Papua New Guinea

Papua New Guinea (PNG), located in the southwestern Pacific Ocean, is known for its diverse landscapes and rich biodiversity. It occupies the eastern half of New Guinea and includes numerous smaller islands and coral reefs. PNG's complex history includes early habitation dating back 60,000 years, colonization by European powers, and eventual independence from Australia in 1975.

The country is the most linguistically diverse in the world, with over 839 languages, and has a population of about 9.12 million as of 2021. Despite its abundant natural resources like minerals, petroleum, and timber, PNG faces challenges such as inadequate infrastructure, land tenure issues, and social inequality. The economy is heavily reliant on subsistence agriculture, though there are significant contributions from the mining and oil sectors.

Culturally, PNG is influenced by the "wantok" system, which emphasizes strong community ties and mutual support but can also lead to nepotism and prioritization of family over work. Communication tends to be indirect, with a high value placed on relationship building and non-verbal cues. Organizational hierarchies respect authority, and decision-making often seeks consensus.

Key economic sectors include agriculture, with most of the population engaged in subsistence farming, and resource industries like mining and oil and gas, which attract foreign investment. Emerging sectors with potential for growth include tourism, renewable energy, and agribusiness. However, political stability and infrastructure development are crucial for realizing these opportunities.

• Employer Tax Responsibilities in Papua New Guinea:

  • Salary and Wage Tax (SWT): Employers must withhold SWT from employee salaries and remit it to the Internal Revenue Commission (IRC). SWT is calculated using graduated tax rates and is due monthly.
  • Superannuation Contributions: Employers are required to contribute 8.4% of a citizen employee's gross salary to an authorized superannuation fund, along with deducting and remitting the employee's contribution of 6% of their after-tax salary.
  • Other Taxes: Employers with a payroll over K200,000 must pay a 2% Training Levy. Additional levies like the Community Development Levy apply to certain sectors such as mining and petroleum.

• Employee Responsibilities and Benefits:

  • Mandatory Superannuation Contribution: Employees must contribute 6% of their after-tax salary to a superannuation fund.
  • Allowable Deductions: Employees can claim a 25% rebate against their SWT for eligible deductions such as work-related expenses, donations to approved charities, and certain medical expenses. Proper record-keeping is required to claim these deductions.

• Goods and Services Tax (GST):

  • Rate and Applicability: The standard GST rate is 10%, applicable to most services, with exemptions including financial, medical, educational services, and basic unprocessed food items.
  • Filing Procedures: Businesses must register for GST, issue compliant tax invoices, file regular GST returns, and remit the net GST owed.

• Tax Incentives:

  • Income Tax Exemption: Available for new businesses in designated areas and specific sectors.
  • Accelerated Depreciation: Allows for higher initial deductions for capital assets.
  • Import Duty Exemptions: For specific equipment and materials used in priority sectors.
  • Market Development Cost Deduction: Offers a double deduction for expenses related to promoting exports.

• Compliance and Record-Keeping: Employers and employees must maintain accurate records for tax calculation and auditing. Non-compliance can lead to penalties and interest charges.

In Papua New Guinea, the Employment Act specifies that employees are entitled to 14 consecutive days of paid annual leave per year of continuous service, which includes non-working days within the leave period. Employees can accumulate leave for up to four years with employer agreement, and employers must pay vacation pay in a lump sum before leave begins. Casual workers do not receive this 14-day leave entitlement, and some industries may offer more generous provisions.

The country observes several national public holidays, including New Year's Day, Good Friday, Easter Monday, Queen's Birthday, National Remembrance Day, Independence Day, Christmas Day, and Boxing Day. Additionally, each province may celebrate its own specific public holidays.

Other mandatory leave types include six days of paid sick leave per year (with a medical certificate), six weeks of paid maternity leave, and three days of paid compassionate leave for immediate family bereavements. Optional leaves like study leave and long service leave are available based on employer discretion.

In Papua New Guinea, labor laws provide several mandatory benefits for employees, including 14 days of paid annual leave, six days of paid sick leave (accruable up to 18 days), six weeks of unpaid maternity leave, and paid public holidays. Employers must also adhere to regulated notice periods for termination and pay overtime at legally mandated rates. Additionally, contributions to social security are required.

While not mandatory, some employers offer extra perks such as private health insurance, additional paid time off, flexible work arrangements, housing allowances, and educational assistance to attract and retain employees. Private health insurance is available through various providers for those whose employers do not offer this benefit.

Regarding retirement, employees can voluntarily contribute to authorized superannuation funds, and there is ongoing discussion about establishing a national retirement benefits scheme, though no firm plans have been set as of April 2024. Traditional support mechanisms like extended family and land ownership also play a role in retirement security.

In Papua New Guinea, employment termination is governed by Section 36 of the Employment Act, which lists valid reasons for dismissal, including misconduct and incapacity due to illness. The notice period required for termination varies with the length of service, as detailed in Section 34 of the Employment Act. Although severance pay is not mandated by law, it is commonly practiced and guided by the Industrial Relations Act 2010 and individual company policies.

The country has established anti-discrimination laws protecting various characteristics, but enforcement remains inconsistent. Employers are responsible for preventing discrimination and ensuring a safe work environment as per the Industrial Safety, Health and Welfare Act (ISHWA) 1961. This includes conducting risk assessments and providing necessary personal protective equipment. Employees have rights to a safe workplace and can refuse unsafe work.

Workplace regulations also stipulate a standard 42-hour workweek, mandated rest periods, and ergonomic considerations to ensure employee welfare. Employers may require overtime under specific conditions and are advised to consult with the Department of Labor and Industrial Relations for compliance and guidance. Enforcement of workplace health and safety is primarily the responsibility of the DLIR, which conducts inspections and can issue notices or prosecute violations.

In Papua New Guinea, employment agreements are either written or verbal.

Written Contracts:

• Governed by the Employment Act 1978.
• Must include employee details, job description, remuneration, working hours, leave, and termination details.
• May require approval from the Department of Labor and Industry.
• Provide clear and secure employment terms.

Verbal Contracts:

• Recognized by law but less secure.
• Employers must keep a written record of employment terms.
• Typically have a maximum duration of one year.

Core Clauses in Written Contracts:

• Identification of parties, job responsibilities, employment duration, salary and benefits, working hours, leave entitlements, and termination procedures.
• Optional clauses for confidentiality, intellectual property rights, and dispute resolution.

Probationary Periods:

• Not mandated by law but commonly used.
• Allow assessment of employee suitability.
• Duration and terms should be clearly defined in the contract.

Confidentiality and Non-Compete Clauses:

• Not specifically covered under the Employment Act 1978.
• Should be reasonable in scope and duration to be enforceable.
• Non-compete clauses are limited and must protect legitimate business interests without overly restricting future employment opportunities.

Consultation with a lawyer is recommended to ensure compliance with local laws and protection of both employer and employee interests.

Remote work in Papua New Guinea (PNG) is not specifically regulated by dedicated laws, but is supported by general employment legislation such as the Fair Work Act (2009) and the Occupational Health and Safety Act (1997), which ensure basic employment rights and a safe working environment for all employees, including remote workers. The success of remote work in PNG largely depends on the availability of stable technological infrastructure, which is generally more accessible in urban areas.

Employers in PNG are advised to create detailed policies for remote work that cover eligibility, equipment provision, work schedules, performance management, and employee support. Flexible work arrangements like part-time work, flexitime, and job sharing are permissible, though not explicitly regulated by law, and should be clearly defined in employment contracts or agreements.

Regarding equipment and expense reimbursements, there are no statutory obligations for employers to provide these, but agreements should specify any arrangements. Data protection is another critical area, with some protection under the Constitution and specific acts like the Cybercrime Act 2016, but comprehensive data privacy laws are lacking. Employers should have clear policies on data handling and ensure best practices in data security are followed to protect both personal and company data.

In Papua New Guinea, the Employment Act 1978 dictates that the standard workweek is 44 hours, typically spread over eight hours from Monday to Friday, with some industries requiring a half-day on Saturday. Overtime is paid at one and a half times the standard rate on weekdays and the same rate on Saturday afternoons, while Sundays and public holidays earn double the rate. Employers can request reasonable overtime, but employees must consent to work on Sundays and public holidays unless otherwise agreed upon by representative organizations.

Workers are entitled to a 24-hour rest period each week, usually on Sunday, although this can be adjusted in the employment contract. The Act does not specify daily rest periods but outlines meal and rest breaks, suggesting a 40-minute break for every five hours worked, based on guidelines from the Department of Works & Implementation.

The legislation also protects young workers, prohibiting employment of those under 16 during night hours (6 p.m. to 6 a.m.) and placing restrictions on 16 and 17-year-olds unless they work in a family business. The Act does not specifically address night shifts or weekend work beyond these provisions.

Understanding competitive salaries in Papua New Guinea (PNG) is essential for attracting and retaining skilled employees. Factors influencing salary competitiveness include job title, industry, experience, qualifications, location, and company size. Research tools like Paylab.com and Salary.com help gauge current salary trends, although they may have limitations.

Employers in PNG must also adhere to the Minimum Wages Board determinations, which set legally binding minimum wages. These determinations are reviewed periodically, with the last known rate set at PGK 3.50 per hour in 2014. Employers are obligated to comply with these rates and maintain proper wage records.

Additionally, PNG labor laws mandate benefits such as annual leave, public holidays, sick leave, maternity leave, and overtime pay. Some companies offer extra perks like housing allowances, holiday bonuses, and transportation stipends to enhance their compensation packages.

Employers must also follow specific payroll practices, including a minimum fortnightly pay cycle and the withholding of income tax and social security contributions. Transparency in pay slips, although not mandated, is recommended for clarity and record-keeping.

Overall, both legal compliance and competitive salary packages are crucial for successful employment relationships in PNG.

• Notice Periods for Termination in Papua New Guinea: The Employment Act 1978 mandates varying notice periods based on the length of service, ranging from one day for less than four weeks of service to four weeks for five years or more.

• Exceptions to Standard Notice Periods: These include mutual agreement for different notice lengths, and immediate termination without notice in cases of serious misconduct or breach of contract.

• Payment in Lieu of Notice: If the required notice is not served, payment equivalent to the salary for the notice period must be made.

• Severance Pay: Employees terminated due to redundancy are entitled to severance pay, calculated based on their length of service, with specific pay scales provided for different durations of service.

• Taxation of Severance Pay: Severance payments may be subject to income tax under local laws.

• Types of Termination: Includes Termination with Notice, Termination without Notice (Summary Dismissal), and Termination by Mutual Agreement, each with specific procedures and considerations.

• Procedure for Termination with Notice: Involves providing written notice, observing the notice period, and settling all final payments including accrued wages and unused leave.

• Rights and Best Practices: Employees can challenge unfair terminations, and both parties are advised to maintain professionalism, adhere to contractual terms, and keep thorough documentation throughout the termination process.

In Papua New Guinea (PNG), distinguishing between employees and independent contractors is essential for compliance with labor laws. Employees are under significant control by their employers, economically dependent on them, integrated into the company's structure, and entitled to statutory benefits. In contrast, independent contractors maintain autonomy over their work, derive income from multiple sources, operate independently, and handle their own taxes and social security contributions.

Independent contractors in PNG engage in various contract structures, including fixed-price, time and materials, and milestone-based contracts. Effective negotiation practices involve direct and respectful communication, relationship building, and formal written agreements. Key industries for independent contractors include construction, IT, and professional services.

Intellectual Property (IP) rights are crucial, with ownership often defaulting to the employer unless otherwise specified in a contract. Freelancers should take steps to protect their IP, such as using copyright notices and maintaining records of their work.

Freelancers must manage their own tax obligations, including income tax payments and filings, and consider securing insurance like public liability, professional indemnity, income protection, and life insurance to mitigate risks associated with independent contracting.

• Laws and Regulations: Papua New Guinea's primary health and safety laws include the Industrial Safety, Health and Welfare Act 1961 (ISHWA), its 1965 Regulations, and the Workers' Compensation Act 1978. These laws provide frameworks for workplace safety and compensation for work-related injuries or illnesses.

• Employer Responsibilities: Employers are required to ensure a safe working environment, provide necessary safety equipment and training, and consult with employees on safety matters.

• Worker Rights: Workers have the right to refuse unsafe work, participate in safety consultations, and claim compensation for injuries or illnesses acquired at work.

• Enforcement and Inspection: The Department of Labour and Industrial Relations oversees the enforcement of safety laws, conducts workplace inspections, and can issue notices or prosecute non-compliant employers.

• Hazard Prevention and Control: Specific regulations address machinery safety, chemical handling, and other industry-specific risks, aligning with international standards like the Globally Harmonized System (GHS).

• Occupational Health Standards: Employers may need to monitor health risks such as exposure to noise or hazardous chemicals and are responsible for reporting and investigating workplace accidents.

• Challenges and Improvements: Papua New Guinea faces challenges in enforcing safety regulations, particularly due to limited resources and the need to extend protections to informal sectors.

• Role of Inspectors: Inspectors play a crucial role in identifying hazards, assessing compliance, and educating workers and employers about safety standards.

• Compensation and Claims: The Workers Compensation Act ensures no-fault compensation for employees injured at work, covering medical expenses and lost wages, among other benefits.

Overall, while Papua New Guinea has established significant legal frameworks for workplace safety and health, ongoing challenges include enforcement, resource allocation, and extending protections to all workers.

Papua New Guinea (PNG) has a specialized Industrial Court that handles labor and employment disputes, deriving its authority from the Industrial Relations Act. This court deals with issues like interpretation and enforcement of industrial awards, breaches of the Industrial Relations Act, and appeals from lower tribunals. Arbitration is another method for resolving employment disputes, either agreed upon by parties or referred by the Minister for Labour and Industrial Relations. Arbitration panels, similar in function to the Industrial Court, offer a more flexible and cost-effective dispute resolution process.

The Industrial Court and arbitration panels commonly address disputes over wages, working conditions, unfair dismissals, discrimination, and collective bargaining issues. The primary legal framework includes the Industrial Relations Act and the Employment Act, supplemented by specific rules from the Industrial Court and the Department of Labor and Industrial Relations.

Compliance audits and inspections are crucial in PNG for ensuring adherence to laws and regulations, improving processes, and maintaining stakeholder confidence. Various entities, including government agencies and internal or external auditors, conduct these audits. Non-compliance can result in fines, legal actions, and reputational damage.

Whistleblowers in PNG are protected under the Whistleblower Act 2020, which safeguards them from retaliation and ensures confidentiality. Practical advice for whistleblowers includes documenting concerns, gathering evidence, and considering legal advice before making disclosures.

PNG has ratified key ILO conventions but faces challenges in fully harmonizing these international standards with domestic laws, particularly in enforcement and oversight, and addressing the informal economy. Recent efforts to improve labor conditions include ratifying additional ILO conventions and collaborating with the ILO to strengthen enforcement and compliance.

In Papua New Guinea (PNG), effective communication in professional settings involves understanding and adapting to several cultural nuances:

• Indirectness: Communication tends to be indirect to maintain social harmony, with people often avoiding direct refusals.
• Formality: There is a strong emphasis on hierarchy and respect, with formal titles often used in workplace interactions.
• Non-Verbal Cues: Non-verbal communication such as eye contact, body posture, and the use of silence plays a significant role in conveying respect and facilitating understanding.
• Cultural Considerations: PNG is a collectivistic society where group harmony is prioritized, and decisions are typically reached through consensus. Gift-giving is common in business to build relationships, though appropriate gifts must be chosen carefully to avoid offense.
• Business Practices: Business meetings can be lengthy and may not always stick strictly to the agenda, requiring patience and flexibility regarding time and deadlines.
• Negotiation: Building trust and rapport is crucial in negotiations, which are seen as a long-term process. Cultural sensitivity and understanding of local norms, including the influence of respected leaders or "big-men," can enhance negotiation outcomes.
• Hierarchical Structures: Decision-making is generally top-down, with senior management playing a pivotal role. Understanding the hierarchical structure and the role of gatekeepers is essential for effective communication.
• Leadership Styles: Leadership tends to be paternalistic, with leaders acting as guardians. Directive leadership is common, though transformational leadership can also be effective if it respects cultural preferences.
• Holidays and Observances: PNG observes several statutory and regional holidays that can impact business operations. Awareness and respect for these observances are important for scheduling and maintaining good relationships.

Understanding these aspects of PNG culture is key to successful professional interactions and business negotiations in the country.