As the year is coming to an end and attention naturally shifts to closing the quarter and preparing for the holidays, a sense of uncertainty looms over the announced amendments to the Croatian Employment Act (Amendments). The need for speed is clear – all EU member states, including Croatia, are under an obligation to transpose the Directive 2023/970 (popularly called the “Pay Transparency Directive”) by no later than June 7, 2026. Concerns remain well-founded – at the time of writing, there is still no publicly available information on the workgroup tasked with drafting the Amendments, and given the formal steps ahead, from public consultation to parliamentary adoption, meeting the deadline appears increasingly optimistic.
Although the Pay Transparency Directive is not the only reason for the Amendments, it is certainly both the most significant and most demanding one. With the drafting process still barely underway, it is increasingly likely that Croatian employers will begin the new year with little to no understanding of the obligations expected under the forthcoming Amendments. Having in mind the wording of the Pay Transparency Directive, it may be generally expected that employers will need to ensure compliance with regard to the following areas: (i) transparency during recruitment – including, among other, the obligation to inform the candidate of the initial pay or pay range during the application process and prohibition of questions related to candidate’s pay history; (ii) employees’ right to information – most notably including information on their individual pay level and the average pay levels, broken down by sex, for categories of employees performing the same work as them or work of equal value to theirs; (iii) employers’ reporting obligations – the intensity of which will depend on the employers’ headcount, and in case where certain statutory conditions are met, most notably including the identified pay gap of more than 5%, an additional duty to carry out deeper and more demanding joint pay assessment measures may be triggered; and (iv) employers’ obligation to establish pay structures – providing a coherent framework for clear comparisons of work of equal value and forming the basis for subsequent reporting obligations.
Considering prevailing HR and payroll practices in Croatia, which are still characterized by limited formalization of job evaluation systems, inconsistent internal pay frameworks, and generally low levels of pay-related transparency, the new obligations will likely create challenges across multiple aspects of workforce management. Of course, the pressure will only grow in the absence of the draft Amendments, as employers are forced to anticipate substantial compliance obligations without clarity on how these requirements will ultimately be framed or implemented. In this context, the key question is what employers can already do to prepare. Even without the draft Amendments, companies can start by reviewing how pay ranges are currently determined and communicated, assessing whether job descriptions and internal documentation allow for credible comparisons, and checking whether their HR and payroll systems can generate reliable pay data. This is also the right moment to revisit internal policies, map existing decision-making processes, and open discussions on potential job evaluation methodologies, as these will likely become central to future compliance. Even if some adjustments must wait for the precise text of the Amendments, proactive internal coordination and early engagement with outside counsel can meaningfully soften the compliance burden once the new rules are introduced.
In addition to the pay transparency, it has been unofficially announced that the Amendments are also expected to refine other areas of the Croatian Employment Act, with limited updates on platform work, but primarily introducing longer carry-over periods for unused annual leave, creating a need for employers to also adapt staffing arrangements, internal policies, and operational planning.
The coming months offer a critical window for employers to assess current practices, ensure that compensation structures are transparent and defensible, and align policies with anticipated requirements. Early engagement with external counsel and service providers is also essential, ensuring that legal advisors, auditors, and compliance experts fully understand internal structures so they can help design practical and effective systems. Finally, fostering cross-stakeholder collaboration across HR, finance, legal, and leadership teams will support consistent implementation and reduce the risk of compliance gaps once the Amendments are formally adopted.
By Marija Gregoric, Partner, and Matija Skender, Senior Associate, Babic & Partners
This article was originally published in Issue 12.11 of the CEE Legal Matters Magazine. If you would like to receive a hard copy of the magazine, you can subscribe here.
