Definitive Guide to Hiring in Bahamas

Hiring in Bahamas

Hiring employees compliantly in Bahamas means doing it yourself or using an Employer of Record like Global Expansion. You should be careful using independent contractor agreements in Azerbaija so that you don’t run afoul of employment laws. To hire an employee compliantly and offer them mandatory benefits and compliant agreements, you can:

(a) Establish your own new legal entity, banking, accounting and payroll service in Bahamas or

(b) use an Employer of Record like Global Expansion who can handle all of the details for you.

Labor Laws in Bahamas

Employee Probation Period

• The probationary period is around 12 months as per certain collective bargaining agreements.

Annual Leave in Bahamas

• Every employer shall give a vacation of at least two weeks to each employee upon the completion of each twelve months of employment.
• The vacation given under subsection shall be extended by one day for every public holiday that occurs during the vacation.

Holidays in Bahamas

Workers are entitled to paid holidays during Festival (public and religious) holidays. These include memorial holidays and religious holidays (Christian origin).

Here is the full list of public holidays in Bahamas:

Maternity Leave Bahamas

• Except where an employee otherwise desires, maternity leave shall be for a period of not less than twelve weeks
• An employee who, after confinement, suffers any illness arising out of such confinement shall be granted, in addition to the maternity leave to which she is entitled, an additional unpaid leave not exceeding six weeks as a medical practitioner recommends.

Paternity Leave Bahamas

• There is no paternity leave
• However, male employees can benefit from the ‘Family Leave’
• An employee who has been employed for at least six months is entitled to family leave without pay for a period not exceeding one week per annum following
• the birth of a child; or
• the death or illness of a child, spouse or parent.

Sick Leave in Bahamas

• An employee who has been employed for at least six months is entitled to one-week sick leave with pay in any year where he is prevented by illness from performing his duties at his place of work:
  • Provided that no employee shall be entitled to receive payment in respect of periods of sick leave which is only one day long nor to accumulate such leave from year to year.
• Every employee shall be required to produce to his employer a medical certificate except in respect of the first day’s sick leave for any period of sick leave

Working Hours in Bahamas

• The standard work week in The Bahamas is eight hours a day or forty hours a week.

Overtime in Bahamas

• Employees who work more than the standard forty hours per week must be paid overtime pay, with the exception of supervisors and managers.
• Overtime pay is one and one-half times the regular hourly rate, and two times the hourly rate on public holidays and days off.

Notice Period in Bahamas

• The minimum period of notice required to be given by an employer to terminate the contract of employment of an employee shall be
  • where the employee has been employed for six months or more but less than twelve months
    • one week’s notice or one week’s basic pay in lieu of notice; and
    • one week’s basic pay (or a part thereof on a pro rata basis) for the said period between six months and twelve months;
  • where the employee has been employed for twelve months or more
    • two weeks’ notice or two weeks’ basic pay in lieu of notice; and
    • two weeks’ basic pay (or a part thereof on a pro rata basis) for each year up to twenty-four weeks;
  • where the employee holds a supervisory or managerial position
    • one month’s notice or one month’s basic pay in lieu of notice; and
    • one month’s basic pay (or a part thereof on a pro rata basis) for each year up to forty-eight weeks.

Severance in Bahamas

• No severance payment in case of dismissal with justified reason, which occurs when the employee has committed a fundamental breach of his contract or has acted in a manner repugnant to the fundamental interests of the employer – gross misconduct- (section31 EA: summary dismissal
• Redundancy Payment: -
  • Employer who dismisses an employee, of at least 1-year tenure, must pay
    • 2 weeks (or a part thereof on a pro rata basis) for each year up to 24 weeks.
    • 1 month (or a part thereof on a pro rata basis) for each year up to 48 weeks for supervisory or managerial positions.
• Personal grounds severance payment: -
  • Employer must pay the following severance payments
    • 1 week (or a part thereof on a pro rata basis > 6 m < 12 m.
    • 2 weeks (or a part thereof on a pro rata basis) for each year up to 24w > 12 months.
    • 1 month (or a part thereof on a pro rata basis) for each year up 48 w for supervisory or managerial positions.

13th / 14th Month Pay

• Yes
• There is no statutory requirement to pay the 13th or 14th month salary, however it is customary to pay a Christmas bonus, this is discretionary however, if the employee includes it in the contract they will be bound by it.

Bahamas Salary and Wages

• All employees and employers must contribute to the social security (national insurance) scheme. Contribution rates are based on the amount of weekly or monthly wages.
• Effective from 1 July 2018, the ceiling increased to BSD670 weekly, BSD2,903 monthly or BSD34,836 annually.
• The total contribution rate is 9.8% of the employees’ wages, of which 3.9% is withheld from the employee and 5.9% is paid by the employer.

Immigration Bahamas

• The right of expatriates to work in the Bahamas is restricted and regulated by the Bahamas government through the Department of Immigration.
• The government attempts to ensure that immigrants do not create unfair employment competition for Bahamians.
• An expatriate may not be offered a position for which a suitably qualified Bahamian is available.
• No quota system exists for work permits.
• A work permit application is not considered if the employee is already in the Bahamas as a visitor.
• The Department of Immigration considers the employment of a non-Bahamian if the prospective employee would be an asset to the Bahamas, and if the following conditions are met:
  • The employer has advertised and interviewed locally and has found no suitable Bahamian to fill the position.
  • The employer has obtained a vacancy certificate stating that no qualified Bahamian is registered who might fill the position.
• Normally, it is the employer’s responsibility to submit the work permit application for the prospective employee.
• This includes all necessary documentation, along with a copy of the local job advertisement, the results of interviews with local applicants and a vacancy certificate.
• Employment may commence only after the work permit is approved and the fee is paid.
• A work permit is usually issued for one year, but may be issued for a longer period for certain key positions under contract.
• Contracts should indicate that renewal is subject to obtaining immigration permission.
• Many employment contracts stipulate that the employee is expected to train or be replaced by a suitable Bahamian within a stipulated period of time.
• The Bahamas does not issue permanent work permits, but does issue permanent residence permits that grant the right to work. Work permits are issued for a specific position only.
• Changes in position within an organization require the issuance of a new work permit

Temporary residence

• Individuals making the Bahamas their temporary home may apply for annual residence permits.
• The annual cost of this permit is BSD2,000 for the head of a household and BSD100 for a spouse and each dependent.
• A person attending an institute of higher education in the Bahamas must pay BSD100 per year for an annual residence permit.
• Holders of annual residence permits may not work in the Bahamas under any circumstances.
• Overseas investors who acquire residential property in the Bahamas are eligible for Home Owners’ Residence Cards, which are renewable annually.
• The annual cost of the card is BSD500.
• The card facilitates entry into the Bahamas and entitles the owner, spouse and minor children to remain in the Bahamas for the period covered by the card.
• This card is most appropriate for seasonal residents. Holders of the card may seek local employment.

Value Added Tax (VAT) in Bahamas

• The Bahamas imposes value-added tax (VAT) on the purchase of various consumer goods and services.
• The standard rate of VAT was reduced to 10% from 12% as from 1 January 2022.
• The supply of real property is subject to VAT at a rate of 2.5% on transactions not exceeding BSD 100,000 and 10% on transactions over BSD 100,000.
• Transactions comprising the disposition of a business’ assets other than cash, deposit accounts, and real property are chargeable at a rate of 6%.
• Transactions comprising the disposition of a business’ assets other than cash, deposit accounts, and real property are chargeable at a rate of 6%.

Termination

• An employer may summarily dismiss an employee without pay or notice when the employee has committed a fundamental breach of his contract of employment or has acted in a manner repugnant to the fundamental interests of the employer
  • Provided that such employee shall be entitled to receive previously earned pay.
• In normal circumstance, an employee may be dismissed with pay and notice period
• The minimum period of notice required to be given by an employer to terminate the contract of employment of an employee shall be
  • where the employee has been employed for six months or more but less than twelve months
    • one week’s notice or one week’s basic pay in lieu of notice; and
    • one week’s basic pay (or a part thereof on a pro rata basis) for the said period between six months and twelve months;
  • where the employee has been employed for twelve months or more
    • two weeks’ notice or two weeks’ basic pay in lieu of notice; and
    • two weeks’ basic pay (or a part thereof on a pro rata basis) for each year up to twenty-four weeks;
  • where the employee holds a supervisory or managerial position
    • one month’s notice or one month’s basic pay in lieu of notice; and
    • one month’s basic pay (or a part thereof on a pro rata basis) for each year up to forty-eight weeks

Mandatory Benefits in Bahamas

• These are mandatory benefits as postulated by law
• These include probationary period, annual leave, public holidays, sick leave, maternity leave, family leave, overtime pay, notice period, and severance pay
• Mandatory benefits also include social security benefits.

Payments And Invoicing

• Income is not taxed in the Bahamas.

Payroll Accrual in Bahamas

Country Accruals Additional Information

Description

All individuals working in the Bahamas are normally liable to pay national insurance on a maximum annual salary of BSD34,836.

An employee rate of 3.9 percent and an employer rate of 5.9 percent is applied to the employee’s salary. The rates are applied up to a maximum ceiling of BSD670 weekly or BSD2,903 monthly (totaling a maximum annual salary of BSD34,836).

This maximum level is effective from 1 July 2018 and is subject to a further increase every 2 years thereafter by the estimated increase in average wages. An update to the National Insurance rates and ceiling is scheduled for 1 July 2020.

Details of the changes are currently not available. The national insurance scheme is compulsory. It provides benefits in respect of sickness, industrial injury, disability, maternity, retirement, and death.

Payroll Accruals Additional Information

Accrued Benefits in Bahamas

Why use Global Expansion to hire in Bahamas

Establishing a branch office or subsidiary in Bahamas can be time-consuming, expensive and complex. With such a robust labor market in place, one must pay great attention to detail when structuring employment because Bahamas labor laws are complex.

The company also has a responsibility to comply with specific employment practices dictated by Bahamas law to maintain its good standing as an equal opportunity employer.

Global Expansion makes it easy for you to expand into Bahamas. We'll help you hire your candidate of choice, handle HR matters and payroll, and ensure that you comply with local laws without the burden of setting up a foreign branch office or subsidiary. In addition, you'll have complete control and direction over your employees.

We enable you to stay in control of everything. Our Bahamas Global Professional Employer Organization (PEO) and Employer of Record (EOR) solution provides you with peace of mind to focus on running your company and the security to enter new markets.