How to Hire Employees in Vanuatu

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Vanuatu is a South Pacific country that is made up of roughly 80 islands and is home to about 327,000 residents. This island nation is located east of northern Australia, and it was formerly known as the New Hebrides before declaring independence in 1980. Its capital and largest city is called Port Vila, and it sits on the volcanic island of Efate. The main industries in Vanuatu include agriculture, fishing, tourism, and offshore financial services. The country is full of tourist attractions like coral reefs, underwater caverns, and even WWII-era shipwrecks.

In 2025, the Digital Nomad Visa opened additional doors in Vanuatu, making the country a popular destination for remote workers and a strong choice for anyone seeking to hire international talent. Vanuatu is also well-known as a tax haven, and it offers an advantageous location for businesses to hire employees and set up shop. If you are seeking to expand your operations into Southeast Asia and Oceania, consider Vanuatu as your first stop.

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Why Expand Your Business to Vanuatu

Strategic Advantages of the Vanuatuan Market

One of the biggest draws for businesses in Vanuatu is its favorable tax structure. Vanuatu also has a high labor force participation rate and an affordable minimum wage, making it relatively inexpensive to employ Vanuatuan talent. The World Bank categorizes Vanuatu as a “lower middle income country,” and it graduated off the United Nations list of least developed countries in the world in late 2020. Now, Vanuatu’s GDP clocks in at about $1.27 billion, and it has seen steady and consistent upward growth since the early 2000s.

The minimum wage in Vanuatu is 300 VUV per hour, which equates to 57,165 VUV per month. 300 Vanuatuan Vatu (VUV) is equivalent to 2.50 USD, which means that the monthly minimum wage in US dollars is just $475.52 per month. Vanuatu is often overlooked as an international business hub, and it is an excellent place to hire foreign employees to bolster your company’s workforce without breaking the bank.

Importance of Being Aware of Vanuatuan Labor Laws

In order to legally hire employees and remain compliant with labor laws in Vanuatu, it is essential to familiarize yourself with the country’s legal regulations. The main piece of employment-related legislation in Vanuatu is the Vanuatu Employment Act, which covers topics like employment contracts, employee rights, leave entitlements, mandatory and optional benefits, and workplace conditions.

Being aware of these legal requirements is essential for anyone hoping to avoid potential legal problems and build a positive reputation as an employer in Vanuatu. We suggest that you start by vetting your current employment practices against Vanuatu’s local regulations.

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Step 1: Define Your Hiring Needs

The first step in any effective hiring process is determining your organization’s long-term goals. For instance, are you hoping to establish a small team tasked with managing local operations, or are you looking to initiate a larger-scale hiring process? Knowing the answers to these questions will help guide your Vanuatuan recruitment strategy.

Once you have a strong sense of the macro-level picture, then you can zoom in and take a look at the specifics. You will want to clearly delineate the roles you need to fill and how they fit into your company’s overall plan. What skills do these roles require? How many employees will you need? What specific qualifications and experience are relevant or necessary for each distinct position? Determining these criteria before you begin writing job descriptions will leave you better equipped to find the right candidates to support your organization’s long-term plan.

Step 2: Familiarize Yourself with Compliance Requirements

Understanding the labor laws, tax obligations, and mandatory benefits offered in Vanuatu is essential when you are considering hiring employees in this South Pacific nation. Vanuatu’s main labor law is the Vanuatu Employment Act. Within its pages, you can find cohesive coverage of Vanuatu’s legislation relating to working relationships and employer/employee responsibilities. The law covers a variety of topics, including social security contributions, leave entitlements, working hours, minimum wage, anti-discrimination regulations, child labor restrictions, and more.

It is also imperative to understand the country’s social insurance schemes. The Vanuatu National Provident Fund is the prevailing pension system in the country. It is compulsory for all employees between 14 and 55 years who earn at least 3,000 VUV per month.

In many nations, you will need to familiarize yourself with tax codes – often, employers will be required to withhold, remit, and report on tax payments for their employees. Vanuatu, however, is widely regarded as a tax haven. Why? Because the nation does not assess any income tax, meaning that employers do not have to worry about withholding taxes from employee salaries. As for legal entities, employers can avoid paying taxes for 20 years by instead paying an annual registration fee that ranges from $300 to $1,000.

Step 3: Choose Your Hiring Method

Before you can proceed with hiring employees in Vanuatu, you will need to decide on the best hiring method for your group. Will you establish a legal entity in Vanuatu, use an Employer of Record (EOR), or hire independent contractors? Each option has both advantages and drawbacks to consider.

Establishing a Legal Entity

Establishing a local company in Vanuatu allows you full control over hiring and operations. That said, there are a few tradeoffs that make this a less-common option.

Setting up a sub-corporation in Vanuatu comes with high overhead costs, administrative setup, and long-term commitment. Setting up a legal entity in Vanuatu generally makes the most sense for organizations that are planning to establish a permanent presence in Vanuatu.

If you do not have the time or resources to jump through a series of administrative hoops or do not plan on establishing a large Vanuatuan headquarters, then setting up a local entity may not be the best course of action for your company’s goals.

Using an Employer of Record (EOR)

An employer of record (EOR) in Vanuatu will function as the legal employer on your behalf. They manage contracts, payroll, taxes, and other HR issues. Plus, they also ensure local compliance.

Generally speaking, working with an EOR is the fastest and most efficient way to hire in Vanuatu without opening a local entity. An Employer of Record can even help you with the recruiting process, ensuring that your hiring methods conform to local norms and that you are able to attract top talent in Vanuatu.

The benefits of working with an EOR in Vanuatu are diverse and plentiful, including:

Reduced overhead costs and legal fees
Access to local expertise and job market experience
Fewer legal/compliance risks
Faster market entry in a new location
Better employee experience and retention
Improved scalability
Simpler payroll and benefits administration

Learn more about EOR in Vanuatu

Hiring Independent Contractors

Maybe you lack the desire or financial means to register a business in Vanuatu. In that case, you can hire independent contractors, often called freelancers. Freelance employees typically come with a reduced administrative burden, since you do not need to provide the same benefits for them that traditional employees receive.

Freelancers normally work remotely on flexible schedules. However, because freelance employees often work for multiple companies and manage their own schedules, you will be able to exert less control over what they do on a daily basis. Freelance employees may also charge higher hourly fees than permanent employees.

It is important to avoid misclassifying regular employees as freelancers, because this can incur fees and even backpayment penalties.

Step 4: Develop a Recruitment Strategy

Now that you have a better understanding of your options in the Vanuatuan hiring scene, you need to figure out how you are going to find the right talent for your positions. This portion of the process begins with writing an effective job description that is aligned with local market expectations. Vanuatu’s three official languages are French, English, and Bislama, which is a local common language. For business purposes, you will normally use French or English. It is also important to make sure the job description aligns with local anti-discrimination codes.

Global job sites have a presence in Vanuatu, specifically Indeed and LinkedIn. However, there are also more niche, local sites such as Vanuatu Work that have a strong focus on local needs. When you are hiring in Vanuatu, it can be beneficial to explore local job boards as well as sites that serve populations around the world.

REMOTE PEOPLE IMPORTANT TIP

Want to learn more about effective recruitment methods? Check out our research on strategies for successful hiring, which provide tips for drawing in top-tier candidates.

Our best tip? Work with a Vanuatuan recruitment agency or partner with an EOR experienced in Vanuatu. These organizations have the local expertise you need to find candidates who are perfect for your unique roles. An experienced EOR can also help you navigate expectations on standard salaries, employment trends, and benefits that will attract potential employees in Vanuatu.

Step 5: Conduct Interviews and Assessments

Once you have identified some potential candidates for your position, you’ll want to conduct interviews that adhere to cultural norms. Vanuatu has a history of collectivism and strong ties to tradition, which include respect for elders and environmental stewardship. To succeed in Vanuatu, it is best to embrace local culture, which includes more flexible standards of punctuality, warm greetings, and building strong relationships before embarking on business-related conversations.

Additionally, you will want to make sure that you structure interviews appropriately and assess candidates fairly. One tip? Consider including written or practical assessments in your interviews. These will help you better evaluate a candidate’s readiness to hit the ground running in their new position.

Step 6: Know the Legal Limitations of Background Checks

Conducting background checks as part of the employment process is permissible in Vanuatu. Approved types of background checks for the hiring process include:

Verifying a candidate’s identity
Checking a candidate’s criminal background
Verifying educational qualifications
Confirming previous work experience through references
Checking professional licenses related the the job

However, it is worth noting that there are some restricted topics for background checks and hiring questionnaires. These restricted topics include medical information, credit screenings, political ideology-related questions, union membership, and physical address verification.

Step 7: Draft Employment Contracts

Although written employment contracts are not legally mandated in Vanuatu, it is always best practice to provide a written contract. Written and mutually signed agreements are much easier to navigate if a dispute or issue ever arises. Here are some suggestions regarding what to include in an employment contract in Vanuatu:

Names of both parties and their contact information
Nature of the job and duties to be performed, including working hours and any start or end dates (if applicable)
Compensation, or the fee/salary to be paid as well as the schedule of payments
Place of work, or where the employee should report
Employee rights and other benefits that the employee is entitled to
Other terms and conditions such as vacation time, notice periods, professional development opportunities, and more

Step 8: Register with Authorities and Set Up Payroll

Before any of your employees begin work, you must complete a few registration steps with the authorities in Vanuatu. The process looks like this:

For Legal Entities in Vanuatu

Choose a Name: If you are setting up a legal entity, you will be required to choose a name that is not already in use and register it with the Vanuatu Financial Services Commission, or VFSC.
Decide on the Right Structure: Decide what type of company you will be setting up. Options like private limited companies, public limited companies, and international companies.
Submit Documents: At the bare minimum, legal entities in Vanuatu need a company constitution. This document must include the name, purposes, registered office location (must be located in Vanuatu), registered agent (must be a person living in Vanuatu), and more information about the company’s shares and structure. There is an official portal where you can submit this document and others.
Pay Registration Fees: If you register your company in Vanuatu, you will have to pay a one-time registration fee online. After paying and submitting required documentation, you will receive confirmation of registration in a matter of days.
Review Licensure Requirements: Certain types of businesses may need specific licenses or permits to operate in Vanuatu. It is crucial to confirm that you are compliant with these local requirements.

For Companies Using an EOR

Unlike organizations that opt to register a legal entity in Vanuatu, companies that work with a Vanuatuan Employer of Record can expect a seamless hiring process. Vanuatu requires reporting of employee deductions and regular revenue filings – and an EOR can handle all of this for you! EORs make responsibilities like contracts, legal compliance, payroll, onboarding, mandatory contributions, and so much more simple and affordable.

Step 9: Onboard Your New Employees

Effectively onboarding new employees is a crucial part of building a consistent company culture and setting up new hires for success. Employers who used a strong onboarding process experienced employees that were 18X more committed to their jobs. A whopping 89% of employees said that a well-designed and intentional onboarding process made them more engaged at work. The benefits are clear, but how do you achieve strong onboarding? Forbes outlines some of the key features of effective onboarding for new hires:

Prioritize necessary training and show employees how to find resources
Introduce the new team member to their peers as well as key stakeholders
Discuss company policies, procedures, and expectations
Explore the company culture and discuss company values with the new hire
Set clear objectives and goals for the new hire’s role, along with a timeline for check-ins

Key Employment Laws and Regulations

Vanuatu Employment Act

The current rendition of Vanuatu’s Employment Act was passed in 2019. This law aims to outline and govern the relationship between employers and employees, delineating the privileges and responsibilities of both parties in such a relationship. Key components of the law include rules about working conditions, wages, working hours, leave entitlements, pension contributions, discrimination in the workplace, child labor, and more. Here is a breakdown of some key sections of the 2019 law:

Part 4: Employment contracts, including probationary periods
Part 5: Remuneration and pay schedules
Part 6: Working hours and overtime regulations, including public holidays
Part 7: Leave entitlements, including sick leave
Part 8: Specific rules about the employment of women and young people
Part 9: Health and safety regulations for workplaces
Parts 10-11: Termination and severance policies

Vanuatu National Provident Fund (VNPF)

The Vanuatu National Provident Fund is the nation’s reigning pension scheme. It has over 80,000 active members. Any Vanuatuan employee between the ages of 14 and 55 (including expatriate employees) who makes over 3,000 VUV (Vanuatuan Vatu) per month must contribute. Self-employed people and freelancers are not required to contribute, but they can opt in to become voluntary members. Currently, the contribution to the VNPF is 8% of an employee’s salary, 4% of which is covered by the employer and 4% of which is covered by the employee.

Types of Employment Contracts

Familiarizing yourself with the different types of employment contracts in Vanuatu is very important when you are hiring in the country.

Open-Ended Employment Contracts

Open-ended contracts are the most popular type of employment contracts in Vanuatu. They do not have a fixed end date, instead continuing on until they are terminated by either party or the employee retires. These contracts can be full-time or part-time, though part-time employees may not be eligible for the same benefits as full-time employees in Vanuatu.

Fixed-Term Employment Contracts

Fixed-term employment contracts can be used in Vanuatu for temporary work. Sometimes, this is a defined span of time. Other times, the contract continues until a certain project or task is completed. The period of employment must be clearly stated in the contract. Vanuatu’s fixed-term contracts do not automatically roll over to open-ended contracts at the end of a term. They can be renewed one time.

Working Hours and Overtime

Standard Working Hours

Standard working hours in Vanuatu amount to 44 hours per week, with daily limits of 8 hours per day excluding break times. Vanuatuan employees can be mandated to work only 6 days per week. However, these hours can be exceeded through voluntary agreement, though excess hours are considered overtime and must be compensated as such. Employees cannot be mandated to work on Sundays, aside from in a select few industries.

Meal breaks are also legally required in Vanuatu. Employees who work more than 6 hours in one day are entitled to a 1 hour meal break and one 20-minute tea break. In Vanuatu, breaks do not need to be paid, though employers normally do not deduct pay for tea breaks.

Overtime Regulations

Overtime hours in Vanuatu are any hours worked in excess of 44 hours per week or 8 hours per day. These excess hours are subject to overtime rates, which are dependent on a few different factors. The first four hours of overtime each week is paid at 125% of the worker’s normal salary. Overtime hours beyond four per week are paid at 150% of the salary. Overtime hours worked at night (between 8 p.m. and 4 a.m.) must be paid at 175% of the employees normal salary.

Leave Entitlements

Annual Leave

Vanuatu’s annual leave system depends on the amount of time that an employee has been working with the same company. Employees are eligible for annual leave after working for the same company for 3 months. After that, the amount of annual leave depends on how long the person has been in service with the organization. Here is the breakdown:

Years of Service	Days of Annual Leave
Up to 6 years	15 days
7–19 years	21 days
20–24 years	36 days
25–29 years	38 days
More than 30 years	72 days

Public Holidays

Employees in Vanuatu are legally entitled to a few different types of leave, which are given in addition to the following public holidays:

New Year’s Day (January 1)
Father Walter Lini Day (February 21)
Custom Chiefs’ Day (March 5)
Easter Weekend (Good Friday through Easter Monday, date varies)
Labor Day (May 1)
Ascension Day (40 days, not including Sundays, after Easter)
Children’s Day (July 24)
Independence Day (July 30)
Assumption Day (August 15)
Constitution Day (October 5)
Unity Day (November 29)
Christmas Day (December 25)
Family Day (December 26)

Sick Leave

Employees in Vanuatu are entitled to 21 days of paid sick leave each year. Sick leave can only be claimed if a person can document their illness with a doctor’s note. Unused sick days do not need to be “repaid” when a person leaves a position.

Maternity Leave

Maternity leave in Vanuatu is fully paid for up to 12 weeks per pregnancy. After 12 weeks, women can continue to take additional leave for up to 8 more weeks, paid at 66% of the woman’s normal salary. There is no entitlement for men to take paternity leave, and women who adopt babies are not eligible for maternity leave.

Termination and Severance

Notice Periods

Employment can be ended legally in Vanuatu for a number of valid reasons, but generally, employees in Vanuatu are entitled to notice and severance pay except in the case of gross misconduct. Providing written notice is highly recommended though not legally required. You do not need to share a reason for termination, and you can offer an employee their wages in lieu of notice. The notice periods employees are entitled to depend on how long they have been with the company:

Length of Service	Notice Period
Up to and including 3 years	14 days
More than 3 years	30 days

Severance Pay

After 12 months of working for the same organization, employees in Vanuatu are eligible for severance pay. The amount of severance pay is calculated at the rate of 1 month’s pay per full year worked plus partial years worked, using this formula:

1/12 x 1 month’s salary x number of months worked

Severance pay is also available to employees who voluntarily terminate their employment with an employer (i.e., quit) after 6 years or more with the company.

Mandatory Contributions

VNPF Contributions

The Vanuatu National Provident Fund, or VNPF, is the only mandatory contribution employers have to worry about in Vanuatu. This is especially true because, since Vanuatu does not assess individual or corporate income taxes, there are no other withholding or deduction requirements to consider. The current employer/employee breakdown for mandatory contributions is:

Contribution Type	Rate	Fund
Employer Contribution	4% of gross salary	VNPF
Employee Contribution	4% of gross salary	VNPF

13th Month Pay

Vanuatuan labor laws do not require employers to pay out a 13th month bonus or implement other bonus structures. As such, bonus payments are typically outlined in employment contracts or agreed upon at the company level. They can even be used as an optional benefit meant to attract the best candidates when your company is looking to hire top talent.

Optional Benefits

In addition to the country’s suite of mandatory benefits, many employers in Vanuatu choose to offer supplemental benefits to attract top-tier applicants. Offering desirable benefits outside of what is legally required can help encourage more people to apply for your job, meaning you can find the candidate who fits your role best. Research shows that a strong benefits program can even increase your company’s average employee retention time.

Here are some of the supplemental benefits that employers in Vanuatu are currently offering:

Health insurance schemes
Holiday bonuses
Performance-based bonuses
Life insurance
Transportation, phone, or car allowances
Extra days of paid leave
Sabbatical programs
Professional development programs
Extended notice periods
Additional severance pay