Bosnia and Herzegovina is a southeastern European country situated on the Balkan Peninsula. It is home to about 3.2 million people, and its countryside is dotted with countless medieval villages and other historic relics. The Dinaric Alps and the natural beauty of this Balkan state attract many tourists, many of whom also visit the assassination site of Archduke Franz Ferdinand, whose death kicked off World War I back in the early 1900s. 

The country borders Serbia and Montenegro to the east and Croatia to the north and southwest. It also has 12 miles of coastline on the Adriatic Sea. While Bosnia and Herzegovina are united as one country (and have been since the 1850s), the dual naming convention reflects the distinct history associated with each region. Bosnia makes up the northern and central sections of the nation, while Herzegovina comprises the southern area. It is important to note that Bosnia and Herzegovina’s name conveys historical tradition, not political strife.

Why Expand Your Business to Bosnia and Herzegovina

Strategic Advantages of the Bosnian Market

Considered a developing country, Bosnia and Herzegovina’s economy is dominated by industry and agriculture. However, the tourism and service sectors have been growing in recent years. As the nation is largely decentralized, the government has limited power, leading to a favorable setting for businesses, which are faced with minimal regulation. Still, workers receive protections through a universal social security and healthcare system. Bosnia and Herzegovina is a European Union candidate country and has also been a candidate for NATO membership since 2010. 

Bosnia and Herzegovina has been a stable democracy since the 1990s and stands out as an ideal location for uniting Eastern and Western cultures through its crossroads position in the Balkan area. The nation boasts a young and adaptable workforce, affordable labor costs, and a cost-effective entry point for businesses looking to get a foot in the door in this hot area. Bosnia and Herzegovina has a GDP of over $27 billion, and major industries include metals, energy, textiles, wood processing, agriculture, and tourism.

Looking for more detailed information on expanding into this region? Review our comprehensive Guide to Doing Business in Bosnia and Herzegovina

Importance of Being Aware of Bosnian Labor Laws

Since applying for membership in the EU in 2016, Bosnia and Herzegovina has been working toward a more consistent regulatory environment, aligning its standards with those of the European Union. Labor laws in the country are governed primarily by the Labor Law of the Federation of Bosnia and Herzegovina and the Labor Law of the Republic of Srpska (an independent region within the larger state of Bosnia and Herzegovina). While there are some minor differences between these two codes, key aspects of each include a standardized 40-hour workweek, overtime regulations, minimum wage requirements, and leave entitlements. 

Being aware of these legal requirements is essential for anyone hoping to avoid potential legal problems and build a positive reputation as an employer in Bosnia and Herzegovina – or Srpska, for that matter. There are also penalties for employers who disregard these laws, either intentionally or through ignorance of the regulations. As an employer in Bosnia and Herzegovina, it is your responsibility to familiarize yourself with the country’s labor laws. In this hiring guide, we will highlight some of the most important aspects to consider.

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Step 1: Define Your Hiring Needs

Before you begin the hiring process in Bosnia and Herzegovina, it is crucial to determine the long-term objectives of your company’s expansion into the Balkans. Are you looking to establish a large European headquarters, or are you hoping to build a small team to oversee local operations? Once you know the scope of your Bosnian ambitions, then you can start thinking more specifically about the roles you want to fill. 

Ask yourself some of these questions: What skills do these roles require? How many employees will you need? What specific qualifications and experience are relevant or necessary for each distinct position? 

Determining these criteria in advance will help with your efforts to recruit employees in Bosnia and Herzegovina. You’ll be better equipped to find the right candidates and ensure that the roles you are hiring for correspond with your organization’s overall goals in the Balkans and build a successful recruitment strategy.

Step 2: Familiarize Yourself with Compliance Requirements

When you are hiring employees in Bosnia and Herzegovina, understanding the labor laws, tax obligations, and mandatory benefits offered in the country is essential. Per the country’s official documents, the scope of the labor law in Bosnia and Herzegovina is to: “govern the conclusion of labor contract, working hours, salaries, termination of labor contract, exercise of rights and obligations arising from employment, conclusion of collective agreements, peaceful settlement of collective labor disputes and other matters arising from labor relations.” 

Staying on top of the country’s tax codes and social security regulations is also paramount. In both the Federation of Bosnia and Herzegovina (FBiH) and the Republic of Srpska (RS), personal income taxes are set at a flat rate of 10%. Corporate income taxes for both FBiH and RS inhabitants are also set at a flat rate of 10%. Employers are responsible for withholding employee taxes and remitting them to the appropriate government payees. In addition, there are mandatory contributions from both employees and employers to pension/invalid insurance, health insurance, and unemployment insurance.

Step 3: Choose Your Hiring Method

The next step in hiring employees in Bosnia and Herzegovina involves deciding on the best hiring method for your needs. Will you establish a legal entity in the country, use an Employer of Record (EOR), or hire independent contractors? Each option comes with pros and cons. 

Establishing a Legal Entity

Establishing a legal entity in Bosnia and Herzegovina normally offers the most flexible arrangement and independence, but it carries the highest administrative burden.

Registering a business in Bosnia and Herzegovina can be time-consuming, and it is difficult to enter the market quickly if you are in a time-sensitive industry. To do business in Bosnia and Herzegovina, companies must navigate multiple procedures involving notary verification, court registration, tax authority enrollment, and statistical office registration. Tax compliance and property acquisition can also be challenging, due to the government’s incomplete ownership records and bureaucratic hurdles. The average time to establish a business in Bosnia and Herzegovina is 81 days. 

Compliance with all of these regulations can be challenging, especially if you are not familiar with local laws. These administrative tasks can also be costly.

Using an Employer of Record (EOR)

Using an Employer of Record in Bosnia and Herzegovina makes hiring in this Balkan nation easy. Instead of worrying about local compliance, you will hand off the administrative burden of hiring to the EOR, who will serve as the legal employer for your Bosnian employees.

An EOR in Bosnia and Herzegovina is already familiar with the country’s labor laws and regulations and will ensure that you are compliant with these rules for taxes, employment codes, mandatory contributions, and more. The EOR handles all HR functions, helping you save time, money, and effort. The EOR will take charge of burdens like payroll, taxes, benefits administration, contracts, dismissals and terminations, compliance, and even recruitment in Bosnia and Herzegovina.

There are limited cons when it comes to using an EOR in Bosnia and Herzegovina. The only potential drawback is a less direct relationship with employees during the hiring process. However, this can ultimately be a benefit as you can save time and money along the way.

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Hiring Independent Contractors

If you do not want to set up a company in Bosnia and Herzegovina, you can hire independent contractors, also called freelancers. Your freelance employees come with a reduced administrative burden, as you do not need to provide social security or healthcare benefits for them. They typically work on flexible or changeable schedules and may also work for other employers.

Because freelance employees may also work for other companies and typically manage their own schedules, you will be able to exert less control over what they do. They may also charge higher hourly fees than permanent employees. Furthermore, if you do try to treat them like a regular employee, you run the risk of penalties for misclassification, which can include back pay of taxes and social security benefits, as well as government-imposed fines.

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Step 4: Develop a Recruitment Strategy

The next question to ask yourself is, how am I going to find the right talent for this job? To begin with, you need to write an effective job description that is aligned with local market expectations. Bosnian, Croatian, and Serbian are the primary languages spoken in the country. These languages are similar and are mutually understandable, and you can use any of the three for business dealings. English is often acceptable as an alternative in professional settings as well. You’ll also want to make sure the job description aligns with local anti-discrimination codes. 

Once you write an amazing job description, you need to make sure that it gets in front of top talent. It is important to gain a solid understanding of the country’s job market and figure out where the best candidates are searching to find employment. Job seekers often use international platforms like LinkedIn and Indeed, but the most popular sites are niche boards specific to the country, such as Posao.bo, MojPosao.bo, and OLX.

Want to learn more about effective recruitment methods? Check out our research on strategies for successful hiring, which provides tips for drawing in top-tier candidates.

Our best tip? Work with a Bosnian recruitment agency or partner with an EOR experienced in Bosnia and Herzegovina. These organizations have the local expertise you need to find candidates who are perfect for your unique roles. An experienced EOR can also help you navigate expectations on standard salaries, employment trends, and benefits that will attract potential employees in Bosnia and Herzegovina.

Step 5: Conduct Interviews and Assessments

Once you have identified some potential candidates for your position, you’ll want to conduct interviews that adhere to cultural norms. Culture in Bosnia and Herzegovina showcases both Eastern and Western influences and holds family, respect, and social connections in high esteem. In business settings, it is customary to engage in social conversation before diving into professional matters. You will see the most success hiring in Bosnia and Herzegovina when you take the time to build trust and relationships and understand the local cultural context. 

When it comes to interviews, it is important to structure them appropriately and assess candidates fairly. Including written or practical assessments can also help you better evaluate a candidate’s readiness to hit the ground running in their new position.

Step 6: Know the Legal Limitations of Background Checks

If you are considering hiring an employee, it is good practice to conduct a background check. This allows you to ensure that all of the information they have provided to you on their resumé is accurate and complete, meaning that you have a clear picture of their educational and career backgrounds. In Bosnia and Herzegovina, it is permissible to conduct more in-depth background checks, such as a criminal history search, for business purposes. However, there are some rules and regulations to keep in mind when you do so. 

Bosnia and Herzegovina has data protection laws in place that regulate collecting and processing personal data, specifically the Law on Personal Data Protection. This code was recently updated to align more closely with EU standards. The main principles include:

  • Relevance of information: Any background check information requested must be related to the nature of the work a person is being hired for.
  • Limited purposes: Personal data can only be processed for specific purposes and must be discarded when those purposes are complete.
  • Consent: Employers must obtain the written consent of candidates before collecting and processing their personal data.
  • Data minimization: The data collected should be limited to that which is truly necessary for the stated purpose (in this case, a background check).

Step 7: Draft Employment Contracts

Employment contracts in Bosnia and Herzegovina must be written in one of the country’s three main languages: Bosnian, Croatian, and Serbian. They must also specify the salary to be provided in the local currency, the Bosnia and Herzegovina Convertible Mark (BAM). Here are the elements that must be included in an employment contract in the country: 

  • Names of both parties and their physical addresses 
  • Contract type, which can be either fixed-term or indefinite
  • Nature of the job, including the duties to be performed and working hours
  • Remuneration, or the fee/salary to be paid, as well as any bonuses or benefits
  • Place of work
  • Other terms and conditions, such as leave entitlements, notice periods, probationary periods, and more

Step 8: Register with Authorities and Set Up Payroll

Before any of your employees begin work, it’s important to complete a few registration steps with the Bosnian authorities. In Step 3, you incorporated your company or worked with an EOR to be able to hire in the country. Now, you need to ensure your organization is ready to onboard employees by following these steps: 

  • Ensure your company is registered with the tax and social security authorities
  • Determine if you are eligible for government programs like the Employment Institute’s co-financing for up to 50% of new hires’ salaries in the first year
  • Set up payroll to automatically withhold tax and social security payments, and ensure your HR department is trained on how to remit these payments to the proper authorities

Once all of these steps are completed, you are ready to bring your newest employees on board. 

Step 9: Onboard Your New Employees

Onboarding your new employees effectively will help them smoothly integrate into your company’s unique culture. Forbes reports that a strong onboarding strategy will increase employee engagement and retention rates, which will in turn impact customer satisfaction. With that in mind, it’s crucial to design an onboarding process that includes the following:

  • Provide the necessary training and resources
  • Introduce the new team member to peers and key stakeholders
  • Explain company policies, procedures, and expectations
  • Immerse the new hire in the company culture and discuss company values
  • Set clear objectives and goals for the new hire’s role

Key Employment Laws and Regulations

Labor Law of the Federation of Bosnia and Herzegovina

Adopted in 2015, the Labor Law of the Federation of Bosnia and Herzegovina is one of two governing labor laws in the country. The other, the Labor Law of the Republic of Srpska is similar and covers the responsibilities of employers and employers in the independent region of Srpska, which is located within Bosnia and Herzegovina. Both of these codes regulate topics like employment contract termination, working time, employment rights and obligations, collective bargaining agreements, leave entitlements, and more. 

The country does not have a single national minimum wage. As of January 2026, the Federation of Bosnia and Herzegovina sets a net minimum wage of BAM 1,027 per month, while Republika Srpska applies a tiered system ranging from BAM 1,000 for unskilled work to BAM 1,450 for jobs requiring higher education. The average net monthly salary is about BAM 1,450–1,500.

Social Security Regulations

Like its general labor laws, Bosnia and Herzegovina’s Social Security system operates on a regional basis. The Federation of Bosnia and Herzegovina (FBiH) has mandatory social security contributions from both the employee and the employer. In FBiH, employees pay 17% for pension/invalid insurance, 12.5% for health insurance, and 1.5% for unemployment insurance. Employers pay 6% for pension/invalid insurance, 4% for health insurance, and 0.5% for unemployment insurance. Employee contributions in FBiH amount to 31% of their salary, while employer contributions amount to 10.5% of the employee’s salary. 

In the Republic of Srpska (RS), social security contributions are mandatory for employees, but not for employers. Employees contribute 18.5% for pension/invalid insurance, 12% for health insurance, 0.6% for unemployment insurance, and 1.7% for child protection. Employee contributions in RS amount to 32.8% of the employee’s salary.

Types of Employment Contracts

Understanding the different types of employment contracts in Bosnia and Herzegovina is important when hiring in the country. While there are some other types of contracts (part-time, seasonal, probationary, temporary, and apprenticeship) indefinite and fixed-term contracts are by far the most common. 

Indefinite Employment Contracts

The most common type of employment contract in Bosnia and Herzegovina, indefinite employment contracts proceed for the foreseeable future and do not have fixed end dates. This type of contact offers long-term job security and benefits coverage for Bosian employees. A permanent employment contract may begin with a probationary period, but this is not required. 

Fixed-Term Employment Contracts

For employment opportunities with a specific end date, a fixed-term employment contract may be used. In Bosnia and Herzegovina, this type of contract can last up to five years. Temporary employment contracts are often used for short-term needs, seasonal work, or certain projects. 

Working Hours and Overtime

Standard Working Hours

The standard work week in Bosnia and Herzegovina is 40 hours, typically split up over five days. One rest day per week is mandatory, and employees are also entitled to a break if they are working more than six consecutive hours. 

Overtime Regulations

Overtime is permitted in Bosnia and Herzegovina, though it must be compensated at a premium rate. This rate is typically set in advance in either an employment contract or collective bargaining agreements, and it is normally paid at an additional 30% to 50% above an employee’s regular salary. The maximum overtime allowed per employee is typically 8 overtime hours per week. 

Leave Entitlements

Employees in Bosnia and Herzegovina are entitled to certain types of leave throughout their service in the workforce. In addition to the country’s public holidays, employees are given annual vacation time, sick leave, and parental leave. There are also some special leave circumstances allowed, such as bereavement leave, education leave, and sabbatical leave. 

Annual Leave

The minimum allotment of annual leave is 20 calendar days per year, which typically cannot be carried over into the next year. Normally, this leave must be used all at once. However, some employers will negotiate different leave terms to make employment with their company more attractive, providing additional days of leave or more flexible terms of usage. 

Sick Leave

There is no statutory limit on sick leave in Bosnia and Herzegovina, but extended absences may lead to review by a medical board, and a medical certificate is required to justify sick leave.

The first 42 days of sick leave are covered by the employer in full. After that initial period, the country’s health insurance fund will cover sick leave, compensating the employee typically between 70% and 90% of their normal salary. 

Maternity and Parental Leave

Female employees are entitled to one year of maternity leave, which typically begin 28 days before the child’s due date. Compensation is typically paid by the state’s health insurance fund and is calculated as a percentage of the employee’s salary.

Paternity leave is not statutorily regulated, but many employers will include a few days of paternity leave in employment contracts, to be taken starting when labor begins. 

Termination and Severance

Notice Periods

In Bosnia and Herzegovina, termination must follow due process. Employers have to provide written notice that cites legally valid reasons for termination, such as redundancy, poor performance, or serious misconduct. The notice period depends on the length of service and ranges from 14 to 30 days.

Severance Pay

Employees in Bosnia and Herzegovina are entitled to severance pay unless their termination happens due to misconduct. The typical severance pay rate is ⅓ of a month’s salary for every year worked, unless another amount is negotiated in a contract or collective bargaining agreement.

Employers are also required to issue a termination certificate and ensure that all debts are settled. Employers must pay out all outstanding wages as well as unused leave days and social contributions upon terminating an employee contract. 

Mandatory Contributions

Social Security and Pension Contributions

Employers in the Federation of Bosnia and Herzegovina (FBiH) are required to contribute to a nationalized social security scheme, which includes pension/invalid insurance, and health insurance. FBiH Employers pay 6% for pension/invalid insurance, 4% for health insurance, and 0.5% for unemployment insurance. In the Republic of Srpska (RS), employers do not have mandatory social security contributions. 

It is also the employer’s responsibility to withhold and remit payment of mandatory contributions and taxes from its employees. FBiH employees pay 17% for pension/invalid insurance, 12.5% for health insurance, and 1.5% for unemployment insurance. RS employees contribute 18.5% for pension/invalid insurance, 12% for health insurance, 0.6% for unemployment insurance, and 1.7% for child protection.

Optional Benefits

To supplement the mandatory benefits for employees in Bosnia and Herzegovina, employers often offer additional benefits to attract and retain top talent. Here are some of the most common offerings: 

  • Extra days of annual leave
  • Life insurance
  • Private health insurance, including dental and vision coverage
  • Workplace cafeterias and/or catered lunches
  • Better terms for severance pay

How to Hire Employees in Bosnia and Herzegovina – Our Take

When you are hiring employees in Bosnia and Herzegovina, you will have to work with a complex set of legal requirements, including labor laws, mandatory contributions, and employee protections set in stone by civic codes. Being familiar with these regulations and ensuring you are complying with the country’s legal considerations is crucial for avoiding lawsuits and building a positive reputation in Bosnia and Herzegovina. 

If juggling these requirements sounds daunting, working with an Employer of Record in Bosnia and Herzegovina can simplify the process, saving you time, money, and effort.