Finding success with your business at home may encourage you to expand beyond your borders. International expansion can be an effective move for your company, but it will require a new set of employment laws and professional expectations. Globalization Partners offers the expertise you need to thrive in Cabo Verde and more than 180 other countries.
Our Employer of Record model begins with our company hiring your employees through our subsidiary. With this arrangement, we can manage payroll, support onboarding, and remove all legal liability from your shoulders. Our other services include benefits management, work visa support, and guidance for employment contracts.
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Take a look at our information on Cabo Verde and learn how our team will be valuable during your expansion.
The Republic of Cabo Verde, also known as Cape Verde, is an island off Africa’s western coast. This archipelago’s economy thrives on tourism, agriculture, and transport. The country’s gross domestic product (GDP) partly relies on the resources and business brought by nonnational investment, making it an excellent location for expansion.
The country’s employment laws emphasize employee rights and representation. When you begin your expansion, you should consider the presence of collective bargaining agreements (CBAs) and internal regulations in the professional world.
Cabo Verde labor laws allow verbal and written contracts, though written agreements are more common. The employer and employee both have the right to request a written agreement if there isn’t one in place. Contracts should include any information valuable to the nature of employment, including:
- Start and end dates
- Professional category
- Wages or salary
If there are CBAs in place, the employment agreements should also include any agreed-upon terms. Fixed-term contracts encompass short-duration work, like seasonal duties, temporary tasks, or jobs with extreme fluctuations. These agreements can last from three to five years with the option for renewal.
When a fixed-term extends beyond five years, it becomes an indefinite contract with no declared end date.
The country’s standard working hours are eight hours a day and up to 44 hours a week. Every employee is entitled to a 24-hour rest period, which is typically Sunday. Employers can distinguish a different day in the employment contract.
Employers are permitted to extend daily working hours by one hour if they provide an additional half-day of rest as well as the standard 24-hour rest period. Overtime is any work over an employee’s prescribed hours. Extra hours are only permitted when additional work doesn’t warrant hiring new employees or the work is required to prevent or repair damages.
Workers can work up to two overtime hours a day for a total of 160 hours each year. If the employee consents, annual overtime can extend to 300 hours. Wages during overtime should be at least 50 percent of regular pay. If an employee works on their rest day, they must earn their standard wages.
Employees must receive at least 22 days of annual leave every year. Workers must have at least a one-year fixed-term contract to earn these days. If their agreement is shorter than one year, they earn leave proportionate to their working term. Annual leave should include standard wages. With consent from the employer, workers can accumulate annual leave up to 44 days.
Sick leave provisions rely on coverage from the National Social Insurance Institute. Employees are covered by social security for up to 1,095 days. The employer is responsible for paying 100 percent of wages for the first three days of sickness. After three days, social security covers 70 percent of earnings for the remaining sick days.
If an employee is sick for more than 30 days, their social security insurance will be reevaluated.
Public holidays are considered rest days in the country. Employees should receive a day off for the following holidays:
- New Year’s Day
- Democracy Day
- Heroes Day
- Labor Day
- Youth Day
- Independence Day
- Assumption Day
- All Saints’ Day
- Christmas Day
Employers are not required to provide pay during these rest days. If an employee works on a public holiday, they must earn their standard wages at a minimum.
Much like sick leave, social security covers maternity benefits for female workers. An insured worker earns 60 days of coverage for delivering a child, and there is no specification for how an employee uses these days. An employer may include more details about taking maternity leave in CBAs or internal regulations.
The National Social Insurance Institue will cover maternity leave at 90 percent of the previous month’s earnings or the average earnings of the past four months — whichever amount is greater. The employer is responsible for covering the difference between an employee’s wages and social security coverage.
If an employee is not insured, the employer is responsible for covering the entirety of maternity leave.
Termination and Severance
There are several types of termination, and severance plays a role in specific circumstances. In the case where both parties terminate the contract mutually, severance is not required. Notice policy is 15 days for every year of service. Employers can also provide payment equal to the days of notice for immediate termination.
Employees can terminate their contract at any time with the appropriate notice. Employers may terminate an employee with grounds for dismissal, including:
- Regular disobedience
- Harmful behaviors
- Repeated conflict
- Intoxication at work
- Lack of proper hygiene
- Neglect of duties
- Unjustified absences
When an employer has grounds for dismissal, they must provide a 40-day warning with their reasoning. The worker has five days to respond to the warning and change their actions.
An objective cause for dismissal revolves around changes at work that an employee can’t keep up with. These instances include:
- Extinction of position
- Incapacity to perform work
- Inability to perform work after organizational changes and training
For objective cause, employers must offer severance pay. Collective dismissal, or the termination of two or more employees, also requires severance pay. In these instances, the employer must terminate multiple contracts in the case of redundancy, company closure, or economic reasons.
Employers must document any form of termination with their signature and a signature from the involved employee.
Income tax has three percentage levels based on annual earnings, and employers must withhold these taxes from employee paychecks. Taxes also include social security contributions for insured workers.
With health coverage under the National Social Insurance Insitute, employers are not required to provide private health insurance.
Bonuses and Additional Benefits
The labor laws in Cabo Verde do not describe required bonuses or additional benefits for employees. Employers may provide more through CBAs or internal regulations.
Expand Business to Cabo Verde With Globalization Partners
Globalization Partners offers the guidance and expertise you need for a streamlined expansion. Don’t let borders be boundaries. Contact us today.