Definitive Guide to Hiring in Gibraltar

Hiring in Gibraltar

Hiring employees compliantly in Gibraltar means doing it yourself or using an Employer of Record like Global Expansion. You should be careful using independent contractor agreements in Gibraltar 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 Gibraltar; or

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

Labor Laws in Gibraltar

Employee Probation Period

• The first week of any employment is a probationary period and can be legally terminated at the end of the week.

Annual Leave in Gibraltar

• The minimum paid annual holiday entitlement is 15 days for employees working at least five days a week, increasing to 25 days once the employee has eight years of service.

Holidays in Gibraltar

Maternity Leave Gibraltar

• Employees are entitled to 14 weeks' maternity leave from the 11th week before the expected week of childbirth. 
• For those with at least one year's continuous employment by the 11th week before the due date, there is a right to additional maternity leave of up to 29 weeks after the baby is born.

Paternity Leave Gibraltar

• There is no statutory right to paid paternity leave.

Sick Leave in Gibraltar

• In a 12-month period, an employee is entitled to a statutory minimum sick pay entitlement of two weeks at full pay and four weeks at half pay, provided that all the following conditions are met:
  
  
  • The employee has been continuously employed for at least three months.
  • The employee reports illness within three days of absence from work.
  • The employee supplies a medical certificate.

Working Hours in Gibraltar

• The average working time over 17 weeks must not exceed 48 hours a week, although employees can contract out of the Act, subject to the employer complying with certain conditions. 
• Workers aged between 15 and 18 years old cannot work for more than 40 hours a week.
• A night worker's average normal hours of work must not exceed eight hours in each 24-hour period.

Overtime in Gibraltar

• Overtime should not exceed 14 days in any period of 6 months
• Overtime rates are subject to the terms of an employment contract

Termination of Employment in Gibraltar

• The employer must file a Notice of Termination with the Employment and Training Board within seven days of dismissal. Failure to do is subject to a fine of GIP£750.
• To avoid breach of contract claims, the employer must comply with any contractual obligations regarding termination.
• A fair process must be conducted to avoid claims for unfair dismissal. 
• Although not a statutory requirement, the Employment Tribunal will consider the process followed by the employer. 
• For example, in misconduct cases, the procedure should usually include the following steps:
  
  
  • Conducting a reasonable investigation.
  • Informing the employee of the allegations against him or her.
  • Holding a disciplinary hearing.
  • Providing an opportunity to appeal.
• After the first week the notice period is governed by the length of service and the pay frequency as detailed below:

Employees

• • Paid monthly: minimum of one month's notice
  • Paid weekly or fortnightly: one week's notice

Employers

• • Monthly: minimum of one month for up to 8 years’ service, two months for 8 to 10 years’ service and three months for 10+ years.
  • Weekly or fortnightly: minimum of one week for less than 2 years, two weeks for 2 to 5 years, four weeks for 5 to 8 years, eight weeks for 8 to 10 years and 13 weeks for 10+ years.
  
  
  

Notice Period in Gibraltar

• After the first week the notice period is governed by the length of service and the pay frequency as detailed below:

Employees

• • Paid monthly: minimum of one month's notice
  • Paid weekly or fortnightly: one week's notice

Employers

• • Monthly: minimum of one month for up to 8 years’ service, two months for 8 to 10 years’ service and three months for 10+ years.
  • Weekly or fortnightly: minimum of one week for less than 2 years, two weeks for 2 to 5 years, four weeks for 5 to 8 years, eight weeks for 8 to 10 years and 13 weeks for 10+ years.

Severance in Gibraltar

• Severance pay is as follows:-
  • For each of the first 5 completed years, 2 weeks of pay
  • For each of the next 5 completed years, 3 weeks of pay
  • Each completed year thereafter, 4 weeks of pay

Gibraltar Salary and Wages

Allowance Based System

• Under the Allowances Based system, the individual will be taxed on their income less allowances
• For the 2022/23 tax year, the applicable tax rates are:

• Social insurance contributions are payable by every employee or self-employed person in any week in which they work.
• Employees' contributions are calculated as 10% of gross earnings, subject to a minimum of GBP 12.1 per week (GBP 52.44 per month) and maximum of GBP 36.3 per week (GBP 157.3 per month).
• Employer's contributions are calculated as 20% of gross earnings, subject to a minimum of GBP 28 per week (GBP 121.34 per month) and maximum of GBP 50 per week (GBP 216.66 per month).
• Self-employed contributions are calculated as 20% of gross earnings, subject to a minimum of GBP 25 per week (GBP 108.34 per month) and maximum of GBP 50 per week (GBP 216.66 per month).

Immigration Gibraltar

• Under the Control of Employment Act, the government may control the employment of “non-entitled” workers by means of work permits. 

• An “entitled” worker is a worker who is one of the following: 
  
  
  • A national of a country belonging to the European Economic Area (EEA)
  •  A non-EEA national who has been working in Gibraltar since before 1 July 1993
  • A non-EEA national authorized to work in Gibraltar under the Immigration Control Act A “non-entitled worker” is a worker who is not an entitled worker. 

• EEA nationals may stay in Gibraltar for three months. 
• After this period, they are granted a renewable residence permit for five years if they have found suitable employment or established a business. 
• A work permit is granted to a non-entitled worker if no entitled workers are able and willing to take up the particular employment. 
• Such individual may be granted a residence permit on an annual basis and are normally renewable only if the individual is still in possession of a work permit. 
• A non-EEA national may be refused permission to buy real estate in Gibraltar; such permission cannot be refused to residents of EEA countries. 
• Work permits for non-EU nationals are only issued after a (refundable) deposit is paid to the Employment Service to cover any repatriation costs and other costs that may be required. 
• A non-EEA national who wants to set up a business and reside in Gibraltar needs to register with the Income Tax Office as a self-employed person. 
• After the work permit is granted, the individual may apply to the Civil Status and Registration Office in Gibraltar for a residence permit.
• An EEA national has the right to enter Gibraltar on the production of a valid passport or national identity card and remain for three months in order to seek employment or to establish himself or herself under any other qualifying category.
• Other nationals require both work permits and residence permits. 
• Any individual not having a right to reside in Gibraltar may be refused admission (or after admission be required to leave) in the interests of public policy, security or health. 
• Residence permits may be granted at the governor’s discretion to non-EEA nationals who do not have a work permit if the governor is satisfied that the applicants are of good character and that it is in the interest of Gibraltar that residency should be granted. 
• Non-EEA nationals who have obtained Category 2 individual tax status are likely to obtain residence permits on this basis. 
• At the governor’s discretion, citizens of the United Kingdom can be granted a certificate of permanent residence if they are of good character and if they are likely to be an asset to the community.

Value Added Tax (VAT) in Gibraltar

• There is no VAT in Gibraltar.

Mandatory Benefits in Gibraltar

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

Payments And Invoicing 

• The tax year for individuals in Gibraltar runs from 1 July to 30 June.
• Income tax and social insurance contributions on the cash earnings of employees are normally collected under the PAYE system. 
• All employers must use the PAYE system to deduct tax and social security contributions from wages or salaries. 
• Any additional tax due, including tax due on benefits in kind, is generally payable by the employee after it is assessed by the Commissioner of Income Tax. 
• Income from self-employment is payable under a self-assessment system. 
• The taxpayer must make two payments on account by 31 January and 30 June of the tax year. Each installment equals 50% of the tax payable for the preceding tax year. 
• If a taxpayer believes that the amount of the advance payments calculated on this basis will exceed the liability payable for the year, the taxpayer may apply to be discharged in whole or in part from the obligation to make the advance payment. 
• However, if it is subsequently determined that the application has been made erroneously and that the final liability is higher than predicted by the taxpayer, a surcharge on the late payment of the difference may apply. 
• Any balance remaining is payable by 30 November following the end of the tax year. 
• Late payment of tax results in a surcharge of 10% of the tax payable on the day immediately after it is due. 
• After 90 days, a further surcharge of 20% of the amount unpaid (tax plus initial surcharge) is imposed. 
• Individuals are required to file their tax return for a tax year by 30 November following the end of the tax year. 
• Individuals with income from self-employment must prepare their accounts for the tax year ending 30 June. 
• A fixed penalty of GIP50 is imposed if an individual does not file the return by the applicable deadline, with a further penalty of GIP300 if the failure continues for three months and a further penalty of GIP500 if the failure continues for an additional three months.

Payroll Accrual in Gibraltar

Payroll Accruals Additional Information

Accrued Benefits in Gibraltar

Why use Global Expansion to hire in Gibraltar

Establishing a branch office or subsidiary in Gibraltar 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 Gibraltar labor laws are complex.

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

Global Expansion makes it easy for you to expand into Gibraltar. 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 Gibraltar 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.