The topic of this final paper is the framework of labor relations act in Republic of Croatia. This topic will cover the concepts of work, workers, salary, types of employment, comparisons of labor relations in Republic of Croatia with other EU members and informal economy. In order to be able to theorize about these concepts we need to be well acquainted with the Labor law and labor relations. Labor Law is a set of legal rules that regulates labor relations, rights and liabilities of all participants in that relationship. Work could be defined according to the economic aspect, meaning every human action that creates added value and that can be expressed moneywise on the market. Before doing any work for the employer, employee should sign an emoloyment contract which derives all rights and liabilities for both the employer and employee. Nothing is ever completely one-sided, there are those who respect the law and those who like to do business in the informal economy. The informal economy is a trap that destroys the whole market.