Brunei might be a small country with a modest population of 462,721 as of 2024, but it continues to attract global businesses to its shores for its strong oil and gas sector, macroeconomic stability, and low corporate tax. Brunei possesses a highly skilled workforce with 95% literacy rates and a well-developed education system. The Brunei government has focused on investing in higher education as an economic driver with a program known as Wawasan Brunei 2035. 

Located on the island of Borneo, the Southeast Asian country reached a GDP of $15.46 billion in 2024. Its economy was ranked 137th in 2024, thanks to low inflation, crude oil export growth, and its high-income status. 

An important part of operating a business in Brunei is hiring a workforce and managing payroll. Brunei’s payroll laws cover the Employees’ Trust Fund (TAP) and Supplemental Contributory Pension (SCP) scheme in addition to employee benefits and wage payments. To ensure that your payroll is compliant and correctly administered, you can hire payroll outsourcing services. 

To support your expansion efforts, discover what payroll outsourcing involves, the benefits it offers businesses, and how to find the right payroll provider for your needs.

What is Payroll Outsourcing in Brunei?

When you hire a third-party company or agency to manage your payroll, this is known as outsourcing payroll in Brunei. The payroll service provider will perform tasks such as calculating your employees’ gross salaries, deducting employee benefits, and processing contributions to TAP and SCP.

In Brunei, there is no income tax imposed on individuals, whether residents or non-residents, which is another attractive feature for businesses investing in the local workforce. In addition to timely wage payments and benefits administration, payroll experts will record payslips and pay your staff’s wages on time. 

The outsourced payroll team can communicate efficiently in the local language, Malay, streamlining employee registrations and payroll practices. For new businesses expanding in Bulgaria, adhering to payroll laws can be time-consuming and challenging without a thorough understanding of local labor regulations.

Working with a trusted payroll provider in Bulgaria provides peace of mind that your business is compliant and protected against potential penalties. Whether locally or globally, you can advance your business with payroll outsourcing services.

How Payroll Outsourcing in Brunei Works?

To benefit from outsourced payroll in Brunei, a trusted service provider must deliver the services described below:

Needs Assessment

For a payroll company to deliver the best services, it must identify your business’s needs, such as the need for accurate payment processing, benefits calculations, and compliance with payroll regulations. The provider will ask about the number of employees, the types of employment contracts, and which employee benefits are included in the contracts. Depending on the types of services agreed upon, the payroll agency will present the costs in a service agreement.

Data Collection

For a payroll company to register employees in the new system and align them with payroll regulations, the employer must provide the personal details of their employees. The goal is to record the new information to accurately calculate employee benefits. Ensure that the company utilizes secure payroll software and systems to protect sensitive information from being leaked.

Payroll Processing

For the agency to effectively process payroll, employers must share employee details concerning their attendance for the payroll period. The service provider will use this information to calculate an employee’s gross salary and deductions for mandatory and optional benefits. Employers must approve the payroll to ensure their employees receive the stipulated net wages.

Managing Taxes and Social Security

Brunei does not impose taxes on salaries and other forms of worker compensation. There is no sales tax or income tax in Brunei. A payroll service provider in Brunei will ensure that your workers are registered for the Employee Trust Fund, National Retirement Scheme, and the Supplemental Contributory Pension Scheme. 

The payroll experts ensure that employee deductions are precisely calculated, including benefits of annual leave and sick leave for public and private sector workers.

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Making Payments and Reporting

Salaries are paid monthly, and the payroll provider will include payslips detailing employee salaries, deductions, overtime, and pension scheme contributions. Once the payroll agency calculates the gross salaries of your workforce and they are approved, salaries will be paid by direct deposit or cash as per the Brunei Employment Order 2009.  

In Brunei, payslips are legally required, and the payroll provider will ensure that payslips are compliant with the Employees’ Trust Fund Board (TAP).

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Brunei Labor Law and Payroll Compliance

Payroll service providers will help you comply with Brunei’s payroll regulations and applicable labor laws as follows:

Minimum Wage and Overtime

Brunei does not have a minimum wage, and instead, wages are negotiated between the employer and employee. The average monthly salary in Brunei is $500, but employers are encouraged to add employee perks to attract skilled and talented employees. 

The workweek in Brunei consists of eight hours per day or 44 hours per week. Most employees work from Monday to Thursday, with Fridays off for religious purposes. The main religion in Brunei is Islam, and Fridays are meant for prayer meetings. Overtime work is paid at 1.5 times the standard hourly wage.

Taxes

Limited companies in Brunei must pay corporate income tax of 18.5%; however, resident companies do not pay withholding tax. Non-resident companies pay withholding tax of between 2.5% and 10%. While employees do not pay personal income tax, the payroll agency will calculate employee contributions totaling 5% of gross salary for the mandatory Employee Trust Fund.

Social Security

The payroll agency will register employees for Tabung Amanah Pekerja (TAP), which is a statutory financial scheme. This scheme offers employees social protection in the form of retirement benefits. The employer contribution is 5%, while employees contribute 5% of their gross salary to TAP. 

Furthermore, Brunei offers a national retirement scheme called Skim Persaraan Kebangsaan (SPK). The payroll agency ensures that employees contribute 8.5% of their salary to the fund.

Another scheme that the payroll agency will align employees and employers with is the Supplemental Contributory Pension Scheme. This scheme provides retirement and survivorship benefits and requires employer and employee contributions of 3.5% each.

What are the Benefits of Payroll Outsourcing in Brunei?

To ease your payroll burden in Brunei, consider the following benefits of hiring a professional payroll company:

  • Specialization: If your business does not have a dedicated payroll department or team, there is a risk of non-compliance with Brunei’s labor laws when establishing a legal entity and hiring a workforce. Having a trusted payroll service on your side ensures that payroll is accurately calculated, processed, and adheres to Brunei’s payroll laws. Experienced providers use advanced software to keep updated on local reforms and maintain the highest levels of confidentiality when handling sensitive data. 
  • Legal Compliance: Do not risk non-compliance with Brunei’s labor laws. Violating payroll requirements in Brunei will lead to fines and possible imprisonment. Partnering with an expert payroll agency will maintain compliance with existing and future payroll regulations. 
  • Reduced Costs: It is more cost-effective for businesses to hire a payroll service provider than set up an in-house team. By hiring a payroll agency, you can scale the desired services as your company grows, making it a more affordable solution. 
  • Employee Satisfaction: Entrusting payroll to a dedicated and expert provider provides peace of mind that employees receive their salaries on time and benefits are correctly calculated and deducted. Employees are more trusting of employers who properly manage their financial interests, resulting in greater motivation and higher retention rates.

What are the Downsides of Payroll Outsourcing in Brunei?

Before hiring a payroll provider, consider the possible downsides of outsourcing these services to a third party:

  • Reduced Control: When you hand your payroll over to a third party, you are no longer in control of processing employee wages, benefits, and social security contributions in Brunei. This prevents modifying employee payroll at the last minute or taking the time to establish your own payroll team. 
  • Data Security Issues: To process payroll, the service provider requires sensitive employee and company information. It is crucial that the provider you choose is reputable to avoid security risks. The payroll agency must offer guaranteed compliance and updated data security systems. 
  • Variable Service Quality: Not all payroll companies provide an equal service standard. Some agencies may have little awareness of Brunei’s labor laws or make costly mistakes, increasing your risk of non-compliance. Always assess the quality of services associated with the agency to avoid delayed salary payments or incorrect deductions. These types of faults will result in employee dissatisfaction and resignations.

How to Choose a Payroll Outsourcing Provider in Brunei

Expanding your workforce in Brunei means access to favorable tax laws and strong economic growth for over two decades. To partner with the best payroll service, follow these tips to avoid compliance issues and employee dissatisfaction:

Reputation

Always consider the reputability of a particular payroll agency before making a hiring decision. Do they have positive reviews, and how are they rated across multiple platforms? This should provide an idea of the quality of services.

Security

A reputable payroll service will invest in advanced technology to prevent access to client data. This includes secure infrastructure, scheduled audits, and encryption. Payroll providers in Brunei do not require certification, but they must follow local labor laws to maintain compliance.

Experience

Exercise caution when looking into the services of new payroll providers. Inexperienced agencies may have attractive marketing strategies, but upon closer investigation, they lack expertise in Brunei’s payroll regulations and labor laws. Invest in the services of experienced companies with in-depth knowledge of payroll.

Price

The cost of outsourced payroll services depends on the number of employees and the complexity of the services required. It is a good idea to create a budget while considering the average costs of specific payroll services across providers in Brunei. This will allow you to choose a payroll agency that offers value and affordability.

How Much Does Payroll Outsourcing Cost in Brunei?

While the costs for payroll vary between service providers, the average fee per employee for outsourced payroll is $30 to $100 per month.

Payroll Outsourcing Alternative: Employer of Record

If you do not have a legal entity in Brunei but wish to outsource payroll, you can do so with the services of an Employer of Record or EOR. The EOR in Brunei serves as the legal employer of your labor force, and they assist with hiring employees, payroll management, benefits administration, and compliance with labor laws. Most small to medium businesses in the country rely on an EOR because it allows them to expand in Brunei without the costs and hassles of setting up a registered company.

Payroll Outsourcing for Success in Brunei

Brunei’s rapid economic growth, low taxation, and strategic location are among the top reasons to establish your business and workforce in the country. But handling payroll according to local labor regulations is a necessary part of compliance and building a motivated workforce. With Brunei payroll outsourcing services, you can expand your business efficiently, economically, and compliantly. 

Contact Remote People for leading payroll solutions that are not only compliant but also affordable and valuable. Remote People offers custom services, ensuring that you feel confident that your payroll needs and goals are always taken care of.