Definitive Guide to Hiring in Timor-Leste

Hiring in Timor-Leste

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

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

Labor Laws in Timor-Leste

Employee Probation Period

• Maximum length of probationary period is 1 month

Annual Leave in Timor-Leste

• The period of vacation shall not be less than 12 working days.

Holidays in Timor-Leste

Maternity Leave Timor-Leste

• Female workers shall have the right to paid maternity leave for the minimum period of 12 weeks
• Paid at the rate of 2/3 (two thirds) of their Remuneration, on the understanding that future social security payments will cover this contingency.
• Maternity leave shall include a period of 6 (six) weeks compulsory leave after childbirth.

Paternity Leave Timor-Leste

• Male workers shall have the right to a five-day remunerated paternity leave after the birth of their children without losing the right to seniority.

Working Hours in Timor-Leste

• The standard work week is of 8 hours per day
• The normal working time shall be 44 (forty four) hours per week.

Overtime in Timor-Leste

• Work provided overtime shall be remunerated with normal hourly remuneration added by 50 per cent.
• Work provided on a weekly rest day or on a mandatory holiday shall be remunerated on the basis of normal hourly remuneration added by 100 per cent.
• The total of normal and overtime hours for each worker shall not exceed 12 (twelve) hours per day.

Termination of Employment in Timor-Leste

The employment contract may be terminated by:

• • Expiry
  • Agreement between the parties
  • Rescission at the initiative of the worker
  • Rescission at the initiative of the employer based on good cause
  • Rescission due to market, technological or structural reasons relating to the company of business.

• The employer and the worker may terminate the employment contract by mutual agreement, which should be concluded in writing and signed by both parties, containing the terms under which the termination takes place, the date of such agreement, the beginning of its entry into force, as well as the compensation to be paid to the worker, if any.

Notice Period in Timor-Leste

• The period of notice shall be as follows:
  • 10 days where the worker has been employed for less than 6 months and more than 3 months
  • 15 days where the worker has been employed for 6 months or more but less than 1 year
  • 30 days when the worker has been employed for 1 year or more

Timor-Leste Salary and Wages

• There is a limited social security contribution scheme in Timor-Leste.
• Individual employees are subject to the social security contribution scheme.
• Employers are required to pay a monthly contribution towards an employee’s social security at a rate of 6% of the “contributory incidence basis.”
• The employer must submit a monthly social security declaration for each individual employee together with a summary declaration for all employees by the 10th day of the following month.
• The employee’s contribution is payable at 4% of the contributory incidence basis and is withheld by the employer.
• The social security contribution scheme also covers foreign employees who work temporarily in Timor-Leste.
• However, where they continue to be covered by and contribute to a social security system in another country, such employees are exempt from social security contributions in Timor-Leste for 10 years.

Immigration Timor-Leste

• Ordinary Visa Class I is designed for foreigners who travel to the national territory for tourism or business, it allows a maximum length of stay of 90 days and is valid for up to one year with one or multiple entries.
• The Work Permit (or Work Visa) allows the holder to enter Timor-Leste to work temporarily, paid or unpaid, as an employee, independent worker or professional.
• The applicant must
  • Demonstrate the purpose of work, by producing the necessary documents and statements, namely: Employment offer, or
    • Interests in a company, or
    • Professional competence for performing an independent profession, or
    • Any other document related to the intended activity.
  • Demonstrate means of subsistence.
  • Demonstrate accommodation arrangements.
  • Demonstrate that (s)he does not have a criminal or police record.
  • Demonstrate that (s)he is physically and psychologically fit.
  • Hold a return ticket, or show ability to fund own departure.

Value Added Tax (VAT) in Timor-Leste

• Sales tax is imposed on the sales tax value of: taxable goods imported into Timor-Leste and taxable goods sold or taxable services provided in Timor-Leste on or after the date specified by Parliament.
• The rates of sales tax are 2.5% for taxable goods imported into Timor-Leste and 0% for the sale of taxable goods and provision of taxable services in Timor-Leste.

Mandatory Benefits in Timor-Leste

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

Payroll Accrual in Timor-Leste

Payroll Accruals Additional Information

Accrued Benefits in Timor-Leste

Why use Global Expansion to hire in Timor-Leste

Establishing a branch office or subsidiary in Timor-Leste 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 Timor-Leste labor laws are complex.

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

Global Expansion makes it easy for you to expand into Timor-Leste. 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 Timor-Leste 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.