How to Hire Employees in Sao Tome and Principe

There are three common approaches to employing individuals in STP:

Setting Up a Local Entity

Establishing a local company in São Tomé and Príncipe provides full control over hiring and operations. This requires compliance with the Investment Code and registration with the Commercial Registry Office.

The process involves obtaining a commercial operations permit, registering with the Office of Tax Administration, and publishing incorporation notices in the official government gazette, Diário da República. This option is time-consuming and costs around $280.

Working with an Employer of Record (EOR)

An EOR acts as the legal employer on your behalf, managing payroll, taxes, and compliance with STP labor laws. This is the fastest and most efficient way to hire without establishing a local entity, ideal for companies seeking rapid market entry or flexibility.

EORs handle complex processes like social security registration with the National Institute of Social Security (INSS) and tax compliance with the Office of Tax Administration.

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Hiring Independent Contractors

Hiring contractors is cost-effective for short-term or project-based work. However, misclassifying employees as contractors risks penalties under STP’s Labor Code, as the Ministry of Labor and Social Affairs enforces strict classification rules. Contractors must be registered with the tax authorities, and businesses should ensure clear contractual agreements to avoid reclassification issues.

Sao Tome and Principe EOR vs Legal Entity

Choosing between an EOR and a legal entity depends on your business goals, budget, and timeline.

  • EOR Benefits: An EOR ensures compliance with STP’s labor laws and tax regulations, eliminating the need for a local company. This reduces administrative burdens, allowing businesses to focus on core operations. EORs manage processes like work permit applications for foreign workers, social security contributions, and tax filings.
  • Legal Entity Challenges: Setting up a legal entity involves registering with the Commercial Registry Office and the Office of Tax Administration under the Ministry of Planning and Finance. The process requires notarizing company statutes, publishing incorporation notices, and obtaining a taxpayer identification number. 

Using an EOR is often more cost-effective, especially for businesses testing the market or hiring a small workforce, as it avoids high setup and maintenance costs.

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Using an Employer of Record in Sao Tome and Principe

An EOR in STP serves as the official employer for your team, ensuring compliance with local laws. Key responsibilities include:

  • Employment Contracts: Draft compliant contracts outlining salary, benefits, working hours, probation periods, and termination terms.
  • Payroll Processing: Manages monthly salary calculations, deductions for individual income tax, the special tax on individual income, and social security contributions, ensuring payments are remitted to the National Institute of Social Security (INSS) and the Office of Tax Administration.
  • Tax and Social Security Contributions: Registers employees with the Office of Tax Administration for IRPS and IERS and ensures employer and employee contributions to INSS for social security.
  • Compliance with Labor Regulations: Adheres to regulations enforced by the Ministry of Labor and Social Affairs, including minimum wage, paid annual leave, maternity leave, workplace safety, and anti-discrimination measures.
  • Benefits Administration: Manages mandatory benefits like social security and may offer additional benefits, such as health insurance, depending on the agreement.

How Much Does a Sao Tome and Principe EOR Cost?

EOR providers in STP typically charge monthly fees per employee ranging from $400 to $700, influenced by factors like employee seniority, salary, and additional HR or benefits services. Regardless, using an EOR is still more cost-effective than establishing a legal entity. 

For businesses seeking to hire in São Tomé and Príncipe, an EOR provides a practical solution to navigate the country’s labor and tax complexities, ensuring compliance while minimizing administrative burdens.

Employment and Labor Laws in Sao Tome and Principe

To hire legally in São Tomé and Príncipe (STP), employers must comply with the country’s labor and tax regulations. Below are the key requirements for employers hiring locally and internationally in STP.

Key Contract Requirements

  • Job Offer and Acceptance: A formal job offer must be provided, detailing the role, salary, and start date, and must be accepted by the employee. This ensures clarity and mutual agreement before formalizing the employment relationship.
  • Written Employment Contract: While not explicitly mandated, a written contract is strongly recommended as best practice. It should include job title, duties, compensation, working hours, probation period (if applicable), and termination conditions. Contracts should be in Portuguese, the official language of the country.
  • Registration with Tax Authorities: Employees must be registered with the Office of Tax Administration for individual income tax (IRPS) and the special tax on individual income (IERS) before their first payday. Employers must also register employees with the National Institute of Social Security (INSS) for social security contributions.
  • Right to Work Verification: Non-STP nationals require a valid work permit issued by the Ministry of Labor and Social Affairs. Employers must demonstrate that the skills are not readily available among local workers.
  • Notification of Employment Rights: Employees must be informed of their rights, including leave entitlements, anti-discrimination protections, and grievance procedures, as outlined in the Labor Code.
  • Health and Safety Compliance: Employers must ensure a safe working environment, adhering to occupational health and safety standards, though enforcement is limited due to resource constraints.
  • Equality in Employment: Discrimination based on race, gender, religion, or other grounds is prohibited under STP’s Constitution and labor laws, promoting equal treatment in hiring and workplace practices.
  • Onboarding: New hires should receive documentation, such as a company handbook, outlining workplace policies, expectations, and procedures to ensure compliance with local regulations.

Working Hours

The standard workweek in STP is 40 hours, typically spread over five days (8 hours per day). Employees are entitled to rest breaks, though specific durations are not mandated and are often determined by employment contracts or collective agreements.

Overtime

Overtime pay is required for work exceeding 40 hours per week. The rate is typically 1.5 times the regular hourly rate for weekdays and 2 times for weekends or public holidays, unless otherwise specified in the employment contract. Overtime terms should be clearly outlined to avoid disputes.

Probation Periods

Probation periods are optional but commonly used in STP, with a maximum duration of 90 days. During this period, either party may terminate the contract with minimal notice (typically 1–2 weeks), subject to the terms of the contract.

Payroll and Employment Taxes in Sao Tome and Principe

Below is a summary of key payroll and tax considerations.

Payroll Cycle

Employees in STP are typically paid monthly, with payments due by the end of the following month. Employers must ensure timely and accurate payments per the employment contract.

Minimum Wage

As of 2026, the country enforces a national minimum wage of STN 3,000 per month (approximately USD 123), which applies to both the public and private sectors following an update in October 2025.

Bonus Payments

There is no legal requirement for bonus payments in STP. Any bonuses are at the employer’s discretion and should be specified in the employment contract.

Employer Tax Contributions

Employers must contribute 8% of the employee’s gross salary to the National Institute of Social Security (INSS), which covers pensions, work accidents, and other social benefits. No additional social security contributions are required.

Employee Payroll Contributions

Employees contribute 6% of their gross salary to INSS and are subject to individual income tax (IRPS) and the special tax on individual income (IERS) deductions.

Income Tax

Employees contribute 6% of their gross salary to INSS and are subject to individual income tax (IRPS) and the special tax on individual income (IERS) deductions.

STP’s income tax system is progressive, with rates as follows for residents (taxed on worldwide income) and non-residents (taxed on STP-sourced income):

Annual Income (STN)Tax Rate (%)
Up to 50,0000%
50,001 – 100,00010%
Over 100,00020%

Additionally, the IERS (introduced in 2024) applies a 20% tax on monthly income exceeding STN 50,000 for both residents and non-residents.

Pension System

The social security system requires contributions for employees earning above a minimal threshold. Employees contributing for at least 15 years are eligible for a pension upon reaching retirement age (typically 60).

Tax Compliance and Payroll Reporting

Employers must register employees with the Office of Tax Administration and report payroll details, including gross pay, IRPS, IERS, and social security contributions, monthly by the end of the following month. 

Non-compliance, such as late filings or incorrect deductions, can result in penalties or audits. Payslips must be provided, detailing gross salary, deductions, and net pay. Using an EOR or payroll provider can ensure compliance with tax regulations.

Work Permits and Visas in Sao Tome and Principe

Non-STP nationals require a valid work permit and visa to work legally in STP, overseen by the Ministry of Labor and Social Affairs.

Short-Term Work Permit

Valid for up to 6 months, suitable for short-term assignments or projects.

Long-Term Work Permit

Valid for 1–3 years, appropriate for fixed-term or permanent contracts.

Specialized Professional Visa

For professionals with specialized skills or qualifications in demand within the local labor market. Employers must demonstrate that the skills are not readily available among local workers.

Investment Work Visa

For employees associated with investments under the Investment Code, offering special incentives in designated economic zones (e.g., Cantagalo, Lemba, Lobata, Caué, and Príncipe).

Work Authorization Process

Employers must submit a request to the Ministry of Labor and Social Affairs, including a labor market opinion demonstrating the necessity of hiring a foreign worker. The process typically takes 6–12 weeks, with fees ranging from $100 to 500, depending on the permit type. Additional visa costs may apply.

Employers must comply with local hiring preferences and minimum salary thresholds. Using an EOR can simplify the work permit and visa process by managing documentation and compliance.

Time Off and Leave in Sao Tome and Principe

São Tomé and Príncipe’s labor laws outline mandatory leave entitlements and workplace protections to ensure fair treatment of employees. Below is a detailed overview.

Mandatory Leave Entitlements

Full-time employees in São Tomé and Príncipe are entitled to a minimum of 20 days of paid annual leave per year after 12 months of continuous service.

Part-time employees receive proportional leave based on hours worked, typically calculated at approximately 5% of total hours, up to a maximum of 20 days.

Leave must be taken within 6 months after the end of the annual leave cycle, or it may be forfeited, unless otherwise agreed in the employment contract.

Public Holidays

São Tomé and Príncipe recognizes several public holidays, reflecting its cultural and historical context. Employees are entitled to a paid day off or compensatory pay (typically 1.5 to 2 times the regular rate) if required to work on these days. Key public holidays include:

  • New Year’s Day (January 1)
  • Martyrs’ Day (February 3)
  • Labor Day (May 1)
  • Independence Day (July 12)
  • Armed Forces Day (September 6)
  • All Saints’ Day (November 1)
  • São Tomé Day (December 21)
  • Christmas Day (December 25)

Additional regional holidays may apply, subject to local government declarations.

Sick Leave

Employees are entitled to paid sick leave with a medical certificate, as required by the Labor Code. A medical certificate is required for absences longer than 2 consecutive days to qualify for paid leave. Without a certificate, absences may be treated as unpaid leave.

Maternity Leave

Female employees are entitled to 14 weeks of paid maternity leave, with at least 6 weeks taken after childbirth. The leave is fully funded by the state through the National Institute of Social Security (INSS), provided the employee has made contributions for at least 6 months before the leave.

Paternity Leave

There is no statutory entitlement to paid paternity leave in São Tomé and Príncipe. However, some employers may offer 1–5 days of paid leave following the birth or adoption of a child.

Parental Leave

There is no statutory entitlement to parental leave in São Tomé and Príncipe.

Bereavement and Jury Duty

Bereavement leave is not mandated by law, but employers typically grant 3–5 days of paid leave for the death of an immediate family member.

Jury duty is not common in São Tomé and Príncipe, and there are no specific legal provisions mandating paid leave for it.

Employers are encouraged to allow reasonable time off for civic duties, with pay determined by company policy.

Employee Benefits in Sao Tome and Principe

In addition to statutory benefits, employers in São Tomé and Príncipe may offer additional perks to attract and retain talent in a competitive labor market. Common benefits include:

  • Private Health Insurance: Not mandatory but often provided, especially for managerial or expatriate staff in urban centers like São Tomé.
  • Supplemental Social Security Contributions: Contributions beyond the mandatory 8% employer contribution to INSS to enhance retirement benefits.
  • Transport Allowances: Support for commuting costs, particularly in urban areas or remote agricultural sites.
  • Meal Allowances: Subsidies for meals, common in industries like tourism and agriculture.
  • Performance-Based Bonuses: Discretionary bonuses to reward high performance, often outlined in employment contracts.

Employers must ensure compliance with tax regulations. Benefits-in-kind, such as transport or meal allowances, may be subject to individual income tax (IRPS) and must be reported accordingly.

Terminations and Severance in Sao Tome and Principe

Ending an Employment Contract

Employers must follow a fair and lawful process when terminating employment, as outlined in the Labor Code. Valid reasons for termination include:

  • Redundancy due to economic or organizational changes
  • Gross misconduct (e.g., theft, insubordination)
  • Poor performance (after documented warnings)
  • Breach of contract
  • Business closure or financial difficulties
  • Health and safety violations

Terminations must comply with procedural requirements, including providing written notice and, in some cases, consulting with the General Labor Inspection Department (IGT) to avoid disputes or unfair dismissal claims.

Notice Periods

The Labor Code specifies minimum notice periods based on the employee’s length of service:

Length of ServiceMinimum Notice Period
Up to 1 year1 week
1 to 3 years2 weeks
3 to 5 years3 weeks
Over 5 years4 weeks

Longer notice periods may be agreed upon in the employment contract. During probation periods, shorter notice periods may apply.

Severance Pay

Employees terminated for reasons other than gross misconduct (e.g., redundancy) after at least one year of service are entitled to severance pay. The amount is typically one week’s salary for each year of service, though specific terms may vary based on the employment contract or collective agreements.

Expand into Sao Tome and Principe Easily with Remote People’s Employer of Record (EOR) Solution

Hiring in São Tomé and Príncipe offers access to a diverse labor market. However, navigating local employment laws, tax obligations, and work permit regulations can be complex due to bureaucratic processes and limited administrative capacity.

An EOR simplifies compliance by managing payroll, taxes, social security contributions, and work permits, allowing businesses to focus on growth and operations.

If you’re ready to hire in São Tomé and Príncipe and need help managing employment and compliance, Remote People is here to support you every step of the way.