The proposal to amend the Foreign Nationals Act, which the Croatian government has sent to parliament, brings in a number of novelties aimed at regulating the labour market and introducing a more flexible model for hiring foreign workers in order to quickly and adequately respond to labour demand.

The proposal was prompted by a steady increase in the number of work and residence permits issued and the fact that 132,164 workers from third countries and almost 11,000 from EU member states have been registered with the Croatian Pension Insurance Institute.

The Foreign Nationals Act covers all persons who are not citizens of the EU, Liechtenstein, Norway, Iceland or Switzerland, and have the citizenship of a third country or are stateless. It has been aligned with the EU Blue Card Directive to attract highly skilled labour.

Under the proposal, the validity of the EU Blue Card, which also serves as permission for temporary residence and work in Croatia, is extended from two to four years. It can be obtained by persons who do not have the necessary educational qualifications, but do have professional skills exclusively in the IT sector, with at least three years’ work experience. The requirement remains that the Blue Card holder must earn a gross monthly salary that is at least one and a half times higher than the Croatian average.

Novelties for third-country workers

Foreign workers may be hired on the condition that the labour market test has shown that there are no available persons in the records of the Croatian Employment Service who meet employers’ requirements.

The novelty is that residence and work permits will be issued for up to three years and seasonal work permits for up to nine months. They will be issued as biometric documents.

The most important thing is that foreign workers will have to prove their competence for shortage occupations as well, which until now was not a requirement. They will need to show proof of work experience or proof of education.

This was criticised by the Croatian Tourism Association during the public consultation.

“Submitting proof of work experience or education is a verification mechanism for shortage occupations that primarily benefits employers. Practice has shown that foreign workers in shortage occupations do not have the appropriate knowledge and skills, which led to the cancellation of employment and the employer being left without the necessary labour,” the Ministry of the Interior said in response.

Just as Croatians, from now on foreign workers will also be allowed to work extra for another employer, and after working for a year in Croatia they will be allowed to change employers to work in the same job for which they received the work permit, without having to obtain a new one.

After the expiry of their employment contract, foreign workers will have a new unemployment period of 60 days. They will be able to register with an unemployment bureau and receive unemployment benefits. If they fail to find a new job within two months, they lose their work permit.

Croatian emigrants who have temporary residence for the purpose of immigration or foreign workers coming from another member of the European Economic Area or Switzerland for a period of up to 90 days, will be allowed to work without a residence and work permit or a work registration certificate.

Foreign nationals will not be able to be hired by employers who have been convicted of criminal offences relating to labour relations, social security and general security, or who owe debts to the state.

The new requirement is that employers must have a certain amount of revenue for the last six months – legal persons must earn at least €10,000 a month and physical persons at least €15,000. During the public consultation, this was criticised as too high an amount in too short a period.

Financial guarantees

The most important novelty is that employers will have to submit a financial guarantee to the state for each worker coming from third countries with a high migration risk (visa countries) in the event that they eventually give up on them. The guarantee will be in the amount of one average monthly gross salary per worker.

This amount will have to be paid into the state budget within eight days if the foreign worker does not start work within the period specified in the employment contract or if the contract was cancelled without the worker’s fault before the end of three months of work in Croatia.

These funds will be used to cover the cost of their return to their home country, which until now has been at the expense of the state.

“This will make employers carry out thorough selection procedures for the workers they really need,” the Ministry of the Interior said.

It was this that caused the most objections during the public consultation.

The Croatian Chamber of Commerce (HGK), the Croatian Chamber of Trades and Crafts (HOK), the Croatian Tourism Association, and some employers pointed out that this would put an additional financial burden on employers “in situations over which they mostly have no influence.”

The HGK proposed that foreign workers be charged directly at the embassy when submitting their passports and visa applications, and that the deposit be returned to them if they started work on the expected date.

“Very often it is employers who find themselves in uncertain situations when third-country nationals give up their employment or terminate the employment relationship of their own accord disregarding the dismissal procedure and do not show up at work again without any explanation or notification. The employer could be required to cover the cost of the return of third-country nationals only if it was legally found that the decision to dismiss was illegal,” the HOK said.

The purpose of the financial guarantee is to prevent unfair competition and ensure that third-country nationals do not find themselves in uncertain situations or illegal residence, the Ministry of the Interior said.

Since the financial guarantee is activated in cases prescribed by law and not during the submission of applications for a residence and work permit, the remark about the financial burden on employers is unjustified, it added.

Monthly wage must not be lower than national average

The proposal says that a foreign worker may not have a lower salary than that received by Croatian employees in comparable jobs.

Where employers provide accommodation for foreign workers, they will have to attach proof of adequate accommodation to the application for the residence and work permit.

Third-country nationals may be required to pay rent the amount of which must not be excessive in comparison with their net pay, and such rent must not be automatically deducted from their salary.

Citing data for June and July, Labour Minister Marin Piletić revealed that more than 9,000 foreign workers worked in the hospitality sector earning €1,130 a month on average. He confirmed that the state paid a portion of the pension contribution for workers whose gross salary was less than €1,300.

The state will ensure that foreign employees learn the Croatian language and has issued vouchers for this purpose.

Third-country nationals residing in Croatia for five years without interruption are required to demonstrate knowledge of the Croatian language and the Latin alphabet for a long-term residence permit.

Family members of Croatian citizens can obtain permanent residence status after four years of residence in Croatia and Croatian expatriates after three years.

Penalties

Legal persons face fines of between €5,000 and 20,000 and physical persons between €2,000 and €6,00 if they employ third-country nationals who are staying illegally in Croatia, who do not have a residence and work permit, who work in jobs that are not specified in the certificate, if they do not provide all the information required or do not provide access to their business premises.

Transport companies that have brought third-country nationals to Croatia from another EEA member state who are found not to meet the residence requirements will be required to transport them out of Croatia without delay and at their own expense.

If they fail to do so, they face a fine of between €3,000 and €4,500, and if they bring third-country nationals into Croatia without travel and other documents, they face a fine of up to €3,000.

Fines of between €1,000 and €2,000 will be imposed for third-country nationals without a work permit and a positive opinion from the Croatian Employment Service. Fines of between €700 and €1,700 will be imposed for EU Blue Card holders for violating the provisions of this law.