Each labour market has some peculiarities. It may be tricky for foreigners to understand fully the payment methods, the taxes and other benefits related. In TalentUp we are starting a series of different blog articles, one for each country. This article analyses the labour market in Bosnia and Herzegovina.

Even if the national currency is the Bosnia-Herzegovina Convertible Marka (BAM), the whole article is in EUR to compare easily across countries and exchange rates

General data about the Bosnian labour market

Some working conditions change by region.

Payroll taxes in Bosnia and Herzegovina

Social security contributions are made by the employer and the employee and are used for funding unemployment, pension, maternity/paternity leave, and sickness or injury.

They depend on the region:

Once contributions are paid, employees need to pay a flat income tax of 10%.

Once contributions are paid, employees need to pay a flat income tax of 8%.

Contingencies from self-employees

Self-employed need to pay 4% as a health insurance contribution and 10% income tax.

Example of net salary in Bosnia and Herzegovina

As a reference, we use the average salary of a software engineer. In Bosnia and Herzegovina, on average, software engineers earn annually 29,200€.

Unemployment regulation in Bosnia and Herzegovina

Employers have the authority to terminate a fixed-term contract for reasons such as business needs, personal reasons, or misconduct by the worker. This termination process necessitates providing notice and a written explanation for the decision. In the case of misconduct, the employee must be given a warning and an opportunity to explain their actions.

Prior to termination due to misconduct, the employee should receive one written warning and two verbal warnings. If another violation occurs within 12 months of the third warning, the employer has the right to dismiss the employee without notice or severance pay. The dismissal must be communicated in writing.

In Bosnia and Herzegovina, employees must provide a notice period ranging from seven to 30 days, while employers are required to give notice ranging from 14 days to three months. During the probationary period, either party can terminate with seven days’ notice.

In Republic Srpska, the minimum notice period for termination by the employer is 30 days, and for termination by the worker, it is 15 calendar days. During probation, either party can terminate with seven days’ notice.

Regarding severance pay, employees in Bosnia and Herzegovina with a minimum of two years of service are generally entitled to a payment determined by the collective agreement. The amount is typically at least 1/3rd of the average monthly salary per year of employment, up to a maximum of six average salaries.

In Bosnia and Herzegovina, probationary periods cannot exceed six months.

Different kinds of leaves in Bosnia and Herzegovina

The annual leave lasts for 20 working days. It should be divided into two parts, with one of the parts being at least 12 working days long.

Moreover, employees have 4 days of leave (two of which are paid) to meet their religious or tradition-related meeds.

There are 21 public holidays.

There first month of sick leave is paid by the employer. After that, the sick leave is paid by the Social Security with no time limit.

Paid parental leave

Maternity leave can last for a year. The minimum maternity leave is 42 days after the birth.

In Bosnia and Herzegovina, a woman working full working hours after having used her maternity leave shall be entitled to be absent from work twice daily for a duration of one hour each time for the purpose of nursing the child until the child reaches one year of age.

One of the parents is able to work half-time until the children are two years old. And they also get a minimum of three days per year after that.

Other common Bosnian benefits

How to employ a Bosnian worker

To hire someone in Bosnia and Herzegovina, you need to have a legal entity registered in the country.

Some platforms (Papaya Global among them) offer the Employer of Record (EoR) service helping companies hire countries where they do not have any office.

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