Definitive Guide to Hiring in Bosnia and Herzegovina

Hiring in Bosnia and Herzegovina

Hiring employees compliantly in Bosnia and Herzegovina means doing it yourself or using an Employer of Record like Global Expansion. You should be careful using independent contractor agreements in Bosnia and Herzegovina so that you don’t run afoul of employment laws. To hire an employee compliantly and offer them mandatory benefits and compliant agreements, you can:

(a) Establish your own new legal entity, banking, accounting and payroll service in Bosnia and Herzegovina or

(b) use an Employer of Record like Global Expansion who can handle all of the details for you.

Labor Laws in Bosnia and Herzegovina

Employee Probation Period

RS:

• The employment contract may provide for a trial period for workers, which can be up to three months (contract for a trial period).
• Exceptionally, this period may be extended by mutual agreement for up to three months (Art. 21 ZOR).

FBiH:

• The Labor Code provides the possibility of contracting the probation period may not exceed six months (Art. 18 Labor Law)

Annual Leave in Bosnia And Herzegovina

• Employees are generally entitled to 20 days of paid annual leave, and in FBiH, no more than 30 days of leave.

Holidays in Bosnia And Herzegovina

Workers are entitled to paid holidays during Festival (public and religious) holidays. These include memorial holidays and religious holidays (Christian origin).

Here is the full list of public holidays in Bosnia and Herzegovina:

Maternity Leave Bosnia and Herzegovina

• Female employees are generally entitled to one year of maternity leave.
• In FBiH, the employee must take at least 42 days of leave, and in RS she must take at least 60 days of leave.
• In FBiH, following her leave, she may work half-time until her children are 2 years old.
• In RS, the employee is also entitled to an additional 6 months of leave if she has twins or for every child from her third child on.
• In FBiH, the employee is entitled to compensation under law, and employers often make up the difference to her full salary.
• In RS, the employee is entitled to compensation of the equivalent of her average salary over the prior 12 months or the time she worked before her maternity leave if it is less than 12 months.

Sick Leave in Bosnia and Herzegovina

• Employees are entitled to 42 days of paid sick leave

Working Hours in Bosnia and Herzegovina

• Companies in Bosnia and Herzegovina typically follow a standard Monday to Friday, 40-hour work week.

Overtime in Bosnia and Herzegovina

• Overtime is allowed but cannot exceed eight hours per week.
• The premium rate at which an employer pays overtime is decided by collective agreement and can vary by the industry.

Notice Period in Bosnia and Herzegovina

RS:

• The notice period may not be shorter than 30 calendar days if the employer is the one terminating the employment contract.

FBiH:

• The notice period shall not be less than 15 days nor more than six months, and the specific length of the notice period shall be regulated by the collective agreement and the rulebook.
• The notice period begins to run from the date of the delivery of notice to the employee or the employer

Severance in Bosnia and Herzegovina

RS:

• A worker who has concluded a contract of indefinite duration, and where employment was terminated by the employer, after at least two years of continuous employment with the employer, the employer is obliged to pay a severance.
• The amount of severance pay shall be determined by the collective agreement, rule book and employment contract, but cannot be less than one third of the average monthly wages of the last three months for each full year of service with the employer (Art. 141 ZOR), and depends on the length of service of the employee with the employer.

FBIH:

• The right to severance pay in the event of termination of employment with employees who have a contract for an indefinite period, provided that the contract is terminated after at least two years of work, and the reasons for dismissal are not breaches of obligation or non-fulfillment of obligations under the employment contract.
• Severance pay is determined by the collective agreement, rule book and employment contract but cannot be set at an amount less than one-third of the monthly salary paid to the employee in the last three months before retirement, for each year of work with the employer (Article 100 of the Labor Act).
• The law permits the employee and the employer agree on another form of compensation.

Bosnia and Herzegovina Salary and Wages

FBiH social security contributions

• Mandatory social security contributions in the Federation of Bosnia and Herzegovina are due by the following rates:

Immigration Bosnia and Herzegovina

• When a foreign national intends to stay in B&H for employment, he/she must obtain a work permit issued by the authority responsible for the employment of foreigners in accordance with applicable regulations.
• Depending on the place of residence, or in other words, the location of the employer, a work permit is issued by the authorities responsible for the employment of foreigners in Federation of Bosnia and Herzegovina, Republic of Srpska or Brcko District.
• In Federation of Bosnia and Herzegovina, work permits are issued by Cantonal Employment Services upon approval of the Federal Employment Service.
• In Republika Srpska, work permits for foreign nationals are issued by the RS Employment Service regional offices responsible for the region of employer’s head office.
• In Brcko District work permits for foreign nationals are issued by Department for Professional and Administrative Affairs in the Government of the Brcko District.
• Work permit for employment of a foreigner shall be issued within the specified work permit quota.
• Work permit quota is the number of work permits that may be issued to foreigners in certain occupations in B&H, during one year.
• The annual quota is determined by the Council of Ministers of B&H in accordance with the migration policy and the situation in the labor market.
• A working permit allows foreigners the right to work in Bosnia and Herzegovina, in the same way as Bosnia and Herzegovina citizens, with equal rights and obligations.
• The employment service issues the working permit, based on the Law of foreigner’s employment.
• A work permit cannot be issued for a period longer than 1 (one) year.

Value Added Tax (VAT) in Bosnia and Herzegovina

• The standard VAT rate is 17%, and the VAT regime applies equally throughout the country of Bosnia and Herzegovina.
• There is no reduced VAT rate in Bosnia and Herzegovina.

Mandatory Benefits in Bosnia and Herzegovina

• These are mandatory benefits as postulated by law
• These include probationary period, annual leave, public holidays, sick leave, maternity leave, overtime pay, and severance pay.
• Mandatory benefits also include social security benefits.

Payments And Invoicing

Federation of Bosnia and Herzegovina (FBiH) tax administration

• The deadline for submission of the annual tax return is 31 March of the following year.
• In the Federation of Bosnia and Herzegovina, monthly social security contributions have to be paid along with salary payment, but no later than by the end of the following month for the previous month.
• Salary taxation specifications have to be submitted to the tax authorities on the same day when payment of salary and contributions was made, but no later than one day after payment was made.

Payroll Accrual in Bosnia and Herzegovina

Country Accruals Additional Information

Description

Payroll Accruals Additional Information

Accrued Benefits in Bosnia and Herzegovina

Why use Global Expansion to hire in Bosnia and Herzegovina

Establishing a branch office or subsidiary in Bosnia and Herzegovina can be time-consuming, expensive and complex. With such a robust labor market in place, one must pay great attention to detail when structuring employment because Bosnia and Herzegovina labor laws are complex.

The company also has a responsibility to comply with specific employment practices dictated by Bosnia and Herzegovina law to maintain its good standing as an equal opportunity employer.

Global Expansion makes it easy for you to expand into Bosnia and Herzegovina. We'll help you hire your candidate of choice, handle HR matters and payroll, and ensure that you comply with local laws without the burden of setting up a foreign branch office or subsidiary. In addition, you'll have complete control and direction over your employees.

We enable you to stay in control of everything. Our Bosnia and Herzegovina Global Professional Employer Organization (PEO) and Employer of Record (EOR) solution provides you with peace of mind to focus on running your company and the security to enter new markets.