Your international employees will provide the services and skills your business needs to succeed overseas. Payroll processing is vital in your employee compensation and your company’s compliance. Globalization Partners covers everything from taxes to entitlement with our payroll outsourcing.
Saint Lucia operates on a progressive tax system and a Pay As You Earn model. With this model, employers are responsible for deducting taxes from employees’ paychecks. The tax progression is as follows for annual earnings:
- 10 percent for up to EC$10,000
- 15 percent for EC$10,001 to 20,000
- 20 percent for EC$20,001 to 30,000
- 30 percent for all amounts over EC$30,001
Employees are also responsible for deducting contributions for the National Insurance Corporation (NIC). Employees pay 5 percent, and employers must match that amount. The NIC considers overtime pay, commissions, holiday pay, and allowances as gross wages that employers should count in the contributions calculations. Payments that do not count as gross wages include:
- Christmas and annual production bonuses
- Terminal gratuities
- Severance payments
- Payments made in place of leave
Saint Lucia Payroll Options
Managing global payroll comes with a few organizational challenges. When you expand to a new country, you’ll have to identify the best means of processing payroll. Your options include:
- Internal department: If you establish a subsidiary in Saint Lucia, you can create an internal payroll department. This method will give you control over your processes, but it requires abundant company resources.
- Payroll processing company: Working with a third party for payroll processing can offer more legal expertise than you have on your own. However, if a processing company makes a mistake, your business will be responsible for any legal implications.
- Remote management: Another option is to rely on your current payroll department at home. Your team members will need to familiarize themselves with new payroll regulations and keep processes separate. Remote management is ideal when you have limited resources, but it comes with a high noncompliance risk.
- Employer of Record: As your Employer of Record, Globalization Partners will place your employees on our payroll. Our HR and legal experts will keep all your processes compliant, and we’ll send you a monthly invoice for your employees’ paychecks. You’ll mitigate all compliance risks with this option, as all functions will be our legal responsibility.
How to Set up Saint Lucia Payroll
All payroll methods and processing will require two essential pieces of information — tax identification numbers (TINs) and NIC registration numbers. Collecting employee TINs allows you to deduct income taxes and pay them to the Inland Revenue Department (IRD). The NIC registration numbers enable your company to make insurance contributions.
If you want to establish a subsidiary, you’ll need to go through the incorporation process first. During this process, you’ll receive government approval for creating a company, and you’ll register for your company’s TIN and NIC registration number.
Termination and Entitlement
Beyond taxes and contributions, payroll plays a role in termination. The Minister of Labor determines severance pay laws based on trade unions and collective agreements. While these laws will vary from one industry to another, all employees have the right to cash out unused vacation days upon termination.
If an employee has worked for an employer for two years and is terminated on the grounds of redundancy, they are entitled to a redundancy payment. Redundancy pay regulations are as follows:
- One week of pay for each completed year up to three years
- Two weeks of pay for every year over three years and less than seven years
- Three weeks of pay for every year over seven years
The employer should use the last week of pay before termination as the reference for redundancy payments.
Look to Globalization Partners for Payroll Outsourcing
Globalization Partners streamlines payroll and eliminates noncompliance risks on your end. Get in touch with us today to learn more.