Are you considering hiring employees in Cabo Verde (also known as the Cape Verde Islands)? A Cabo Verdean Employer of Record (EOR) solution can help you save time and money in building your team on the island. 

Here we explain how Cabo Verde EOR solutions work and how they can benefit your company. 

What is a Cabo Verde Employer of Record Service?

A Cabo Verde Employer of Record (EOR) is a third-party service that helps international companies build a local workforce without the need to establish a legal entity. By functioning as the official employer for hired personnel, the EOR takes on essential responsibilities such as tax registration, payroll management, benefits administration, onboarding, and HR oversight. This approach enables businesses to maintain a presence in Cabo Verde with fewer administrative hurdles while ensuring that day-to-day workforce management is handled by a local, knowledgeable partner.

An EOR also plays a pivotal role in keeping your operations compliant with employment regulations in Cabo Verde. It handles contract creation and termination, monitors tax obligations, and addresses HR matters in accordance with local laws, so the hiring company can focus on broader strategic objectives. By sharing compliance expertise and offering practical support, an EOR streamlines entry into the Cabo Verde market and reduces the risks associated with expanding into a new country.

How Does a Cabo Verde Employer of Record Work?

A Cabo Verde Employer of Record (EOR) becomes the official employer on behalf of the hiring company, thus relieving the company of the need to establish a formal entity in Cabo Verde. This includes handling employment contracts, onboarding, payroll, and tax obligations. By taking on these responsibilities, the EOR ensures that your team’s employment terms and benefits adhere to Cabo Verde’s local regulations, creating a secure, compliant framework for your workforce.

Beyond day-to-day administration, the EOR offers ongoing HR support and stays updated on any legal changes that could affect your operations. This means overseeing contract renewals, managing benefits, and efficiently addressing issues like contract termination or disputes, all while aligning with Cabo Verde’s employment laws. Through this comprehensive approach, a Cabo Verde EOR streamlines the entire employment process and helps organizations focus on their core goals, rather than dealing with regulatory hurdles.

Cabo Verde EOR vs Cabo Verde Entity

The traditional way for a business to expand into Cabo Verde (or Cape Verde) is by setting up a legal entity as a subsidiary in the country. 

Setting up a legal entity is relatively straightforward in Cabo Verde, but foreign businesses are encouraged to adhere to the Cabo Verde Labor Code, 2007. Failure to comply with regulations for registering a new business and hiring employees will result in penalties, including legal consequences. 

Foreign investors choose Cabo Verde for its tax incentives, political stability, and strategic Atlantic location, as well as its access to the African Continental Free Trade Area (AfCFTA). Cabo Verde is also a member of ECOWAS, which can provide preferential access to a market of more than 400 million people across West Africa.

Common legal structures for market entry include public or private limited liability companies and sole proprietorships. Entity setup typically involves depositing any required minimum capital, registering with the Commercial Registry, obtaining a tax identification number, and securing a municipal licence through the relevant inspectorate to complete the process. A registration fee of CVE 10,000 (approximately $91 USD / €91 EUR) must be paid to the Commercial Registry Department.

A more efficient, cost-effective, and simple way to do business in Cabo Verde is to work with an EOR. An Employer of Record assists in hiring qualified and skilled employees and manages processes such as payroll, benefits administration, onboarding, and HR. A Cabo Verde EOR can have your workforce up and running in a matter of days compared to the weeks it may take to register a legal entity.

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Are Employer of Record Services Legal in Cabo Verde?

Yes, you can legally hire an EOR in Cabo Verde to help with your company’s day-to-day operations and compliance measures. An African EOR specializes in managing payroll and calculating taxes and deductions in addition to HR administration.

How Much Do Employer of Record Services Cost in Cabo Verde?

How Does a Cape Verdean Employer of Record Help with Payroll and Taxes?

Cabo Verde has a monthly payroll cycle, and wages, salaries, and benefits are stipulated in the employment contract. The EOR calculates and pays employee remuneration, taxes, and social security contributions. They complete the necessary paperwork and register individual staff with the National Social Insurance Institute (INPS). 

How Does a Cape Verdean Employer of Record Help with Benefits Administration?

A Cape Verdean EOR simplifies benefits administration by offering employers benefits packages from mandatory pension funds to health insurance and fringe benefits. They will set up and manage these plans supporting employee satisfaction while complying with the law. Furthermore, EORs can answer employee questions and concerns to ensure they understand their benefits.

What Labor Laws Apply to Hiring in Cape Verde?

The Constitution of Cabo Verde and the Cabo Verde Labor Code govern the employment relationship and formal recruitment processes. When hiring in the African island country, regulations include anti-discrimination laws, minimum wages, overtime and holiday compensation, and termination. A closer look at the Cabo Verdean labor laws can protect and prepare your business for expansion:

Employment Contracts

Employment contracts in the Republic of Cabo Verde, also known as Cabo Verde, can be either verbal or written, as stipulated in the National Labor Code. Most employers use a written contract covering working hours, wages, procedures for dismissal, and leave entitlements.

In Cabo Verde, employment contracts must be written in Portuguese or Cabo Verdean Creole. An employment contract is considered valid when it includes confidentiality clauses, details of both the employer and employee, the job description, the start date of employment, and the duration of the contract, whether indefinite or fixed-term. 

Working Hours and Paid Holidays

Standard working hours in Cabo Verde are 44 hours per week, with a maximum of 8 hours per day, typically spread across 5 or 6 days. Young workers aged 16 to 18 are subject to lower limits of 38 hours per week and 7 hours per day. Employees are entitled to a minimum weekly rest period of 24 consecutive hours, usually on Sunday.

Meal breaks are also regulated. Employees must receive at least a 30-minute break after 6 consecutive hours of work, and this can be split into two 15-minute breaks by mutual agreement. Employers may extend the workday by up to 1 additional hour if they provide an extra half-day of weekly rest in return.

Social Security Contributions

The social security system in Cabo Verde provides pension benefits, health cover, unemployment assistance, and cover for maternity leave. Social security contributions are paid to the National Social Security Institute (INPS). Cabo Verde’s social security consists of the contributory scheme managed by the INPS and the non-contributory pension scheme handled by the National Centre for Pensions (CNPS). 

Employers and employees are obligated to provide the following contributions:

Shared Contributions

  • National Social Security System: 24.5% (Employers contribute 16%, and employees contribute 8.5%). As per Remote People, the allocations of these contributions haven’t been disclosed.

Employer-Only Contributions

  • Workers’ Compensation Insurance: Employment injury insurance must be sought from private insurance companies covering both full-time and part-time workers.
  • Severance Pay: Employees are entitled to one month’s pay for every year of service.

Overtime

Overtime in Cabo Verde is generally limited to 2 hours per day and 160 hours per year, but it can be extended up to 300 hours annually with the employee’s written consent. Overtime is paid at a 50% premium on the regular hourly rate, meaning employees receive 150% of normal pay for overtime hours. Night work carries a 25% premium above the regular hourly rate, and work performed on public holidays is paid at a 100% premium, or 200% of normal pay.

It’s also important to calculate these premiums correctly. The 50% overtime premium is applied to the base hourly rate, not to an already increased night work rate.

Probation Periods

In Cabo Verde, probation is optional but must be clearly stated in writing in the employment contract. It allows employers to assess a new hire’s suitability while the employee begins working under the full protection of labour rules.

Under the Labour Code, probation periods are typically: 2 months for general employees, 3 months for technical or specialist roles, and 180 days (6 months) for senior management or C-suite positions. During probation, either party may terminate the contract without notice or severance.

If a probation period goes beyond the legal standard or is not included in writing, the employment relationship is treated as permanent from the contract start date. Even while on probation, employees retain the same core rights as permanent staff, including minimum wage protections, leave entitlements, and statutory benefits.

Non-Compliance

Cabo Verde’s labor law includes INPS social security, mandatory bonuses, and strict contract rules. A Cape Verdean EOR handles payroll and compliance. No local entity needed.

Payroll and Employment Taxes in Cabo Verde

Payroll Compliance

Cabo Verde’s labor law includes INPS social security, mandatory bonuses, and strict contract rules. A Cape Verdean EOR handles payroll and compliance. No local entity needed.

Average Salary

As of January 1, 2025, Cabo Verde’s minimum wage increased to CVE 17,000 per month in the private sector, while the public administration minimum was set at CVE 19,000 per month.

There is also a stated goal to raise and converge the minimum wage by 2027, but the exact target is reported differently depending on the source. Some references cite a target of CVE 20,000 by 2027, while other recent reporting tied to the 2026 state budget mentions CVE 25,000 effective January 1, 2027. If you include a forward-looking figure, it’s best to label it as a planned target and note that it should be verified against the latest official guidance.

Income Tax

The country applies progressive tax rates on employees’ income ranging between 16.5% and 27.5%.

  • Individuals with annual net income up to CVE 220,000 are exempt from personal income tax.
  • Income above CVE 220,000 and up to CVE 960,000 is taxed at 16.5%.
  • Income between CVE 960,001 and CVE 1,800,000 is taxed at 23.1%.
  • Income above CVE 1,800,000 is taxed at a top rate of 27.5%.

Taxes are regulated by the National Directorate of Public Administration, or the ‘Agência Nacional de Administração Pública’ (ANAP).

The 2025 budget exempts productivity bonuses, performance bonuses, profit-sharing, and balance sheet bonuses from personal income tax and INPS contributions, capped at 6% of the employee’s annual basic salary. This incentive may reduce the effective tax burden for high-performing employees.

Bonus Payments

Cabo Verde’s labor law includes INPS social security, mandatory bonuses, and strict contract rules. A Cape Verdean EOR handles payroll and compliance. No local entity needed.

Work Permits and Visas in Cabo Verde

All foreign nationals seeking employment in Cabo Verde must have a valid work visa and work permit. Employers are responsible for securing an employee’s work visa, which includes the temporary visa for short-term employment and the residence visa, which is issued to foreign workers and expatriates who work for an establishment in Cabo Verde. Furthermore, the country offers a highly skilled work visa for those with specialized skills and an intra-company transfer visa for employees transferred to Cabo Verde from a multinational company. 

Nationals of ECOWAS member states (Benin, Burkina Faso, Gambia, Ghana, Guinea, Guinea-Bissau, Ivory Coast, Liberia, Mali, Niger, Nigeria, Senegal, Sierra Leone, and Togo) do not require a work permit to be employed in Cabo Verde under the ECOWAS Free Movement Protocol. However, they must still obtain a residence permit if staying longer than 90 days.

To simplify obtaining work visas while guaranteeing labor law compliance, Remote People manages Cabo Verde’s immigration process.

Hiring Contractors in Cabo Verde

Income Tax Withholding

Cabo Verde’s labor law includes INPS social security, mandatory bonuses, and strict contract rules. A Cape Verdean EOR handles payroll and compliance. No local entity needed.

VAT (Value-added Tax)

Cabo Verde’s labor law includes INPS social security, mandatory bonuses, and strict contract rules. A Cape Verdean EOR handles payroll and compliance. No local entity needed.

Social Security Contributions

Cabo Verde’s labor law includes INPS social security, mandatory bonuses, and strict contract rules. A Cape Verdean EOR handles payroll and compliance. No local entity needed.

Workers' Compensation in Cabo Verde

As of January 2025, employers must obtain Compulsory Insurance for Accidents at Work (Seguro Obrigatório de Acidentes de Trabalho — SOAT) from a private insurance provider. SOAT premiums are based on the company’s activities and specific risk factors. This is an employer-only cost — no employee deduction. Non-compliance may result in penalties from the General Labour Inspectorate.

The current requirements for workers’ compensation or employee injury insurance are based on a company’s activities, with the option to adjust for specific risk factors. 

Employers must legally provide their workforce with safe working conditions. In addition to labor laws, local trade unions representing employees ensure that worker rights are upheld. 

Time Off and Leave in Cabo Verde

Mandatory Leave Entitlement

Cabo Verde’s labor law includes INPS social security, mandatory bonuses, and strict contract rules. A Cape Verdean EOR handles payroll and compliance. No local entity needed.

Sick Leave

Cabo Verde’s labor law includes INPS social security, mandatory bonuses, and strict contract rules. A Cape Verdean EOR handles payroll and compliance. No local entity needed.

Maternity Leave

Maternity leave rules depend on whether the employee works in the private or public sector. Under the Labour Code (Decree-Legislative No. 5/2007), private sector employees are entitled to 60 consecutive calendar days of maternity leave, typically paid at 80% of regular salary through INPS social security benefits, as long as the employee is registered with INPS. In the public sector, the New Basic Law of Public Employment provides a longer entitlement of 90 calendar days.

It’s important not to apply the 90-day rule broadly. The 90-day maternity leave applies specifically to public sector employees, while private sector employers should follow the 60-day standard unless a collective bargaining agreement grants more generous terms. Recent reforms have also introduced 10 days of paternity leave.

Paternity Leave

Paternity leave entitlements depend on whether the employee works in the public or private sector.

In the public sector, fathers are entitled to 10 days of paid paternity leave under the New Basic Law of Public Employment.

In the private sector, the Labour Code does not currently mandate paternity leave. Some employers may offer short compassionate leave, typically 1 to 3 days, under general leave provisions. Certain collective agreements may also provide more generous terms.

The key point is that the 10-day entitlement applies only to public sector employees. Private sector EOR clients should not assume it applies unless a specific collective bargaining agreement covers it.

Terminations and Severance in Cabo Verde

Termination Requirements

Cabo Verde’s labor law includes INPS social security, mandatory bonuses, and strict contract rules. A Cape Verdean EOR handles payroll and compliance. No local entity needed.

Severance Pay

Cabo Verde’s labor law includes INPS social security, mandatory bonuses, and strict contract rules. A Cape Verdean EOR handles payroll and compliance. No local entity needed.

Compliance and Procedures

Employees in Cabo Verde are protected by law against unfair dismissals. This means that an employer cannot terminate an employment contract without just cause. Employers must document the reasons for dismissal and follow due process, which includes implementing disciplinary procedures. 

Should an employee feel they have been unfairly dismissed, they have the right to recourse by requesting a formal review of the events leading up to the dismissal, or they can file a formal complaint with the local labor authorities. Workers also have the right to participate in trade unions and collective agreements. 

Engage an Employer of Record in Cabo Verde today with Remote People

Cabo Verde’s economy has steadily improved over the last decade owing to its exports of coffee, fruit, and maize. The island country offers a high quality of life compared to other West African countries and provides international businesses with tax breaks and stringent labor laws.

For companies looking to explore opportunities in Cabo Verde, understanding the local business environment, legal requirements, and talent landscape is essential. Cabo Verde’s skilled workforce and pro-business climate make it an attractive location for international growth and investment.

Remote People supports international businesses with insights into expansion opportunities in Cabo Verde and other global markets. Our mission is to connect organizations to the resources, knowledge, and local expertise they need for sustainable success.

Reach out today to learn how our Cabo Verde EOR solution can support your expansion goals.

Frequently Asked Questions

The pros of hiring an EOR in Cape Verde include compliance with the Cape Verde Labor Code. An EOR can streamline payroll, calculate and register employee taxes, and provide benefits packages to improve employee satisfaction and retention. 

The cons of hiring a Cabo Verde EOR include a lack of control over all business processes. As the EOR is recognized as an employer, companies may feel less involved in the management of their workforce. 

You can hire an EOR by discussing your company goals, including the workforce you wish to hire, the skills you are looking for, and which aspects of payroll, taxes, and HR you want them to manage. You also have the option of partnering with a global recruitment agency such as Remote People to guide you in finding an EOR and maximizing the benefits of the services they provide. 

A Cabo Verde PEO (Professional Employer Organization) is a co-employer, and they handle HR, payroll, and compliance measures. A PEO manages recruitment and assists with placing new employees. An EOR offers more comprehensive services, including payroll, HR, tax registration and calculations, administering benefits, and assisting with onboarding and offboarding. They can connect you to talented employees and always maintain compliance with labor laws.