Definitive Guide to Hiring in The Federated States of Micronesia

Hiring in The Federated States of Micronesia

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

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

Labor Laws in The Federated States of Micronesia

Employment laws in The Federated States of Micronesia are uniquely suited to the country’s way of life, and crucial to understand if you want to employ local talent in this country. Get the details on The Federated States of Micronesia employment laws and The Federated States of Micronesia policies here.

Employee Probation Period

• Probationary period is generally of 6 months

Holidays in The Federated States of Micronesia

Maternity Leave The Federated States of Micronesia

• Female employees are entitled to 12 weeks of maternity leave

Paternity Leave The Federated States of Micronesia

• There is no paternity leave

Working Hours in The Federated States of Micronesia

• The law sets a standard of an eight-hour day and a five-day workweek

Overtime in The Federated States of Micronesia

• The law mandates premium pay for overtime. 
• There are no legal provisions prohibiting excessive or compulsory overtime.

The Federated States of Micronesia Salary and Wages

13th / 14th Month Salary in The Federated States of Micronesia

• No
• There is no evidence that there is a statutory requirement to pay the 13th or 14th month salary.
• The labour code refers to governmental employees.

• Social security contribution to be paid by the employers must be at 7.5% of twice the salary of the highest-paid employee per quarter.
• The minimum earnings used to calculate contributions are US $300 a quarter.
• The maximum earnings used to calculate contributions are US$7,000 (rising by US$1,000 every five years until reaching US$10,000 in 2028) a quarter.

Immigration The Federated States of Micronesia

• The Federated States of Micronesia allows anyone to enter the nation visa-free. In fact, there is no such thing as a Micronesia visa. 
• The permitted length of stay varies from 30 days to 365 days. 
• For example, the citizens of the United States can remain in Micronesia for up to a year, while the nationals of the Schengen Area can visit for just 90 days. 
• All the other travelers can stay for 30 days in Micronesia, but once they get arrive, they can extend their stay up to 60 days.
• The only thing that is required of you before you go to Micronesia is to have a valid passport that does not expire for 120 days (about 4 months) from the date of your arrival.
• Foreigners seeking to settle down in Micronesia’s idyllic isles for work or a business related enterprise, will need to have a working permit before they travel. 
• Work permits and permanent residency visas can be obtained by writing to the Federated States of Micronesia Department of Resources and Development.
• The department will let you know what further evidence you need to provide; this may include an official business invitation from the company you’ve been sent to work with or a birth certificate

Value Added Tax (VAT) in The Federated States of Micronesia

• The sales tax ranges from 3% to 5% depending on the state

Payments And Invoicing

• An Employer’s Income Tax Quarterly Withholding Return must be filed for each quarter, showing each employee, the amount of wages paid, and the amount of tax withheld, along with certain other information. 
• These tax returns and the payment of the tax withheld are due on January 31, April 30, July 31 and October 31. 
• An employer not withholding the tax from employees or withholding the tax but not paying it over to the Division of Customs and Tax Administration can be held liable for the tax, interest and penalties.

Payroll Accrual in The Federated States of Micronesia

Country Accruals Additional Information

Description

Gainfully employed persons, including self-employed persons earning at least US$10,000 a year or with at least one employee (small businesses).
Voluntary coverage for self-employed persons earning less than US$10,000 a year.

Payroll Accruals Additional Information

Accrued Benefits in The Federated States of Micronesia

Why use Global Expansion to hire in The Federated States of Micronesia

Establishing a branch office or subsidiary in The Federated States of Micronesia 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 The Federated States of Micronesia labor laws are complex.

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

Global Expansion makes it easy for you to expand into The Federated States of Micronesia. 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 The Federated States of Micronesia 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.