Hiring in Bosnia and Herzegovina

The contract sets out role, salary in BAM, working time, leave, notice and any restrictive covenants. The EOR is the counterparty to the employee, which is what removes the need for your own entity.

Contracts are drafted in Bosnian, Croatian or Serbian, often with an English version alongside. Labour law is set by each entity, so the contract follows the rules of the Federation, Republika Srpska or Brčko District, depending on where the employee works.

Fixed-term contracts are capped at three years in both entities, and most EORs default to indefinite terms.

Set probation from day one. In Republika Srpska, an extension to 6 months needs the employee's agreement. In the Federation, 6 months is the ceiling.

Some EORs shorten probation as policy because they, not you, carry the dismissal risk. Ask before you agree a start date.

Overtime is paid at a premium set by collective agreement or the employer's work rules. Republika Srpska also limits it to 180 hours a year unless a collective agreement allows more.

There is no salary threshold that takes senior hires out of the rules, so put the position in writing and make sure hours are recorded.

Leave usually rises with length of service under collective agreements and work rules, typically up to 30 days, so budget above the floor for experienced hires. There is no single national holiday calendar, so days off depend on where the employee works and, for religious holidays, on their faith.

The employer pays the first 42 days of sick leave in the Federation and the first 30 days in Republika Srpska before the health insurance fund takes over. Maternity leave runs 12 months and is funded publicly, but the rate and reimbursement process differ by entity and, in the Federation, by canton. Confirm which side the EOR carries.

Dismissal needs a justified reason, given in writing. Statutory severance is one third of average monthly pay for each year of service, capped at six months' pay, for employees with two years on an indefinite contract who are not dismissed for misconduct.

The EOR runs the process as the legal employer and will want the paperwork in order, including final pay, unused leave and severance. If it releases the employee early, the full notice period is still paid. Unfair dismissal claims can end in reinstatement or compensation, so keep a documented reason.

Meal, transport and holiday allowances are where budgets slip. Collective agreements in the Federation commonly require them, and they are standard practice elsewhere, so check they are in the quote.

Private medical cover is not mandatory, though some employers add it for senior roles. EORs often bundle benefits through a group scheme. Ask what is included in the fee and what is billed on top.

Employer contributions add 5% on top of gross salary in the Federation, plus a few small levies, and nothing in Republika Srpska. That is before the EOR fee.

The entity is the trap. Tax, contributions and labour law follow where the employee works, so a hire in Banja Luka is costed differently from one in Sarajevo, and Brčko District has rules of its own. Confirm the location before you accept a quote.

Ask whether the EOR sponsors directly or refers to a partner. A partner-model EOR often cannot sponsor at all, and the quota and labour market checks apply to the sponsor, not to you.

Quotas are set for each entity every year, and the permit is tied to the employer and the role. Set start dates after approval, not before.

Get the data processing terms in the service agreement, not just the privacy notice. Cross-border transfers need a lawful basis, and the Personal Data Protection Agency supervises.

Ask where payroll data is hosted and who in the partner chain can see it.

Incorporation runs through entity-level court registers rather than a single national system, and the running cost is the point: accounting, statutory reporting, audit thresholds, payroll software and a work permit for any foreign director on the payroll set an annual floor. With staff on both sides of the inter-entity line, expect registrations in both.

Permanent establishment risk is about what people do, not where payroll sits. Revenue-generating activity can create exposure regardless of the employment route.