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Hiring in Bahamas
The Bahamas, officially known as the Commonwealth of The Bahamas, is a country in the Caribbean. Bahamas is one of the richest countries in the Americas in terms of its GDP per capita. International Tourism and offshore financial services are two of the major sectors of the economy that make substantial contributions to its GDP. These are followed by agriculture and manufacturing. Global PEO or Employer of Record (EOR) play a pivotal role in providing companies with services related to hiring employees, and ensuring compliance with Bahamas legal and tax regulations. The labor code postulates that employees are entitled to 2 weeks of annual leave after 1 year of service. As the Employer of Record (EOR), Global PEOs facilitate companies by ensuring compliance with the aforementioned labor code. Bahamas is essentially a tax haven as income is not taxed in the Bahamas.
statutory labor requirements
Probation Period
- The probationary period is between 6 to 12 months
Annual Leave
- 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.
Public Holidays
- New Year's Day (1st January)
- Majority Rule Day (10th January)
- Good Friday (10th April)
- Easter Monday (13th April)
- Whit Monday (1st June)
- Labor Day (5th June)
- Independence Day of Bahamas (10th June)
- Emancipation Day (of Bahamas) (3rd August)
- National Heroes Day (in Bahamas) (12th October)
- Christmas Day (25th December)
- Boxing Day (26th December)
Maternity Leave
- 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
- 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
- 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
Work Hours
- The standard work week in The Bahamas is eight hours a day or forty hours a week.
Overtime
- 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
- 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.
- where the employee has been employed for six months or more but less than twelve months
Severance
- 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.
income tax
- Income is not taxed in the Bahamas.
deductible expenses
- There is no income tax
- Hence, there are no deductible expenses.
immigration
- 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.
|
Type of Visa/Permit |
Documentation |
Validity |
Eligibility |
|
Work Permit |
|
Generally 1 year |
|
|
Annual Residence Permit |
|
1 year |
|
|
Home Owners’ Residence Card |
|
1 year |
|
value added tax
- The Bahamas imposes value-added tax (VAT) on the purchase of various consumer goods and services.
- The VAT rate is 12%.
|
VAT |
|
|
Standard Rate |
12% |
withholding tax
- There is no withholding tax on dividends, interest, royalties, or technical services fees in the Bahamas
- Additionally, there is no branch remittance tax
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 six months or more but less than 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 has been employed for twelve months or more
-
- 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.
- where the employee holds a supervisory or managerial position
statutory benefits
- 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
- Statutory benefits also include social security benefits
|
Statutory Benefits |
|
Probationary Period |
|
Annual Leave |
|
Public Holidays |
|
Maternity Leave |
|
Family Leave |
|
Sick Leave |
|
Overtime Pay |
|
Notice Period |
|
Severance Pay |
|
Social Security Benefits |
payments and invoicing
Income is not taxed in the Bahamas.
ease of doing business
- The ease of doing business index is an index created by Simeon Djankov, an economist at the Central and Eastern Europe sector of the World Bank Group.
- Higher rankings (a low numerical value) indicate better, usually simpler, regulations for businesses and stronger protections of property rights.
- According to the World Bank Bahamas ranked 119th in the World in 2019 in terms of ease of doing business.
employee accruals
| Christmas Bonus% | 0% |
| Christmas Bonus Over Vacations % | 0% |
| Severance per Year % | Employees are entitled to severance pay equal to one week's pay(1.37% of annual salary) |
| Vacations % | Employees are entitled to 2 weeks of paid leave following one year of service (4.16% of annual salary) |
| Notice % | Employees are entitled to 2 weeks of notice after the completion of 1 year of service (2.74% of annual salary) |
| Christmas Bonus Over Notifications% | 0% |
| Vacations Plus% | 0% |
| Total percentage of Salary (yearly) | The total employment accruals as a percentage of salary per anum are equal to 6.85% |
employer accruals
Additional information (Country Accruals)
| National Insurance | 5.90% |
| Vacations | 5.48% |
| Severance per year of service | 4.00% |
| 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. |
Employer Accruals Additional information
| Employment Accruals | ||
| Annual Leave | Every employer shall give a vacation of at least two weeks to each employee upon the completion of each twelve months of employment. | This equals 3.84% (2/52 weeks) of annual income |
| Maternity Leave | Maternity leave shall be for a period of not less than twelve weeks | This equals 23% (12/52 weeks) of annual income |
| Sick Leave | An employee who has been employed for at least six months is entitled to one-week sick leave with pay | This equals 1.92% (1/52 weeks) of annual income |
| Overtime | Overtime pay is one and one-half times the regular hourly rate, and two times the hourly rate on public holidays and days off. | Normal hourly rate is around 24.32 BSD. Overtime is paid at an additional 12.16 BSD. |
| Severance | 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. |
This equals 3.84% (2/52 weeks) of annual income |
| Social Security | Social security contribution by the employer is 5.9% of monthly salary | This equals 5.9% of monthly salary. Multiply this by 12 to attain an annual amount |
