The Assembly passed the Law on the suppression of undeclared work

In a significant legislative move, the Croatian Parliament passed a new law aimed at curbing undeclared work, introducing stricter penalties for employers who engage in such practices. The law was adopted under an expedited procedure, receiving 81 votes in favor and 36 abstentions. This decision aligns Croatia with recent amendments to the Foreigners Act, reflecting broader efforts to ensure compliance with labor regulations. One of the most notable changes involves increasing financial sanctions against employers found using undeclared workers. Previously, fines ranged between 2,650 and 6,630 euros per undeclared worker. Now, a third offense within three years will incur a fine of 8,000 euros, significantly raising the stakes for repeated violations.

The law also introduces modifications regarding the publication period on the so-called “black list” of employers found guilty of undeclared labor. Previously, this information was made public for six years, but now it will be published for just one year. Alongside this change comes a more severe consequence: employers listed on the black list will lose access to active employment policies measures. Additionally, the process for removing an employer from the list has been streamlined. If an employer pays the required penalty or receives a court ruling that nullifies the finding, they can be removed from the list within three days. However, this provision does not apply to cases involving a third or subsequent instance of undeclared work.

Another major change involves the abolition of the “white list,” which previously highlighted employers without any violations related to declaring their workforce. This shift aims to focus attention solely on those who have breached labor laws rather than rewarding compliance. Employers who hire foreign nationals and face administrative delays in processing extension requests for work permits are now protected under the new law. Specifically, work performed after the expiration of a permit will not be considered undeclared if the request for its extension was submitted before the deadline, as stipulated by relevant regulations governing the stay and work of foreigners.

The law also mandates that employees must be registered for pension insurance until they reach full-time working hours, even if they are already employed part-time elsewhere. Furthermore, the system known as JEER (Unified Electronic Record of Employment) has been expanded beyond digital platforms to cover other types of activities as well.

Alongside these labor-related reforms, the Croatian Parliament also approved the Spatial Plan of the Exclusive Economic Zone of the Republic of Croatia in the Adriatic Sea. This measure, supported by 80 votes and 26 abstentions, aims to create simpler and more efficient conditions for business operations within free zones. A key aspect of this reform involves reducing the requirement for export revenue from 50 percent to 33 percent for businesses operating in these zones. Currently, there are six recognized free zones in Croatia, four located in port areas of Pula, Rijeka, Split, and Plitvice, while two are land-based zones in Zagreb and Bakar.

Croatia's entry into the European Union led to the elimination of the free zone status for those areas where companies primarily operated on the internal EU market. As a result, the number of free zones dropped from 14 in 2013 to six, and since then, there has been little interest in establishing new ones or expanding existing ones significantly.

In another unanimous decision, the Parliament adopted legislation implementing Regulation 2024/1991 of the European Parliament and Council from June 24, 2024, concerning the restoration of nature and amending Regulation 2022/869. This regulation sets clear deadlines for implementing restoration measures both within and outside the Natura 2000 ecological network. By 2030, at least 20 percent of terrestrial and marine areas in the EU should be covered by these measures, aiming to restore all ecosystems deemed necessary by 2050.

The adoption of these laws underscores a comprehensive approach to addressing labor issues and environmental sustainability. With increased penalties for undeclared work and streamlined procedures for managing employer listings, the government seeks to enforce compliance more effectively. Meanwhile, the expansion of free zones and implementation of EU environmental directives reflect ongoing commitments to economic growth and ecological preservation. These legislative actions collectively aim to enhance regulatory adherence, promote fair labor practices, and support sustainable development across various sectors of Croatian society.