Employer of Record in Bermuda

Hiring talent in Bermuda requires a clear understanding of the local employment landscape. Companies looking to expand their global footprint into this vibrant market need to navigate specific legal and compliance requirements to ensure a smooth and compliant hiring process. Establishing an employment relationship in Bermuda involves adherence to local labor laws, payroll regulations, and benefit mandates.

Businesses have several pathways to engaging employees in Bermuda:

• Establishing a local legal entity: This option involves setting up a subsidiary or branch office, which requires significant time, investment, and ongoing administrative effort to manage local registration, corporate governance, and compliance.
• Leveraging an Employer of Record (EOR): Partnering with an EOR service like Rivermate allows companies to hire employees in Bermuda without the need to establish their own local entity, streamlining the entire process.
• Engaging independent contractors: For project-based or short-term work, companies may opt to hire individuals as independent contractors. However, it's crucial to correctly classify these workers to avoid misclassification risks under Bermuda's employment laws.

How an EOR Works in Bermuda

An Employer of Record service acts as the legal employer for your workforce in Bermuda, handling all compliance, payroll, and HR functions on your behalf, while you retain full control over day-to-day management and assignments. Specifically, in Bermuda, an EOR takes care of:

• Payroll processing and tax withholding: Ensuring accurate and timely payment of salaries, along with the correct calculation and remittance of local taxes and social insurance contributions.
• Employment contract generation: Drafting compliant employment agreements that adhere to Bermuda's labor laws and regulations.
• Benefits administration: Managing and administering statutory benefits such as paid time off, public holidays, and any mandatory insurance schemes.
• Compliance with local labor laws: Staying updated on and adhering to all aspects of the Bermuda Employment Act and related legislation, including working hours, termination procedures, and non-discrimination.
• HR support and administration: Providing ongoing human resources support, including onboarding, offboarding, and managing any employee-related inquiries or disputes in line with local practices.

Benefits of Using an EOR in Bermuda

For companies aiming to hire in Bermuda without the complexities of establishing a local entity, an EOR offers substantial advantages:

• Rapid market entry: Quickly onboard employees in Bermuda without the extensive lead time and costs associated with entity setup.
• Reduced compliance risk: Mitigate the risks of non-compliance with Bermuda's intricate tax, payroll, and labor laws, as the EOR assumes legal responsibility.
• Cost-efficiency: Avoid the significant expenses of incorporating and maintaining a local subsidiary, allowing resources to be focused on core business activities.
• Flexibility and scalability: Easily scale your team up or down in Bermuda as business needs evolve, without the administrative burden.
• Access to local expertise: Benefit from the EOR's deep understanding of Bermuda's employment regulations and local market nuances.

Rivermate's transparent pricing model eliminates complexity with a single, competitive monthly fee per employee. Unlike traditional PEO providers, our pricing in Bermuda 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 Bermuda.

Bermuda's tax system relies primarily on payroll tax and social insurance contributions, with no income, capital gains, or sales tax. Employers are responsible for deducting and remitting payroll tax and social insurance contributions for both themselves and employees. Payroll tax rates vary by remuneration band, typically structured as follows:

Social insurance contributions are also mandatory, with example weekly contributions of $35.20 each from employer and employee. Bermuda does not impose income tax, so there are no income tax withholding requirements or employee deductions beyond payroll tax and social insurance. Employers must file payroll tax and social insurance reports regularly, typically monthly or quarterly, to avoid penalties.

Foreign workers are subject to the same payroll obligations but must obtain work permits, and their tax residency status may influence additional tax considerations in their home countries. Bermuda has international tax agreements to facilitate information exchange, which companies should consider for compliance.

Bermuda offers competitive salaries influenced by high living costs and industry specialization, with notable ranges across sectors. For example, financial roles like accountants earn between BMD 70,000–110,000 annually, while legal professionals such as corporate lawyers can earn up to BMD 250,000+. The minimum wage as of 2025 is BMD 16.75/hour, with strict compliance required. Employers often supplement base pay with bonuses (performance: 5–20%, sign-on: 10–25%), allowances (housing, transportation), health insurance, and pension contributions.

Payroll is typically processed bi-weekly or monthly via direct bank transfers, with statutory deductions for taxes and social contributions. Salary trends indicate moderate increases driven by rising living costs, skills shortages, and a focus on enhanced benefits. Remote work and industry growth are shaping future compensation strategies, emphasizing flexibility and talent retention.

Bermuda's employment laws guarantee various leave types, with minimum standards outlined in the Employment Act 2000. Employees are entitled to paid annual vacation leave based on their length of service: less than 1 year earns 1 day per month, 1-3 years grants 2 weeks, 4-9 years 3 weeks, and 10+ years 4 weeks. Vacation must generally be taken within 12 months, with notice required for requests.

Public holidays are observed with paid time off, and employees working on these days typically receive double pay. Key holidays include New Year's Day, Bermuda Day, National Heroes Day, and Christmas, with observance adjustments if falling on weekends.

Sick leave provides at least 5 days of paid leave annually after qualifying employment, often requiring a medical certificate. Parental leave includes 8 weeks of maternity leave for women, paid social insurance benefits, and 1 week of paid paternity leave for fathers. Adoption leave is also available, aligning with maternity or paternity provisions.

Bermuda's employee benefits include mandatory social insurance, health insurance, payroll tax, and pension contributions. Employers must contribute at least 50% of health insurance premiums and enroll employees in pension plans with minimum contribution rates. Social insurance covers sickness, maternity, invalidity, and death benefits, funded through weekly contributions from both parties. Payroll tax, calculated as a percentage of gross payroll, supports government programs and varies by income level.

Employers should budget for these mandatory costs, which differ based on industry and company size, and stay compliant with local regulations to attract talent effectively.

Employment agreements in Bermuda are fundamental for defining the employer-employee relationship, ensuring legal compliance, and protecting business interests. They typically fall into two categories: fixed-term contracts, which specify a set duration, and indefinite-term contracts, which continue until terminated. Key clauses include details on parties, job description, start date, compensation, working hours, benefits, place of work, termination procedures, confidentiality, and governing law.

Probationary periods, usually lasting three to six months, are common but not legally mandated, allowing employers to assess employee suitability with greater flexibility for termination during this time. Confidentiality and non-compete clauses are enforceable if reasonable in scope and duration, safeguarding trade secrets and business interests. Amendments to agreements require mutual written consent, and termination must adhere to notice periods based on length of service, with potential severance pay in redundancy cases. Employers should ensure fair termination practices to avoid wrongful dismissal claims.

Bermuda is actively promoting remote work to attract global talent, with legal frameworks based on existing employment, human rights, and health and safety laws. Employers must develop clear policies, provide necessary equipment, ensure health and safety standards, and implement data protection measures compliant with Bermuda’s Personal Information Protection Act (PIPA). Employees can negotiate remote work arrangements, but employers are obligated to support them with communication, support, and ergonomic guidance.

Key practical considerations include equipment policies—either company-provided or Bring Your Own Device (BYOD)—and expense reimbursements for home office costs like internet and phone bills. Data security is critical, requiring access controls, encryption, and training. The legal and operational environment emphasizes compliance, clear policies, and safeguarding data, making Bermuda an attractive yet regulated location for remote work.

Terminating employees in Bermuda requires compliance with specific legal procedures to avoid disputes. Employers must adhere to minimum notice periods based on employee tenure, ranging from 1 week for less than 26 weeks of service to 8 weeks for employees with 10 or more years. Severance pay, typically calculated as two weeks' pay per year of service, is owed when employees are dismissed without cause, provided they have at least one year of continuous employment.

Key grounds for lawful termination include termination with cause (e.g., misconduct, breach of contract) and without cause (e.g., redundancy, restructuring). Employers must follow procedural steps such as providing written notice, maintaining documentation, paying final wages and severance, and returning company property. Employees are protected against wrongful dismissal on grounds of discrimination, procedural violations, retaliation, or constructive dismissal. Ensuring fairness and proper documentation is crucial to mitigate legal risks.

Employers should document performance issues, provide proper notice, and ensure fair treatment to avoid wrongful dismissal claims.

Bermuda's economy, driven by international business and tourism, frequently employs independent contractors and freelancers to access specialized skills and meet project-specific needs. Understanding the legal and contractual nuances of these relationships is crucial for compliance and effective collaboration. Key distinctions between employees and independent contractors include control, integration, mutuality of obligation, provision of equipment, right to substitute, financial risk, and exclusivity. Misclassification can result in significant penalties, including back payments and legal claims.

Formal contracts are essential for defining the scope of work, payment terms, and intellectual property rights. Contracts should clearly delineate the independent nature of the relationship to avoid misclassification. Intellectual property created by contractors typically defaults to the creator unless otherwise specified in the contract. Therefore, explicit IP assignment clauses are necessary to ensure client ownership.

Independent contractors in Bermuda must manage their own tax obligations, including social insurance contributions, as there is no personal income tax. They should also consider insurance needs, such as professional indemnity and public liability insurance, based on their service nature. Common sectors utilizing independent contractors include international business, insurance, legal services, technology, marketing, construction, and tourism, reflecting the demand for specialized skills and flexible staffing.

Bermuda's work permit system is essential for foreign nationals seeking employment, with several visa categories tailored to different employment scenarios. The primary work permit is employer-sponsored and tied to specific jobs, with durations varying based on the role. Short-term permits (up to six months) are available for temporary projects, while global and new business permits facilitate intra-group transfers and business establishment, respectively. Investors making significant financial contributions may qualify for an investor visa.

Key data points for employers include:

Navigating Bermuda's immigration policies requires careful planning and compliance with the Bermuda Department of Immigration's guidelines. The work permit often serves as a pathway to longer-term residency, making understanding these categories crucial for employers aiming to bring in foreign talent efficiently.