary) before the due date for the child and goes until 70 days after birth. After that, the mother may continue with paid maternity leave until the baby is six months old, but it is not mandatory.
In all, paid maternity leave goes for 208 days.
In special circumstances, the father can take over the mother’s mandatory leave if the mother is unable to care for the child.
After the 70th day after birth, the mother can transfer the remainder of the leave to the father.
Each parent has the right to paid parental leave for each child, usable until the child turns 8. It goes for 8 months (for the first and second-born child) or 30 months (for twins, third and each subsequent child).
Both parents use parental leave for 4 or 15 months, but if only one parent takes it, it goes for 6 or 30 months.
Employers can terminate a fix term contract by giving the following reasons – business, personal or worker’s’ misconduct. It requires notice and a written explanation for the termination. If the reason is misconduct, a warning needs to be given and the employee gets a chance to explain actions.
Severance is paid, and all statutory obligations, such as paid time off, are compensated.
The notice period in Croatia is:
2 weeks for employees with a year of service
6 weeks for employees with two years of service
8 weeks for employees with five years of service
10 weeks for employees with 10 years of service
12 weeks for employees with over 20 years of service
Add 2 weeks for an employee over 50. Add four weeks for an employee over 55.
An employee with two or more years of service with a company has the right to severance pay in the event of termination. Minimum severance is one-third of the regular monthly pay per year at the company.
The probation period cannot be longer than one year.