Employer of Record in Bosnia and Herzegovina

An Employer of Record (EOR) in Bosnia and Herzegovina is a company that legally hires employees on your behalf. This lets you build a team in the country without setting up your own local entity. The EOR takes care of all HR tasks like payroll, taxes, benefits, and making sure you follow local labor laws. You manage your employees' day to day work, while the EOR handles the paperwork. For companies looking to hire in Bosnia and Herzegovina, an EOR like Rivermate can make the process much simpler.

How an Employer of Record (EOR) Works in Bosnia and Herzegovina

Using an EOR simplifies hiring and employment. Here is how it usually works:

1. You Find the Talent. You are in charge of recruiting and choosing the best person for your team.
2. The EOR Hires Your Candidate. The EOR uses its local business entity in Bosnia and Herzegovina to legally employ the person you chose.
3. A Compliant Contract is Created. The EOR creates an employment contract that follows all local labor laws. This contract will be in the local language and will outline salary, benefits, and working conditions. According to the Labour and Employment Agency of Bosnia and Herzegovina, all employment contracts must adhere to the country's labor regulations (http://www.arz.gov.ba).
4. The EOR Manages HR and Payroll. They take care of all administrative work. This includes paying salaries, withholding taxes, and managing social security contributions.
5. Your Employee Starts Working for You. Your new team member begins their work for your company, while the EOR handles all the HR administration in the background.

Why use an Employer of Record in Bosnia and Herzegovina

Using an EOR can save you time and money, especially if you are new to the Bosnian market. It lets you focus on growing your business while the EOR handles the complexities of local employment law.

Here are some key benefits:

• Avoid Setting Up a Local Entity. Establishing a legal entity in a new country can be a long and expensive process. An EOR allows you to hire employees quickly without this step.
• Ensure Compliance. Bosnia and Herzegovina has specific labor laws that can be hard to navigate. An EOR ensures that you are fully compliant with all local regulations, reducing your legal risks.
• Simplify Payroll and Taxes. The EOR manages all payroll processing, tax withholding, and social security contributions. This saves you the trouble of learning and managing a new country's financial systems.
• Offer Competitive Benefits. An EOR can provide your employees with competitive benefits packages, helping you attract and keep top talent.
• Focus on Your Business. With the EOR handling HR and administrative tasks, you can focus on your core business goals and managing your team.

Rivermate's transparent pricing model eliminates complexity with a single, competitive monthly fee per employee. Unlike traditional PEO providers, our pricing in Bosnia and Herzegovina includes comprehensive HR support, benefits administration, compliance management, and access to our proprietary dashboard for real-time workforce analytics. No hidden costs, no setup fees—just straightforward pricing that scales with your business needs while ensuring full legal compliance in Bosnia and Herzegovina.

Hiring in Bosnia and Herzegovina gives you access to a hardworking and highly educated workforce. The country has a growing talent pool, especially in cities like Sarajevo and Banja Luka, with expertise in industries like IT and business process outsourcing. To hire compliantly, you need to understand the local labor laws, which have specific rules for things like employment contracts, working hours, and employee benefits. The country is divided into two main entities, the Federation of Bosnia and Herzegovina (FBiH) and the Republika Srpska (RS), plus the Brčko District, each with some of its own regulations.

Employment contracts & must-have clauses

You must provide a written employment contract in the local language. The contract should state the salary and any other compensation in Bosnian convertible marks (BAM).

Contracts can be for a fixed term or an indefinite period. Indefinite contracts are the most common. Fixed-term contracts have limits: 24 months in the Federation of Bosnia and Herzegovina and 3 years in the Republika Srpska.

Your employment contracts should include these key details:

• Job description and duties
• Salary and benefits
• Working hours
• Duration of the contract
• Termination and notice period requirements
• Annual leave entitlement

Probation periods

You can agree to a probationary period with a new employee. This period allows you and the employee to see if the role is a good fit.

• Maximum duration: The probation period cannot be longer than six months in the Federation of Bosnia and Herzegovina and three months in Republika Srpska.
• Notice period: During the probation period, either you or the employee can end the contract with at least seven days' notice.

Working hours & overtime

The standard workweek in Bosnia and Herzegovina is 40 hours, typically spread over five days.

Overtime is allowed but regulated. Employees must be paid more for overtime hours. The maximum amount of overtime varies by region:

• Federation of Bosnia and Herzegovina: Up to 8 hours per week.
• Republika Srpska: Up to 10 hours per week, with a maximum of 4 hours per day.

Public & regional holidays

Bosnia and Herzegovina has national holidays as well as regional and religious holidays observed in specific entities. The holidays for 2025 include:

Hiring contractors in Bosnia and Herzegovina

Hiring independent contractors can be a flexible way to access specialized skills for specific projects. This approach can save you the time and cost of setting up a legal entity in the country.

However, it is crucial to classify workers correctly. If a relationship with a contractor looks like a traditional employment relationship, authorities may reclassify them as an employee. This is known as worker misclassification and can lead to fines, back taxes, and other penalties.

An Employer of Record (EOR) can help you avoid this risk. An EOR acts as the legal employer for your workers in Bosnia and Herzegovina. They handle all the administrative tasks, including:

• Creating compliant employment contracts
• Managing payroll and taxes
• Administering statutory benefits

Using an EOR ensures your workers are classified correctly and that you comply with all local labor laws, while you still manage their day-to-day work.

In Bosnia and Herzegovina, your approach to compensation and payroll depends on where your business operates. The country has two main entities, the Federation of Bosnia and Herzegovina (FBiH) and the Republika Srpska (RS), plus the Brčko District. Each has its own rules. This means you need to pay close attention to the specific labor and tax laws for your location.

Payroll cycles & wage structure

The standard work week is 40 hours, typically eight hours per day from Monday to Friday. When you hire an employee, you must provide a written employment contract and register them with the Pension/Disability and Health Funds.

Your payroll calculation starts with the employee's gross salary. From there, you deduct social security contributions and income tax to arrive at the net salary you pay your employee.

Overtime & minimums

Overtime is permitted but has limits. In the Federation, employees can work up to eight extra hours per week, while in the Republika Srpska, the limit is ten hours per week. Overtime pay rates are usually set by collective agreements, but there are legal minimums. The minimum overtime rate is 125% of the regular hourly rate in the Federation and 130% in the Republika Srpska.

Minimum wages also differ by region. As of early 2024, the monthly minimum wage was 1,000 BAM in the Federation and 900 BAM in the Republika Srpska.

Employer taxes and contributions

As an employer, you are responsible for contributing to social security funds on behalf of your employees. These contributions cover pensions, health insurance, and unemployment. The rates you pay depend on your location. In the Republika Srpska, employers have no required social security contributions.

Here is a general breakdown of employer contributions:

Employee taxes and deductions

Employees also contribute to social security from their gross salary. In addition, a flat personal income tax is deducted.

Here is what employees contribute:

In Bosnia and Herzegovina, benefits and leave are shaped by a dual legal system. The country is divided into two main entities: the Federation of Bosnia and Herzegovina (FBiH) and the Republika Srpska (RS). This means that while some rules are the same, many details about leave and benefits can change depending on where your business operates. Understanding these differences is key to staying compliant and keeping your employees happy.

Statutory leave

Employees in Bosnia and Herzegovina are entitled to several types of leave required by law. These provide time off for rest, illness, and significant life events.

• Annual Leave: All employees are entitled to a minimum of 20 working days of paid annual leave. In the Federation of Bosnia and Herzegovina (FBiH), this can be up to 30 working days. An employee usually becomes eligible for this after one year of continuous service.
• Sick Leave: If an employee is sick, they can take up to 42 days of sick leave and must provide a medical certificate. The employer pays for the first 42 days. If the leave extends beyond that, a medical board reviews the case, and the state typically takes over the payments.
• Maternity Leave: Female employees are entitled to one year of continuous maternity leave. In FBiH, a new mother must take a minimum of 42 days of leave after giving birth, while in RS, the minimum is 60 days.
• Unpaid Leave: Employees can request unpaid leave for religious or traditional reasons. In FBiH, this is typically up to 4 days, while in RS, it is up to 3 days.

Public holidays & regional holidays

Bosnia and Herzegovina has national public holidays, but each entity also has its own holidays. If an employee has to work on a public holiday, they are entitled to increased pay.

Typical supplemental benefits

To attract and retain talent, many companies offer benefits that go beyond the legal requirements. Here is a look at what is required by law versus what is often offered as an extra perk.

How an EOR can help with setting up benefits

Setting up employee benefits in a place with two different sets of rules can be complicated. An Employer of Record (EOR) simplifies this process for you.

An EOR acts as the legal employer for your staff in Bosnia and Herzegovina. This means they handle all the administrative tasks tied to employment.

Here is how an EOR can help:

• Ensures Compliance: An EOR understands the specific labor laws in both the FBiH and RS. They make sure your benefits packages meet all legal requirements in the region where your employee works.
• Manages Administration: From enrolling employees in mandatory pension and health insurance plans to tracking leave, the EOR takes care of the paperwork. This frees you up to focus on your business.
• Provides Local Expertise: An EOR can advise you on what supplemental benefits are common in the local market. This helps you offer a competitive package that will attract the right talent.
• Simplifies Payroll: An EOR handles all payroll contributions for statutory benefits, ensuring everything is calculated and paid correctly and on time.

By partnering with an EOR, you can confidently build your team in Bosnia and Herzegovina without getting lost in the complexities of local labor laws.

Ending a work relationship in Bosnia and Herzegovina requires following specific rules. The country has two main regions, the Federation of Bosnia and Herzegovina (FBiH) and the Republika Srpska (RS), and each has its own labor laws. When you end an employment contract, you must provide a written notice and have a valid reason. These reasons can be related to the employee's performance, behavior, or for economic reasons within your company. It is important to follow the correct procedures to avoid legal issues.

Notice periods

When ending an employment contract, both you and your employee must give notice. The length of this notice period depends on the region and the employee's length of service.

In the Federation of Bosnia and Herzegovina (FBiH):

• The minimum notice period for an employer is 14 days.
• For an employee, the minimum is 7 days.

In the Republika Srpska (RS):

• Employers must give at least 30 days' notice.
• Employees must give at least 15 days' notice.

During a probationary period, which can last up to six months, either party can end the contract with at least seven days' notice.

Severance pay

Employees in Bosnia and Herzegovina may be entitled to severance pay when their contract is terminated. This is usually the case unless they are let go for serious misconduct. To be eligible, an employee typically needs to have at least two years of service with the company.

The amount of severance pay is at least one-third of the employee's average monthly salary for each year of employment. The salary is calculated based on the last three months. The total severance payment cannot be more than six times the employee's average monthly salary.

How Rivermate handles compliant exits

When you partner with Rivermate, we manage the entire offboarding process for you. We make sure that every termination is handled in full compliance with the local laws in Bosnia and Herzegovina.

Here is how we help:

• Legal Compliance: We stay up to date with the labor laws in both the Federation of Bosnia and Herzegovina and the Republika Srpska. This ensures that all terminations meet the legal requirements.
• Documentation: We handle all the necessary paperwork, including the written notice of termination. We make sure the reasons for termination are clearly stated and documented.
• Notice Periods and Severance: We calculate the correct notice periods and severance pay based on the employee's contract and local laws. This reduces the risk of disputes.
• Clear Communication: We help you communicate the termination to your employee in a clear and professional way. This helps maintain a positive relationship, even during a difficult time.

By letting us handle the complexities of employee exits, you can focus on your business. We make sure the process is smooth, fair, and compliant.

Navigating the visa and work permit process in Bosnia and Herzegovina can be straightforward with the right information. Generally, if you plan to work in the country, you will need both a work permit and a temporary residence permit. The employer usually starts the work permit application on your behalf. For short-term stays, many nationalities can enter visa-free for up to 90 days.

Employment visas & sponsorship realities

An Employer of Record (EOR) can be a practical solution for hiring in Bosnia and Herzegovina, especially if you don't have a local legal entity.

• EOR Sponsorship: An EOR can legally sponsor work permits for your employees. They act as the legal employer, handling all the necessary paperwork with the local authorities.
• What an EOR handles:
  • Work permit applications
  • Compliant employment contracts
  • Payroll and tax administration
  • Navigating local labor laws

This arrangement allows you to hire talent without the time and expense of setting up your own company in the country.

Business travel compliance

For short-term business trips, the process is simpler.

• Visa-free travel: Citizens of many countries, including the United States, can enter Bosnia and Herzegovina for business or tourism for up to 90 days without a visa.
• Registration: You must register with the local police within 72 hours of arrival. If you are staying in a hotel, they will typically handle this for you.
• Passport validity: Ensure your passport is valid for at least 90 days beyond your planned departure date.

It's important to remember that a short-stay visa does not permit you to work in the country. If your activities go beyond typical business meetings, you may need to explore work permit options.