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Posted workers – what do you need to know as an employer – part 1

New busines challenges, but also opportunities have appeared with globalisation, connecting and market expanding. Posted workers, i.e., employees that are sent to work in other countries are becoming one of the growing popular challenges that companies face. What that is exactly and what do you need to know as an employer, find out in this blog.

Who are posted workers?

You can find the definition for a ‘posted worker’ in the provisions of the Contributions Act ((NN no. 84/08 to 106/18) in article 7, paragraph 13 that states:

„13.1. person insured based on employment that has been posted to work abroad by the employer, in accordance with regulations on statutory insurances, the EU social security coordination regulation and trans-national social security contracts during their stay abroad remains in the statutory insurance system of Croatia… .

13.2. person insured based on employment that has been posted to work abroad by the employer with the purpose of performing duties in a diplomatic mission or a consular office of Croatia .

13.3. person that has been posted by a foreign employer to work in a domestic company, in accordance with the EU social security coordination regulation and trans-national social security contracts, has an arranged status in the insurance of the employer’s country. “

That means...

Simply put, posted workers are people that work for their company and offer services in another country for a certain period. But they are still being inside the social security system of their home country. Posting a worker is always temporary and during that time, the worker is employed by his/her domestic company.

You can post workers in the case of having services contracts that the company enters with a company from some other country that is a member of the EU. Moreover, it is possible to post workers inside a group of companies, but at a department in another country. And finally – posting workers through a temporary employment firm where the firm assigns workers to a company that acts in another country form the EU. In all these instances the Directive 96/71/EZ on posting workers is applied.

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What do you need to do before posting workers?

When posting workers in EU countries, Norway, Iceland, Lichtenstein, and Switzerland the same rules apply. First, you must contact the appropriate institution for social security in the domestic country. I.e., the Croatian Pension Insurance Institute. Then, you need to ask for the A1 certificate that confirms belonging to the Croatian social security system. Based on the certificate issued with the purpose of posting workers, the employer is exempt from paying contributions in another country.

For it to be approved by the HMZO – posting mustn’t be longer than two years and the person mustn’t be posted as a substitution for another worker. Also, the legislation of the home country (in this case Croatia) has to be applied for the person at least one month before posting. The employer must regularly perform activities in the foreign country where the worker is being posted. Finally, both, the worker and employer, are in direct contact during the posting period. The A1 form is filled by you (the employer). Employer is obligated to notify the HMZO on any changes that may occur (for example, the discontinuation of posting due to unplanned circumstances).

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Duration of posting

One of the more important things to know is the duration of the posting. Some regulations of the EU Directive on posted workers may vary, depending on the duration of the posting. In the case of short-term posting (up to 8 days), the regulation on minimum paid leave and work receipts does not apply. On the other hand, in the case of posting for more than a year, all employment rights and benefits of the company’s domestic country apply to the posted worker. Though,  except the regulation on additional pension systems and procedures, and conditions of entering and terminating an employment contract.

Also, when posting a worker to another country, the employee must give the worker a written employment contract or a written confirmation. Document must include the duration of posting, working hours, free days, currency in which the worker will be paid. Furthermore, other benefits that the worker is entitled to while being posted, and the conditions of the worker’s return are stated (according to the Labour Law, (NN 93/14, 127/17, 98/19,).

Posted workers vs. Business trips

It is important to distinguish posted workers in another country from workers going on a business trip. If your worker is going to another country for a meeting, a fair, a qualification and so forth, he/she is not actually providing services abroad and therefore is not a posted worker. In the case of a business trip, we advise to implement GOOMA – a travel management system , and in the case of posted workers follow the EU guides.

Calculating payrolls for posted workers

Any income from work are elements determined as mandatory according to the national law or a contract and is applicable. They are applied in accordance with article 3 paragraph 8 of the Directive.

Calculating payrolls is a complex process, especially in the case of posted workers. Luckily, there are digital solutions that can make this process easier and decrease the need for tables, charts, calculations, and constant following of complex legal processes. HR.PAYROLL.APP   is designed for the Croatian market and it enables the visibility of all data, while being adjustable and appropriate for all companies, regardless of the size.

What to do after posting?

If you abided to all the rules and obligations prescribed by the Directive, you shouldn’t worry. Still, there are certain situations you must be ready for. After the posting period has ended, the country where the worker had been posted can ask of you (employer) certain documentation. These can be an employment contract, payslips, working hours records and proof of work incomes payment So you should have all those safely stored.

In case of problems or questions, there is the European Labour Authority (ELA) that is responsible for issues regarding posting workers. You can also get concise answers and information in the Practical guide on posting on the official sites of the European Union .

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