Guide to employment, payroll and benefits in

Micronesia (Federated States of)

Rivermate offers complete payroll, benefits and compliance services for

Micronesia (Federated States of)

01. Overview

Last updated: 

August 19, 2021

United States Dollar
Ease of doing business
GDP growth

02. Grow your team in

Micronesia (Federated States of)

with Rivermate

Payroll, benefits, taxes, and compliance can be difficult to manage in

Micronesia (Federated States of)

, particularly if you don't have established local relationships. You can hire employees in

Micronesia (Federated States of)

effectively, conveniently, and in full compliance with all relevant labor laws using Rivermate's global employment solution. We handle the responsibilities and legal risks associated with foreign employment so you can concentrate on growing your company.

03. Summary

Micronesia, also known as the Federated States of Micronesia, is an island nation in Oceania. It is made up of four states that are distributed across the western Pacific, from west to east: Yap, Chuuk, Pohnpei, and Kosrae. The states are made up of about 607 islands that stretch about 2,700 kilometers north of the equator. They are located northeast of Indonesia and Papua New Guinea, south of Guam and the Mariana Islands, west of Nauru and the Marshall Islands, east of Palau and the Philippines, 2,900 kilometers north of eastern Australia, 3,400 kilometers southeast of Japan, and 4,000 kilometers southwest of the main Hawaiian Islands islands. While the FSM's total land area is limited, it encompasses more than 2,600,000 km2 of Pacific Ocean, making it the world's 14th-largest exclusive economic zone. Palikir, the capital of the sovereign island nation, is situated on Pohnpei Island, while Weno, in the Chuuk Atoll, is the largest city. All but Kosrae's four states are based on one or more key high islands, with various outlying atolls. The Federated States of Micronesia is made up of thousands of small islands scattered over many countries in the Micronesia zone, which includes the Caroline Islands. Micronesia may apply to either the Federated States or the entire country. The FSM was formerly a part of the Trust Territory of the Pacific Islands, a United Nations Trust Territory administered by the United States, but it formed its own constitutional government on May 10, 1979, and became a sovereign state on November 3, 1986, after signing a Compact of Free Association with the United States. The Republic of the Marshall Islands and the Republic of Palau are two neighboring island entities that formed their own constitutional governments after leaving the TTPI. Since 1983, the FSM has been a member of the Pacific Community and has a seat at the United Nations.

04. Public holidays

05. Types of leave

Paid time off

Public holidays

Sick days

Maternity leave

Paternity leave

Parental leave

Other leave

06. Employment termination

Termination process

Notice period

Severance pay

Probation period

07. Working hours


National law establishes a standard workday of eight hours, a five-day workweek, and a two-day weekend. This 40-hour workweek is the industry standard across the country.


While overtime pay is optional in Micronesia, the employer should provide an employee with an overtime payment that is greater than the employee's regular pay rate.

08. Minimum wage


The Federated States of Micronesia has established an hourly minimum salary for national government employees. Minimum wages vary by state, ranging from $2 in Pohnpei to $1.42 in Kosrae, $1.60 in Yap, and $1.25 in Chuuk.

This minimum wage applies only to government employees and is usually lower for private-sector workers. Remember that, although the minimum pay is much lower, the average hourly salary is $8.

09. Employee benefits


In each of the country's four states, the state government heavily subsidizes medical and public health services. This includes giving free or low-cost access to any of the country's public hospitals or health facilities. Residents may also opt to go to a private facility if they choose, but they will have to pay for it out of pocket or via their medical insurance.

You are not obliged to offer medical insurance to workers because of the extensive and inexpensive public health care system. However, as part of your extra benefits package, you may wish to include an insurance package.

While you must pay workers at least the minimum wage, you are not required to offer incentives or other perks. However, cash incentives of about 5% of an employee's yearly pay are often anticipated. These monetary incentives may take the shape of performance-based bonuses, business performance bonuses, goal fulfillment bonuses, and holiday or yearly bonuses.

It is customary, but not necessary, to provide extra perks like as housing stipends, travel cost reimbursement, or free meals. Incorporating these types of perks and bonuses into your employment contracts may aid in the creation of a good work environment in which your workers feel pleased and appreciated. It may also help you improve your reputation in-country as an appealing and competitive employer.

10. Why Rivermate as your Employer of Record / PEO?

Establishing an entity in

Micronesia (Federated States of)

to hire a team takes time, money, and effort. The labor law in

Micronesia (Federated States of)

has strong worker employment protection, requiring great attention to details and a thorough awareness of local best practices. Rivermate makes expanding into

Micronesia (Federated States of)

simple and effortless. We can assist you with hiring your preferred talent, managing HR and payroll, and ensuring compliance with local legislation without the hassle of establishing a foreign branch office or subsidiary. Our PEO and Global Employer of Record solutions in

Micronesia (Federated States of)

give you peace of mind so you can focus on running your business.

Please contact us if you'd like to learn more about how Rivermate can help you hire employees in

Micronesia (Federated States of)

via our Employer of Record / PEO solution.

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