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Payroll In Maldives

Comprehensive Guide to Employee Benefits and Compensation in Maldives

What are Employee Benefits?

Employee benefits are perks provided by employers to employees on top of the base wage. With these work perks, companies attract talented employees and retain a skilled workforce. Besides, these benefits lead to employees’ increased loyalty and productivity and improved morale. They let employees feel like they are properly taken care of. Thus, they will feel engaged and satisfied at the workplace. The offered benefits and compensation can be either monetary or non-monetary depending on the employees’ requirements and the company’s budget.

The employment contracts outline certain mandatory benefits all employees will receive in Maldives. These benefits cover working hours, overtime payment, statutory minimum wage, annual leave, paid leaves, paternity leave, maternity leave, sickness benefits, disability pension, severance fund, retirement benefits, and more. 

Compensation Laws in Maldives

Different compensation laws administer compensation and benefits in Maldives. The following section discusses the laws related to the compensation and benefits policy in Maldives:

i. Employment act of the Maldivian Law (Law No.: 2/2008)

– The mentioned law covers all employment aspects, which includes holiday entitlements and other employee benefits in the Maldives.

-For employees working regular hours during a public holiday, the employer shall at least pay an amount equal to half of the minimum wage of a regular work day. It is in addition to overtime.

-The act also covers aspects like leave for a child’s circumcision, Ramadan allowance, minimum wage, and deductions.

-According to the compensation and benefits policy in Maldives, the employer must compensate any unused annual leave entitlement before termination from employment.

ii. Amendments to the Employment Act:

-The Seventh Amendment to the Employment Act discards the obligation of employers to compensate minimum wage to expatriate employees in agreement with the Minimum Wage Order until the Minister of Economic Development declares a compliance date.

-The Sixth Amendment to the Employment Act offered in-depth instruction on establishing the minimum wage employees receive in the Maldives. Specifically, the Minister must issue an order stating the minimum wage within 30 days of acknowledging the Minimum Wage Board’s advice.

How to Design an Employee Benefits Program for Employees in Maldives?

Focusing on the below considerations before preparing a compensation package in Maldives helps you design an employee benefits program effectively. 

Step 1: List down your business objectives and plan budget

Listing down the business goals you expect to achieve from the compensation structure in Maldives serves as the first step to gaining the maximum advantage from your compensation policy. You should inspect collective bargaining agreements or employment contracts to authenticate employment relationships and entitlements of compensation and benefits in the Maldives.

Before preparing the employee compensation policy in Maldives, you must focus on the company’s competence, commercial environment, and the business division in which it operates. Deeply study the employment contracts or collective bargaining agreements to verify employment relationships and employee benefits entitlements. You should also weigh your company’s budget to invest in employee benefits and accordingly design the compensation structure in Maldives. 

Step 2: Learn employee requirements

You can arrange use cases or interviews or create opinion polls to learn the employees’ requirements and anticipations thoroughly. As a result, this step in designing the compensation and benefits policy in Maldives motivates employees to share their opinions confidently.

Comprehensively research the set industry standards and the benefits other companies in your sector provide their employees. The relevant assessment and research outcomes help you prepare a comprehensive compensation and benefits policy in Maldives that abide by market competition and industry principles. So, you can prepare a compensation package in Maldives that provides all the necessary employee advantages.

The internal survey mentions the areas that demand improvements and signifies necessary changes must reflect in the compensation and benefits policy in Maldives. You can exclude certain redundant benefits to control company expenses.

Step 3: Create your benefits plan

After deducing the employees’ requirements and expectations, you should carry out a gap analysis to understand the existing scenario of the benefits plan. Next, you should prepare a feasible employee compensation policy in Maldives that resembles the dynamic characteristics of the business. The corresponding flexible benefits and compensation structure in Maldives enables employees to choose mandatory benefits easily. Moreover, it counsels the employer to acquire the optimum benefits from the created compensation and benefits policy in Maldives.

The aspects you should include while creating a benefits plan for worker’s compensation in the Maldives are the company’s budget, employee contributions, and outsourcing requirements.

Step 4: Communicate the benefits to the stakeholders and attain feedback

Next, you can implement a functional plan for the employees and the organization. Ensure you convey the advantages of your created compensation package in Maldives to all the employees and stakeholders. They can send feedback on the plan’s draft. Consequently, you can implement a valuable plan of worker’s compensation in Maldives that benefits the company and the employees.

If you identify any worthwhile feedback, you can adapt them to your compensation and benefits policy in Maldives. But, if the feedback identifies any benefits as redundant, you can remove them and amend the employee benefits in the Maldives accordingly.

Step 5: Regularly examine the plan

Companies in Maldives aim to provide the optimum employee benefits in Maldives to boost their competitive advantage in the market. Hence, you must repeatedly examine the compensation structure in the Maldives. This step also assists you in identifying the benefits plan’s practicality and efficiency.

Go ahead with implementing the employee compensation policy in Maldives after confirming that it is error-free. You must meticulously examine all the benefit plan’s components and implement them.

Types of Guaranteed Benefits in Maldives

Employees are entitled to diverse types of employee benefits in Maldives. The mandatory benefits are as follows:

Minimum wage

  • The minimum wage is 3,100 MVR (for the government sector) and 8,000 MVR (for the tourism sector).

Working hours and overtime

  • Maldives’s standard working hours are 48 hours per week.
  • The employee shall only work six consecutive days per week without taking 24 hours of rest.
  • The employer provides overtime compensation for the working hours surpassing the decided standard working hours per week.
  • The overtime compensation for weekday work is 1.25 times the average salary.
  • The overtime compensation of this employee benefits in Maldives is 1.50 times the average salary for overtime during weekends (Friday to Sunday) and public holidays.
  • Employees who have finished a year of employment receive a paid annual leave of 30 days and must take this leave within 12 months. 
  • The corresponding workers’ compensation in Maldives can’t be amassed and conveyed to the following year.
  • Employees can encash unused  leave benefits in Maldives before termination.

Public holidays

1 Jan

New Year’s Day

23 Mar

First day of Ramazan

22 Apr

Eid-ul Fitr

23 Apr

Eid-ul Fitr Holiday

24 Apr   

Eid-ul Fitr Holiday

1 May    

Labour Day

28 Jun 

Hajj Day

29 Jun 

Eid-ul Al’haa

30 Jun

Eid-ul Al’haa Holiday

1 Jul

Eid-ul Al’haa Holiday

19 Jul

Islamic New Year

26 Jul

Independence Day

27 Jul

Independence Day Holiday

16 Sep

National Day

17 Sep

National Day Holiday

27 Sep

Prophet Muhammad’s Birthday

17 Oct

The Day Maldives Embraced Islam

3 Nov

Victory Day

11 Nov

Republic Day

12 Nov

Republic Day Holiday

Sick leaves

  • In Maldives, employees receive up to 30 days of sick leave.
  • The employer may demand employees show/submit a valid medical certificate from a medical practitioner before validating the medical benefits for employees in Maldives. The certificate is applicable upon using the 15 days of medical leave without showing/submitting a medical certificate.
  • Employees who are unwell for up to two successive days can take medical leave without providing a medical certificate for 15 to 30 days of the medical leave.

Maternity leaves

  • Female employees in the country receive a maternity leave of 60 days based on a licensed medical practitioner’s medical certificate.
  • The maternity leaves start based on the estimated date of delivery as specified in the medical certificate.
  • The female employees working in government organizations receive six months of paid maternity benefits in Maldives.
  • The employees who submit a medical certificate (stating the incapability to resume work) from a licensed medical practitioner can receive an additional 28 days of  maternity benefits in the Maldives. It’s up to the employer whether to compensate during that additional leave period.

Paternity leaves

  • A male employee can receive up to 3 days of paid leave in case of the birth of a child.

Severance pay

  • Employees with less than a year of employment experience in the same organization are entitled to a severance package equivalent to one month’s notice or payment in exchange for the same.
  • Employees who have worked 1-4 years in the same organization are entitled to a severance package equivalent to 3 months’ notice or payment in exchange for the same.

Employee Benefits for Expatriates

Foreign employees working in the Maldives are entitled to the same compensation and benefits in Maldives as local employees. The compensation package in Maldives entitles expats to benefits like family allowance, health care insurance, meal allowance, child home care allowance, travel allowance, dental care, and unemployment benefits.

Expats may repeatedly travel to and from abroad to complete their short-term projects. So, businesses adopt an easy, cost-effective alternative to hiring and compensating expats through local subsidiaries.

Maldives Immigration (MI) issues a Work Visa (WV) depending on Employment Approval (EA) (provided by PFED). EA is a written statement allowing permission for expatriates to work in the country.

Employers in the Maldives can prefer to pay Ramadan allowance to Muslim expatriate employees working in public sectors [according to subsection (a) of Law No.: 2/2008 (Employment Act)]. Moreover, expatriate Muslim employees working in the private sector are entitled to a Ramadan allowance identical to Maldivian employees working in the private sector. The expatriate employees receive legal redress according to the Employment Act.

How are Employee Benefits Taxed in Maldives? 

Employees in Maldives should pay income tax ranging from 0% to 15% (depending on their income). Additionally, each employer and employee should make 7% of social security contributions. The tax residents must pay for their worldwide income, but the non-residents only pay for their income earned from the Maldives. Besides, self-employed individuals must pay contributions due to general sickness, pension, and disability.

Restrictions for Maldives Benefits and Compensation

Almost all benefits offered to Maldivian employees are taxable. Therefore, you should be aware of the benefit’s financial worth to calculate the tax amount owed by the employer correctly. An employer should also ensure that all tax payments are released and sent to the conforming authorities on time.

Ensure your business is incorporated and legally operates in Maldives before creating employee benefits plans. The companies should also pay the minimum remunerations to employees based on their business segments. The benefits and compensation package in Maldives should also follow all the labor laws regulated by the government.

Employing foreigners in the Maldives is legal under the permission authorized by the Permits and Foreign Employment Division (PFED) of Maldives Immigration (MI). If the employee leaves the country within 15 days of arrival, they need not pay a visa fee.

The parties joined in an employment contract can sign a non-competition agreement. Within this agreement, the employee can consent not to conduct competitive activities during employment or for a definite period after termination. Furthermore, an employee can enter into another employment bond during service, except for the employment contract of the compensation package in Maldives specifying otherwise.

The enforcement and validity of a non-compete differ by jurisdiction. Any restrictions levied on an employee’s upcoming employment are unaccepted. It may require the former employer to continue paying the ex-employee a base salary throughout the non-compete period.

Supplemental Benefits for Employees in Maldives 

The below section discusses some additional benefits offered to employees as per the compensation package in Maldives.

Holiday Bonus

Employees receive a bonus equivalent to one-third of their monthly wage for Ramadan. Usually, it is paid before the commencement of Ramadan, and is known as the “Ramadan Bonus.”

The details of a few more supplemental employee compensation and benefits in Maldives are as below:

  1. Wellness programs: Several companies in Maldives let employees access wellness programs that keep them healthy and fit.
  2. Free healthcare: Certain companies provide this compensation and benefits in Maldives that gives employees and their families access to premium healthcare free of cost.

iii. Free housing: Certain companies provide free housing to employees, especially to help them save funds if they live in costly areas of the Maldives.

  1. Other benefits: Certain employers may also provide social security, healthcare insurance, overtime pay, transportation allowance, meal allowance, Ramazan bonus, service charge, and dental benefits in Maldives.

How Multiplier Can Help with Benefits Management in Maldives

Establishing a business abroad and recruiting a proficient workforce is easy but time-consuming. An employer should obey the local laws and regulations before framing employment contracts and confirming employee benefits. You can effectively organize this process by contacting an international PEO platform like Multiplier.

Multiplier facilitates compliance with Maldives’s labor rules. We also support you with hiring skilled employees. Our talented staff can assist you in effectively supervising the workforce without founding a subsidiary in the country. Hence, you can diminish your employment expenses and investigate new markets.

Frequently Asked Questions

The standard VAT rate is 6% in Maldives.

In Maldives, it is mandatory to provide written employment contracts for your employees. These contracts should contain wages, working hours and obligations, and other appropriate information.

During the absence of an employment agreement in the Maldives, the employer must pay penalties ranging from MVR 2,000 to MVR 20,000, based on the size of their business.

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