The Maldives is a tropical island nation comprising over 1,000 islands in the Indian Ocean. It’s best known as a tourist destination, but the country also has a growing service economy and an increasingly diverse economic sector, including construction, logistics, and renewable energy. The Maldives is a newer hiring destination for companies that have recently become open to hiring remote employees. The labor market is small, but the country could be a strategic fit for a company seeking to expand operations in South Asia or hire regionally based talent.

Hiring employees in the Maldives is most easily and compliantly done by partnering with a remote Employer of Record (EOR). Remote People provides an Employer of Record solution in the Maldives starting at just $199/month. We can onboard your employees, help you manage payroll and hiring, and stay labor law compliant without requiring you to set up a local entity.

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How to Hire Employees in the Maldives

Companies hiring employees in the Maldives must adhere to the Employment Act of the Maldives (2008), as well as any rules, regulations, or orders of the same effect. To do so, businesses that hire directly are required to establish a legal presence in the country and register for tax purposes. They must also follow national employment standards, which cover contracts, minimum wage, hours and overtime, rest periods, annual leave and public holidays, social security contributions, insurance, and other benefits.

Setting Up a Local Entity

In the Maldives, to start a business, one would need to register with the Ministry of Economic Development, secure necessary permits, and open a local bank account. The most common form of business entity is a limited liability company.

On average, it takes 15-25 business days to complete all registration, licensing, and VAT enrollment procedures. The estimated cost of initial setup and registration of a business in the Maldives can range from $2,000 to $5,000, depending on the nature of the business, legal fees, and operational requirements.

Working with an Employer of Record (EOR)

An Employer of Record (EOR) can facilitate global hiring by acting as the legal employer on behalf of a foreign company. The EOR offers various services, including managing employment contracts, compliance with local labor laws, payroll processing, and tax filings. In the Maldives, the EOR is responsible for these administrative tasks while the client has full authority and control over day-to-day employee management. 

The EOR option is best suited for companies that are hiring for short or long-term projects and do not have the resources to set up a local legal entity. It is also a good option for employers who need to hire quickly.

Hiring Independent Contractors

Independent contracting is allowed in the Maldives, though it is less common than regular employment contracts. Contractors don’t get full labor protections such as paid leave, severance, or other employee benefits. The misclassification of employees as contractors to avoid labor and tax obligations can lead to legal issues. 

Contractors are paid for their services and are responsible for their taxes. Foreign employers hiring contractors must ensure that contracts are drafted, that the worker is not subject to managerial control, and that the relationship is consistent with independent contracting.

Maldives EOR vs Legal Entity in the Maldives

Setting up a legal entity allows companies complete operational freedom in the Maldives, but at the price of higher costs, longer setup times, and greater compliance risk. On average, establishing a legal entity will require an upfront investment of thousands of dollars in addition to ongoing legal and accounting requirements.

The Maldives EOR, on the other hand, removes the need to incorporate entirely. Hiring in the Maldives is easier and faster, with new employees able to be onboarded in a matter of days, and easily scaled up or down.

Ready to get started with a Maldives EOR?

Let us handle the complexities of hiring, compliance, and payroll in the Maldives while you focus on growing your team.

  • Hire employees in the Maldives with a Maldives EOR
  • No local entity is needed
  • Pricing starts at USD 199 per employee
  • Remote People can also help you find the best talent in the Maldives

👉 Get Your Customized Maldives EOR Proposal Today!

Using an Employer of Record in the Maldives

An EOR is a legal entity based in the Maldives that allows foreign companies to legally hire staff locally or remotely without establishing a legal entity of their own. The EOR is the legal employer on paper, while the client company manages the employee’s daily work. It is a cost and time-efficient way for businesses to enter the Maldivian market and remain compliant with local labor laws.

Maldives Employer Of Record

EOR services in the Maldives usually include the following:

  • Employment contracts: Prepares locally compliant contracts.
  • Payroll: Processes salaries and statutory deductions.
  • Taxes: Manages tax filings and withholdings.
  • Hiring and termination: Onboards and off-boards legally.
  • Visas and permits: Secures work authorisation for foreign staff.
  • Benefits: Processes leave, pension, and other entitlements.
  • Compliance: Ensures complete local labour law compliance.
  • Records: Manages HR files and delivers regular reports.

How Much Does a Maldives EOR Cost?

Remote People provides EOR services in the Maldives beginning at $199/month/employee. This flat rate includes the base administration of payroll, compliance, and HR. 

Additional one-time onboarding fees are paid per employee. They are generally based on the employee’s role, and can range from $200 to $500 per employee. Optional services (private health insurance, HR consulting, and custom reporting) can be purchased as your business scales.

Employment and Labor Laws in the Maldives

Employment Contracts 

Written employment contracts are mandated under the Employment Act of the Maldives. These must be written and formalized before the employee’s first day of work. As a minimum, these contracts must include:

  • Identifying details of each party
  • Permanent/temporary classification
  • Start date
  • Working hours
  • Pay
  • Benefits
  • Leave entitlements
  • Disciplinary principles
  • Termination procedures
  • Probationary clauses (if relevant)

Employers are also required to include a written job description that outlines the role and responsibilities expected. Additionally, a copy of the signed contract must be issued to the employee.

Working Hours

The standard Maldivian work week is 48 hours spread over six days. Friday is considered to be a rest day, per local customs, but the Employment Act doesn’t dictate scheduling. All hours worked beyond the standard 48-hour work week are classified as overtime and must be paid at a premium.

Overtime rates are 125% for standard overtime hours and 150% for overtime carried out on rest days and public holidays. Note that work and overtime scheduling can be impacted during the Ramadan holiday, due to shorter daytime hours.

Overtime

If an employee works more than 48 hours per week, they are entitled to overtime pay. Overtime pay is often at the rate of 1.5 times the normal rate, and on public holidays or special hours, the pay is at double the rate. The law, in most cases, restricts overtime to 20 hours per week, unless previously authorised.

Probation Periods

The Maldives sets a hard cap on probation periods of three months. Employers may opt for shorter probationary periods, but longer ones are a violation of the provisions of the Employment Act.

During the probationary period, an employer is entitled to terminate the agreement without notice. Furthermore, they’re not required to provide a specific justification. Do bear in mind that dismissing probationary workers can’t be discriminatory.

Upon conclusion of the probation period, it’s illegal to either extend or renew the probation period. This includes firing and rehiring, as this would be seen as a way of circumventing workers’ rights.

Any probation period must be outlined within the employee’s written contract to be legally valid.

Learn more about probationary period in the Maldives

Social Security

 All employers and employees in the Maldives are required to contribute to the Maldives Retirement Pension Scheme (MRPS). The statutory minimum defined by the Maldives Pension Act is 7% from the employer and 7% from the employee.

Both employer and employee may opt to increase their share. All payments must be remitted to the Maldives Pension Administration Office (MPAO). 

Public Health Insurance and Medical Coverage 

State-funded national health insurance is available to every Maldivian citizen through the Aasandha scheme. Any foreign employee is also legally obligated to possess health insurance, and employers are required to submit proof as a condition of obtaining a work permit. In a practical sense, this means any employer hiring non-citizens is required to purchase private health insurance that aligns with government standards.

Payroll and Employment Taxes in the Maldives

Payroll Cycle

In the Maldives, employee payroll is typically processed every month. Employers are required to deposit the net salary of the employees into the bank account of each employee by the last working day of the month. Payslips must be provided to the employees.

Minimum Wage

Starting from 2022, the Maldives introduced a minimum wage. The minimum wage varies based on the size of the business. Per The Maldives Journal, the current minimum wage levels are:

Enterprise SizeMinimum Wage (MVR)
Small Enterprises5,700
Medium Enterprises8,000
Large Enterprises10,200

The minimum wage for expat workers has yet to be finalized, but is expected to be introduced in the near future.

Learn more about minimum wage in the Maldives

Bonus Payments

Bonus payments are not legally required in the Maldives. However, it is very common in many contracts in the private sector for employees to be offered a bonus. Annual bonuses, performance incentives or allowances, and payments during religious times like Ramadan are common practices offered by employers in the tourism and banking sectors.

Employer Tax Contributions

Employers in the Maldives are required to pay a pension contribution of 7% on each employee’s pensionable earnings to the Maldives Retirement Pension Scheme (MRPS). This is the only mandatory employer tax. There are no employer social security tax requirements; however, the employers are obligated to register the employees with the MIRA and ensure the monthly contributions are paid on time.

Employee Payroll Contributions

Employees are required to contribute 7% of their pensionable wages to the MRPS. The contribution is withheld by the employer and paid on the employee’s behalf. There are no other standard payroll deductions for Social Security. However, depending on the level of salary earned, there may be a requirement for individual income tax, which would also be withheld by the employer.

Income Tax

The Maldives Inland Revenue Authority is responsible for levying income tax nationwide. Citizens are taxed on their worldwide income, whereas non-residents are taxed only on their Maldives-derived income.

Here are the current Maldives income tax brackets:

Annual Taxable Income (MVR)Tax Rate
Under 720,0000%
720,001 – 1,200,0005.5%
1,200,001 – 1,800,0008%
1,800,001 – 2,400,00012%
Over 2,400,00015%

It’s the employer’s job to register employees for income tax and withhold and remit tax payments to the tax authorities. The same requirement applies to social security contributions, which should be remitted alongside tax payments for every payroll cycle.

Pension System

In the Maldives, the MRPS is a defined contribution plan, and both employers and employees are required to make contributions. These contributions are to be remitted to the Maldives Pension Administration Office every month. Statements are to be provided to employees on an annual basis. Retirement benefits are available upon reaching the age of 65.

13th Month Pay

The 13th-month pay concept isn’t a statutory requirement in the Maldives. However, there is a Ramadan bonus, which must be paid before the holiday starts. It’s payable once per year and amounts to a special allowance of MVR 3,000. It’s enshrined by law under the Employment Act, and it’s usually considered to be the equivalent of an annual bonus.

Work Permits and Visas in the Maldives

Foreign nationals working in the Maldives require a work permit issued by the Ministry of Economic Development & Trade. These are usually referred to as the Xpat permit, and it’s issued via the online XOS portal.

Here’s how the process of obtaining a permit works for foreign nationals:

  • Pre-Arrival: Employer must apply for Employment Approval, create a written employment contract, arrange accommodation, obtain approved health insurance, and complete work-permit medicals.
  • Post–Arrival: An employee’s entry into the country on a valid work permit is accepted for the first 15 days. The employer must then complete the necessary steps for a work visa within 15 days of arrival, usually via the Xpat Online platform.

We understand that this can be a complex process, which is why Remote People offers full visa coordination for foreign nationals. Our consultants can also act as a local sponsor in some scenarios to help you take advantage of local talent without establishing a formal Maldivian entity.

Critical Skills Employment Permit

There is no special critical skills permit, but professional or managerial positions do require extra documentation from the employer. They must prove the qualifications of the employee, usually a MQA Level 7 certificate (or equivalent), or an MQA Level 5 with 5 years of experience and a recognition report, ensuring that only genuinely skilled workers are employed for these high-responsibility positions.

General Employment Permit

The most common option for foreign employees. Before even hiring a foreign employee, the employer needs to be registered with the Xpat System and must advertise the position on the National Job Center to ensure that no suitable Maldivian is available. If none is found, the employer is able to apply for a foreign employment quota, which is required for each foreign national that a company wants to employ, at a fee of MVR 2,000 per year.

The approved quota is used by the employer to apply for a Work Permit Entry Pass (WPEP) that the employee then uses to enter the Maldives for work purposes. Once the employee arrives, the employer needs to submit the Work Permit application via the Xpat portal and pay MVR 350 per month, in addition to a nationality-based security deposit. 

The last step is the application for a Work Visa, which needs to be applied for within 15 days after the arrival of the employee. The work visa will be processed digitally and sent for passport stamping. The processing time for the visa is usually a few working days.

Intra-Company Transfer Permit

There is no separate permit for intra-company transfers in the Maldives. If a foreign multinational company needs to transfer one of its employees to a local branch, they need to go through the entire process, as they would for a new foreign employee, from advertisement to quota approval, WPEP, Work Permit, and Work Visa without exception.

Hiring Contractors in The Maldives

Choosing to hire freelancers or independent contractors is a viable alternative to hiring full-time employees. In most cases, this takes the relationship out of the jurisdiction of the Employment Act. 

However, there are implications for GST rates for contractors. The Maldives uses a dual-rate GST system, where most sectors have a GST rate of 8%, whereas the tourism sector has a rate of 16%. Contractors are required to register for GST if they generate more than MVR 1,000,000 in each 12-month period.

Working with an EOR in the Maldives is critical in this situation as the authorities take disguised employment extremely seriously. Your EOR can provide tailored compliance support to avoid triggering regulatory penalties.

Workers’ Compensation in The Maldives

Workers’ compensation coverage is well-established in the Maldives. This was reinforced by the latest Occupational Safety and Health Act (Law No. 2/2024). It mandates that every business must provide this protection to its employees. Furthermore, it sets the standards businesses must follow in guaranteeing health and safety standards in the workplace.

In practice, the Maldives doesn’t have a universal workers’ compensation scheme for private employers to use. Instead, businesses are required to have the appropriate private health insurance policy to cover all non-resident workers.

Time Off and Leave in the Maldives

Employers are required to provide statutory leave to their workers in the Maldives. These requirements are laid out in the Employment Act.

Mandatory Leave Entitlements

All employees receive 30 days of paid leave after a year of continuous service. If an employment relationship ends, businesses are required to compensate the worker for any unused annual leave.

Sick Leave

Employees receive 30 days of paid sick leave each year. However, employees must provide a medical certification obtained from a licensed professional to prove that they’re unable to work. Medical certificates are usually required after two consecutive days of absence.

Maternity and Paternity Leave

The private-sector baseline for paid maternity leave is set at 60 days. Fathers also receive three paid days off around the time of the birth. Additionally, parents can take advantage of parental leave for up to one year. However, should this parental leave be taken, it will be taken unpaid.

 Note that parental leave in government roles tends to be higher, which is why many employers choose to offer more than the minimum to increase the attractiveness of their compensation packages.

Other Leave

Certain types of special leave may also be offered by employers, even if they’re not required to by law. For example, it’s standard for most companies to offer ten days’ bereavement leave for the deaths of close relatives.

Other forms of leave usually only apply to government sector workers. The Civil Service Regulations 2014 allow employees to take a fully paid period of leave to perform their first Hajj pilgrimage. Again, this form of leave isn’t imposed upon the private sector, but many choose to offer it anyway as a benefit.

Employee Benefits in the Maldives

The statutory benefits offered in the Maldives are pension contributions, paid annual leave, sick leave, and work-related injury compensation. In addition to the mandatory benefits, employers may also voluntarily offer their employees health insurance, transport allowance, subsidized meals, or accommodation as benefits. 

Terminations and Severance in the Maldives

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Notice Periods

Notice periods for termination in the Maldives correspond to the length of a worker’s service. Typically, no notice period is required for workers with under six months of service. Beyond this, notice periods work like this:

Length of ServiceNotice Period
6–12 months2 weeks
1–5 years1 month
Over 5 years2 months

Dismissal without a notice period is allowed for probationary workers. Likewise, long-term workers may be terminated immediately for gross misconduct, but businesses must be prepared to show proof of this.

Severance Pay

Severance pay also corresponds to how long a particular employee has worked. Employers usually have a choice and may offer one month of notice or one month of salary for employees who have worked for a business for at least a year. Employees with over five years of service are entitled to a two-month severance package or notice period.

Expand into Maldives Easily with Remote People’s Employer of Record (EOR) Solution

Hiring local employees in the Maldives doesn’t have to be complicated. With Remote People’s Employer of Record service, companies can legally hire local talent from the Maldives without setting up a legal entity. Remote People will take care of onboarding, monthly payroll, and administration of any benefits in the Maldives.

Remote People offers a trusted Employer of Record solution for companies expanding their operations in South Asia or for companies interested in new remote workforce solutions. Whether you are looking to enter the Maldives for the first time or you are already established, Remote People can help. Contact us today and start hiring remote workers in the Maldives.