Hire in North Macedonia through our Employer of Record (EOR)

North Macedonia's employment landscape presents a unique blend of challenges and opportunities. The country's workforce is relatively young, with a significant portion in the prime working age group of 25-54. However, the labor force participation rate hovers around 58%, lower than the EU average. This suggests untapped potential, particularly among women, who have a lower participation rate compared to men. The country's ethnic diversity is reflected in its workforce, with ethnic Macedonians forming the majority, followed by ethnic Albanians and other groups.

Overview of Labor Laws

North Macedonia's labor laws aim to protect workers' rights while fostering a conducive business environment. Key aspects include:

• Standard working hours of 40 hours per week
• Minimum of 20 days of paid annual leave
• Maternity leave of up to nine months
• Protection against discrimination and unfair dismissal
• Mandatory social security contributions

These laws provide a framework for fair employment practices, though enforcement can sometimes be inconsistent.

Cultural Considerations

Understanding North Macedonia's cultural nuances is crucial for effective workforce management:

• Family-oriented: North Macedonians value family bonds highly, often expecting flexibility from employers for family commitments.
• Direct communication: Clear and straightforward communication is appreciated in professional settings.
• Relationship-building: Investing time in personal relationships is important for building trust in the workplace.
• Respect for hierarchy: There's often deference to authority and seniority in organizational structures.
• Language: While Macedonian is the official language, English proficiency varies across sectors.

Adapting to these cultural norms can significantly enhance workplace harmony and productivity.

Challenges of Direct Hiring

Direct hiring in North Macedonia comes with several challenges:

1. Skills mismatch: There's often a gap between the skills workers possess and those required by employers, leading to difficulties in finding suitable candidates.

2. Language barriers: While English proficiency is growing, it may still be a challenge in certain sectors or regions.

3. Regulatory complexity: Navigating the local labor laws and regulations can be complex for foreign companies unfamiliar with the system.

4. Administrative burden: Managing payroll, taxes, and social security contributions can be time-consuming and require local expertise.

5. Cultural adaptation: Understanding and adapting to local work culture and expectations can be challenging for foreign employers.

6. Retention issues: With increasing opportunities abroad, retaining skilled workers can be difficult, especially in certain high-demand sectors.

These challenges underscore the importance of thorough preparation and potentially seeking local expertise when considering direct hiring in North Macedonia. Understanding the local context, both legal and cultural, is key to successful employment practices in the country.

North Macedonia's payroll and tax system is designed to ensure both employers and employees contribute to the country's social security and healthcare systems while also fulfilling their tax obligations. The system is characterized by a flat personal income tax rate and a series of mandatory social security contributions. This structure aims to create a balance between supporting the nation's social welfare programs and maintaining a competitive business environment.

Employer Contributions

Employers in North Macedonia play a crucial role in the country's tax and social security system. They are responsible for several key contributions and obligations:

Social Security Contributions

Employers are required to withhold and pay social security contributions on behalf of their employees. These contributions include:

• Pension and Disability Insurance: 18.8% of the gross salary
• Health Insurance: 7.5% of the gross salary
• Employment Insurance: 1.2% of the gross salary

It's important to note that these social security contributions are capped at a maximum base of 16 times the national average salary.

Personal Income Tax (PIT)

In addition to social security contributions, employers are responsible for withholding a flat 10% as Personal Income Tax from employee salaries.

Payment Deadlines

Employers must calculate, withhold, and submit the social insurance contributions and PIT on a monthly basis. The deadline for payment is the 15th of the following month.

Corporate Income Tax (CIT)

Companies in North Macedonia are subject to a flat Corporate Income Tax rate of 10% on their profits.

Property Tax

Property owners, including businesses, are subject to property tax based on the value of the property.

Employee Contributions

Employees in North Macedonia also have several tax and social security obligations:

Personal Income Tax

Employees are subject to a flat tax rate of 10% on their taxable income after social security deductions. The taxable income is calculated by subtracting mandatory social security contributions and a personal allowance from the employee's gross salary. For 2024, the annual personal tax exemption is set at MKD 114,480.

Mandatory Social Security Contributions

Employees are required to contribute to various social security funds, including:

• Pension and Disability Insurance: 18.8% of gross salary
• Health Insurance: 7.5% of gross salary
• Unemployment Insurance: 1.2% of gross salary
• Additional Health Insurance: 0.5% of gross salary

Other Potential Deductions

Employees may be subject to additional deductions such as:

• Union membership dues (if applicable)
• Voluntary contributions to pension schemes or other savings plans

It's important to note that these deductions are made directly from the employee's gross salary by the employer. The social security contributions are calculated based on specific percentages of the gross salary, making their computation straightforward.

Understanding these payroll and tax obligations is crucial for both employers and employees in North Macedonia. It ensures compliance with local regulations and contributes to the country's social welfare system. As an Employer of Record, Rivermate can assist companies in navigating these complexities, ensuring accurate payroll processing and tax compliance in North Macedonia.

North Macedonia offers a comprehensive set of employee benefits, combining mandatory provisions with optional perks to create a robust workplace environment. As an Employer of Record (EOR), Rivermate expertly manages these benefits, ensuring compliance with local labor laws while helping companies attract and retain top talent. By handling the intricacies of both mandatory and optional benefits, an EOR allows businesses to focus on their core operations while providing employees with a competitive benefits package.

Mandatory Benefits

In North Macedonia, employers are required to provide several benefits to their employees:

• Paid Annual Leave: A minimum of 20 working days, with a maximum of 26 days for full-time employees
• Sick Leave: Up to 30 days of paid sick leave, with varying pay rates depending on the duration
• Public Holidays: Paid time off for all official North Macedonian public holidays
• Special Leave: Additional paid leave for specific life events such as marriage, bereavement, and military service
• Social Security Contributions:
  • Pension: 18.8% of employee's salary
  • Health Insurance: 7.5% of employee's salary
  • Unemployment Insurance: 1.2% of employee's salary

Optional Benefits

To enhance their employee value proposition, many employers in North Macedonia offer additional benefits:

• Educational Assistance:
  • Tuition reimbursement for relevant degrees or certifications
  • Coverage for workshops, conferences, or training programs
• Health and Wellness:
  • Private health insurance plans
  • Gym membership subsidies
  • Team-building events and recreational activities
• Financial Security:
  • Additional retirement savings plans
  • Performance-based bonuses
• Work-Life Balance:
  • Flexible work schedules
  • Remote work options
  • Compressed workweeks

While these optional benefits are not as common in North Macedonia as in some other countries, they can significantly contribute to employee satisfaction and retention. The specific perks offered may vary depending on the company's size, industry, and budget.

The process of termination and offboarding in North Macedonia is governed by specific labor laws that protect both employers and employees. These regulations ensure fair treatment and provide a structured approach to ending employment relationships.

Grounds for Termination

In North Macedonia, employment contracts can be terminated for various reasons. These include employee-related factors such as failure to fulfill work duties, serious violations of workplace discipline, misuse of sick leave, or breach of confidentiality. Employer-related reasons may involve economic, technological, or organizational changes necessitating workforce reduction or the cessation of business operations.

Notice Periods

The law mandates minimum notice periods for both employers and employees. For employer-initiated terminations, a one-month notice is standard, which can extend to two months in cases of large-scale layoffs. Employees resigning must provide a one-month notice, while seasonal workers are entitled to a seven-working-day notice period.

Severance Pay

When termination is initiated by the employer due to economic, technological, or organizational reasons, employees are entitled to severance pay. The amount varies based on the length of service, ranging from one month's salary for those with up to 5 years of service to six months' salary for those with over 25 years of service.

Offboarding Process

The offboarding process typically involves several steps:

1. Formal Notification: Provide written notice of termination, clearly stating the reasons and effective date.

2. Exit Interview: Conduct an exit interview to gather feedback and ensure a smooth transition.

3. Return of Company Property: Collect all company-owned items, including equipment, access cards, and confidential documents.

4. Final Pay Calculation: Compute the final pay, including any outstanding wages, unused vacation time, and applicable severance pay.

5. Documentation: Complete all necessary paperwork, including termination letters and certificates of employment.

6. Benefits Closure: Inform the employee about the status of their benefits and any continuation options.

7. Knowledge Transfer: Facilitate the transfer of any critical information or ongoing projects to relevant team members.

By following these guidelines, employers in North Macedonia can ensure compliance with labor laws while maintaining a professional and respectful termination and offboarding process.

North Macedonia, a country in southeastern Europe, has specific regulations for foreign nationals seeking employment within its borders. Understanding the visa and work permit requirements is crucial for both employers and international workers looking to navigate the process smoothly.

Visa Requirements

Foreign nationals from many countries need a visa to enter North Macedonia. However, citizens of certain countries, including most EU member states, the United States, and several other nations, can enter visa-free for short stays, typically up to 90 days within a 180-day period.

For those who require a visa, the type needed depends on the purpose and duration of the stay:

• Short-stay visa (Type C): For visits up to 90 days
• Long-stay visa (Type D): For stays exceeding 90 days, including for work purposes

Work Permit Process

To work legally in North Macedonia, foreign nationals generally need to obtain a work permit. The process typically involves the following steps:

1. The employer must first register the job position with the Employment Service Agency.
2. The employer then applies for a work permit on behalf of the foreign worker.
3. Once approved, the foreign national can apply for a long-stay visa (if required) and a temporary residence permit.

Temporary Residence Permit

Foreign workers staying in North Macedonia for employment purposes must obtain a temporary residence permit. This permit is usually valid for up to one year and can be renewed. The application for a temporary residence permit should be submitted to the Ministry of Interior.

Important Considerations

• The work permit application process should be initiated before the foreign national enters North Macedonia.
• Processing times can vary, so it's advisable to start the application process well in advance of the intended employment start date.
• Certain professions may have additional requirements or restrictions for foreign workers.

By understanding and following these visa and work permit requirements, foreign workers and their employers can ensure compliance with North Macedonian regulations and facilitate a smooth transition into the country's workforce.