Managing payroll under local laws is essential to your company’s compliance as you grow in new countries.
Taxation laws in Bermuda
Bermuda does not impose income tax on individuals, so employers will not have to deduct tax values from employee paychecks. Employers are required to make contributions to the country’s pension scheme for all employees above the age of 17.
These contributions must occur every week that an employee works more than four hours. Employees contribute from their earnings, and employers match this amount. The current contribution is BMD 35.92 each for a total of BMD 71.84 weekly.
The country also imposes a payroll tax on employers that allows employers the right to recover a certain percentage from their employees. The rate at which employers can recover this is based on annual payroll values and can range from 1.75 percent to 10.25 percent.
How to set up payroll in Bermuda
Establishing your payroll requires the social insurance numbers of all of your employees as well as bank account information for wiring their paychecks to them. As an international employer, you have a few payroll options in Bermuda:
- Remote: Manage your international payroll from your existing payroll. Bear in mind that regulations may vary widely between your home country and international location.
- Local: Work with a payroll processing company in the area. This method offloads the responsibility of payroll management, but all liability falls back on you.
- Internal: Take the time to establish a subsidiary and run payroll from your entity in the country. This option gives you control but requires extensive resources to establish.
- Global employment platform: A global employment platform manages the payroll process for you — without requiring local subsidiary or bank account setup. Leveraging this technology reduces your responsibilities and mitigates risk of noncompliance.
Termination and entitlement
Employees must receive severance allowance upon termination if they’ve been continuously employed for at least a year. The severance pay calculation is as follows:
- Two weeks of wages for each year of employment up to the first 10 years
- Three weeks of wages for each year following the 10-year mark
This calculation has a maximum of 26 weeks of wages.
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