Why Expand Your Business to Papua New Guinea

Strategic Advantages of the Papua New Guinea Market

Papua New Guinea (PNG) provides competitive advantages to employers seeking to enter the labour market. Its resource‑rich economy, with the mining, agricultural, and maturing services sector, is opening access to local communities as well as developing consumer markets.

There is a limited workforce, particularly in rural areas. However, growing urban centres such as Port Moresby and Lae have a workforce of skilled candidates. PNG’s close ties with Australia and regional trade offer opportunities for growth in the construction, education, and engineering sectors. 

Employers can benefit from the relatively lower wages in PNG compared to neighbouring countries, yet provide training and capacity building for a motivated workforce looking for professional opportunities.

Importance of Being Aware of Papua New Guinea Labor Laws

Employers must be completely aware of the labour laws of PNG before hiring employees. PNG’s labour laws regulate wages, types of contracts, employers’ obligations, and employee rights. The main laws are the Employment Act, 1978, and the Work Health and Safety Act, 2015, as well as the regulations on hiring foreigners, employment contracts, their formation, and termination. 

Failure to comply with PNG labour law can lead to fines, industrial action, or reputational damage.

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Step 1: Define Your Hiring Needs

Before starting to recruit candidates in Papua New Guinea, an employer must clearly identify their hiring needs. For technical, administrative, or support roles, you should be clear on exactly what jobs need to be filled. You should also consider the desired employment status, such as full-time, part-time, or contractor.

The qualifications and languages/cultural knowledge required for the role should also be considered. For example, some companies seek employees with cultural skills such as Tok Pisin. Defining a job’s exact scope and responsibilities will help an employer remain clear during the following stages of hiring and prevent misunderstanding across PNG’s diverse communities.

Step 2: Familiarize Yourself with Compliance Requirements

Be aware that employers are legally required to follow the official wage rules. As of January 2026, the national minimum wage is PGK 5.00 per hour (approximately PGK 220 per week for a 44-hour workweek) for most sectors. This marks the first increase in over a decade, following a nationwide review by the Minimum Wages Board (MWB) in 2024–2025.

There had been calls to raise the wage to PGK 5.50 or more, but the board implemented a phased increase to balance worker needs with business stability. Employers must now pay at least PGK 5.00 per hour and be prepared to adjust wages according to the schedule: PGK 5.25 in 2027 and PGK 5.50 in 2028.

Step 3: Choose Your Hiring Method

Establishing a Legal Entity

Employers can open a legal entity in PNG, such as a subsidiary or branch. They need to register the business with relevant authorities in PNG, including the Investment Promotion Authority, the business registry, the tax office, and labour authorities. This entity allows the business owner to directly hire workers, handle payroll, social security, and legal compliance.

Using an Employer of Record (EOR)

Employers can collaborate with an EOR in PNG. The EOR can hire workers on its behalf without establishing a local entity. An EOR typically issues employment contracts and is responsible for payroll, contributions, and labour compliance.

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Hiring Independent Contractors

Employers in PNG can work with independent contractors who are not employees of the company. The contractors are responsible for their taxes and insurance. This can be a good option for work that is short-term or project-based, such as consulting.

Misclassification as an independent contractor can have consequences under the Employment Act if the relationship with the worker is that of an employer and employee. The primary issues to consider are the hours worked, level of control, and benefits.

Step 4: Develop a Recruitment Strategy

Employers in Papua New Guinea usually use a combination of local job websites, community referrals, and word of mouth from trusted acquaintances. Newspaper advertisements, in The National, for example, or online job sites, are effective ways of advertising job positions in cities such as Port Moresby or Lae.

Engaging with trade schools and using social media, newspapers, and local business contacts are particularly useful when searching for skilled labor in niche industries, and in Tok Pisin in particular. For positions outside urban areas, formal jobs are uncommon, and networking with local community and tribal leaders, word of mouth, and community engagement are effective strategies for hiring.

Step 5: Conduct Interviews and Assessments

Interviews may be used to evaluate technical skills, language, and cultural fit. Employers may also have practical assessments or probationary assignments. In PNG, using Tok Pisin or English (as the candidate is comfortable) is a good way of ensuring understanding.

Employers should be aware that candidates may have accessibility and travel challenges if they are coming from rural communities and may require support for transport and accommodation or remote interviews.

Step 6: Know the Legal Limitations of Background Checks

PNG has no legal requirement for employers to conduct full pre‑employment background checks. Employers may request reference letters, criminal clearances, or identity documents.

Employers should respect data privacy in reference enquiries and with the candidate’s permission only. Employers should also be aware that the background checks must be non‑discriminatory and must be conducted the same for everyone.

Step 7: Draft Employment Contracts

Employment contracts in PNG should state position, salary in kina, hours of work, leave entitlements, probation, benefits, termination, and governing law. Employment contracts are typically in English, though often with Tok Pisin translation for the benefit of all PNG communities.

Employment contracts should at least provide for minimum wage and statutory entitlements. Overtime, leave, and termination of employment should be clear in the contract to avoid future disputes.

Step 8: Register with Authorities and Set Up Payroll

After signing contracts, employers must register employees with the relevant PNG authorities. Employers must also enroll employees in the PNG National Superannuation Fund, deducting employer and employee contributions.

Employers must establish a payroll that is timely and compliant: pays employees in kina on time, makes statutory deductions, and maintains record‑keeping in accordance with PNG tax and labour laws. Employers should also maintain a safe workplace as per the Work Health and Safety Act 2015 by training staff, preventing workplace hazards, and implementing mechanisms to report health and safety issues.

Step 9: Onboard Your New Employees

Onboarding is the process of introducing new hires to company policies, health and safety, cultural, and role expectations.

In PNG, orientation also includes community engagement, remote/rural work protocols, and local indigenous cultural sensitivity. Employers may have a mentor or supervisor to help acclimate new employees to the organisation. Clear induction programmes lower staff turnover and increase productivity.

Key Employment Laws and Regulations

Papua New Guinea Labor Code

The Employment Act, 1978, is the main labor law in PNG. It covers different aspects of the employment relationship, such as contracts, wages, hours, leave, and termination. Employers should comply with this law or risk facing legal issues.

Social Security Regulations

PNG doesn’t have a national social security system. But the country does have a compulsory retirement savings scheme called superannuation. Under the Superannuation Act 2000, employers with 15 or more employees must register their PNG citizen employees with a licensed fund such as Nambawan Super. The employer and THE employee make regular contributions into the fund to provide a means of saving for retirement.

Employers are also required to provide insurance cover for any work-related injury or illness under the Workers’ Compensation Act 1978. This cover provides for employees and their families in the event of an incident at work.

Employment Standards and Employee Rights

Employees have the right to a minimum wage (currently K3.50/hr), safe workplaces, paid leave, and notice prior to termination. Trade unions and the PNG Trade Union Congress monitor working conditions, with particular focus on the fairness of wages and workplace treatment.

Types of Employment Contracts

Permanent Employment Contracts

Permanent contracts are open‑ended. They outline base wage, hours, leave entitlements, and termination conditions. Permanent employees receive full statutory benefits.

Fixed-Term Contracts

Fixed‑term contracts are for a set period or until the end of a specific project. The contract must state the date of expiry and conditions. A fixed‑term contract may only be extended by a written amendment. Fixed‑term contracts should not be used to get around providing benefits to permanent employees.

Part-Time Contracts

Part‑time contracts specify hours that are less than a normal full‑time workload. The Employment Act covers part‑time employees on a pro rata basis. Leave entitlements, benefits, and termination notice period all scale with hours worked.

Working Hours and Overtime

Standard Working Hours

PNG standard full‑time hours are usually 38 hours per week, over five or six days, depending on the sector and employer agreement.

Overtime Regulations

Extra work must be paid at an increased rate, as specified by sectoral awards or regulations. Employers must establish the terms of overtime in contracts and ensure compliance with appropriate record‑keeping.

Leave Entitlements

The PNG Employment Act and Regulations provide statutory leave entitlements as follows:

Annual Leave

Employees are entitled to annual leave, typically four weeks per year for full‑time staff. Annual leave policies, including accumulation and payment upon termination, should be stated in the contract.

Sick Leave

Employees are entitled to paid sick leave, which is usually up to 10 days a year (calculated pro rata for part‑time workers). An employer can require a medical certificate if the absence is prolonged.

Maternity and Paternity Leave

Maternity leave for female employees in PNG is typically unpaid and consists of six weeks’ leave following delivery. Women are allowed to use paid recreation or sick leave that is paid. The law only provides for unpaid maternity leave, but the PNG government has admitted that the Employment Act needs reviewing for paid maternity leave.

Termination and Severance

Notice Periods

In Papua New Guinea, the period of notice that is required by law is based on the length of employment. For a period of less than four weeks, one day’s notice is required. One week’s notice is required for a period of four weeks to one year. Two weeks’ notice is required for one to five years of service. Four weeks’ notice is required for five years or more.

Severance Pay

Severance is often based on the employee’s length of service, with a minimum of one month’s salary for each year of service. This is subject to variation by individual employment contracts, collective agreements, and the circumstances surrounding termination.

Mandatory Contributions

Social Security Contributions

PNG’s mandatory contributions go to a superannuation system rather than a national social security system, according to the Superannuation (General Provisions) Act, 2000.

Health Insurance and Pension

Private health insurance is a common employee benefit, but it is not mandatory. Employers are required by law under the Workers’ Compensation Act 1978 to insure employees against injury or illness arising from their employment.

Optional Benefits

Additional Perks

To make the jobs more attractive, the employers may also provide transportation allowances, housing or training allowances, and medical or health insurance.

Profit bonus may also be provided in addition to the minimum wage in order to compensate for the low wage, for the scarcity of the skills, in order to attract good quality labour, or for the purposes of retaining their existing employees. This is more so for the cases when the jobs are required to be done in the urban areas or in remote locations.

How to Hire Employees in Papua New Guinea — Our Take

When hiring employees in Papua New Guinea, it’s important to know the legal aspects to remain compliant. 

It’s best to follow the standard recruitment steps, from job planning and posting to hiring and onboarding. The country offers great opportunities for growth, so finding and hiring talented employees can be made easier with a respectful work environment, employee rights protection, and the inclusion of optional benefits.

An EOR can help make the entire process smooth so that you can dedicate your time to the other important aspects of your business.