Hire Employees in the Marshall Islands

The Marshall Islands is a Pacific island republic in free association with the United States, using the US dollar as its currency.

Two routes exist. A local entity gives direct employment; an Employer of Record removes that setup and acts as legal employer.

Employers must register with MISSA and obtain an Employer Identification Number, withhold the employee share of contributions and of wages and salaries tax, add their own contributions, and remit the total quarterly. They also report employee wages and changes in employment status.

MISSA is a component unit of the Republic, providing pension, security and support benefits for the elderly, the disabled and the immediate family of deceased workers.

Employer contributions total 11.5% at the lower end, across two funds with different ceilings.

The Retirement Fund is 8% of covered payroll for wages paid from 6 March 2017 to present, based on a maximum of US$10,000 quarterly taxable wages. The employee matches it, giving 16% in total, or US$40,000 of covered wages a year.

The Health Fund is 3.5% for wages paid from 1 January 2002, based on a maximum of US$5,000 gross taxable wages a quarter, half the Retirement Fund ceiling. The employee matches that too.

So employer cost is 11.5% up to US$5,000 a quarter, then 8% only between US$5,000 and US$10,000, and flat in absolute terms above that, about 9.75% at the upper ceiling.

Small business employers report differently. A self-employed individual with one or more employees reports either actual wages or twice the wages of the highest paid worker in the quarter. Where two self-employed individuals share a business, the total taxable wages are divided by two and both report that amount.

A separate Workers’ Compensation programme launched on 1 October 2023 under MISSA oversight, requiring employer registration and contribution for work-related injury cover.

Break-even rule of thumb: EOR fees begin to exceed the running cost of an RMI entity somewhere between 12 and 20 employees. See EOR vs Entity.

MISSA collects a fund it does not administer, which is worth knowing when queries arise. Its own material is explicit: although MISSA does not administer the Health Fund, it remains to collect Health Fund contributions.

Both rates have moved in both directions historically, and MISSA publishes the full series. The Retirement Fund ran 3% from October 1987, then 4%, 5%, 6% by July 1995, then down to 5% in April 1997, up to 7% in January 2001, and to 8% from March 2017.

The Health Fund shows the same pattern: 2.5% from October 1991, 3.5% from April 1997, back down to 2.5% in January 2001, then 3.5% from January 2002 to present.

So rates here are not on a one-way escalation, unlike much of the Caribbean. They have been reduced before and could be again, which is an argument for checking rather than assuming direction of travel.

The two ceilings sit in an exact 2:1 ratio, but the health fund carries the lower one, the reverse of the arrangement in several other small jurisdictions.

Gross quarterly wages in US dollars. Employer cost is 11.5% to US$5,000, then 8% only, then flat above US$10,000.

Benchmarks below are gross quarterly wages in US dollars, which the Marshall Islands uses as its currency. Employer cost falls as wages pass each of the two ceilings.

Filing and payment are quarterly. The employer deducts the employee share through payroll and remits it every quarter to MISSA together with an equivalent amount representing the employer’s share.

Deadlines can shift for public holidays. For the quarter ending 30 June 2026, MISSA moved the filing and payment deadline to Monday 13 July 2026 because of the special holiday for the Constitutional Convention on 10 July, so check announcements rather than assuming a fixed date.

The obligation applies to every employer and self-employed person doing business within and outside the Republic.

Overtime earnings must be included in the wages base used for MISSA, Health Fund and income tax withholding.

A wages and salaries tax is withheld alongside the contributions. Confirm current bands before configuring payroll.

The Marshall Islands is midway through a significant wage reform cycle.

The Minimum Wage (Amendment) Act 2024, P.L. 2024-13, ended a rate that had been stagnant at US$3.00 an hour since 2017 for want of any formal review process.

The floor rose to US$4.50 on 1 October 2025, and is scheduled to reach US$5.00 on 1 October 2026 and US$5.25 on 1 October 2027.

The phasing follows a 2024 assessment by Graduate School USA’s Economic Monitoring and Analysis Programme, and the review process now incorporates cost-of-living data rather than relying on ad hoc decisions.

It applies to both government and private sector employees. Salaried staff must be paid at or above the minimum-wage equivalent when hours are converted.

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

There is no statutory cap on total overtime hours, so document any internal cap in the contract rather than relying on a legal limit.

Register with MISSA and obtain an Employer Identification Number before the first quarter closes.

Overtime earnings enter the wages base for both funds and for income tax withholding.

No statutory cap on total overtime hours applies, an internal cap should be documented contractually.

Because the Health Fund ceiling is half the Retirement Fund ceiling, additional pay between US$5,000 and US$10,000 a quarter attracts only the 8% retirement charge.

There is no statutory 13th-month obligation, so overtime premiums do not interact with one.

The Marshall Islands observes public holidays including Nuclear Victims Remembrance Day in March, Constitution Day on 1 May and Manit Day in September.

The Marshall Islands observes public holidays including Nuclear Victims Remembrance Day in March, Constitution Day on 1 May and Manit Day in September.

This is the most important paragraph on the page for anyone relying on a third party to run payroll.

MISSA was asked directly what happens where an employer deducts contributions but fails to remit them. Its answer: earned wages of an employee are computed based on actual payments by his or her employer.

So a deduction that never reaches MISSA does not build the employee’s record. The worker carries the loss, not the employer, the opposite of the position in several comparable jurisdictions, where the employee’s entitlement survives the employer’s default.

That makes verified remittance a duty of care rather than an administrative nicety, and a reason to confirm each quarterly payment rather than assume it.

Contributions are non-refundable, unless a wage earner has two or more employers in the same period and quarterly contributions exceeded the required amount. On reaching age 60, a worker may apply for a lump sum computed at 4% of total cumulative taxable wages.

Private health insurance is not mandated, though employers with international assignees often add cover because the national Health Fund focuses on basic domestic care and overseas referral.

Termination follows local employment law, with notice and procedure set by statute and contract.

The old-age pension age was 61, rising gradually to 65 by January 2025.

A retirement earnings test applies. For workers who retired after 6 March 2017, are under 65 and are still working, the benefit is reduced by US$1.00 for every US$3.00 earned in a quarter in excess of US$1,500, relevant when re-engaging a retiree part-time.

The Marshall Islands is in free association with the United States. Confirm work authorisation requirements before committing to a start date.

The refund rule is narrow. Contributions are non-refundable except where a worker held two or more employers in the Marshall Islands in the same period and the quarterly total exceeded what was required, so contribute in full and rely on that route rather than under-contributing.

The minimum wage applies to government and private sector alike, and aims to balance conditions between Majuro, where living costs are higher, and the more remote atolls.

Failing to verify remittance is the most consequential risk here. Benefits are computed on actual payments by the employer, so an unremitted deduction leaves the employee worse off with no recourse to the fund.

Applying one ceiling to both funds is the second. Retirement runs to US$10,000 a quarter, Health only to US$5,000.

Running a monthly cycle is the third, filing and payment are quarterly, and the deadline can move for public holidays.

Note also the retirement earnings test for working retirees; that there is no statutory overtime cap; and that a separate Workers’ Compensation registration has been required since October 2023.

Register with MISSA, obtain an Employer Identification Number, and register separately for Workers’ Compensation.

Configure the two ceilings separately at US$10,000 and US$5,000 quarterly, set a quarterly calendar, and check MISSA announcements for deadline shifts.

Confirm each remittance actually reaches MISSA, the employee’s record depends on it.