How to Hire Employees in Tonga

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Tonga is becoming an attractive country for companies expanding abroad, primarily as it offers a less-saturated market in the South Pacific than other countries. With growing sectors such as tourism, fishing, and telecommunications, companies are choosing to hire workers in this area due to its varied economy and competitive labor costs.

This help guide will inform employers on how to hire in Tonga, providing information on local labor laws, a 9-step hiring guide, and the mandatory employee benefits that companies are required to provide to workers. We’ll also explain how Remote People can assist in streamlining the hiring process with Employer of Record services.

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Why Expand Your Business to Tonga

Strategic Advantages of the Tonga Market

There are various reasons why investors would choose Tonga over other countries when hiring abroad. The government in Tonga is known for encouraging foreign businesses to operate, with tax incentives, customs exemptions, and investment support coming under the Foreign Investment Act.

They have a stable economy, and labor costs are often more affordable than in Western countries, particularly in the public sector and the hospitality industry.

Importance of Being Aware of Tonga Labor Laws

Understanding local labor laws is vital for companies hiring in Tonga. The Employment Relations Act of 2013 is a legal framework that outlines the rights and obligations of employers/employees in Tonga, including rules governing contracts, working hours, and leave entitlements.

Other acts that also inform on Tonga’s working environment include the following:

Labour Relations Act / Employment Order of 2009
Occupational Health and Safety Act of 2005
Public Health Act of 2008
Health Services Act of 1991
Public Holidays Act of 1988
Factories Act
Mines and Minerals Act

We strongly recommend that all companies hiring in Tonga consult with legal professionals before signing employment contracts, to mitigate legal risks or penalties associated with non-compliance with local labor laws.

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Step 1: Define Your Hiring Needs

The first step in your hiring journey is to define your hiring needs clearly.

Think about what kind of roles your business needs, and how many employees you’re looking to hire. These requirements must align with your long-term business objectives to ensure you’re not backtracking on employee contracts in the future.

Step 2: Familiarize Yourself with Compliance Requirements

Before you start hiring, you should familiarize yourself with Tonga’s compliance requirements regarding tax, social security, and labor laws.

This includes understanding your obligations as an employer in terms of the local minimum wage, rules around overtime compensation, and statutory holiday entitlement.

Step 3: Choose Your Hiring Method

There are various hiring methods when operating in Tonga, which we’ve detailed in the sections below.

Establishing a Legal Entity

Setting up a legal entity in Tonga is the best way to hire if you want to retain full control of the employment process and are planning on hiring in this country long-term.

Establishing a legal entity means that you would be the legal employer of workers in Tonga, and requires you to set up your business as a Private Ltd Company, a Branch of a Foreign Company, or as a Sole Trader / Partnership.

This method is best suited to larger companies or those able to carry the administrative/financial burden that establishing a legal entity may require.

Using an Employer of Record (EOR)

Another popular method of employment in Tonga is instructing an Employer of Record.

An EOR provider would act as the legal employer of workers in Tonga, ensuring that they receive all mandatory employee benefits they are entitled to, and would also handle tasks such as payroll.

This is a good choice for businesses looking to test the market or gain quick access to workers in Tonga. It does require companies to relinquish some control, so it may be better suited to smaller companies or those testing out the hiring process in this country.

Learn more about EOR in Tonga

Hiring Independent Contractors

You could also hire workers more flexibly by using independent contractors.

This method is ideal for companies looking to hire people on a short-term basis, particularly for project-based work, for example. Contractors work independently, meaning employers wouldn’t be required to provide benefits as with employed workers, and contractors are also responsible for managing their own taxes/social insurance contributions.

It’s very important to ensure that contractors are classified correctly to avoid any legal risks/penalties involved with misclassification.

Step 4: Develop a Recruitment Strategy

The next step is to develop your recruitment strategy.

This involves crafting your job adverts and descriptions, ensuring they are detailed and adhere to anti-discrimination legislation as detailed in Tonga’s Employment Relations Act.

When you’re happy with your adverts, you can begin posting them on job boards and professional networks. Here are a few online job sites that many workers in Tonga use to find work:

Step 5: Conduct Interviews and Assessments

When you have received some job applications, you can start conducting interviews and assessments.

A top tip when hiring in Tonga is to bear in mind cultural norms such as respect for authority and hierarchy. Avoid overly aggressive or confrontational questioning, and encourage candidates to be open about their strengths and qualifications.

Step 6: Know the Legal Limitations of Background Checks

Background checks are a typical part of the hiring process in Tonga; however, employers must abide by privacy, fairness, and employment laws as explained in the Employment Relations Act, as well as obtain explicit consent.

Typical checks involve the following:

Work History
Criminal Record
Education
Medical Clearance (in some industries)

Employers cannot access police or government records without a candidate’s consent, and credit history checks are not commonly performed.

Step 7: Draft Employment Contracts

Drafting your employment contracts is the next key stage. This must include a succinct job title and job description, and details on probationary periods, notice periods, primary responsibilities, and employee benefits.

It’s worth having your employment contracts reviewed by a legal professional before signing to ensure everything is correct and included.

Step 8: Register with Authorities and Set Up Payroll

Once your contracts have been checked and signed, your business needs to register with Tonga’s Ministry of Revenue and Customs and the Social Security System.

All employees must be allocated tax numbers and social security IDs, and any insurance schemes you’re offering must also be set up. Now is also the time to set up payroll processes to ensure that workers are paid correctly and on time.

Step 9: Onboard Your New Employees

The last step is to welcome your new employees to the team.

Make sure all workers have access to all necessary resources and training they need, and are introduced to their new colleagues on their first day.

You should also take the time to explain all company policies/procedures to your new workers, and consider issuing them an employee handbook.

Key Employment Laws and Regulations

The Tonga Labor Code

Labor laws in Tonga are primarily informed by the Employment Relations Act of 2013.

This outlines the main regulations around contracts, employee benefits, and working conditions, to ensure fair treatment of all workers and a set of standards for companies to follow.

Social Security Regulations

Social security in Tonga is limited, with no official system in place. However, they do operate the National Retirement Benefits Fund (NRBF), a mandatory fund that provides retired employees with financial assistance upon retirement age.

This requires contributions from both employees and employees at the following rates:

Contributor	Contribution Rate
Employers	7.5% of gross monthly payroll
Employees	5% of gross monthly salary

Employment Standards and Employee Rights

Unions and Works Council

Workers are entitled to join or form a trade union, as per the Employment Relations Act. There are no specific pieces of legislation on Trade Unions, meaning that regulation can be limited. As such, strikes and industrial action are permitted, but are heavily discouraged and rarely take place.

There are no formal systems in place for managing work councils; however, employers may choose to set up voluntary schemes to encourage communication between employees and executive positions.

Types of Employment Contracts

There are three main types of employment contracts in Tonga:

Permanent (Open-Ended) Contracts

Set for an infinite duration for long-term, full-time employment.

Fixed-Term Contracts

Set for a specific duration, usually for project-based work.

Casual Employment

Irregular work which tends to be seasonal or for specific events

Working Hours and Overtime

Standard Working Hours

Normal working hours in Tonga are 40 hours per week, usually worked over 5 8-hour days.

Workers are also entitled to a 30-minute break if they work for longer than 5 consecutive hours.

Overtime Regulations

Employees in Tonga are entitled to overtime compensation if they perform hours beyond their normal contracted hours. This must be paid at a minimum rate of 1.5 times their normal wage, and there are no set maximums on overtime hours.

Leave Entitlements

Annual Leave

Workers in Tonga are entitled to 12 working days of annual leave per year, once they have completed 1 continuous year of service with their employer.

Sick Leave

If an employee is too unwell to attend work, they may take a maximum of 10 days of paid sick leave per year.

This is eligible for employees who have worked for their employer for a minimum of 6 months.

Maternity and Parental Leave

Female employees are entitled to 12 weeks of fully paid maternity leave if they have a baby, which tends to be taken as 6 weeks before birth and 6 weeks postpartum.

Male employees may take 3 days of paid paternity leave if their spouse has a baby, which must be taken in the days following the birth.

There is no legal right to parental leave in Tonga. Employers may choose to offer parental leave as part of a supplementary benefits package.

Termination and Severance

Notice Periods

The Employment Relations Act requires that the following notice periods be observed by both employers and employees:

Length of Service	Notice Period
Less than 1 year	1 week
1 to 3 years	2 weeks
Over 3 years	1 month

Severance Pay

There is no statutory right to severance pay in Tonga. However, some employers may choose to offer severance pay as a supplementary benefit.

Mandatory Contributions

Social Security Contributions

Both employers and employees must make contributions to the NRBF, as per the following rates:

Contributor	Contribution Rate
Employers	7.5% of gross monthly payroll
Employees	5% of gross monthly salary

Health Insurance and Pension

Tonga operates under a publicly funded healthcare system, which is generally funded by income tax and foreign aid. Some private health insurance schemes cover expatriates and foreign workers.

The pension system is primarily governed by the NRBF, which provides workers with a lump sum payment or a monthly pension upon retirement at 65 years old. Some employers may offer a supplementary private pension scheme to workers; however, this is not widespread.

Optional Benefits

Employers are encouraged to offer workers supplementary benefits to improve staff retention and increase the number of candidates applying for new roles.

Some examples of additional perks companies could offer include:

Performance bonuses
Additional leave entitlement
Private pension
Company car
Enhanced sick/maternity leave