Employer of Record in Brunei Darussalam

Expanding your team into Brunei Darussalam in 2025 requires a clear understanding of the local employment framework. Businesses looking to tap into the skilled workforce here must navigate specific labor laws, social security contributions, and payroll regulations unique to the Sultanate. Successfully integrating new hires means ensuring full compliance from the outset, whether you're establishing a long-term presence or exploring the market.

Companies have several strategic options when considering how to hire employees in Brunei Darussalam:

• Establishing a local legal entity: This involves setting up a subsidiary or branch office, which can be a complex and time-consuming process involving registration, legal fees, and ongoing administrative overhead.
• Partnering with an Employer of Record (EOR): An EOR, such as Rivermate, legally employs your staff on your behalf, handling all compliance, payroll, and HR functions.
• Hiring independent contractors: This option offers flexibility but requires careful classification to avoid misclassification risks under Brunei's labor laws.

How an EOR Works in Brunei Darussalam

An Employer of Record simplifies the hiring process by acting as the legal employer for your workforce in Brunei Darussalam. This allows your company to direct daily tasks while the EOR manages all official employment responsibilities. Specifically, an EOR in Brunei Darussalam takes care of:

• Legal Employment: Drafting and issuing compliant employment contracts in line with Brunei's Labor Act.
• Payroll Processing: Ensuring accurate and timely salary payments to employees.
• Tax Withholding and Remittance: Calculating and remitting income tax and mandatory social security contributions, including Tabung Amanah Pekerja (TAP) and Supplemental Contributory Pension (SCP).
• Benefits Administration: Managing and administering statutory benefits such as annual leave, sick leave, and public holidays, as well as any agreed-upon supplementary benefits.
• HR Compliance: Navigating local employment regulations, including termination laws and severance pay, to mitigate risks for your company.

Benefits of Using an EOR in Brunei Darussalam

For companies looking to hire talent in Brunei Darussalam without establishing a local entity, an EOR offers significant advantages:

• Rapid Market Entry: Hire employees quickly and efficiently without the need to set up a legal entity, accelerating your operational timeline.
• Reduced Administrative Burden: Offload complex HR, payroll, and legal compliance tasks to an expert, allowing your team to focus on core business activities.
• Cost Efficiency: Avoid the substantial expenses associated with company registration, maintaining a local office, and managing a dedicated in-country HR and legal team.
• Ensured Compliance: Mitigate the risks of non-compliance with Brunei Darussalam's labor laws and tax regulations, ensuring your operations remain lawful.
• Flexibility and Scalability: Easily expand or contract your workforce as business needs evolve, providing greater agility in a new market.

Rivermate's transparent pricing model eliminates complexity with a single, competitive monthly fee per employee. Unlike traditional PEO providers, our pricing in Brunei Darussalam includes comprehensive HR support, benefits administration, compliance management, and access to our proprietary dashboard for real-time workforce analytics. No hidden costs, no setup fees—just straightforward pricing that scales with your business needs while ensuring full legal compliance in Brunei Darussalam.

Brunei Darussalam has no personal income tax, but employers must contribute to social security schemes for employees. Employers are required to contribute 5% of each employee's salary to the Employees Trust Fund (TAP) and 3.5% to the Supplemental Contributory Pension (SCP), with employees also contributing 3.5% to SCP. These contributions are mandatory for all Brunei citizens and permanent residents employed in the country.

Employers must remit these contributions monthly by the 15th of the following month and submit detailed reports. While no income tax withholding is required, foreign companies should be aware of other taxes such as corporate income tax at 18.5%, withholding taxes on payments to non-residents, stamp duties, and import duties. Foreign workers are subject to the same social security contribution obligations as locals.

Brunei Darussalam's salary landscape is shaped by its stable oil and gas-driven economy, with higher compensation in energy, finance, and technical sectors. Notably, salary ranges vary by role, with senior oil and gas engineers earning between BND 8,000 and 15,000 monthly, while entry-level engineers earn BND 2,500 to 4,000. Other roles like IT managers and HR managers command BND 4,500 to 8,000 and BND 4,000 to 7,000 respectively. Market rates serve as de facto minimum wages, as the country lacks statutory minimum wage laws.

Employers commonly supplement base salaries with bonuses and allowances, such as annual bonuses (~one month’s salary), housing, transportation, medical, education, and COLA, especially for expatriates. Salaries are typically paid monthly via direct bank transfers, with payroll compliance and statutory deductions being essential. Salary trends forecast continued growth in high-demand sectors like oil, IT, and finance through 2025, driven by economic diversification and talent competition.

Employees in Brunei Darussalam are entitled to minimum annual leave based on service length: 14 days for less than 5 years and 18 days for 5 or more years, with leave generally taken within 12 months. Public holidays, including Islamic and national observances, are paid days off, but if they fall on weekends, no substitute day is provided. Sick leave typically offers 14 days of paid leave annually, requiring medical certification, with extended leave at employer discretion.

Parental leave includes 105 days of paid maternity leave, 7 days of paid paternity leave, and adoption leave, subject to specific conditions. Employers should also be aware of other leave types like bereavement, study, sabbatical, and marriage leave, which may vary by company policy. Accurate tracking and compliance with these entitlements are essential for maintaining employee relations.

Employee benefits in Brunei Darussalam are governed by statutory requirements and customary practices. Mandatory benefits include a minimum monthly salary of BND 500 (effective June 2023), paid annual leave (7-14 days), sick leave (around 14-30 days), paid public holidays, maternity leave (typically 90 days with salary), overtime pay (1.5x regular rate), and contributions to the Employees Trust Fund (TAP) and Supplemental Contributory Pension (SCP). Employers must also provide paid leave for public holidays and maternity, but paternity leave is not statutory.

Beyond mandatory benefits, many employers offer optional perks such as private health insurance, life and disability insurance, housing and transportation allowances, education assistance, company cars, performance bonuses, and wellness programs. Health insurance coverage usually includes inpatient, outpatient, and sometimes dental and optical care, with costs borne mainly by employers. Retirement benefits are primarily through TAP and SCP contributions, with rates shared equally between employees and employers at 5% and 3.5%, respectively.

Benefit packages vary by industry and company size, with oil and gas, financial services, and large corporations typically providing more comprehensive benefits, including allowances and supplementary pension plans. SMEs tend to offer basic packages focusing on statutory benefits. Employers should ensure compliance with labor laws, accurately remit contributions, and benchmark their offerings to attract and retain talent effectively.

Employment agreements in Brunei Darussalam are vital for defining employer-employee relationships and ensuring legal compliance under the Employment Order 2009. While contracts can be oral or written, written agreements are strongly recommended for clarity. They must include essential clauses such as job scope, salary, working hours, leave entitlements, termination conditions, and confidentiality.

Brunei recognizes two main contract types: fixed-term (specifying a start and end date) and indefinite-term (ongoing until terminated). Most employment relationships are covered by these agreements, except for certain roles like government employees and domestic workers, who are governed by separate regulations.

Employers should ensure contracts are comprehensive, compliant, and include these key clauses to mitigate disputes and align with legal standards.

Brunei Darussalam is progressively adopting remote work, driven by benefits like talent attraction, productivity, and cost savings. Although there is no specific remote work legislation, existing laws such as the Employment Order 2009 govern employment terms, requiring clear agreements on remote work conditions, performance, and data security. Employers must ensure compliance with labor laws, including safe working environments, fair pay, and adherence to working hours, while documenting remote arrangements in employment contracts.

Flexible work options are expanding, including work from home, flexible hours, compressed workweeks, telecommuting, and job sharing. Employers should establish policies covering equipment provision, expense reimbursement, data protection, and technology infrastructure. Data security is critical, with requirements for encryption, secure VPNs, access controls, and staff training to comply with the Personal Data Protection Act (PDPA). Reliable internet, collaboration tools, cloud services, and IT support are essential for effective remote operations.

Employers should develop comprehensive policies addressing these areas to optimize remote work benefits while minimizing risks.

Employers in Brunei Darussalam must adhere to specific legal requirements when terminating employees to avoid disputes. Notice periods depend on the employee's length of service, ranging from 1 day for less than 26 weeks to 4 weeks for 5 years or more, with contracts potentially stipulating longer periods. Severance pay is applicable mainly in redundancy cases, calculated based on years of service: 1 week’s wages per year for 1-3 years, 2 weeks for 4-5 years, and 3 weeks for over 6 years, provided the employee has at least one year of continuous service.

Terminations can be with or without cause. Justifiable reasons for termination with cause include misconduct, negligence, or dishonesty, while redundancy due to business restructuring qualifies for without cause, requiring proper notice and severance. Employers must follow procedural steps such as maintaining documentation, providing written notice, specifying reasons, paying owed wages and severance, and conducting exit interviews. Employees are protected against wrongful dismissal, with remedies including reinstatement or compensation if unfairly terminated.

In Brunei Darussalam, the use of independent contractors and freelancers is becoming increasingly prevalent among businesses seeking specialized skills and flexibility. Proper classification of workers is crucial due to the legal, tax, and compliance implications. Misclassification can lead to penalties and disputes. Key factors distinguishing employees from contractors include control, integration, economic reality, duration, exclusivity, provision of benefits, and method of payment. These factors help determine the true nature of the working relationship, beyond contractual labels.

A well-structured contract is essential for maintaining a clear independent contractor relationship. Contracts should include scope of work, term, payment terms, deliverables, intellectual property rights, confidentiality, termination clauses, indemnification, and governing law. Intellectual property rights are particularly important, with businesses typically including clauses to assign IP ownership to the company. Contractors must understand their tax obligations, as Brunei does not impose personal income tax, but corporate tax may apply if operating through a business entity. Insurance responsibilities generally fall on the contractors themselves.

Independent contractors are widely used across various sectors in Brunei, including IT, creative services, consulting, education, professional services, and construction. These industries often require contractors for project-based work, specialized expertise, or to manage workload fluctuations. The evolving landscape of freelancing in Brunei highlights the importance of clear agreements and compliance with local laws for successful collaboration.

Brunei Darussalam's work permit system prioritizes protecting local employment while allowing foreign nationals to fill specialized roles. The main visa types include Employment Visa (sponsored by a Brunei-registered employer), Professional Visit Visa (short-term professional assignments), and Dependent Visa (family members of work visa holders). Employers must conduct labor market tests to prove no qualified Bruneian is available before applying for a work permit, which involves submitting supporting documents such as passports, educational certificates, employment contracts, and medical reports.

The application process involves securing a job offer, conducting a labor market test, obtaining approval from the Labour Department, and then applying for an Employment Visa. Processing times typically range from several weeks to months, with fees varying based on job category and permit duration. Foreign nationals can eventually apply for permanent residency after long-term residence (usually over 20 years), though this is challenging.

Employers are responsible for ensuring valid work permits, compliance with labor laws, and supporting employee welfare, while employees must adhere to visa conditions, laws, and maintain valid documents. Penalties for non-compliance include fines, imprisonment, or deportation.