Legal requirements for paying your staff
Minimum wages information is found in Orders made under the Minimum Wages and Minimum Wages Board Act [Cap 182]. As of August 2020, the most recent wage order is No. 116 of 2019, setting the minimum hourly rate at 220vt per hour.
This is the rate that must be paid for regular hours of work of up to 44 hours per week, or 8 hours per day. If the regular hours are exceeded, overtime must be paid in accordance with the law.
There are four exceptions to the standard minimum wage rate:
- Seasonal copra cutters shall be paid a minimum of 13.5 per cent of the price fixed by the Vanuatu Commodities Marketing Board for hot air or sun-dried copra.
- Seasonal cocoa cutters shall be paid a minimum of 6 per cent of the price fixed by the Vanuatu Commodities Marketing Board for 1st grade cocoa.
- Students engaged during school holidays shall be paid a minimum of 250 vatu per day.
- Children who are employed in accordance with the relevant sections of the Employment Act shall be paid a minimum of 250 vatu per day.
Record of Payment
Employers must keep a record of payments made, which should be signed by each employee or marked by her thumbprint, each time payment is received. Whilst the law does not specify what must be in this record, it should show the amount of payment and shows how this amount was calculated. Wages or pay records books can be purchased from stationery stores to help with this. Records must be kept for at least 3 years by the employer.
If the employee requests it, then he must be given a statement which states the name of the employer and the employee, shows the amount of payment and shows how this amount was calculated. There is no legally required form for this statement.
Maximum HoursThe normal maximum hours of work are 44 hours per week. There are also daily limits of 8 hours per day. These limits exclude any break times. Employees can also only be required to work 6 days per week. These hours can be exceeded in some specific situations, including by voluntary agreement.
Paying your staff’s VNPF
In addition to wages, the other main payment that employers must make is contributions to the Vanuatu National Provident Fund (VNPF). These contributions are required under the Vanuatu National Provident Fund Act [Cap 189]. All employers are also required to register with the VNPF and obtain an employer registration number. All employees in Vanuatu earning a minimum monthly salary of VT 3,000 are required to contribute to the VNPF and therefore should apply to obtain a VNPF membership number. There are a very few exceptions to this.
The total contribution rate to VNPF is 8%. Employees have 4% of their gross remuneration or salary deducted by their employer and paid into the VNPF. The employer also contributes an amount which is equal to 4% of the employee’s salary to the VNPF. Severance pay, gratuity payments (due under terms of employment), and Housing Allowance, reimbursement of monies spent on behalf of the Employer does not form part of the gross remuneration.
Both contributions must be sent to the VNPF before the last day of the following month. Payment can be made by cash or cheque to Vanuatu National Provident Fund and submitted with a completed contribution schedule and a remittance advice. Note: the 4% contribution must be deducted from the employee's salary each time the employee is paid.
An example of the calculations required to deduct the 4% from the employee's salary is as follows:
- An employee receives a salary of VT 9,755 for the month of January 2022.
- By multiplying .04 (4%) to VT 9,755, the contribution to be paid by the employee would be VT 390.2.
All fractions (in this case .2) should not be accounted for. So, the amount of VT 390 would then be deducted from the employee's salary.
- The employer adds another VT 390 (contribution of the employee) and then pays VT 780 in cash or cheque to Vanuatu National Provident Fund along with the completed contribution schedule and the remittance advice.
- The employer made the deduction in January 2021 and then sent in the contribution on or before 28 February 2022. The employer, in this case, cannot be penalized for late payment of contributions.
If the employer fails to deduct the 4% when paying the contributions for the employees, that deduction cannot be collected at a later date - the deduction is lost and the employer is required by the VNPF Act to make up for the loss. In other words, the employer, if not careful, would be obliged to pay out of his or her pocket for the entire 4% contribution of the employee as well as the employer's own contributions.
Payment of the contributions should be made directly to the Vanuatu National Provident Fund offices either through mail or in person. However, it is advisable that cash payments be made in person. Employers in the outer islands are advised to make the payment of contributions through the branch of the National Bank of Vanuatu closest to the location of the business.
The payment of contributions must be sent with the completed Contribution Schedule. The sum of contributions in the Contribution Schedule should agree with the payment. If there are discrepancies in the Contribution Schedule, the Fund will return the payment along with the schedule and advise the employer by letter to rectify the discrepancy. On correcting the discrepancy, the Contribution Schedule along with the payment should then be returned to the Fund for verification and for a receipt to be issued. If paid by cheque, the contribution should be made payable to the Vanuatu National Provident Fund. If paying by cheque, make sure the cheque is crossed so it can only be deposited.
Make sure you receive a receipt, especially when paying in cash. Contact the VNPF if you do not receive a receipt.
At the beginning of each month the Employer receives a computer-generated Contribution Schedule form. This form will show the names, membership numbers, salaries and the contributions that must be made for each of the employees.
The information contained in the Contribution Schedule is based on the information provided by the employer and is assumed to be up to date. If during the month from the last deduction, employees have been recruited or dismissed, or had their salaries increased or decreased, without the knowledge of the VNPF, the Contribution Schedule will not show these changes. It is therefore important that if the employer has employed a new employee since the previous month's contribution, the employer must fill in the blank sheet attached to the Contribution Schedule with details about the new employee.
If the employer has made changes in an employee's status, the Contribution Schedule must be adjusted to include these changes by doing the following:
By making the changes in the Contribution Schedule, the total amount of the contributions will be affected. After making these adjustments, the employer will need to change the total amount of contributions to be paid on the Remittance Advice form. The employer must sign this form.
The employer should retain a photocopy of the completed Contribution Schedule, and of the Remittance Advice Form (if used) and return the originals with the contribution payment to the Vanuatu National Provident Fund.
If, for some reason, the employer does not receive a Contribution Schedule by the middle of the month of which the contributions are due, the employer should contact the Fund immediately for a copy. Not receiving a Contribution Schedule does not absolve the employer from the liability of paying the contributions on time.
Paying your own VNPF as self-employed worker
Those who are sole proprietors/self-employed can become a member as a voluntary contributor. In such cases the self-employed person must visit the VNPF office and seek approval. If approved, they can pay such contributions in the same way as detailed above, for the amount they have elected to pay. For voluntary contributions, the minimum payment is 1,000 vatu every month, however no penalties are imposed if you decide to not make a contribution.
For more information visit: https://www.vnpf.com.vu/index
VNPF Building - Head office +(678) 23808
Cnr Pierre Lamy & Andre Ballande Street. PO Box 420. Port Vila, Vanuatu
Santo +(678) 36106
Malekula +(678) 48517
Tanna +(678) 88038
Members of VNPF, particularly those in the informal sector, can now make their contributions directly into their accounts using M-Vatu and MyCash, digital platforms for secure mobile money service. M-Vatu and MyCash allows access VNPF services for self-employed workers in Vanuatu and overseas. Seasonal workers abroad can also start putting aside some of their income earned using their mobiles
How to register for M-Vatu (Vodafone users)?
- Visit Vodafone shop or agents with at least one of the following ID: Passport, VNPF card, Driver’s license or National ID card
- Complete registration process with customer care agent
- Customer care agent will confirm that registration is completed
- You will receive activation code on your Mobile phone
- Dial and call 120 or *120# to activate your M-VATU account
- Enter your activation code
- Enter your new 4 Digit Secret Pin
- Your account has been activated
- Now you can access M-VATU menu by dialing *120# & call
For more information, visit: https://vodafone.com.vu/pages/m-vatu
How to register for MyCash (Digicel users)?
- Download the MyCash app from your Google Play Store on your Android smartphone or from the App Store on your iOS device. If you have a feature phone dial *888# to access the USSD menu.
- Open the app, enter your phone number, and follow the steps in the screen
- If you are a new user, you will receive an SMS message with a verification code to enter into the MyCash app.
- You will receive a temporary PIN via SMS which you will use to log into the MyCash app and be prompted to enter a new personal 4-digit PIN.
- You are now ready to start using your MyCash mobile wallet! Visit your nearest Digicel Store or MyCash Agent to add funds and start using your wallet.
For more information, visit: https://mycash.vu
Conditions of Employment of Your Staff
The Vanuatu law doesn't require you to have written employment contracts with the following two exceptions:
- For a fixed term exceeding 6 months.
- When the employee needs to live away from his ordinary place of residence.
Although the Vanuatu Law doesn’t require you to have a written contract, it is always best that when anyone employs a worker, they give them a written contract of employment. This helps if disagreements arise later on as it will be easier for a court or mediator to iron out conflicts. This is not to say that a contract cannot be verbal and still valid, because it is.
A written contract must provide for all the conditions of employment for the employee. A written contract cannot offer a worker less than the basic conditions stated in the law. Your employer can offer more than, or better than the basic conditions, but never less.
In Vanuatu’s law there are two main categories of employment contracts:
- Fixed term contracts, which have a definite start and end date
- Open ended contracts, which have a start date, but no set end date.
It is important to decide which type of contract you want because each has different ways of coming to an end.
Vanuatu’s law does not define full time, part time and casual employees. Some benefits, such as paid leave and severance allowance are only available to employees who are in continuous employment. In practice, employers in Vanuatu often refer to full time, part time and casual employees and there is a general understanding that part time and casual employees have different entitlements.
The Vanuatu Chamber of Commerce has prepared a helpful contract building tool designed to create employment contracts in accordance with Vanuatu’s laws. You can find the contract builder here: https://vcci.vu/resources/employment-contract-builder/.
An employee must have worked for you in order to be entitled to claim leave. The law surrounding leave depends on the type of leave. There are three types of paid leave:
- Annual leave must be given to employees who have been in continuous employment with you for more than 3 months, although annual leave is earned every month for the first year.
- Sick leave can be claimed by employees who have worked for you full time for more than 3 months.
- Maternity leave must be given to all pregnant employees, regardless of the amount of time they have worked for you, and whether they are full or part time.
Part time and casual employees do not have to be given paid annual leave or sick leave but are entitled to maternity leave.
The amount of payment that must be given to the employee whilst he or she is on leave is:
- Annual leave or sick leave, the employee’s full salary or wage.
- Maternity leave, 66% of the employee’s usual salary or wage.
Annual leave must be given to employees who have been in continuous employment for more than 3 months.
In calculating continuous employment, periods of absence due to accident at work, illness caused by work, maternity leave of periods up to 12 weeks, and other leave due to illness for periods of up to 3 months count as part of the period of continuous employment.
There is a grey area in the law regarding the definition of “Continuous employment”. It has been defined by the court as working more than 22 days a month. This means employees who work less days per month do not have to be given paid annual leave. The other option for defining continuous employment comes from section 54(2)(a) of the Employment Act, which defines continuous employment for the purposes of determining eligibility for severance allowance. Section 54(2)(a) requires the employee to work 4 or more days per week in order to be in continuous employment. Many employers interpret continuous employment to mean workings 4 or more days per week and do not “count” the number of days per month an employee works.
Sick leave must be given to employees who have been in continuous employment for more than 3 months. The amount of leave that can be claimed is 21 working days per year.
The Act does not define what continuous employment means for the purposes of sick leave. As a result, the definition used in respect of defining continuous employment for annual leave is probably used. In practice many employers interpret continuous employment to mean workings 4 or more days per week and do not “count” the number of days per month an employee works.
Note: 21 working days per year is the minimum amount of sick leave. Employers can voluntarily choose to give more sick leave if they want to. If additional sick leave is given by the employer, then the employment contract should clearly state the conditions under which additional sick leave can be taken and whether additional sick leave is paid or unpaid.
Unlike annual leave and sick leave, which require employees to have worked for a certain amount of time before being eligible to claim leave, there is no minimum time an employee must have worked for you before she is entitled to claim maternity leave.
Maternity leave is also available to all employees regardless of whether they are part time, full time or casual staff. The amount of maternity leave is 12 weeks. The law says that up to 6 weeks must be taken before the woman gives birth and 6 weeks must be taken after the woman gives birth. This implies that it is compulsory for a woman to take leave. However, if the employee wants to work up to the date where she gives birth then she can do so providing she produces a medical certificate which certifies she is safely able to work during the 6 weeks prior to giving birth.
The period of leave can be extended by up to 3 weeks if a doctor certifies that the woman is unfit to return to work after giving birth.
Many employers choose to allow the woman to decide when the 12 weeks will be taken, as some women prefer to work up to their date of birth and take most leave after the child is born.
Grey area: Some women want to return to work soon after giving birth. Whilst this is not permitted in law, section 6 permits any arrangement that is more favorable to the employee. If the employee wants to return to work this may be covered by section 6.
Note: This is the minimum amount of maternity leave. Employers can choose to give more maternity leave if they want to.
It is the duty of every employer to ensure the health, safety and welfare at work of all his employees. Some examples of that duty are:
- The provision and maintenance systems of work that are safe and without risks to health.
- Arrangements for ensuring, so far as is reasonably practicable, safety and absence of risks to health in connection with the use, handling, storage and transport of articles and substances.
- The provision of information, instruction, training and supervision as is necessary to ensure the health and safety at work of his employees.
- The maintenance of the place of work it in a condition that is safe and without risks to health.
- The provision and maintenance of means of access to and from work that are safe and without risk.
- The provision and maintenance of a working environment for his employees that is safe, without risks to health, and adequate as regards facilities and arrangements for their welfare at work.
Why would your staff lodge a labour dispute?
According to the Department of Labour and Employment Services, the 9 main reasons staff generally lodge a labour dispute is for one of the following reasons:
- Employer not paying wages or underpaying staff
- Employer not paying notice of termination
- Employer not paying of Annual Leave
- Employer not paying Sick Leave when medical certificate has been supplied
- Employer not paying of Maternity Leave
- Employer not paying of Overtime
- Employer not paying Severance
- Ill treatment of Staff (including physical or verbal abuse)
- Accident or workplace injury (employer not paying medical bills/compensation)
Complaints mainly result from disputes between employers and employees over work rules, interpretation of the meaning of the contract as well as personnel policy or entitlements such as wages, severance allowance, sick leave, maternity leave, over time, annual leave, notices and many others.
Where is this dispute lodged?
The dispute is lodged Department of Labour and Employment Services, Port Vila, Vanuatu. There are Labour Department offices located in Shefa, Malampa, Tafea and Sanma provinces
What is the labour dispute process?
- The labour officer will listen to the employee’s complaint. If determined to be a complaint of Right, the staff member will then be asked to register their complaint and fill out a complaint form provided by the Labour officer.
- The Labour Department will contact the employer to advice of the complaint and set a date, no later than 7 days after the complaint was lodged, for a mediation or “round table” with the employee. The mediation takes place at the Department of labour and a labour officer will be present to mediate the discussion. During the mediation process, both parties will have a chance to give their interpretation of the events/issue that led to the dispute. The labour officer will encourage finding an acceptable non-juridical resolution that suits both parties.
If a resolution is found, an agreement is written and signed by all parties present. Copies of the agreement are given to all parties. The details of the complaint and the resolution are filed in the Department of Labour’ Memorandum. The matter is deemed closed.
If a resolution is unable to be found, the matter will be referred to the Trade Dispute Tribunal and the case will be hard by the adjudicator.
What is your role/responsibility in the process?
During mediation, the Department of Labour encourage employers to not hire the services of a lawyer as the aim of the mediation is to find a non-juridical resolution. However, should the matter go to the Trade Dispute Tribunal, then you are encouraged to seek legal counsel.
You are encouraged to attend the mediation with an aim to find a resolution.
You are expected to respect the rights of your employee as detailed in the Employment Act.
What happens when a decision is made on the dispute?
When a decision is made on the dispute, an officer from the Department of Labour will visit the workplace premises within 7 working days and verify that the agreement has been complied with.
If either party has not upheld their end of the agreement, the matter can be taken to the Trade Dispute Tribunal.
Rights and responsibilities of an employee
The regulatory framework relating to public and private sector employment is primarily governed by the Employment Act 1983, Trade Disputes Act 1983, Trade Unions Act 1983, Workmen’s Compensation Act 1987 and Public Service Act 1998.
The most notable feature of the existing framework is an absence of legislative protections for workers from discrimination in employment and limited references to the promotion of equality for all workers.
The Act provides no protection for workers from discrimination of any kind in employment other than a prohibiting sex discrimination with respect to salary. The penalty for violation of this prohibition is a maximum fee of VT 10,000 or a prison term of up to three years.
The Employment Act primarily deals with terms and conditions of employment including annual leave, maternity leave, the abolition of forced labour, contracts of employment, hours of work, overtime, sick leave, termination of employment and other matters. The scope of coverage applies to both the public and private sector with the exception of the police force, armed forces or prison service.
People with Disabilities
The Constitution of the Republic of Vanuatu is the supreme law of Vanuatu. It guarantees fundamental rights and freedoms for all citizens. Article 5 provides that all citizens are equal before the law and fundamental freedoms are guaranteed without discrimination. Discrimination for the purposes of Article 5 means “race, place of origin, religious or traditional beliefs, political opinion, language or sex”.
The absence of any reference to disability appears to leave opportunity for discriminatory legislation to be in place without breaching the Constitution.
While people with disabilities are equally likely to take part in productive activities as non-disabled people, they are less likely to be employed outside the home and more likely to be either self-employed or working in a family business. This shows that despite the willingness and capability of people with disabilities to undertake productive activities, there are barriers preventing them from obtaining employment.
Vanuatu has not enacted specific legislation protecting and promoting the rights of persons with disabilities consistent with the Committee on the Rights of Persons with Disabilities, which Vanuatu signed in 2007. Consequently, the protection and promotion of the rights of persons with disabilities does not feature to any significant extent in Vanuatu’s legislative framework, other than in a small number of areas and therefore is more piecemeal in approach.
As an employee you are entitled to basic working conditions/rights:
- You are entitled to be paid for the period of time which you work.
- You cannot be paid less than the minimum wage of VT220 per hour. (See Section 1 of Labour Compliance).
- Working Environment
- You must be provided with a clean working environment in which to work, if you work in a building. This includes proper ventilation and lighting, a bathroom, a place to eat and enough drinking water.
- Provision of safe working conditions or for any unsafe working conditions to be fixed.
- Provision of First Aid such as medicines, dressings, etc at the place of work.
- Hours of Work
- You are not to work more than 8 hours a day or 44 hours a week or 6 days a week. These hours do not include lunch and tea break. There are exceptions to this rule set out in the law.
- You are entitled to a 1-hour lunch break and 2 tea breaks of 10 minutes each or 1 tea break of 20 minutes.
- You are not to be made to work on public holidays or Sundays without your agreement. The exception to this rule would be persons who work in the tourist industry, entertainment such as the cinema, bars, the media, utility companies, airport staff, etc.
- You are allowed a day of rest of 24 hours. This day would normally be a Sunday but another day can be agreed between the employer and employee.
- Overtime pay for work carried out outside the normal working hours. If working on a public holiday or Sundays then you are to be paid 1 ½ times the normal hourly rate. If, during a normal working day you work beyond the normal hours then you are to be paid, for the first 4 hours 1 ¼ times the normal hourly rate and for every hour after that 1 ½ times the normal hourly rate. If you are required to work at night, between 8 p.m. to 4 a.m. (other than as a watchman) then you are paid 1 ¾ times the normal hourly rate.
- Entitled to be given notice if contract to be terminated. If you have been employed for at least 3 years then 3 months’ notice. For less than 3 years, if you are paid every 14 days then notice of 14 days.
- Reasonable time off during the notice period to seek other employment such as for interviews. There is to be no deduction of your wages during this time.
- Entitlement to a certificate of employment verifying your period of employment.
The right, when your contract is ended or terminated for your employer to pay to send you back to your place of residence, provided you work more than 50 kilometers from your home and your employer hired you from your place of residence.
It is the duty of every employee while at work:
- To take reasonable care for the health and safety of themselves and other people who may be affected by their acts or omissions at work.
- To comply with health and safety regulations during any duty or requirement requested/imposed by the employer.
- To not intentionally or recklessly interfere with or misuse anything provided in the interests of health, safety or welfare in pursuance of health and safety regulations.