Croatian Supreme Court passes an important employment-related decision for foreign companies with branch offices in Croatia

On 28 February 2017, the Supreme Court of the Republic of Croatia passed a decision no. Revr-1425/16-2 where it has concluded that if a foreign company (employer) with a branch office in Croatia employs fewer than 20 employees, but together with employees in Croatia and abroad 20 or more employees, is not obliged to apply the provision of Article 115 Paragraph 2 of the Labor Act (OG 93/14).

From this decision of the Supreme Court of the Republic of Croatia which repealed the second instance decision and confirmed the first instance decision, it could be concluded that regardless of the fact that a branch office is not a legal entity and that the rights and obligations are assumed by the founder of the branch office, when terminating employment of a Croatian employee and determining the number of employees in terms of Article 115 Paragraph 3 of the Labour Act (OG 93/14), the foreign company (employer) should only take into account the number of employees employed in the Republic of Croatia and not those employed in its own and / or other countries (which is opposite to the conclusion of the lower – second instance court). 

The full text of the decision is in the attachment hereto.