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Hiring in Barbados

Barbados is a Caribbean island and a sovereign British commonwealth country. Bridgetown is the largest city and capital of Barbados. Some of the main sectors of the economy and primary contributors of the GDP are tourism, manufacturing and offshore finance and information services. Its main trading partners are Canada, United Kingdom, United States and the Caribbean Community. Global PEO or Employer of Record (EOR) play a pivotal role in providing companies with services related to hiring employees, and ensuring compliance with Barbados’ legal and tax regulations. Employment regulations including probation period, holidays and termination are covered by the Labor Code. The Labor Code stipulates that employees are entitled to 3 weeks of annual leave after competing 5 years of service. Residents are taxed on their worldwide income; whereas nonresidents are taxed on their Barbados source income only. Global PEO’s facilitate companies by ensuring compliance with Barbados’ labor code and tax laws.

statutory labor requirements

Probation Period

  • No statutory regulation

 Annual Leave

  • An employee who completes a year of employment with an employer is entitled to 
    • an annual holiday of not less than 3 weeks where he has been in the employment of that employer for less than 5 years; and 
    • an annual holiday of not less than 4 weeks where he has been in the service of that employer for 5 years or more.

Public Holidays

  1. New Year's Day (1st January)
  2. Errol Barrow Day (21st January)
  3. Good Friday (10th April)
  4. Easter Monday (13th April)
  5. National Heroes Day (in Barbados) (28th April)
  6. Labor Day (1st May)
  7. Whit Monday (1st June)
  8. Emancipation Day (of Barbados) (1st August)
  9. Kadooment Day (3rd August)
  10. Independence Day (of Barbados) (30th November)
  11. Christmas Day (25th December)
  12. Boxing Day (26th December)

Maternity Leave

  • Except where an employee otherwise desires, maternity leave shall be of a period of not less than twelve weeks and shall be so arranged that the employee is allowed
    • such period, not exceeding six weeks, as she desires before the expected date of confinement; and 
    • a period of not less than six weeks from the date of confinement.

Paternity Leave

  • There is no paternity leave

Work Hours

  • Working hours for office personnel vary between 35 to 40 hours, while a 40-hour week is the norm for manual workers.

Overtime

  • Work in excess of 40 hours is paid at a premium overtime rate
  • The rate for overtime is one and-a-half times the normal rate and double pay for public holidays.

Notice Period

  • Length of notice varies depending on years of service and frequency wages are paid. 
  • They apply to employees with at least 1 year of continuous service (ERA Section 22): 
    • Hourly, daily or weekly paid 
      • 1 week notice period for employment period of more than 2 years
      • 2 weeks’ notice period for employment period exceeding 2 years but less than 5 years
      • 4 weeks’ notice period for employment period exceeding 5 years but less than 10 years
      • 6 weeks’ notice period for employment period exceeding 10 years but less than 15 years
      • 10 weeks’ notice period for employment period exceeding 15 years
    • Fortnightly paid
      • 2 weeks’ notice period for employment period up to 5 years
      • 4 weeks’ notice period for employment period exceeding 5 years but less than 10 years
      • 6 weeks’ notice period for employment period exceeding 10 years but less than 15 years
      • 10 weeks’ notice period for employment period exceeding 15 years

    • Monthly paid
      • 1-month notice period for employment period of 10 years
      • 1.5 months’ notice period for employment period exceeding 10 years but less than 15 years
      • 2.5 months’ notice period for employment period exceeding 15 years
  •  

Severance

  • Severance pay is legally required for employees with 2 years’ tenure dismissed for: redundancy, lay off/ kept on short-time and natural disaster
  • The amount of severance payment is: 
    • 2.5 weeks’ basic pay for each such year up to 10 years 
    • 3 weeks’ basic pay for each such year by which the employment exceeds 10 years but does not exceed 20 years, and 
    • 3.5 weeks’ basic pay for each such year by which the employment exceeds 20 years but does not exceed 33 years.

13th / 14th Month Pay

  • No
  • There is no statutory requirement to pay the 13th or 14th month.
  • There is no evidence that it is customary.
  • Instead employers are only required and often do pay only the holiday entitlement.

 income tax

  • An individual who is both resident and domiciled in Barbados is taxed on one’s worldwide income.
  • An individual who is resident but not domiciled in Barbados is taxed on income derived from Barbados and on income from any other sources outside Barbados to the extent that a benefit is obtained in Barbados.
  • In general, a non-resident individual is taxed only on income arising in Barbados and is not entitled to personal deductions against income.
  • For the period 1 January 2019 to 30 June 2019, the basic rate of income tax is 16%, and the higher rates are 33.5% and 40% (the latter being introduced from 1 August 2018). 
  • The basic rate applies to the first BBD 35,000 of taxable income; 33.5% applies to taxable income above BBD 35,000 and up to BBD 50,000; and 40% applies to taxable income in excess of BBD 50,000. 
  • Effective 1 July 2019, the basic rate is 12.5% and the higher rate is 33.5%. 
  • The basic rate applies to the first BBD 50,000 of taxable income; 33.5% applies to taxable income above BBD 50,000.

1 January 2019 to 30 June 2019

Taxable income (BBD)

Tax on column 1 (BBD)

Tax on excess (%)

Over (column 1)

Not over

0

35,000

5,600

16.0

35,000

50,000

5,025

33.5

50,000

   

40.0

 

1 July 2019 to 31 December 2019

Taxable income (BBD)

Tax on column 1 (BBD)

Tax on excess (%)

Over (column 1)

Not over

0

50,000

6,250

12.5

50,000

   

33.5

 

deductible expenses

Employed expenses

  • Employees may deduct only unreimbursed expenses incurred for travel and entertainment in the performance of their duties.
  • An employee may claim a deduction for an annual bonus that is converted into shares of their employing company, up to the lower of 75% of their annual bonus or BBD 7,500.
  • A deduction is allowed for subscriptions to a registered trade union/statutory association, up to BBD 240 per annum.
  • A deduction is allowed for subscriptions by a Parliamentarian to a political party, up to the lower of 10% of salary or BBD 5,000.

Personal Deductions

  • Non-residents are precluded from claiming any deductions in calculating taxable income.

Medical Expenses

  • A deduction is allowed for annual medical examinations for persons 40 years of age and over, up to BBD 750 per annum.

Renewable Energy

  • A deduction of 150% of expenditure on energy audits or electrical retrofitting to produce electricity from sources other than fossil fuels is allowed, not exceeding BBD 10,000 per annum for each year over a five-year period.

Charitable Contributions

Deductions are allowed for donations as follows:

 

Charity

Less than BBD 1 million

More than BBD 1 million

Settlement to a registered charity that is not an exempt charity

Deduction of the amount of the payment made or the market value of the property transferred not exceeding 10% of assessable income

Deduction of the amount of the payment made or the market value of the property transferred not exceeding 50% of assessable income; deduction taken over a five-year period

Settlement to an exempt charity

Deduction of the total amount of the payment made or the market value of the property transferred

Deduction of the total amount of the payment made or the market value of the property transferred

 

Personal Allowances

  • Non-residents are precluded from claiming any allowances in calculating taxable income.
  • Residents of Barbados can claim the following allowances:

Allowance

BBD

Individuals

25,000

Individuals over the age of 60 and in receipt of a pension

40,000

Individuals whose spouse had no income and was either fully supported or lived with the spouse

3,000

 

Business Deductions

  • An individual carrying on a trade, business, profession, or vocation can generally deduct expenses incurred for the purpose of producing assessable income of the individual.
  • Depreciation of a motor vehicle is not deductible.

immigration 

  • In general, visitors from certain countries are required to have visas to enter Barbados. 
  • In certain cases, individuals from these countries are required to have visas only if they are going to be in Barbados longer than 28 days.
  • Foreign nationals and foreign companies are allowed to establish companies in Barbados.
  • Foreign nationals employed by these companies in Barbados must obtain work permits.
  • Nationals of member countries of CARICOM who are university graduates are not required to have work permits to live and work in Barbados. 
  • However, such nationals must obtain a certificate of recognition as a CARICOM Skilled National instead of a work permit contingent rights, including the right to leave the country without permission and the right to seek employment without first obtaining a work permit. 
  • All other foreign nationals who wish to work in Barbados must apply for work permits. 
  • Work permits allow individuals to reside and work in Barbados and normally are issued for a period of three years unless otherwise specified. 
  • No quota system exists for issuing work permits; each application is evaluated on its own merit. To approve a work permit application, the government must be satisfied that no suitable Barbadians can fill the vacancy. 
  • Work permits are non-transferable. 
  • If a work permit holder leaves the employer, the work permit is canceled. 
  • The employer should inform the Immigration and Passport Department that the employee has left the company. 
  • Applicants may not work while their work permit applications are being processed. 
  • Work permit holders should renew their work permits three to four months before expiration.
  • Work permit holders who have lived in Barbados for six years or more may apply for nonimmigrant visas, which eliminate the necessity of applying for work permits. 
  • If necessary, an application should be made for a long-term work permit to cover the processing period of the non-immigrant visa.
  • Non-immigrant visas are issued to individuals who wish to retire or reside on the island.
  • Applicants must be of sound body and mind and must be capable of supporting themselves.
  • Each application is processed on its own merit. 
  • The process is lengthy and can take more than one year. 
  • To approve a residence application, the government must be satisfied that the applicant can support himself or herself and will not be a burden to the country. 
  • The individual’s qualifications and entitlement are also taken into consideration. 
  • No quota system exists for issuing residence permits; each application is evaluated on its own merit.

Type of Visa/Permit

Documentation

Validity

Eligibility

Work Permit

  • Application fee of BBD300 (USD150). 
  • C-1 and C-2 forms.
  • Medical form completed by a medical practitioner (including X-ray report and venereal disease research laboratory report). If it is done outside of Barbados, it must be reviewed by a local doctor (compact disc is required).
  • Four passport-size photographs.
  • Copy of passport bio-data page.
  • Two character references. 
  • A Police Certificate of Character (PCC) based on a fingerprint check from the applicant’s place of residence and from each country in which the applicant has resided for six months or more during the past three years.
  • For UK residents, an affidavit may be accepted instead of the PCC, but a certificate based on a nationwide search of the country’s database is also required.
  • Documentary evidence of the applicant’s qualifications (for example, university degree).
  • A cover letter setting out the nature of the business in which the applicant will be engaged.
  • For an applicant hoping to set up a business in Barbados, clear evidence of the amount of his or her investment (for example, bank transfer statements). 
  • A copy of the certificate of registration or incorporation of the company as well as the company’s International Business Companies license, if applicable.

11 months to 3 years                                                                                                                                                                                                                                                                                                                                                                                                                                                                             

  • Foreign nationals employed by companies in Barbados must obtain work permits.

value added tax

  • VAT is levied at the rate of 17.5% on the value of a wide range of goods and services imported or supplied in Barbados by VAT-registered persons.

VAT

Standard Rate

17.5%

Zero Rate

0%

withholding tax

Dividends

  • Dividends paid by a Barbados resident company to a nonresident company or individual generally are subject to withholding tax at 5%, unless the rate is reduced under a tax treaty.
  • The rate is 25% for dividends paid out of tax exempt profits
  • A 15% rate applies to dividends paid to a resident individual

Interest

  • No withholding tax applies on interest paid to a nonresident 
  • A 15% withholding tax applies to interest payments between resident companies and individuals

Royalties

  • No withholding tax applies on royalties paid to a resident or nonresident

Fees for technical Services

  • No withholding tax applies on fees for technical services paid to a resident or nonresident

Type of Payment

Residents

Nonresidents

 

Company

Individual

Company 

Individual

Dividends

0%

15%

0%/5%/25%

0%/5%/25%

Interest

15%

15%

0%

0%

Royalties

0%

0%

0%

0%

Technical Service Fee

0%

0%

0%

0%

termination

  • Employees with 1 year´s continuous service have the right to receive, upon request a written statement of the reasons of their dismissals (Section 22 and 23(2) of the Employment Rights Act –hereinafter ERA).
  • Length of notice varies depending on years of service and frequency wages are paid. 
  • They apply to employees with at least 1 year of continuous service (ERA Section 22): 
    • Hourly, daily or weekly paid 
      • 1 week notice period for employment period of more than 2 years
      • 2 weeks’ notice period for employment period exceeding 2 years but less than 5 years
      • 4 weeks’ notice period for employment period exceeding 5 years but less than 10 years
      • 6 weeks’ notice period for employment period exceeding 10 years but less than 15 years
      • 10 weeks’ notice period for employment period exceeding 15 years
    • Fortnightly paid
      • 2 weeks’ notice period for employment period up to 5 years
      • 4 weeks’ notice period for employment period exceeding 5 years but less than 10 years
      • 6 weeks’ notice period for employment period exceeding 10 years but less than 15 years
      • 10 weeks’ notice period for employment period exceeding 15 years
    • Monthly paid
      • 1-month notice period for employment period of 10 years
      • 1.5 months’ notice period for employment period exceeding 10 years but less than 15 years
      • 2.5 months’ notice period for employment period exceeding 15 years
  • Severance pay is legally required for employees with 2 years’ tenure dismissed for: redundancy, lay off/ kept on short-time and natural disaster
  • The amount of severance payment is: 
    • 2.5 weeks’ basic pay for each such year up to 10 years 
    • 3 weeks’ basic pay for each such year by which the employment exceeds 10 years but does not exceed 20 years, and 
    • 3.5 weeks’ basic pay for each such year by which the employment exceeds 20 years but does not exceed 33 years.

statutory benefits

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

Statutory Benefits

Annual Leave

Public Holidays

Maternity Leave

Overtime Pay

Notice Period

Severance Pay

Social Security Benefits

payments and invoicing 

  • The tax year for individuals is the calendar year.
  • All individuals who carry on business (whether or not assessable income has been derived during the income year) or earn assessable income in excess of BBD 25,000 (BBD 40,000 in the case of pensioners over age 60) are required to file a separate income tax return.
  • The return is due by the following 30 April.
  • Income tax returns can be filed online.
  • Income tax is normally withheld from salaries under the PAYE system, and interest is payable to the taxpayer on overdue tax refunds. 
  • Individuals earning more than 25% of their total assessable income from business or rent must pay three instalments, each representing 25% of the previous year’s income tax liability, on 15 June, 15 September, and 15 December. 
  • Other individuals must pay 50% of the income tax due on filing the income tax return on 30 April and the remainder on 30 September.

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 Barbados ranked 128th 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 severanc epay that is equal to 2.5 week's of pay (3.29% of annual salary)
Vacations % Employees are entitled to 3 weeks of annual leave for a service period of less than 5 years (4.1% of annual salary) Employees are entitled to 4 weeks of annual leave for a service period of more than 5 years (5.49% of annual salary)
Notice % Employees are entitled to 1 week of notice after the completion of 1 year of service (1.37% 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 8.78%

 

employer accruals

Additional information (Country Accruals)

   
National Insurance Contribution

6.75%

 
Non Contributory

2.00%

Employment Injury

0.75%

Unemployment

1.00%

Training Levy

0.75%

Health Insurance Contribution

1.50%

Vacations

4.11%

Description

The rates of the national insurance contributions for employees are 11.10 percent and for employer’s 12.75 percent, up to the maximum insurable earnings of BBD4,820 per month from income in the year 2019.

Employer Accruals Additional information

    Employment Accruals
Annual Leave An employee who completes a year of employment with an employer is entitled to
• an annual holiday of not less than 3 weeks where he has been in the employment of that employer for less than 5 years
This equals 5.7% (3/52 weeks) of annual income
Maternity Leave Maternity leave shall be of a period of not less than twelve weeks This equals 23% (12/52 weeks) of annual income
Overtime The rate for overtime is one and-a-half times the normal rate and double pay for public holidays. Normal hourly rate is around 20.375 BBD. Overtime is paid at an additional 10.18 BBD.
Severance The amount of severance payment is:
• 2.5 weeks’ basic pay for each such year up to 10 years
• 3 weeks’ basic pay for each such year by which the employment exceeds 10 years but does not exceed 20 years, and
• 3.5 weeks’ basic pay for each such year by which the employment exceeds 20 years but does not exceed 33 years.
This equals 4.8% (2.5/52 weeks) of annual income
Social Security Employers are required to make contributions to the National Insurance Scheme at the rate of 12.75% This equals 12.75% of annual income

 

 

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