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Hiring in Jamaica
Jamaica is an Island country in the Caribbean. Kingston is the capital and the largest city of Jamaica. Some of the major sectors of Jamaica are tourism, manufacturing, mining, agriculture, petroleum refining, financial and insurance services. Tourism and mining are the main contributors of foreign revenue. Jamaica’s main trading partners are the United States, China, Japan and Trinidad and Tobago. Global PEO or Employer of Record (EOR) play a pivotal role in providing companies with services related to hiring employees, and ensuring compliance with Jamaica’s legal and tax regulations. Employment regulations including probation, holidays and termination are covered by the Labor Code. Labor Code stipulates that employees are entitled to 2 weeks of paid annual leave. Residents are taxed on their worldwide income; non-residents are taxed on Jamaican-sourced income. Global PEO’s or Employer of Record (EOR) facilitate companies by ensuring compliance with Jamaica’s Labor Code and tax laws.
statutory labor requirements
Probation Period
- There is no requirement for a probationary period, however, collective agreements generally stipulate a 3 to 6-month period.
Annual Leave
- Employees are granted 2 weeks of paid leave per year.
- 3 weeks of paid leave is granted to employees with over 10 years of continuous service.
Public Holidays
- New Year's Day (1st January)
- Ash Wednesday (26th February)
- Good Friday (10th April)
- Easter Monday (13th April)
- Labor Day (25th May)
- Emancipation Day (of Jamaica) (1st August)
- Jamaican Independence Day (6th August)
- Heroes' Day (in Jamaica) (19th October)
- Christmas Day (25th December)
- Boxing Day (26th December)
Maternity Leave
- The period to be granted maternity leave shall be the period or periods during which she is absent from work wholly or partly because of her pregnancy or confinement, but shall not, exceed twelve weeks in respect of each pregnancy or confinement.
Paternity Leave
- There is no paternity leave
Sick Leave
- Employees are entitled to 10 days of paid sick leave
Work Hours
- The ordinary work week should consist of 40 hours
Overtime
- Overtime is defined as work exceeding 40 weekly hours, work on a rest day, or work on a holiday.
- Overtime pay is 150% the normal pay for each additional hour worked, or whatever contractual agreement the employee and employer have agreed upon.
Notice Period
- The notice required to be given by an employer to terminate the contract of employment of employees’ who have been continuously employed for four weeks or more shall be
-
- not less than two weeks’ notice if his period of continuous employment is less than five years;
- not less than four weeks’ notice if his period of continuous employment is five years or more but less
- not less than six weeks’ notice if his period of continuous employment is ten years or more but less than fifteen years;
- not less than eight weeks’ notice if his period of continuous employment is fifteen years or more but less than twenty years;
- not less than twelve weeks’ notice if his period of g/m continuous employment is twenty years or more,
Severance
- Severance pay is only required for cases of redundancy.
- Severance for redundancy is 2 weeks’ pay per year for the first 10 years and 3 weeks´ pay per year, from the 10th year onwards.
13th / 14th Month Pay
- No
- There is no statutory requirement to pay the 13th or 14th month salary.
- It does not seem customary that it is paid to employees.
income tax
- In general, Jamaican residents and domiciled individuals are taxed on their worldwide income, while non-resident individuals are taxed on Jamaican-sourced income.
- A non-Jamaican domiciled individual is generally not taxable on foreign-sourced income unless one remits this to Jamaica.
- Notwithstanding this, a non-domiciled individual working in Jamaica is taxed on the compensation attributable to services rendered in and in relation to Jamaica (subject to certain exceptions) as well as Jamaican-sourced income.
- Individuals are generally liable to income tax at the rate of 25% on their chargeable income (not exceeding 6 million Jamaican dollars [JMD] per annum) less an annual tax-free threshold (where applicable).
- Chargeable income derived in excess of JMD 6 million per annum is subject to income tax at a rate of 30%.
- An annual tax-free threshold of JMD 1.5 million is available to Jamaican tax resident individuals.
- Tax is imposed on individuals at the national level. Income tax is not separately imposed at the local level.
|
Income Tax |
|
|
Income (JMD) |
Tax Rate (%) |
|
Up to JMD 1.5 million |
Exempt |
|
JMD 1.5 million to JMD 6 million |
25% |
|
Above JMD 6 million |
30% |
deductible expenses
Personal Deductions
- Social security and contributions to pension schemes approved under the Income Tax Act are deductible in determining taxable income, as is interest paid on capital employed in acquiring income.
- Approved charitable contributions, restricted to 5% of taxable income, are also deductible.
Personal Allowances
- There are no personal allowances in Jamaica.
- However, the first JMD 1,500,096 of a Jamaican tax resident individual’s statutory income is tax free.
- There are also exemptions from income tax on the first JMD 80,000 for an individual who is aged 65 and over.
- A person who is 55 years and over who is in receipt of income from an approved superannuation fund or an approved retirement scheme also enjoys an exemption of JMD 80,000 of income from that source and any other source.
- If the individual is younger than 55 years of age, the exemption is limited to income from the approved scheme not exceeding JMD 80,000.
Business Deductions
- To the extent not reimbursed, individuals (resident or non-resident) can deduct all expenses that are incurred wholly and exclusively by them in earning their income (e.g. business-related travel, automobile, and entertainment expenses), provided these expenses are not of a capital nature or specifically mentioned in the tax legislation as non-deductible.
- Expenses for travel to and from work are not deductible.
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Deductible Expenses |
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|
Personal Deductions |
|
|
Personal Allowances |
|
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Business deductions |
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immigration
- Foreign nationals from certain specified countries may visit Jamaica without a visa depending on the landing options available to them.
- The specified countries are the CARICOM member states and British Commonwealth countries except for the British Virgin Islands, the Cayman Islands, Nigeria, Pakistan and Sri Lanka.
- A visa is required for all foreign nationals coming to Jamaica to work except for the countries specified above.
- The right to work in Jamaica is relatively restricted.
- The Ministry of Labor and Social Security and the Ministry of National Security are responsible for ensuring that employment opportunities are made available to Jamaican citizens and permanent residents before being offered to foreign nationals.
- Foreign nationals coming to Jamaica to work are required to have valid work permits and visas if they are not citizens from specified CARICOM and British Commonwealth countries.
- Work permit exemptions may be available to citizens from CARICOM member states who have obtained CARICOM Skills Certificates.
- The duration of the work permit period can be based on the employment contract and may be granted for a maximum of three years.
- Work permits are renewable but are not transferable.
- The Ministry of Labor and Social Security requires 8 to 12 weeks to process a work permit application.
- The Ministry of National Security requires three working days to process a resident permit and a visa.
- The work permit process requires the Jamaican employer to submit the work permit application on behalf of the foreign national to the Ministry of Labor and Social Security prior to the national commencing an assignment in Jamaica.
- If approval is granted, the foreign national must apply to a Jamaican consulate abroad to obtain a visa before arriving in Jamaica.
- An application to the Immigration Department and the Ministry of National Security must then be completed to register the foreign national for employment.
- A self-employed person must apply to the Ministry of Labor and Social Security for a work permit and then apply to the immigration department of the Ministry of National Security for a visa and registration.
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Type of Visa/Permit |
Documentation |
Validity |
Eligibility |
|
Work Permit |
|
Maximum 3 years |
|
value added tax
- GCT is a value-added tax (VAT), and the standard rate is currently 15%. Higher or lower rates of GCT are applicable to certain goods and services.
- For example, the provision of telephone services (including phone cards) and handsets is subject to GCT at the rate of 25%, while the tax is imposed on hotels and other businesses in the tourism sector at an effective rate of approximately 10%.
|
VAT |
|
|
Higher Rate |
25% |
|
Standard Rate |
15% |
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Reduced Rate |
10% |
withholding tax
- WHT is required to be deducted from chargeable payments made to non-residents and remitted to TAJ (along with the applicable return) within 14 days of the end of the month in which the payment is made in order to avoid the imposition of interest and penalties.
- Subject to securing approval from TAJ (where appropriate), the following rates of WHT apply to the categories of payments highlighted (this is not an exhaustive list):
|
Recipient |
WHT (%) |
||||
|
Dividends |
Interest |
Royalties |
Management fees |
||
|
Portfolio |
Substantial holdings |
||||
|
Resident corporations |
15% |
0% |
25% |
0% |
0% |
|
Resident individuals |
15% |
15% |
25% |
0% |
0% |
|
Non-treaty: |
|||||
|
Non-resident corporations |
331/3% |
331/3% |
331/3% |
331/3% |
331/3% |
|
Non-resident individuals |
25% |
25% |
25% |
25% |
25% |
termination
- An employee who resigns or voluntarily quits his or her employment is not entitled to termination pay or working notice.
- In order to be eligible for termination pay or notice of termination, an employee must have worked at least three consecutive months for the employer.
- The notice required to be given by an employer to terminate the contract of employment of employees’ who have been continuously employed for four weeks or more shall be
-
- not less than two weeks’ notice if his period of continuous employment is less than five years;
- not less than four weeks’ notice if his period of continuous employment is five years or more but less
- not less than six weeks’ notice if his period of continuous employment is ten years or more but less than fifteen years;
- not less than eight weeks’ notice if his period of continuous employment is fifteen years or more but less than twenty years;
- not less than twelve weeks’ notice if his period of g/m continuous employment is twenty years or more,
- Severance pay is only required for cases of redundancy.
- Severance for redundancy is 2 weeks’ pay per year for the first 10 years and 3 weeks´ pay per year, from the 10th year onwards.
statutory benefits
- These are mandatory benefits as postulated by law
- These include probationary period, annual leave, public holidays, sick leave, maternity leave, overtime pay, notice period, and severance pay
- Statutory benefits also include social security benefits
|
Statutory Benefits |
|
Probationary Period |
|
Annual Leave |
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Public Holidays |
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Maternity Leave |
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Sick Leave |
|
Overtime Pay |
|
Notice Period |
|
Severance Pay |
|
Social Security Benefits |
payments and invoicing
- An individual is subject to tax on one’s income for a calendar year; however, a taxpayer may obtain the approval of the Commissioner General, TAJ to file on a fiscal-year basis.
- Income tax returns are due for filing on 15 March in the year following the year of assessment and are based on a system of self-assessment of the tax payable.
- However, an individual who expects that income tax will be payable by one’s self only in respect of emoluments is not required to file an income tax return.
- Husbands and wives generally file separately and must elect in writing to be jointly assessed.
- Individual income tax returns must be filed electronically.
- Tax is payable in quarterly instalments on the 15th day of March, June, September, and December of each tax year.
- Quarterly instalments are based on an estimate of the year's liability or the actual tax payable for the previous year.
- The balance of income tax payable for a taxation year, after deduction of the instalments of estimated tax, is due on 15 March of the following year.
- Interest is charged on unpaid tax at a rate of 16.62% per annum while the amount remains unpaid.
- A penalty of up to 50% may also be imposed if TAJ issues an assessment.
- Income tax (PAYE) is withheld from emoluments; however, where withholding is not possible (e.g. because the employer is not resident in Jamaica), the taxpayer will be required to make payment of estimated tax in quarterly instalments.
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 Jamaica ranked 71st in the World in 2019 in terms of ease of doing business.
employee accruals
| Christmas Bonus% |
|
| Christmas Bonus Over Vacations % |
0% |
| Severance per Year % |
Employees are entitled to severance pay that equals two weeks of pay after one year of service (2.74% of annual salary)
|
|
Vacations %
|
Employees are entitled to 10 days of paid annual leave (2.74% of annual salary) |
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Notice %
|
Employees are entitled to 2 weeks of notice after one year of service (2.74% of annual salary) |
|
Christmas Bonus Over Notifications%
|
0%
|
|
Vacations Plus%
|
0%
|
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Total percentage of Salary (yearly)
|
The total employment accruals as a percentage of salary per anum are equal to 8.22%
|
employer accruals
Additional information (Country Accruals)
| National insurance contribution | 3.00% |
| National housing trust | 3.00% |
| Human employment and resource training | 3.00% |
| Maternity leave | 12 weeks |
| Vacations | 2.74% |
| Description | Employees and self-employed persons are required to be insured under a state-administered programme of social security insurance. Employees and employers contribute at a rate of 3% (each) on a maximum remuneration of JMD 1.5 million per annum. Self-employed persons contribute at a rate of 6% on maximum earnings of JMD 1.5 million per annum. The income threshold for both employed and self-employed individuals is programmed to increase to JMD 3 million per annum with effect from 1 April 2021 and to JMD 5 million per annum with effect from 1 April 2022. NIS contributions are tax deductible. NHT contributions are made by employers at the rate of 3% while employees contribute at the rate of 2% on all taxable emoluments received from employment in Jamaica. Self-employed persons also contribute at a rate of 2% of earnings. An employer's contribution is tax deductible but that of an employee is not.
|
Employer Accruals Additional information
| Employment Accruals | ||
| Annual Leave | Employees are granted 2 weeks of paid leave per year. | This equals 3.84% (2/52 weeks) of annual income |
| Maternity Leave | The period to be granted maternity leave shall be the period or periods during which she is absent from work wholly or partly because of her pregnancy or confinement, but shall not, exceed twelve weeks in respect of each pregnancy or confinement. |
This equals 23% (12/52 weeks) of annual income |
| Sick Leave | Employees are entitled to 10 days of paid sick leave |
This equals 2.7% (10/365 days) of annual income |
| Overtime | Overtime pay is 150% the normal pay for each additional hour worked, or whatever contractual agreement the employee and employer have agreed upon. | Depends on the number of overtime hours worked |
| Severance | Severance for redundancy is 2 weeks’ pay per year for the first 10 years and 3 weeks´ pay per year, from the 10th year onwards. | This equals 3.84% (2/52 weeks) of annual income |
| Social Security | Employers must make the following contributions: - National insurance scheme (NIS) 2.75%; National housing trust (NHT) 3%; Education Tax 3.5%; Human Employment and Resource Training (HEART) 3%. | This equals 12.25% of annual income |
