Definitive Guide to Hiring in Isle of Man

Hiring in Isle Of Man

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

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

Labor Laws in Isle Of Man

Employee Probation Period

• Probationary period is generally of 3 to 6 months

Annual Leave in Isle Of Man

• Workers have an entitlement to:
  • 4 weeks' paid leave in each leave year; and
  • payment for any leave to which they are entitled but which they have not taken when their employment terminates.

Holidays in Isle Of Man

Maternity Leave Isle Of Man

• Women who are employees are entitled to
  • reasonable paid time off work to attend ante-natal sessions;
  • up to 26 weeks’ unpaid Ordinary Maternity Leave; and
  • if they have 26 weeks’ continuous employment (see section 5), up to 26 weeks’ unpaid Additional Maternity Leave; and
  • up to 39 weeks’ Maternity Allowance at a maximum of £179.85 a week from the Treasury provided they meet the conditions of entitlement to the benefit.

Paternity Leave Isle Of Man

• Men and, in some circumstances, women who are employees are entitled to:
  • 1 or 2 weeks’ unpaid Paternity Leave (26 weeks’ continuous employment required);
  • 1 or 2 weeks’ Paternity Allowance @ a maximum of £179.85 a week from the Treasury provided they meet the conditions of entitlement to the benefit

Sick Leave in Isle Of Man

• Incapacity Benefit (IB) is a contributory benefit which gives financial assistance to people who become sick and are unable to work.
• IB is paid at one of two basic rates:
  • short term rate for the first 52 weeks of incapacity
  • long term rate after 52 weeks
• No payment is made for the first 3 days of incapacity.

Working Hours in Isle Of Man

• Currently the European Working Time Directive is not Law on the Isle of Man.
• There is no legislation specifying working hours in respect of other employees, but an employer has to be aware of any health of safety implications when requesting employees to work longer hours.
• Where the working day is longer than 6 hours, all staff are entitled to take a break of at least 20 minutes.

Overtime in Isle Of Man

• Civil servants, (other than those who have no set conditioned hours), are eligible to be paid overtime, in accordance with the following provisions, for additional hours worked at management's request, which are in excess of their conditioned hours.
• Overtime working should, in general, only occur during periods of exceptional pressure of work and only then, at the request of management.
• It should be worked on Monday to Friday if feasible and not over the weekends except as a last resort.
• The calculation of overtime payments is based on the pay and allowances of the civil servant concerned (excluding allowances in lieu of overtime or for night duty, for shift disturbance, house, clothing, lodging, travelling and subsistence or similar out of pocket expenses).
• Hourly plain time rates of overtime should be calculated to the nearest 0.10 pence as follows:
  • Annual Salary ÷ (37 (hours) x 52.2 (weeks)) = Plain-time rate

Termination of Employment in Isle Of Man

• The contract or written statement should set out the statutory entitlement as to the notice which an employee is both obliged to give and entitled to receive.
• The notice period to be provided by the employer is as follows: -
  • If employment period is less than 2 years, notice period is of one week
  • If employment period is of more than 2 years but less than 12 years, notice period is of 1 week for each year of continuous year of employment
  • If employment period is of more than 12 years, notice period is of 12 weeks
• The notice period to be provided by the employee is as follows: -
  • If employment period is less than 2 years, notice period is of one week
  • If employment period is of more than 2 years but less than 4 years, notice period is of 1 week for each year of continuous year of employment
  • If employment period is of more than 4 years, notice period is of 4 weeks
• Employees with two or more years’ continuous employment are entitled to a statutory redundancy payment if they are made redundant.
• The amount of a redundancy payment is one week’s gross pay, capped at a maximum of £540 a week, for each completed year for which the employee has been continuously employed, up to the calculation date.
• The maximum amount of years to be taken into account is 26 and the maximum statutory payment is £14,040.
• If a contractual redundancy payment is greater than the statutory maximum, then the contractual payment will apply.
• Employees are also entitled to reasonable paid time off to look for work or to arrange training once notice of redundancy is given.
• On a finding of unfair dismissal, where the Tribunal does not make an order for re-employment, it makes an award of compensation, calculated as follows:
  • a basic award of one week's gross pay, capped at a maximum of £540 a week, for each completed year for which the employee has been continuously employed, up to the calculation date.
  • The maximum amount of years to be taken into account is 26;
  • a compensatory award based on the employee's loss, including any expenses reasonably incurred in consequence of the dismissal and any other benefits including pensions that might reasonably have been expected but for the dismissal; the award must not exceed £56,000 except in health and safety or whistleblowing cases or the case where an employer refuses an order of re-employment made by the Tribunal; and
  • a compensation for injury to feelings award, if the Tribunal thinks it just and equitable, up to a fixed maximum of £5,000.

Notice Period in Isle Of Man

• The contract or written statement should set out the statutory entitlement as to the notice which an employee is both obliged to give and entitled to receive.
• The notice period to be provided by the employer is as follows: -
  • If employment period is less than 2 years, notice period is of one week
  • If employment period is of more than 2 years but less than 12 years, notice period is of 1 week for each year of continuous year of employment
  • If employment period is of more than 12 years, notice period is of 12 weeks
• The notice period to be provided by the employee is as follows: -
  • If employment period is less than 2 years, notice period is of one week
  • If employment period is of more than 2 years but less than 4 years, notice period is of 1 week for each year of continuous year of employment
  • If employment period is of more than 4 years, notice period is of 4 weeks

Severance in Isle Of Man

• Employees with two or more years’ continuous employment are entitled to a statutory redundancy payment if they are made redundant.
• The amount of a redundancy payment is one week’s gross pay, capped at a maximum of £540 a week, for each completed year for which the employee has been continuously employed, up to the calculation date.
• The maximum amount of years to be taken into account is 26 and the maximum statutory payment is £14,040.
• If a contractual redundancy payment is greater than the statutory maximum, then the contractual payment will apply.
• Employees are also entitled to reasonable paid time off to look for work or to arrange training once notice of redundancy is given.
• On a finding of unfair dismissal, where the Tribunal does not make an order for re-employment, it makes an award of compensation, calculated as follows:
  • a basic award of one week's gross pay, capped at a maximum of £540 a week, for each completed year for which the employee has been continuously employed, up to the calculation date.
  • The maximum amount of years to be taken into account is 26;
  • a compensatory award based on the employee's loss, including any expenses reasonably incurred in consequence of the dismissal and any other benefits including pensions that might reasonably have been expected but for the dismissal; the award must not exceed £56,000 except in health and safety or whistleblowing cases or the case where an employer refuses an order of re-employment made by the Tribunal; and
  • a compensation for injury to feelings award, if the Tribunal thinks it just and equitable, up to a fixed maximum of £5,000.

Isle Of Man Salary and Wages

13th / 14th Month Salary in Isle of Man

• No
• There is no statutory requirement to pay the 13th or 14th month salary.
• Employees have a standard entitled of annual leave of 4 weeks.

• In general, National Insurance contributions are payable on the earnings of individuals who work in the Isle of Man.
• The Isle of Man has a reciprocal agreement with the United Kingdom that permits National Insurance contributions to be paid in either jurisdiction to count toward total payments required.
• For the tax year commencing on 6 April 2022, no national insurance contributions are payable by employees where earnings are less than IMP 138 per week.
• Above this limit, 11% is paid by employees on earnings up to a limit of IMP 823 per week, and at 1% on earnings above IMP 823 per week.
• Employers are also required to make a national insurance contribution in respect of each employee at rates dependent on individual circumstances.
• Self-employed persons earning IMP 7,176 or more per annum pay a flat-rate contribution of IMP 5.40 per week.
• In addition, there is a contribution of 8% on profits between IMP 7,176 and IMP 42,796 per annum and at 1% on earnings over IMP 42,796.

Immigration Isle Of Man

• Subject to the following, anyone who is not classed as an 'Isle of Man worker' requires a work permit to take up employment, (including self-employment), in the Island.
• There are exemptions for a number of occupations and employments, and for certain temporary employments.
• Non EEA nationals who have an immigration employment document do not require permits.
• The following are, upon application, entitled to an automatic permit –
  • the spouse, civil partner or cohabiting partner of a work permit holder or an exempt person, provided that the work permit holder or exempt person is engaged in permanent, regular full-time employment ('the primary employment'), and
  • the cohabiting partner of an Isle of Man worker.
• An employer must not employ a person unless he or she is an Isle of Man worker, except in accordance with the above.
• The Department must take the following matters into account in deciding whether or not to grant a permit. 'The person concerned' means the person for whom an application is made.

Economic circumstances

• Whether or not there are any suitable Isle of Man workers available in the trade, occupation or profession for which the application is made, having regard to any skills, qualifications, knowledge or experience required, and the importance of the position to the applicant's undertaking.
• The level of unemployment in the trade, occupation or profession.
• Any likely economic or social consequences of granting or declining the application.

The process

• Whether and how the job was publicized in the Isle of Man.
• The process by which the applicant has selected the person concerned.
• The grounds on which the applicant has selected the person concerned.

Personal circumstances of the person concerned

• Any criminal convictions (in the Island or elsewhere) of the person concerned which are not "spent" for the purposes of the employment for which the permit is sought. (see further at 'criminal records').
• Where the person concerned has worked in the Island for a continuous period of 2 years or more by virtue of a permit or an exemption, his or her family circumstances, including whether his or her family are living in the Island.
• Whether a refusal to grant or renew a permit would cause substantial hardship to the person concerned.

Value Added Tax (VAT) in Isle Of Man

• The standard rate of VAT is 20% and is applicable on the purchase of most goods and services. Some supplies (e.g. food, books and publications, public transport) are charged at 0% VAT.
• There is also a rate of 5% VAT charged on domestic property repairs.
• It should be noted that self-employed individuals who have a turnover of more that IMP 85,000 are required to register for VAT and charge it to their customers at the relevant rate.

Mandatory Benefits in Isle Of Man

• These are mandatory benefits as postulated by law
• These include probationary period, annual leave, public holidays, maternity leave, paternity leave, sick leave, overtime pay, notice period, severance pay, 13th month pay
• Statutory benefits also include social security benefits

Payroll Accrual in Isle Of Man

Country Accruals Additional Information

Description

Social security contributions are payable by both employers and employees and are calculated as a percentage of the employee’s wages. The system and rates are, apart from a few minor differences, largely the same as the U.K. social security rates and they are not deductible for income tax purposes. The contribution year follows the 6 April to 5 April income tax year

Payroll Accruals Additional Information

Accrued Benefits in Isle Of Man

Why use Global Expansion to hire in Isle Of Man

Establishing a branch office or subsidiary in Isle Of Man 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 Isle Of Man labor laws are complex.

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

Global Expansion makes it easy for you to expand into Isle Of Man. 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 Isle Of Man 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.