How to Hire Employees in the Marshall Islands

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If a business plans to hire staff in a new country, its first move should be to learn about the local job market. For companies considering the Republic of the Marshall Islands (RMI), it’s very important to be aware of the specific hiring rules.

This guide will show you the main steps and things to consider for hiring in the Marshall Islands. We’ll look at the country’s economic benefits, the important laws that apply to workers, and the different ways you can compliantly find your ideal employees in this Pacific nation.

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Why Expand Your Business to Marshall Island

Strategic Advantages of the Marshall Islands’ Market

The Marshall Islands market offers multiple benefits when making hiring decisions since its economy possesses a certain stability. The Marshallese economy receives financial assistance from the United States under the Compact of Free Association (COFA) agreements.

The International Monetary Fund (IMF) anticipates a per capita GDP growth of 2.5% for the Marshall Islands in 2025, with a GDP of $0.3 billion, supported by public investments and external assistance.

The Marshall Islands’ economy is dependent on its fisheries and shipping sector, which generates significant revenue through fishing licenses and uses the United States Dollar as its official currency.

Importance of Being Aware of the Marshall Islands’ Labor Laws

An employer must become familiar with the Marshall Islands’ labor laws and regulations. The employment framework is established by national legislation, which governs contracts, working hours, leave, and termination procedures via proper documentation.

Employers who fail to meet these laws can be subject to penalties, disputes, and fines. An experienced Employer of Record can help companies stay compliant with local regulations.

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Step 1: Define Your Hiring Needs

The initial step to hiring employees in the Marshall Islands is for employers to determine the type of employee they need. A careful assessment of operations, budget, and project scope will help clarify whether the role requires a full-time, part-time, or temporary employee.

Step 2: Familiarize Yourself with Compliance Requirements

The Marshall Islands Social Security Administration (MISSA) requires that all employers register and enroll their employees in the social security system. Employers who fail to meet these requirements risk penalties and labor disputes with the relevant authorities.

Step 3: Choose Your Hiring Method

Choosing the right hiring method is an important decision that impacts costs and compliance.

Establishing a Legal Entity

Establishing a legal entity in the Marshall Islands, such as a corporation or a branch office, is an option for businesses planning a long-term presence. The process involves registration with the Registrar of Corporations, obtaining necessary business licenses, and registering with the MISSA.

Using an Employer of Record (EOR)

An Employer of Record (EOR) in the Marshall Islands hires local staff for companies without the lengthy process of establishing a legal entity. The EOR takes on all administrative responsibilities, manages payroll and tax compliance, and handles registration with RMI authorities on the employer’s behalf.

This option is popular with businesses that need to hire a few employees quickly, save time, avoid complex legal setups, and want to be sure they have full compliance with the Marshallese labor laws.

Learn more about EOR in the Marshall Islands

Hiring Independent Contractors

Hiring independent contractors is another option in the Marshall Islands, to be aware of local laws, as misclassification is a serious risk and almost a crime, and authorities may penalize the employer. A contractor should not be hired as a workaround to a proper employment structure.

Step 4: Develop a Recruitment Strategy

Job opportunities can be advertised through various channels to find, attract, recruit, and retain possibly the best candidates for employment with the help of local newspapers and professional networks.

Employers should be clear and provide detailed information in job advertisements, including the expected salary, working hours, type of contract, leaves, bonuses, and required qualifications. For foreign hires, specific justification for local candidates may be required as part of the work permit process.

Step 5: Conduct Interviews and Assessments

After a company receives applications, the next step is to conduct interviews and assessments to find the right person for the job. Interviews in the Marshall Islands are professional, though they can vary from one company to the next. You might also use technical tests to check a candidate’s skills for specific jobs.

Any testing is directly related to the job’s requirements. Employers must not ask unfair questions or require any tests that are irrelevant, invasive, or illegal. They should always follow principles of fairness.

Step 6: Know the Legal Limitations of Background Checks

Companies can and should run background checks on potential hires in the Marshall Islands. These checks focus on things like work history, education, and professional references. For jobs that handle money or work with sensitive groups, you might be allowed to do a criminal background check, but only if you have a good reason for it. The candidate must always permit you first.

As an employer, you also need to be careful with their private information and follow local privacy rules.

Step 7: Draft Employment Contracts

Employment contracts in the Marshall Islands serve as a legal document for most roles, and they are supposed to be in writing. A well-defined contract serves as the foundation of the employer-employee relationship, as it outlines the rights, responsibilities, and terms of employment for both parties.

A well-structured contract should outline the full names and addresses of both parties, the employee’s specific job title, a clear description of their duties, and the designated place of work. It must also specify the exact date when the employment officially begins.

Step 8: Register with Authorities and Set Up Payroll

Before a new employee’s first day of work, the employer must register them with the MISSA. This is a mandatory step to ensure social security contributions are properly remitted. Companies must also take out any necessary insurance coverage for the employee, such as workers’ compensation.

The Marshall Islands’ payroll system has its specificities with regard to reporting and deadlines. Salaries are paid in U.S. dollars. Employers must withhold income tax and social security contributions from employee salaries. It is common to engage the services of a local payroll provider or an EOR to be 100% compliant with the Marshallese requirements.

Step 9: Onboard Your New Employees

Bringing new people onto the team is a crucial step. It helps new hires settle into their roles and get a feel for the company’s culture. They’ll meet their coworkers and get familiar with the new workplace.

A solid onboarding process should also teach them about their rights and responsibilities as employees in the Marshall Islands. Employers should provide necessary training on any health and safety rules. You might also use a checklist to introduce new hires to all the internal systems and tools they will use daily.

Key Employment Laws and Regulations

Marshall Islands Labor Code

The way jobs work in the Marshall Islands is set by the nation’s laws. These rules cover everything from hiring and pay to work hours, time off, and safety on the job. The Labor Code is meant to stop unfair treatment, harassment, and wrongful firing. It also makes sure all workers have the right to a safe and healthy place to do their work.

Social Security Regulations

All employees must be registered with the Marshall Islands Social Security Administration. This system provides for old-age, survivors’, and disability insurance. The employer and the employee must contribute 16% to the system, with an 8% share for both the employer and the employee.

Employment Standards and Employee Rights

Working conditions in the RMI are governed by the Labor Code and employment contracts. This grants employees various rights, such as safe working conditions and the right to file grievances.

Unions and Works Council

Employees have the right to form and join unions for legally binding agreements and may set specific working conditions, wage scales, and benefits for particular sectors, but employers should be aware of that arrangement, as that may impact their workforce.

Types of Employment Contracts

There are different types of contracts in the Marshall Islands, each with specific rights and restrictions.

Permanent Employment Contracts

This type of contract is permanent and gives long-term employment security to the employee. The full benefits are mandatory, and employees are protected against unfair dismissal. If the employer wants to terminate such a contract, they must give proper notice, and the reasons must be legally valid. All permanent employees must serve a probation period of six months.

Fixed-Term Contracts

Fixed-term contracts are permitted in the RMI for specific and temporary jobs, such as for a defined period or until the completion of a particular project. These contracts automatically terminate upon the specified end date. The employment handbook or contract should clearly outline the terms, and the reason for the fixed term must be legitimate to avoid the contract being deemed an indefinite one.

Part-Time Contracts

This is almost similar to a fixed-term contract, but the contract must specify the working hours and days with specific rights and proper obligations of the employee, along with the hours to be worked.

Working Hours and Overtime

Standard Working Hours

The standard workday is 8 hours, and the workweek is 40 hours. The workweek usually runs from Monday to Friday, and employers are required to maintain accurate records of employees’ working hours.

Overtime Regulations

Overtime must be paid for hours worked over the standard. Marshall Islands labor law mandates specific rates for compensating employees for overtime work. The most common overtime rate is 150%.

Leave Entitlements

Employees in the Marshall Islands are entitled to various types of leave, which should be clearly defined in the employment contract.

Annual Leave

There is no statutory law for annual leave in the RMI; however, it is a customary benefit. Employees with at least one year of continuous service are entitled to 14 working days of annual leave per year.

Sick Leave

Employees in the Marshall Islands are entitled to 21 days of sick leave per year for personal illness or injury. This entitlement applies from the start of employment. Employees should inform their employer as soon as possible, ideally on the first day of absence.

Maternity and Parental Leave

Maternity leave is a statutory entitlement for female employees. They are entitled to a minimum of 6 weeks of maternity leave. The laws for paternity leave are not very specific, but it is a common practice to grant between 3 to 7 days of paternity leave.

Termination and Severance

Notice Periods

Advance notice is generally required for termination of indefinite-term contracts unless the termination is for specific serious misconduct. The length of the notice period often depends on the employee’s length of service. The minimum notice periods in the Marshall Islands are:

Length of Service	Notice Period
Less than 6 months	1 week
6 months to less than 2 years	2 weeks
2 years to less than 5 years	4 weeks
5 years or more	8 weeks

Severance Pay

Severance pay entitlements are linked to the employee’s length of service and the circumstances of termination, and are not legally mandated. A common approach is to calculate severance based on one week’s pay for each completed year of service.

Mandatory Contributions

Social Security Contributions

The employer contribution rate to MISSA is 8% and the employee contribution is also 8% of their gross wages. These contributions are mandatory for all employees.

Health Insurance and Pension

Health insurance is not mandatory in the RMI. However, many employers provide it as a benefit to employees. Pensions are provided by the state social security system (MISSA).

Optional Benefits

Additional Perks

Additional benefits are not obligatory but are common extras that employers may provide to attract the best hires and enhance retention for international hires.