When your company finds success at home, you may want to expand on a global scale to introduce further growth opportunities. International expansion is an advantageous move, and it takes an understanding of employment laws in different countries to do it correctly. While you can attempt to handle labor laws on your own, you sidestep the challenges with Globalization Partners.
Our Employer of Record services allow us to act as your international entity in your country of choice. We’ll hire your employees through our subsidiary, add them to our payroll, and handle all related employment laws in the process. This model also offloads associated liabilities from your shoulders to ours.
You can have peace of mind knowing you’ve mitigated risk while having a team of legal and HR experts keeping your employees compensated and supported. We can help you find notable talent in Vanuatu, and we’ll ensure all international employees have the proper documentation. With our services, global expansion is straightforward.
Doing Business in Vanuatu
With low taxes, an expanding economy, and government encouragement for international investors, global expansion in Vanuatu is an excellent choice for any company. The Strata Titles Act allows nonresidents to invest in the country with ease, and you’ll likely receive a significant return.
While the loose rules seem inviting, employment regulations are still critical to legal labor and success. Providing for employees, from housing to medical aid, is a pillar of the country’s labor regulations.
Vanuatu labor laws dictate that a contract is required for formal employment. Your contract can be written or oral. If the length of work is a fixed term for longer than six months, or the employee moves away from their place of residence to fill the position, you must create a written contract.
If you’re required to provide a written contract, it should include information like the names of both parties, salary, and any other terms, like housing, transportation, and rations. No employment contract can exceed three years. If an employer wishes to keep a worker on service after three years, they must draft a new agreement.
When the employee moves more than 50 kilometers away from their normal residence, the contract cannot exceed one year, and if they are a nonresident, the contract cannot exceed two years.
In Vanuatu, the maximum working hours without overtime are six days, 44 hours a week. Employees receive one day off each week. While this day is typically Sunday, employers may choose to recognize a different rest day in their employment contract. Before overtime, a workday cannot exceed eight hours.
If an employee works on Sundays, they must receive 150 percent of their standard rate. On a regular workday, the first 4 hours of overtime should be 125 percent of pay, and any additional hours are 150 percent. During nighttime hours, defined as 8 p.m. to 4 a.m., workers must receive 175 percent of their standard rate.
When an employee works for 12 consecutive months, they receive one day of leave for every month worked. Once a worker reaches 20 years of service, they receive two days of leave for every month. This leave increases to four days at 25 years, and six days at 30 years. Employers must pay workers their standard rates on these days off.
Any employee that works for an employer for 12 consecutive months receives 21 paid days of sick leave each year. If a worker takes sick leave for four days or more, they must present a medical certificate to the employer.
The country recognizes 14 public holidays:
- New Year’s Day
- Father Walter Lini Day
- Custom Chief’s Day
- Christmas Day
- Family Day
- Labour Day
- Ascension Day
- Independence Day
- Children’s Day
- Good Friday
- Easter Monday
- Feast of Assumption
- Constitution Day
- National Unity Day
Employees are not required to work on public holidays unless they’re in certain industries, including:
- Public utilities
- Hospitality and foodservice
- Places of entertainment, like theatres
- Health care
- Media, like radio and newspaper
- Animal husbandry
An employer can receive approval from a labor officer to require work on a public holiday, and an employee can volunteer to work on these days. Regardless of circumstance, workers should receive 150 percent of their standard rate when they work on a public holiday.
If a woman becomes pregnant while under an employment contract, she must present a medical certificate to her employer when she is six weeks away from delivery. She receives six weeks of leave before and after labor. Employers must pay at least half a worker’s standard rate while on maternity leave, and they can choose to provide more.
Termination and Severance
Required notice for termination depends on the number of years served and an employee’s pay schedule. Employers must provide three months of notice if a worker has been under contract for three years or longer. When an employee serves less than three years, notice relies on the pay schedule.
If an employee receives their paychecks biweekly or at a larger interval, they must receive at least 14 days of notice. For a pay schedule shorter than biweekly increments, notice periods should be equal to the days in between each payday. Employers may choose to provide a notice period’s worth of pay instead of notice for termination.
In the case of misconduct, employers do not need to provide notice or any form of severance. Severance packages depend on the length of employment.
The island nation is considered a tax haven because there are no income taxes for individuals below a certain income. Employers and employees both contribute to the country’s provident fund.
Private health insurance is very limited in the country and typically goes to expatriates. There is no social scheme for healthcare on the islands, but there are public hospitals available.
Employers are responsible for covering employees’ medical aid as needed, and the Minister will determine an appropriate rate for the circumstances. This medical coverage includes injuries on the job and illnesses or injuries that occur outside of work. If an employee lives with their family on the employer’s property, the employer is also responsible for their medical aid.
Additional Benefits and Bonuses
There are no additional benefits or bonuses outlined in the labor laws, though employers may choose to provide more at their own discretion.
Expand Business to Vanuatu With Globalization Partners
When you work with Globalization Partners, we handle the details of your expansion while you focus on what you know best — developing your company. Learn more about our Employer of Record model by reaching out to us today.