Looking for an Employer of Record in Bosnia and Herzegovina? Here’s what you need to know

Tapping into the huge workforce in Bosnia and Herzegovina can be a strategic benefit for your business. The vast talent pool allows you to explore a wide range of possibilities with offshore teams in the country.

However, managing company workflows and international teams can be overwhelming for employers and affect efficiency. Typically, companies use an employer of record to manage offshore teams. 

However, like other European countries, an employer of record in Bosnia and Herzegovina may not be permitted. 

So, companies can use a workforce management platform. For instance, Payoneer Workforce Management can help simplify the process. 

This guide breaks down the different nuances you need to remember while engaging talent in Bosnia and Herzegovina and how you can manage teams efficiently in the country. 

How to hire employees in Bosnia and Herzegovina

For companies seeking ways to engage talent in Bosnia and Herzegovina, there are multiple ways. Here are the primary ways:

• Setting up a local entity: This is the most direct way to set up a long-term presence in Bosnia and Herzegovina. You can register a subsidiary or an international branch office to directly hire and manage employees in the country. However, you need to follow compliance guidelines and navigate registration, taxation, and other nuances to be legally present as a business in Bosnia and Herzegovina.
• Hiring an independent contractor: You can engage BiH residents as freelancers or contractors to hire or onboard employees. Although this option gives you the flexibility and cost-effectiveness, there are high risks of misclassifications that can lead to legal issues or penalties, affecting your overall operations in the country.
• Using a workforce management platform: You can partner with a workforce management platform to engage talent in Bosnia and Herzegovina. Using the services, you can access the talent pool, while the platform supports onboarding, payroll, benefits, taxes, and other admin processes. 

Payoneer Workforce Management assists with engagement of talent in 160+ countries. We can help you set up localized benefits without having to set up a local entity.

How to onboard employees in Bosnia and Herzegovina

Onboarding employees in Bosnia and Herzegovina involves a few critical elements that you need to ensure.

Typically, BiH employment requires a written contract, employee documentation, authorized registration, payroll, taxation, and benefits. 

Here’s what usually goes into the employee onboarding workflow:

• Employment contract: A written contract stating employer-employee details, agreements, remuneration, benefits, and more.
• Documentation: Verify documents for legitimacy; check identification proof, medical certificates, tax and social security registrations, de-registration form to show non-association with previous employer (not applicable for freshers), and educational qualifications.
• Payroll enrolment and benefits initiation: Register new candidates with the payroll governing authority in Bosnia and Herzegovina, like the Federation of Bosnia and Herzegovina (FBiH) and Republika Srpska (RS). Besides, multiple entities oversee statutory benefits and social security. As an employer, you need to ensure that the employees are registered with such authorities for statutory benefits.
• Device assignment: Start shipping devices, tools, and necessary assets to employees to seamlessly continue operations.
• Onboarding briefing and introductions: Initiate operations by briefing local candidates on company policies, HR ethics, workflow, and other nuances. Organize and introduce teams to help them familiarize themselves with the work environment and colleagues.

Pay employees in Bosnia and Herzegovina

Employers need to pay employees in Bosnia and Herzegovina within the 10th of the following month, in Bosnia-Herzegovina Convertible Marka or BAM. 

Employees are required to pay income tax in BiH. 

The individual tax is calculated as 10% of the base, which is calculated by deducting 31% from the gross annual salary, along with a personal deduction. 

The personal deduction is calculated by multiplying the coefficient on an employee’s tax card by 300.

Social security contributions

In Bosnia and Herzegovina, both employers and employees contribute to the social security system.

These contributions cover retirement insurance and unemployment insurance and are calculated as a percentage of the employee’s gross salary.

Employment laws in Bosnia and Herzegovina

Employment laws in Bosnia and Herzegovina outline several regulations intended to maintain smooth end-to-end workflows across organizations. These laws dictate several provisions, including:

Working hours

Full-time BiH employees are entitled to work for 40 hours per week.

• Overtime: Overtime working hours are limited to 40 hours a month. 

Probation

There’s no defined minimum probation period in Bosnia and Herzegovina. 

The maximum limit is 6 months for both indefinite and definite-term contracts. 

The notice period for termination looks like this:

• During probation: 7 days
• After probation:
  • If the employee is terminating the contract: 7 to 30 days
  • If the employer is terminating the contract: 14 days to 3 months

Payoneer Workforce Management can help you navigate these labor law nuances and more, so that you can stay aligned with federal regulations and manage international teams on a single dashboard. 

Minimum wage in Bosnia and Herzegovina

The minimum wage in Bosnia and Herzegovina is set at 996 BAM. 

These rates can increase and are subject to amendments as per government decisions. 

Employment contracts in Bosnia and Herzegovina

Employment contracts in Bosnia and Herzegovina are primarily of two types:

• Definite-term: These are generally fixed-term contracts that end after a certain period. Employers can renew the contracts on demand or if needs arise. 
• Indefinite contracts: These are the more standard contracts in Bosnia and Herzegovina. Employers and employees agree upon an open-ended contract that ends when either of the two agrees to terminate, provided appropriate notice periods are served. 

A written contract in Bosnia and Herzegovina typically includes details like:

• Employee details (DOB, address, etc.)
• Nature of contract
• Job role and responsibilities 
• Date of joining
• Working hours
• Statutory benefits
• Non-disclosure clauses (based on company policies)
• Probation periods
• Termination conditions

Leave policy in Bosnia and Herzegovina

In Bosnia and Herzegovina, employees are entitled to various types of leave, including public holidays, earned leave, sick leave, and more. Here’s a quick overview:

Public holidays

Employees receive paid time off on 4 national holidays. Besides them, employees of different religious affiliations also receive their respective holidays during relevant times of the year.

Earned leave

You can provide a minimum of 20 days of paid time off per year, and the maximum number of days is capped at 30 days. 

Sick leave

There are no specific limits to sick leave days in BiH. However, with a proper doctor’s notice, employees receive only 80% of their salary during the leave. 

The employer should pay for the first 42 days of the leave, after which the net salary can be reimbursed from the social security fund. 

Maternity leave

Employees are entitled to a 12-month maternity period, which begins 28 days before the expected delivery date. 

After childbirth, either the mother or the father can choose to take the 12-month gap to look after the newborn.

Paternity leave

If the mother doesn’t avail the maternity leave after childbirth, the gap counts as paternity leave, and can be used by the father to care for the child.

Compassionate and wedding leave

You can provide 7 days per year for all sorts of occasions.

Employees can also use a leave carry-forward policy. As per it, they need to use the first 12 days of leave within a year, and the remaining can be carried over to the next year. 

The only stipulation is that employees need to use this leave by June of the following year. 

Work permit in Bosnia and Herzegovina

A work permit is an official document that non-BiH citizens need to work in the country. Official government authorities like the FBiH or the Republika Srpska usually issue these documents.

Typically, to legally work in Bosnia and Herzegovina, any foreign national or expat needs a valid BiH work visa issued at a diplomatic mission in their home country. That, and a valid passport, are mandatory documents required to obtain a legally issued work permit in Bosnia and Herzegovina. 

For more information, it is recommended that employers and employees consult official government resources for accurate information.

Background check in Bosnia and Herzegovina

Typically, most employers conduct background checks on employees before sending out offer letters or contracts. Make sure these checks follow federal policies and preserve the right to privacy to avoid penalties or legal ramifications.

These checks usually verify identity, legal presence in the country for expats, education, criminal records, and employee quality from previous employment, if any.

Employers should consult local regulations before performing background checks in Bosnia and Herzegovina.

Employment termination in Bosnia and Herzegovina

In Bosnia and Herzegovina, employee contracts can be terminated in two cases:

1. Mutual termination:
   • No legal risks
   • Both the employer and the employee mutually agree to terminate the contract.
   • The process includes meetings to discuss the situation and terms.
   • In this case, the termination date can be set without a notice period.
   • Severance payment isn’t a legal mandate, but it’s usually provided as compensation.
   • Typical factors that determine severance include:
     • Employer capacity
     • Employee tenure
     • Employability
     • Loss of unemployment benefits

2. Unilateral termination:
   • Chances of redundancies and legal risks exist
   • Legal obligations for employers include:
     • Amending systemization and canceling job posts
     • Waiting 8 days before the termination
     • Providing a 30-day notice period
     • Proving employees cannot be retrained or reassigned
     • Restricting new hires in similar positions for a year
   • Severance payment is mandatory in this case. You need to pay one-third of their net salary per year of service, for six salaries.
   • Employees have the right to appeal for a lawsuit if procedures are not followed.

Company registration in Bosnia and Herzegovina

Registering a business organization usually follows multiple steps that involve nuances like permits, taxation, and legalities. Whenever you open a company or subsidiary in Bosnia and Herzegovina, it’s best to consult the official authorities and look for details on the government websites.

Most employers prefer a workforce management platform to avoid the hassle of setting up branches. Payoneer Workforce Management operates in 160+ countries and can help employers with managing global teams. This frees them up to focus on company activities, without having to set up legal entities for international expansion.

PEO in Bosnia and Herzegovina

Professional Employer Organizations (PEOs) in Bosnia and Herzegovina are one way to engage talent in the country. However, with these organizations, you carry legal liabilities that can escalate risk, especially since you need to maintain a legal presence inside BiH borders.

This is why most employers prefer a workforce management platform instead. The platform can help you engage talent without having to set up a local entity.

Payoneer Workforce Management services in Bosnia and Herzegovina

Payoneer Workforce Management can help you manage international teams without worrying about the admin and HR workflows. 

Our platform can assist by:

• Onboarding local talent in Bosnia and Herzegovina on your behalf
• Helping with payroll, benefits, taxes, timesheets, and more
• Navigating local compliance

Connect with our experts today.

FAQs

1. Is there a set time for employees to receive their salaries in Bosnia and Herzegovina?

Yes, the country’s federal government has set a date for completing the monthly payroll in Bosnia and Herzegovina. You need to pay an employee’s salary by the 10th of the following month. 

2. Do employees receive health benefits?

While private health insurance isn’t obligatory, public health insurance is. You need to ensure that employees are insured by public health benefit schemes. The total contribution to health benefits is 16.5% of the gross salary, with 12.5% paid by the employer and 4% by the employee, covering hospital care, healthcare services, and medical treatment.

3. What are the social security contributions in Bosnia and Herzegovina?

Social security contributions in Bosnia and Herzegovina include 23% of the gross salary for retirement insurance. In this, 17% is covered by the employer, and 6% by the employee. There’s also a 2% contribution towards unemployment insurance, where 1.5% comes from the employer and 0.5% from the employee.

4. Is there an employer cost in Bosnia and Herzegovina?

The employer cost in BiH usually depends on the region and role. The net cost typically comes down to a sum of the gross amount. For an employment cost breakdown, you can use our employee cost calculator.