New act on restriction of undeclared work?

On Friday, December 16^th the Croatian Parliament passed the Act on Restriction of Undeclared Work (the "Act"), which applies from January 1^st, 2023.

What is undeclared work?

Undeclared work (in a narrow sense) is:

• work without registration with the HZMO prior to work commencement, prior to the first day of work, or without registration of appropriate working hours
• work without a written employment contract or a written confirmation of a concluded employment contract
• work on the basis of other contracts concluded between the employer and a natural person when such work has the characteristics of an employment relationship
• work of a third country national contrary to the regulations regulating the conditions of entry, movement, residence and work of foreigners 

Undeclared work (in a broader sense) is:

• an employment relationship in which the employee is not paid an increased salary and the prescribed public benefits are not paid on and from the increased salary
• payment of salary or part of salary without calculation and payment of contributions

Records and lists

The Act provides for the establishment of two records:

1. Unique electronic work record
2. Records of inactive persons

All employers (including digital work platforms) are obliged to submit data to the Unique electronic work record.

The Act also provides for keeping two lists:

1. List of employers with undeclared work
2. List of employers without undeclared work (publication on the list only with the employer's prior consent)

Liability for subcontractors

The contractor is jointly liable for the obligations that his subcontractor as an employer has towards his employee, for claims on behalf of due and unpaid salaries for work performed or services provided, to which the employee is entitled.