Hire Employees in Vanuatu

Two routes exist. Registering a Vanuatu entity gives you direct employment, followed by registration with the VNPF and issue of an employer registration number.

An Employer of Record removes that setup. The EOR is the legal employer, runs payroll and remits contributions, while day-to-day direction stays with you.

Payroll here is unusually simple in structure. There is no income tax to withhold and one mandatory contribution, so gross to net is a single deduction. The complication is not the mechanics but the rate.

Vanuatu levies no income tax of any kind, no personal income tax, no corporate income tax and no capital gains tax. Government revenue comes from a 15% value added tax, rental income tax, customs duties and business licence fees.

The economy rests on agriculture and fishing, which employ around 80% of the population, alongside tourism and offshore services.

The Department of Immigration has continued to refine the Remote Worker Visa introduced in 2020, which lets foreign digital professionals live in Vanuatu while employed by a company abroad. That is a different arrangement from local employment and does not create a Vanuatu payroll.

Break-even rule of thumb: EOR fees begin to exceed the running cost of a Vanuatu entity somewhere between 12 and 20 employees. Model both, see EOR vs Entity for the framework.

The contribution rate is currently disputed, and the disagreement is between official and commercial sources rather than among commercial ones.

The Vanuatu National Provident Fund publishes 8% in total, 4% deducted from the employee and 4% contributed by the employer, on both its employers and members pages. The Department of Labour compliance guidance says the same.

One EOR provider reports that amendments to the VNPF Act passed in 2025 raised the total to 12%, split 6% and 6%, applying from the January 2026 contribution payable in February 2026, and cites the Vanuatu Daily Post and a legal briefing as corroboration. That same publisher still shows 8% on another of its pages.

Both figures are recorded here. Confirm the current rate directly with the VNPF before running payroll, the difference is two points of employer cost and two points of employee deduction.

What is not in dispute is the base. Severance pay, gratuity payments due under terms of employment, housing allowance and reimbursement of money spent on the employer’s behalf do not form part of gross remuneration. The Fund’s members page states the exclusion more broadly, covering any allowances or reimbursements.

Contributions are required for employees earning a minimum of VT 3,000 a month, and are calculated on monthly remuneration with fractions dropped, a 4% charge on VT 9,755 gives VT 390.2, which is remitted as VT 390.

Gross monthly salaries in vatu. With no income tax, the only deduction is the provident fund contribution.

Benchmarks below are gross monthly salaries in vatu. With no income tax, gross to net is simply the provident fund deduction, so employees keep 96% or 94% of gross depending on which rate applies.

There is no income tax to withhold, so payroll is a matter of contributions and records. Employees receive 96% of gross at the 4% rate, or 94% at the reported 6% rate.

The remittance deadline is also published two ways. The Department of Labour states that both contributions must reach the VNPF before the last day of the following month; one provider states the 15th of the following month. Treat the earlier date as the safe one.

Payment may be made by cash or cheque to the Vanuatu National Provident Fund, submitted with a completed contribution schedule and a remittance advice.

All employers must register with the VNPF and obtain an employer registration number, and employees should apply for a VNPF membership number.

Vanuatu levies no personal income tax, corporate income tax or capital gains tax. The rows below record the position rather than a scale.

Employment is governed by the Employment Act 1 of 1983, as amended by Act 20 of 1986, Act 33 of 1989 and Act 8 of 1995. Both foreign and domestic employees fall under it.

Contracts may be written or verbal. Open-ended contracts are the most common form, running until terminated by either party or until retirement.

The minimum wage is VUV 300 an hour, unchanged since the June 2023 revision, about VUV 51,960 a month on a 40-hour week or VUV 57,165 on a 44-hour week. There is no scheduled review for 2026, though the Tripartite Labour Advisory Council typically revisits the rate every two to three years.

Even casual workers are entitled to the minimum wage, informal arrangements are not exempt.

Annual leave accrues at 1.25 days a month, giving fifteen days a year.

Contracts may be written or verbal, though written terms are strongly preferable for clarity on pay, hours, leave and termination.

Register with the VNPF and obtain an employer registration number before the first payroll run, and ensure the employee holds a VNPF membership number.

Confirm the applicable contribution rate with the Fund, given the current disagreement between published sources.

Working hours follow the Employment Act, with the minimum wage expressed hourly at VUV 300.

Allowances deserve attention when negotiating: housing allowance is outside the contribution base, but overlooking allowances such as housing, meals and transport when setting terms is a common source of later dispute.

Because there is no income tax, overtime and bonuses reach the employee almost in full, subject only to the provident fund deduction where they form part of gross remuneration.

Vanuatu observes national and Christian public holidays, including Independence Day at the end of July and Unity Day in November.

Vanuatu observes national and Christian public holidays, including Independence Day at the end of July and Unity Day in November. Dates and any substitution rules are set out below.

The Vanuatu National Provident Fund, established in 1987, provides retirement, invalidity and survivor benefits, and covers work injury.

Workers may retire at 60 with a full pension, provided they have the required accumulated contributions. Private pension arrangements are available alongside.

Membership applies to employees between 14 and 55 earning at least VT 3,000 a month. Self-employed workers, including employers, are not obliged to join but may contribute as Voluntary Members.

There is no mandatory thirteenth month payment. Bonuses are set by contract or at company level.

Severance is more generous than most, and it reaches resignations. An employee is entitled after twelve months of service where the contract is terminated without fault, and also where they resign after six years or more, or where illness or injury prevents them working.

It is calculated as one month of pay per year of service, pro rata for partial years, and is often capped at six months of salary.

Severance is excluded from the provident fund base, so it does not itself attract a contribution.

A fixed-term contract terminates on its expiry date.

Expatriate employees are subject to Vanuatu law and must contribute, unless VNPF has approved redirection of their contributions to an alternative overseas superannuation fund, or they serve with a diplomatic or international mission.

That approval route is worth pursuing early where an expatriate already contributes to a home-country scheme, since it is the only practical exemption.

The Remote Worker Visa, introduced in 2020 and since refined, allows foreign professionals to live in Vanuatu while employed by a company abroad, a separate arrangement that does not create a local payroll.

The contribution rate is genuinely unsettled. The Fund and the Department of Labour publish 4% and 4%; one provider reports 6% and 6% from January 2026 under a 2025 amendment. Confirm with VNPF rather than relying on either.

Severance on resignation after six years is easy to miss and is not a feature of most comparable systems. Provision for it rather than treating severance as a dismissal-only cost.

The remittance deadline is published two ways, the last day of the following month and the 15th. Use the earlier date.

Note also that housing allowance and reimbursements sit outside the contribution base; that even casual workers are entitled to the minimum wage; and that expatriates contribute unless VNPF approves an overseas redirection.

Work backwards from the start date. An EOR hire takes two to four weeks; entity formation runs two to four months.

Confirm the VNPF rate before quoting, since 4% and 6% are both currently published.

Register for an employer number, check pay against VUV 300 an hour including for casual staff, provision severance including for resignations after six years, and remit before the last day of the following month.