Vanuatu is an archipelago nation in the South Pacific, located east of Australia. It’s known for its mountainous landscapes and tropical forests, and an economy heavily dependent on the tourism and agricultural sectors.

With a growing GDP of 1.12 billion US dollars (2024) and a young workforce of 118K people (2024), Vanuatu is becoming an attractive destination for companies hiring from abroad. It operates under well-established labor mobility programs such as Australia’s PALM scheme and New Zealand’s RSE scheme, plus it offers highly skilled workers at more cost-effective labor costs than other countries.

This guide will explain the labor laws that companies expanding into Vanuatu must be aware of, as well as the mandatory benefits that employees in this country are entitled to. We’ll also explain how Remote People can help optimize the hiring process, particularly for companies that are testing the waters in Vanuatu before committing to setting up a legal entity.

Vanuatu Labor Law

The main labor law in Vanuatu is the Employment Act [Cap 160]. This act sets out a legal framework for working conditions, employment contracts, rules around terminations, and employee benefits.

Other acts that are also relevant to labor laws in Vanuatu include:

  • Minimum Wages Act [Cap 182]
  • Vanuatu National Provident Fund (VNPF) Act [Cap 189]
  • Trade Disputes Act
  • Labour (Work Permits) Act [Cap 187]

When employing workers in Vanuatu, employers should consult legal experts for detailed compliance. This will maintain fair, legal employment practices, ensuring that they always adhere to the latest legislation set by local labor laws and simplify the process of hiring in Vanuatu.

Mandatory Employee Benefits in Vanuatu

There are several mandatory employee benefits in Vanuatu that are detailed in local labor laws. We’ve included these in some detail in the sections below:

Minimum Wage

Employees in Vanuatu are entitled to a minimum wage, which is government-mandated and must be complied with by employers.

The national minimum wage in Vanuatu as of January 2026 is 300 VUV per hour, 51,960 VUV per month (based on 40 hour working week), or 57,165 VUV (based on 44 hour working week).

Social Security Contributions

Vanuatu operates under a Social Security System, which is also known as the Vanuatu National Provident Fund (VNPF). This was established in 1987 and aims to provide all workers with financial protection upon retirement, and in cases of invalidity or work injury.

Social security rates in Vanuatu for employers and employees are:

ContributorContribution Rate
Employees4% of gross monthly covered earnings
Self-Employed Workers1,000 VUV – 10,000 VUV per month
Employers4% of gross monthly covered payroll

Annual Paid Leave

Employees in Vanuatu are entitled to 1.25 days of paid annual leave per month. Once they have worked for their employer for at least 6 years, this increases to 1.75 days of paid annual leave per month.

Annual leave requests must be made with 2 weeks’ advance notice.

Working Hours

Normal working hours in Vanuatu are 44 hours per week, which are usually spread over 6 working days.

Employees cannot work more than 8 hours per day (excluding break times and overtime).

Break times usually consist of one unpaid meal break for each working day, which is usually set at a minimum of 30 minutes.

Overtime Pay

If an employee’s hours exceed 44 hours per week or 8 hours per day, they are entitled to overtime pay.

This equates to 1.25 times an employee’s normal wage for the first 4 hours of overtime, or 1.5 times thereafter. Overtime worked on Sundays or public holidays is automatically paid at the 1.5 rate.

Public Holiday Leave

Vanuatu celebrates public holidays each year, which typically provide workers with a paid day off (if falling on a working day). The public holidays in Vanuatu are as follows:

  • New Year’s Day (January 1)
  • Father Lini Day (February 21)
  • Custom Chiefs’ Day (March 5)
  • Good Friday (April 3)
  • Easter Monday (April 6)
  • Labor Day (May 1)
  • Ascension Day (May 14)
  • Children’s Day (July 24)
  • Independence Day (July 30)
  • Assumption of Mary (August 15)
  • Constitution Day (October 5)
  • Unity Day (November 29)
  • Christmas Day (December 25)
  • Family Day (December 26)

If a worker is required to work on a public holiday, they are usually eligible for pay at an enhanced rate of 1.5 times their normal wage.

Sick Leave

Employees in Vanuatu are entitled to 21 days of paid sick leave per year, provided that they can show a medical certificate if they’re ill for more than 2 days. They must also inform their employer of their inability to work as soon as possible.

Maternity Leave

Female employees in Vanuatu are entitled to maternity leave if they have a baby and have worked continuously for their employer for 1 year. This consists of 12 weeks of maternity leave, which is taken as 6 weeks before birth and 6 weeks after birth.

Maternity leave can be extended by up to 3 weeks if certified by a doctor, and is paid at a rate of 66% – 100% of the worker’s normal salary, depending on the employer and contract.

Workers are protected from dismissal while pregnant or on maternity leave. They must also be provided with additional rest/breastfeeding breaks upon their return to work, and a private, hygienic area for breastfeeding/expressing milk.

Paternity Leave

There is currently no statutory paternity leave in Vanuatu.

Some workers use their accrued annual leave for time off if they have a baby, while others are provided with supplementary paternity leave at the discretion of their employer.

Pensions

The pension system in Vanuatu is primarily based on the VNPF, which provides an old-age pension to workers.

Workers can retire at the age of 60 with a full pension, provided that they have the correct accumulated contributions.

There are also private pensions in Vanuatu that can help workers save additional funds for retirement.

Severance Pay

Employees in Vanuatu are entitled to severance pay if they have worked for their employee for at least 12 months, and have had their contract terminated without fault.

They may also be eligible for a severance payment if they have resigned after working for 6 years, or are unable to work due to an illness or injury.

Severance pay is calculated as 1 month’s pay per year of service, or pro rata payments for partial years worked. This is often capped at 6 months’ salary.

Supplementary Employee Benefits in Vanuatu

Employers are encouraged to offer their workers supplementary benefits in Vanuatu.

These are employee benefits that are provided in addition to government-mandated benefits, which can help motivate employees and increase retention rates, while also attracting new workers to open job roles.

Some examples of supplementary benefits that are often provided to workers in this country include:

  • Private health insurance
  • Flexible working hours
  • Housing/transport allowances
  • Additional annual leave
  • Advanced training opportunities
  • Performance bonuses

Optimize Employee Benefits with Remote People

If you’re looking to hire in Vanuatu but are unsure where to start, Remote People can help.

As an Employer of Record (EOR), we legally employ workers on your behalf, ensuring they are hired compliantly and efficiently while receiving all statutory employee benefits they are entitled to. This allows companies to hire internationally without the need to set up a local legal entity.

EOR services are particularly useful for businesses testing the waters in a new country, as they reduce administrative complexity and allow employers to focus more on growth and day-to-day operations.

In addition, an EOR can manage key employment functions such as payroll processing, regulatory compliance, and employee benefits administration.

We can also assist with directly hiring new workers in Vanuatu via our recruitment partners. This involves linking you with a qualified recruitment agency that can carry out executive searches and headhunting, while being well-experienced in the best recruitment seasons and practices in Vanuatu.

Contact Remote People to learn how we can help you do business in Vanuatu legally and compliantly, while also confidently maintaining the rest of your business.