Introduction

As companies increasingly expand their footprint across Europe and North America, understanding the differences between labour laws in countries like Croatia and the United States has become essential. While both countries offer strong talent pools and strategic advantages, their regulatory frameworks couldn’t be more different.

If you’re managing employees or contractors in either jurisdiction, getting it wrong could mean fines, reputational risk, or even legal claims. And as someone who has advised businesses across both regions, I can tell you: assuming the same rules apply globally is a shortcut to costly mistakes.

Quick Tips

• At-will employment doesn’t exist in Croatia - terminations require justification and notice.

• Employee rights are more strongly protected in Croatia, particularly around working time and paid leave.

• The US has fewer mandatory benefits - employers often provide perks voluntarily.

• Misclassifying a worker in either country can carry major penalties - local legal review is vital.

• Croatian labour inspections are frequent and detailed - ensure documents are up to date.

Employment Contracts and Termination

In the US, most employment is “at will,” meaning either party can end the employment at any time, with or without reason. In contrast, Croatian law mandates valid grounds for termination, along with clear notice periods, severance pay, and consultation procedures.

A 2023 OECD study found Croatia among the top EU countries for employment protection legislation, reflecting a culture that prioritises job security. In practice, this means you’ll need robust documentation before making any changes to contracts or dismissals.

From a business perspective, this requires more preparation but can also reduce legal conflict when processes are well-managed. I’ve supported clients in setting up Croatian operations by first auditing their US HR playbooks and identifying what would - and wouldn’t - fly under EU law.

Working Time and Leave

Croatia follows strict rules on maximum working hours, overtime pay, and rest periods. Employees are entitled to at least four weeks of paid annual leave, plus public holidays and additional leave in many sectors.

By contrast, the US has no federal requirement for paid leave. Most employers offer time off as part of their benefits package, but there’s no statutory floor. This can give US-based companies flexibility, but also makes comparisons difficult when building cross-border equity.

For HR teams, this means recalibrating benefits expectations. In one case, I helped a client align their benefits offering for a global team without undercutting the entitlements of EU employees - we created a framework based on local baselines, with a shared ‘top-up’ benefit model.

Contractors and Misclassification Risk

The US has seen a surge in contractor usage, with IRS guidelines defining who qualifies. But enforcement varies by state. In Croatia, misclassifying an employee as a contractor can result in back pay, penalties, and legal exposure. Authorities in the EU are becoming stricter on ensuring employment protections are not bypassed via freelance arrangements.

In 2022, a US tech firm approached me after expanding into Croatia using the same contractor agreements they’d used in Illinois. Unfortunately, local inspectors flagged the roles as dependent employment. We quickly converted those contracts, registered a local entity, and avoided a costly fine - but it was a close call.

If you’re hiring across both countries, don’t assume the contractor model scales. Always review your employment structure with local advisers.

A Real Example: Aligning Policies Across Borders

A mid-sized SaaS company I worked with had teams in California, Zagreb, and Split. Their US handbook focused on flexibility and minimal bureaucracy, but in Croatia, that led to confusion and compliance risk. We rebuilt their policies with shared global principles (fairness, inclusion, accountability), but tailored them to meet each region’s legal realities.

The result? Stronger alignment, reduced attrition, and no compliance breaches in their first year.

Final Thoughts

Labour laws in Croatia and the US reflect very different legal traditions and cultural expectations. Neither is better - but they require different strategies. For HR leaders and founders, the key is respect: for local law, for employee rights, and for your brand’s integrity.

What’s next for your global people strategy?

Book a free compliance check-in or HR audit with ThinkGlobal HR. Whether you’re building a team in Europe, the US, or both, we’ll help you get it right - with compliant contracts, practical systems, and clear advice from experts who know the landscape.