Global HR Compliance in Bosnia and Herzegovina

To hire employees in Bosnia and Herzegovina legally, international employers must comply with two distinct legal systems: the Federation of Bosnia and Herzegovina (FBiH) and Republika Srpska (RS). Each has its own labour laws, tax regulations, and social security obligations.

Whether you’re employing local professionals, assigning expatriates, or managing short-term project staff, understanding entity-specific employment rules is essential for compliant operations.

This guide outlines key legal requirements for employment contracts, working hours, leave, termination, and employer contributions, allowing you to assess hiring feasibility without needing to establish a local legal entity.

Employment Contracts in Bosnia and Herzegovina

All employment relationships must be formalised through written employment contracts, which must clearly define:

• Role and responsibilities
• Compensation
• Working time
• Leave entitlements
• Termination conditions

Open-ended contracts are the default model. Fixed-term contracts are permitted up to five years and must be justified by objective reasons, such as project-based work or seasonal needs. Successive renewals beyond five years require explicit employee consent and may be reclassified as indefinite.

Verbal agreements are legally recognised but not recommended, as they increase the risk of disputes and regulatory scrutiny.

Probation Period

Employers may set a probation period of up to three months, subject to written agreement in the employment contract. During this period, either party may terminate the contract with shortened notice, typically 7 days. Probation terms must be applied equally and transparently.

Working Time and Overtime

The standard work schedule is:

• 8 hours per day
• 40 hours per week

Overtime is permitted under exceptional circumstances, such as operational emergencies. Overtime pay must meet or exceed:

• 125% of the base hourly rate
• Higher rates apply for night shifts, weekends, and public holidays depending on collective agreements

Maximum overtime is generally 8 hours per week in the Federation of BiH, while Republika Srpska permits more with prior approval or union agreement.

Paid Annual Leave

Employees are entitled to a minimum of 24 calendar days of paid annual leave per year. At least 21 days must be taken consecutively. Leave entitlement begins after six months of continuous employment. Unused leave must be compensated upon contract termination. Carryover rules vary by employer policy or collective agreement.

Sick Leave

Entitlement to sick leave varies by entity:

• In FBiH, employers pay for the first 42 days, after which the Health Insurance Fund reimburses the cost.
• In RS, the employer pays for the first 30 days, followed by public reimbursement.

Employees must provide medical certification for absences, and the rate of pay during illness typically ranges from 70% to 100% of the regular salary, depending on collective agreements and service duration.

Maternity and Parental Leave

Maternity leave is a minimum of 126 days, with extensions possible in case of:

• Multiple births
• Complications during pregnancy or delivery.

During this period, mothers receive full wage compensation funded by the Health Insurance Fund.

Fathers are entitled to up to 14 days of unpaid paternity leave within six months of the child’s birth. Paid or extended paternity leave may be available depending on employer policies or union agreements.

Minimum Wage

Minimum wage levels are set separately:

• Federation of BiH: Reviewed periodically and adjusted through government decree.
• Republika Srpska: Established annually by the RS Government.

Employers must comply with entity-specific wage requirements and ensure sectoral agreements are also respected where applicable.

Termination and Notice Periods

Employees may resign with 1 month’s written notice. Employers may terminate contracts due to:

• Misconduct
• Operational restructuring
• Redundancy
• Long-term incapacity
• Failure to meet probation requirements

Termination must be in writing, with clear reasons and effective dates stated. Dismissals without cause, or those lacking procedural transparency, may be contested in labour courts.

Notice periods:

• 2 weeks: expiry of fixed-term contract
• 1 month: employee resignation
• 2 months: employer-led redundancy (in liquidation or downsizing scenarios)

In cases of employer misconduct (e.g. breach of contract), employees may resign without notice.

Severance Pay

Severance is payable when:

• The company is liquidated or restructures
• The employee rejects materially worsened working conditions
• The employment is terminated without fault of the employee

The statutory entitlement is:

One-third of the monthly salary per year of service, unless a collective agreement stipulates a more favourable amount.

Severance is not mandatory in cases of serious misconduct or for part-time workers unless otherwise stated in contract or law.

Social Security and Employer Contributions

Employers are responsible for registering all employees for:

• Pension and disability insurance
• Health insurance
• Unemployment insurance

Rates and reporting procedures differ between FBiH and RS. Contributions are typically withheld from gross salary and paid monthly. Employers may also be responsible for workplace injury insurance or solidarity fund payments depending on sector.

Employers must ensure timely filing and payment, as delays may incur penalties or expose the company to inspection by local tax or labour authorities.

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