Hire Employees in Bermuda

Two routes exist. Registering a Bermuda entity gives you direct employment and permit sponsorship; international businesses normally register as exempted undertakings, which places them in a single employer payroll tax category.

An Employer of Record removes that setup. The EOR is the legal employer, runs payroll, files with the Office of the Tax Commissioner and sponsors work permits, while day-to-day direction stays with you.

Work permits set the real timeline and are a material cost. Every non-Bermudian requires an employer-sponsored permit before commencing employment, and fees run from around $5,700 to $35,900 a year depending on the job category.

Bermuda has no personal income tax — no tax on salary, dividends, interest or capital gains, no VAT or sales tax, and no withholding tax. Payroll tax is the main revenue source, raising roughly $448 million in a recent fiscal year against total government revenue near $999 million.

Rates fell across the board on 1 April 2026. The Payroll Tax Amendment and Validation Act 2026 implemented the Budget commitment that no business would pay more employer payroll tax and no worker would pay more employee tax. International business fell from 10.25% to 9.75%, large local employers from 10% to 9.5%, hospitality from 5% to 4%, retail from 6% to 5%, and the Hospitals Board and municipal corporations from 3.5% to 3%. Most of the fourteen categories now sit at 7% or below.

The Tax Reform Commission has recommended going further — capping the higher employer bands at 7% for all taxpayers, at an estimated cost of about $68 million a year, with a longer-term objective of a 5% maximum employer rate.

Break-even rule of thumb: EOR fees begin to exceed the running cost of a Bermuda entity somewhere between 20 and 25 employees, though permit sponsorship and cost of living dominate the calculation. Model both — see EOR vs Entity.

Payroll tax is split between employer and employee, but the liability is not. Since April 2017 the tax has been imposed on both sides, yet the obligation to pay the full amount rests with the employer. Employers may deduct the employee portion from salary, but if they do not, they still owe it.

The employer rate depends on category or total annual payroll. From 1 April 2026, international business exempted undertakings pay 9.75%, large local employers with payroll above $1 million pay 9.5%, medium-sized businesses between $200,000 and $1 million saw a 0.5 point reduction, hospitality pays 4% and special retail 5%.

The employee portion is progressive across five bands, starting at 0.25% on the first $48,000 and 7.75% on the next band — both reduced on 1 April 2026 from 0.50% and 9.25%. Higher bands run to 12.5%. Taxable remuneration caps at $1,000,000 per person per year, above which no further payroll tax accrues on either side.

Social insurance is a flat weekly dollar amount, not a percentage. The total was BMD 75.30 per employee per week for 2025, split evenly at BMD 37.65 each. Weeks are counted by the number of Mondays in the month, which is an unusual mechanic worth configuring correctly. Published figures vary — one provider gives BMD 71.84 and another BMD 30.40, the latter badly out of date.

A new-hire relief exempts the employer portion entirely. The New Hire Relief of 2026 replaces the 2024 scheme and covers full-time employees — 15 hours a week or more — hired between 1 April 2025 and 31 March 2026 and still employed after 1 April 2026, and anyone hired between 1 April 2026 and 31 March 2028, measured against a January to March 2025 baseline.

Gross annual salaries in Bermudian dollars, pegged one-to-one to the US dollar. Payroll tax stops accruing above $1,000,000 of remuneration per person.

Benchmarks below are gross annual salaries in Bermudian dollars, pegged one-to-one to the US dollar. Employer payroll tax depends on your category, and taxable remuneration caps at $1,000,000 per person.

The tax year runs 1 April to 31 March, and returns are filed with the Office of the Tax Commissioner.

Progressive rates apply to each person’s annual rate of pay, not to the amount paid in the period. For employees whose earnings fluctuate, the annual rate of pay must be recalculated each pay period so payroll tax can be adjusted accordingly. That is easy to get wrong with commission or shift-based staff.

Enforcement is stringent. Employers must keep adequate books and records under the Tax (Accounts and Records) Regulations 1991. Submitting false returns, failing to keep or produce records, or evading payment is an offence carrying fines up to $500,000, and the Tax Commissioner may assess a value for undeclared remuneration.

Officers and directors of exempt companies count as employees where there is a contract for services and they regularly perform managerial functions on a day-to-day basis — so board arrangements need checking against the payroll tax base.

A foreign currency purchase tax of 1.25% applies to foreign currency bought by a Bermuda resident from a local bank, and customs duty of around 25% on most imports is the other major revenue source and a principal driver of the cost of living.

There is no personal income tax. The employee payroll tax bands below apply from 1 April 2026 to the annual rate of pay, capped at $1,000,000.

Employment is governed by the Employment Act, with payroll tax under the Payroll Tax Act 1995 as amended in 2026.

The minimum wage is $16.40 an hour, with proposals during 2025 to raise it to between $16.81 and $17.23. Confirm the current rate before contracting.

The standard working week is 40 hours over eight-hour days. Work on a public holiday attracts at least one and a half times the normal hourly wage.

Bermuda is one of the higher-paying jurisdictions globally, particularly in insurance, reinsurance and finance, but the cost of living is correspondingly high because almost everything is imported.

Contracts should record pay, hours, leave, notice and termination terms.

Secure the work permit before the employee starts. Commencing employment without one is not an option for any non-Bermudian, and the permit is employer-sponsored rather than portable.

Register the employee for payroll tax and social insurance, and confirm whether the New Hire Relief applies — it can remove the employer portion of payroll tax entirely for qualifying hires.

The standard week is 40 hours across eight-hour days, Monday to Friday.

Work on a public holiday is paid at a minimum of one and a half times the normal hourly wage.

Because payroll tax applies to the annual rate of pay rather than the period amount, overtime and bonuses require the annual rate to be recalculated for that pay period rather than simply taxed at the standing rate.

Bermuda observes its own public holidays, including Bermuda Day in May and the two-day Cup Match holiday combining Emancipation Day and Mary Prince Day in late July.

Bermuda observes its own public holidays, including Bermuda Day in May and the two-day Cup Match holiday in late July. Work on a public holiday attracts at least one and a half times the normal hourly wage. Dates and any substitution rules are set out below.

Social insurance funds the contributory pension and related benefits, at a flat weekly amount rather than a percentage of pay.

Three exemptions matter. Full-time students under 26 employed during holidays, weekends and summer breaks are exempt, and so are their employers. Employees over 65 are exempt from their own half, but the employer must still contribute its part. Self-employed people pay both portions.

Expatriates can recover their contributions. Someone who pays into the system but fails to qualify for a pension through insufficient contributions may apply at 65 for a refund of the total value of contributions made on their behalf — including both the employer and employee portions. That is worth raising with internationally mobile hires.

Statutory leave is 13 weeks of paid maternity leave after one continuous year of service, five days of paid paternity leave on the same condition, and eight days of paid sick leave after the first year.

Termination follows the Employment Act, with notice requirements set by statute and contract.

Final pay including accrued leave is due on separation and must be reflected in the payroll tax return for the period.

A work permit is tied to the employer. Termination ends the permit, so a non-Bermudian employee moving between employers needs a fresh sponsorship rather than a transfer.

Because the employer remains liable for the employee portion of payroll tax whether or not it was deducted, a final settlement should be reconciled against deductions actually made during the year.

All non-Bermudians require an employer-sponsored work permit before commencing employment. There is no route that allows work to begin while an application is pending.

Permit fees are a material budget line, running from roughly $5,700 to $35,900 a year depending on the job category. That is a genuine cost of hire, not an administrative formality, and it should be modelled alongside salary.

Short assignments may fall outside payroll tax entirely. A person who ordinarily works outside Bermuda and whose period of employment in Bermuda does not exceed four consecutive weeks is exempt from payroll tax. That is a useful structural point for project visits, though it does not remove immigration requirements.

Using pre-April 2026 payroll tax rates overstates cost. International business fell from 10.25% to 9.75%, and most of the fourteen employer categories were reduced. Some published sources still give employer rates as high as 13.5%, which are years out of date.

Missing the New Hire Relief leaves money on the table. Qualifying employers receive a full exemption from the employer portion on qualifying full-time hires made through 31 March 2028.

Social insurance is a flat weekly amount, not a percentage, and weeks are counted by the number of Mondays in the month. Published amounts vary between BMD 30.40, BMD 71.84 and BMD 75.30 — the first two being superseded.

Note also that the employer remains liable for the employee portion even if it is never deducted; that progressive rates apply to the annual rate of pay and must be recalculated where earnings fluctuate; and that false returns or inadequate records carry fines up to $500,000.

Work backwards from the start date, and start with immigration. For a non-Bermudian the work permit must be granted before employment begins, which is what makes three to six weeks realistic rather than two.

Confirm your employer payroll tax category and load the post-April 2026 rate, and check whether the New Hire Relief applies to the hire.

Configure social insurance as a flat weekly amount counted by Mondays, set the annual rate of pay recalculation for anyone with fluctuating earnings, and budget the permit fee alongside salary rather than as an afterthought.