The Amendments to the Employment Act
Lexology, June 27, 2013
In accordance with the proposed plan of the Ministry of Labour and Pension System, the Croatian Parliament passed at its eight session on 14 June 2013 the long expected Amendments to the Employment Act (“the Amendments”). The Amendments were published in the Official Gazette No. 73/2013 on 18 June 2013 and shall enter into force on 26 June 2013. In general, the Amendments should ease quick adaptation of the employers to the market demands and enable more flexible hiring and firing policy, especially in cases where the increased demand for work is just of temporary meaning. Following the adoption of the Amendments, the Croatian Government announced that more significant changes to the Employment Act are yet to follow in the third quarter of the calendar year. As Amendments provide for a number of modifications to the Employment Act, in this Article attention is given to the changes affecting the regime of fixed-term contracts and possibilities of dismissal during the probationary period.
Fixed- term contracts
Before adoption of the Amendments, a fixed-term contract (employment contract concluded for a definite period of time) may have been concluded only exceptionally for establishment of such an employment relation which termination was predetermined by objective reasons justified by a deadline, performance of certain task or particular occurrence. The maximum duration of a fixed-term contract was limited up to three years.
As opposed to previous standards, the Amendments provide for no limit in respect to maximum duration of the fixed-term contract. Yet, if the fixed-term contract is concluded for a period that is greater than three years, the employer is not permitted to conclude successive fixed-term contract with the same employee. In case where the fixed-term contract is concluded for a period that is lesser than three years, the overall time of concluded fixed-term contracts with the same employee shall not exceed three years, unless in case of necessity for replacement of a temporary absent employee or due to some other objective reasons permitted by the Employment Act or applicable collective agreement. The next restrictions is that every consecutive fixed-term contract with the same employee may be concluded only if there is an objective reason for conclusion of such fixed-term employment, what shall be laid down in the respective employment contract.
Termination during probationary period
Prior to entry into force of the Amendments the courts had imposed a rather conservative practice when interpreting the possibility of termination of employment during the probationary period, e.g. if terminating the employment within the probationary period, the employer was required to state legal basis for termination that is provided in the Article 107 of the Employment Act (termination due to business reasons, personal reasons or employee's misconduct) and sufficiently and objectively explain the reasons justifying such a termination. In order for termination of employment contract to be valid it was not sufficient for employers to merely state that the employee failed to meet employer’s expectations in terms of behaviour or performance but the employers had to provide objective explanation in favour of such arguments. The result was that in practice there was no major difference between ordinary termination of employment and termination of employment during the probationary period.
Such a solution showed to be inadequate in times where the need for a quick adjustment to the market conditions and cost effective employment has been given priority over the employees’ social welfare. Taking into consideration the necessity for introduction of more flexible regulation, the Amendments tend to ease firing of employees within the probationary period in that, the failure of employee to meet employer’s expectations within the probationary period has been introduced as a particularly justified reason for termination of employment.