In July 2012 the Croatian Parliament abolished the rule that had enabled employees to receive salaries and other benefits as agreed in collective bargaining agreements (CBAs), years after the CBAs had ceased to be in force.

For decades companies with a large number of employees, through the CBAs, were establishing a minimum level of employees’ rights, such as vacation bonuses, Christmas bonuses and loyalty bonuses. In most cases the CBA’s also contained a detailed list of work positions and the basic salary levels for each position, and were granting rights to paid vacation that were above the national average.

Where companies were trying to renegotiate the social rights of their employees with the trade unionists, if they failed to agree on a new level of social protection for the employees, in theory the companies had the possibility to cancel the collective bargaining agreements. However, if they did that, the provisions of the cancelled collective bargaining agreement granting employees lucrative rights, would remain in force by virtue of law. This was the case with all employees whose contracts were signed under the regime of the collective bargaining agreement, as well any employees that started work after the cancellation of the collective bargaining agreement, due to the existence of a duty not to discriminate against employees. Basically, if trade unionists did not want to decrease the level of the employees’ rights, they would simply do nothing during the collective bargaining process.

The government has finally changed this rule after years of complaints from businesses. It is expected that this change will also help the government to end a never-ending collective bargaining agreement with public servants, after rounds upon rounds of unsuccessful renegotiations with trade unions.

Now, under the new law, once terminated, the old collective bargaining agreements will provide rights to employees for another 3 months. This seems to be a fair amount of time for companies and unions to renegotiate the terms of a new collective agreement. If they fail to do that, the employees will obtain their salaries and other lucrative rights as set out in their employment contracts and the company’s rulebooks.

Where the lucrative benefits from the collective bargaining agreements were simply copied into HR documents, which is a common practice in Croatia, this level of rights would most likely remain unchanged after the collective bargaining agreement expired. Therefore, companies should draft their HR documents in a manner which gives them the flexibility to tackle labour costs when such a need arises.


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