Cabo Verde

Cabo Verde, an archipelago nation off the western coast of Africa, consists of ten islands with a rugged, volcanic terrain and a dry tropical climate. Initially uninhabited, the islands were discovered by Portuguese navigators around 1456 and became a significant hub in the transatlantic slave trade. After enduring severe droughts and famines, Cabo Verde gained independence from Portugal in 1975.

Today, Cabo Verde is a lower-middle-income country with an economy driven by tourism, services, and fisheries. The population is predominantly of mixed African and European descent, and there is a significant Cabo Verdean diaspora, mainly in the United States and Portugal, whose remittances play a crucial role in the economy. Despite challenges like limited rainfall and vulnerability to climate change, the nation is working towards sustainable development, including ambitions for 100% renewable energy.

Culturally, Cabo Verde is known for its Creole heritage, blending African and Portuguese influences, with music, particularly the genre Morna, playing a central role. Portuguese is the official language, but Cabo Verdean Creole is widely spoken. The country values education, though more skilled workforce development is needed to meet market demands.

In the workplace, Cabo Verdeans prefer a relaxed pace with a focus on relationship-building, often using indirect communication to maintain harmony. The economy is service-oriented, with tourism as a backbone, contributing significantly to GDP. Other important sectors include fisheries, government services, and emerging sectors like renewable energy and ICT.

In Cabo Verde, employers have multiple tax responsibilities including withholding 8.5% of an employee's gross income for social security, with an additional 16% contributed by the employer. Other withholdings include taxes on payments to non-residents such as interest, royalties, dividends, and services, with varying rates. Employers may also face customs duties, special consumption taxes, property taxes, stamp duty, ecologic charges, and tourism taxes based on their business activities.

Employees face mandatory deductions including income tax and social security contributions, with income tax based on a progressive rate structure. Other potential deductions from salaries could include union dues. The standard VAT rate in Cabo Verde is 15%, with certain services exempt, and a "reverse charge" mechanism applies to imported services.

Cabo Verde offers tax incentives to encourage investment, including reduced corporate income tax rates, emigrant investment incentives, and sector-specific benefits for tourism, industrial activities, renewable energy, and IT and communications sectors. Additional incentives include employment creation deductions and foreign tax credits. It's crucial for businesses to consult the latest tax code or a tax advisor to ensure compliance and understand the full scope of tax responsibilities and incentives.

• Cabo Verde Labor Laws:

  • Employees are entitled to 22 working days of paid annual leave per year, with eligibility starting after the probationary period or a specified service period.
  • Vacation leave accrues throughout the year and cannot be taken in advance, with scheduling done by mutual agreement between employer and employee.
  • Unused vacation leave can be carried over to the following year within certain limits.

• Public Holidays in Cabo Verde:

  • Secular Holidays: Include New Year's Day, National Heroes Day, Democracy and Freedom Day, Carnival, Women's Day, Labor Day, Children's Day, Independence Day, Nationality Day, and Christmas Day.
  • Religious Holidays: Include Ash Wednesday, Good Friday, Easter Sunday, Assumption Day, and All Saints' Day.

• Other Types of Leave:

  • Sick Leave: Up to 30 days per year with a valid medical certificate, extendable upon further evaluation.
  • Maternity Leave: 60 consecutive days of fully paid leave, contingent on social security contributions.
  • Paternity Leave: 5 consecutive working days of paid leave.
  • Additional leave includes justified absence for family bereavements and discretionary leave for significant family events.

In Cabo Verde, employees are entitled to various mandatory benefits including 22 days of paid annual leave, paid national holidays, and up to 60 days of maternity leave with 80% pay. There is no statutory paternity leave, but it may be available through collective agreements. Sick leave is available for up to 30 days with a medical certificate. The social security system provides several benefits such as pensions and disability benefits, funded by employer contributions. Additionally, employers may offer optional benefits like private health insurance, wellness programs, financial bonuses, childcare assistance, and flexible work arrangements to enhance employee satisfaction and competitiveness. The public health system offers basic coverage, while private health insurance, not mandated by law, provides more comprehensive coverage. Retirement planning includes both public social security pensions and optional private pension plans, with the latter potentially offering higher returns and tax benefits. Employer-sponsored pension plans are less common but may be available in larger companies.

In Cabo Verde, employment termination and anti-discrimination laws are comprehensively outlined in the Labour Code. Termination can be based on objective grounds such as economic reasons or job extinction, or subjective grounds like worker misconduct or inability. Notice periods vary by contract type and length of service, with severance pay depending on the grounds for dismissal.

The Labour Code also enforces strict anti-discrimination policies protecting characteristics such as race, gender, religion, and disability. Employers are required to implement anti-discrimination policies, provide training, and establish grievance procedures.

Additionally, the Labour Code regulates work hours, rest periods, and ergonomic requirements to ensure employee well-being. The standard workweek is capped at 44 hours, with regulations on overtime and mandatory rest periods.

Employers must adhere to Occupational Safety and Health (OSH) regulations, conducting risk assessments and implementing preventive measures. Employees have rights to a safe work environment, necessary training, and can refuse unsafe work.

Enforcement of these regulations is managed by the Ministry of Labour and Employment and the Labour Inspectorate, which conduct inspections and can impose penalties for non-compliance.

In Cabo Verde, there are two main types of employment contracts: Fixed-Term and Uncertain-Term.

Fixed-Term Employment Contract:

• Predetermined end date, suitable for temporary or seasonal work.
• Maximum duration of five years, including renewals.
• Requires explicit reasoning for the fixed term.
• Entitles employees to compensation upon contract expiry.

Uncertain-Term Employment Contract:

• No predetermined end date, providing greater job security.
• Standard probation period of two months, extendable to six months.
• Minimum of 22 paid vacation days annually.

General Contractual Elements:

• Written contracts in Portuguese are recommended, detailing salary, benefits, working hours, leave policies, and termination clauses.
• Includes compensation for overtime and outlines leave policies for various types of leave.
• Addresses intellectual property rights and includes termination clauses adhering to local labor laws.

Probation Periods:

• Fixed-term contracts have a maximum probation of two months.
• Uncertain-term contracts typically have a two-month probation, extendable to six months under certain conditions.
• Probation periods allow for mutual evaluation by the employer and employee.

Confidentiality and Non-Compete Clauses:

• Confidentiality clauses prevent the disclosure of sensitive information, with obligations potentially extending beyond employment.
• Non-compete clauses restrict post-employment competition, enforceable if reasonable in scope and duration.

Overall, employment contracts in Cabo Verde are governed by the Labour Code, which provides frameworks for various aspects of employment, including probationary periods, confidentiality, and competition.

Cabo Verde has established itself as a key player in Africa's remote work sector, supported by a comprehensive legal framework and attractive environment. The country introduced the Cabo Verde Remote Working Program in December 2020, offering a six-month renewable visa for remote workers, which includes tax exemptions and a simplified visa process. Despite advancements, the technological infrastructure still needs enhancement, particularly in internet reliability and digital literacy.

Employers in Cabo Verde must adapt employment contracts to specify remote work details and may choose to provide necessary equipment and cover internet costs. The labor laws also accommodate flexible work arrangements like part-time work, flexitime, and job sharing, though these are less regulated and may require legal consultation to ensure compliance.

Data protection is a critical aspect, with the country adhering to GDPR principles. Employers must implement robust security measures and be transparent about data handling practices. Remote workers have rights to access, correct, or request deletion of their personal data. Best practices for securing data include using encrypted platforms, implementing access controls, and training employees on data protection.

Cabo Verde's national labor legislation stipulates a standard workweek of 44 hours, with a daily limit of 8 hours, extendable by one hour if compensated with extra rest. For workers aged 16 to 18, the workweek is reduced to 38 hours and 7 hours per day. Overtime is regulated, with daily overtime capped at 2 hours and annual overtime limited to 160 hours, extendable to 300 hours with employee consent. Overtime pay must be at least 50% above the regular wage. Workers are entitled to a mandatory 30-minute break after 6 hours, and a minimum of one rest day per week, typically Sunday. Night and weekend work are subject to additional premiums, although specifics may vary and are often outlined in employment contracts or collective bargaining agreements.

Understanding market competitive salaries in Cabo Verde involves considering factors such as skill and experience, industry, location, and education. Salaries generally exceed the minimum wage, and resources like job boards, salary surveys, and government statistics can provide insights into market rates.

The national minimum wage is set by the government after consultations with employer and worker representatives. The actual minimum wage may vary by sector or region due to collective bargaining agreements. Additional compensation in Cabo Verde includes performance bonuses, industry-specific allowances, and standard allowances like transportation and meals.

Employers must adhere to payroll guidelines set by the Cabo Verde Labor Code, ensuring salaries are paid at intervals not exceeding 31 days. The standard workweek is 38 hours, with overtime compensated at a minimum of 50% above the regular pay rate.

In Cabo Verde, the Labour Code (Lei n.º 2/2007) governs employment termination, specifying notice periods and severance pay conditions based on the nature of the contract and the party initiating termination.

Notice Periods:

• Employer-initiated termination (Fixed-Term Contracts): Minimum of 10 days notice required.
• Employee-initiated termination (Indefinite-Term Contracts): Notice ranges from 15 days to a maximum of 2 months, increasing by 15 days for each year of service.

Exceptions to Notice Periods:

• No notice is needed for mutual agreement terminations or upon reaching retirement age.

Severance Pay:

• Entitled to employees dismissed for economic, technological, structural reasons, or without valid cause, calculated as one month's salary per year of service.

Types of Termination:

• Includes dismissal with cause, redundancy, resignation, mutual agreement, and expiration of fixed-term contracts.

Procedures:

• Dismissal with Cause: Requires written notice and a chance for the employee to respond.
• Redundancy: Involves consultation with workers' representatives and fair selection criteria.
• Resignation: Requires written notice respecting the stipulated notice period.
• Mutual Agreement: Needs a formal written agreement detailing termination terms.

Important Considerations:

• Notice periods and severance entitlements vary, and some collective agreements may offer better terms than the legal minimum. Employees terminated for valid reasons like misconduct are not entitled to severance pay.

In Cabo Verde, the labor law distinguishes between employees and contractors, impacting their tax, social security, and rights. Employees are under employer control, dependent on their employer for income, and integrated into the business using the employer's resources. Contractors operate independently, often serving multiple clients, and use their own tools.

The Cabo Verde Labor Code governs employment relationships, detailing obligations like salary, social security, and employee rights such as minimum wage and safety. Contractor relationships fall under the Civil Code, emphasizing the importance of written contracts to define work scope, compensation, terms, and confidentiality.

Contract negotiation in Cabo Verde should focus on clear expectations, fair compensation, and dispute resolution. Key industries for contractors include IT, tourism, creative sectors, and marketing.

Intellectual property (IP) created by contractors typically belongs to the client unless otherwise stated in a contract. Contractors should protect their IP through copyrights, trademarks, and NDAs.

Freelancers must handle their tax obligations and may opt into social security for benefits. They should consider insurance options like health, professional liability, and life insurance to mitigate risks. Regular consultation with legal and tax professionals is advised to navigate these complexities effectively.

Cabo Verde's health and safety regulations are primarily governed by the Labor Code (Código Laboral), Law No. 85/VI/2008, which outlines the responsibilities and rights of both employers and employees. Employers are mandated to ensure a safe working environment by conducting risk assessments, providing training, and supplying personal protective equipment (PPE). They must also report work-related accidents and illnesses and may need to conduct health surveillance in certain industries.

Employees are responsible for following safety procedures, using equipment properly, and reporting hazards. The General Directorate of Labor and the Labor Inspectorate are key agencies overseeing the enforcement of these regulations.

The Labor Code also addresses specific health and safety issues such as ergonomic risks, hazardous substances, and sectors with increased risks like construction and agriculture. Employers must comply with occupational health and safety (OHS) standards that align with international guidelines, including hazard identification, accident prevention, and emergency preparedness.

Workplace inspections by the General Labor Inspectorate (IGT) play a crucial role in ensuring compliance with health and safety standards. These inspections can be scheduled or unannounced and involve a thorough review of workplace conditions, equipment safety, and hazard management.

Employers must report serious accidents and fatalities immediately to the IGT, and they are required to provide occupational accident insurance for employees, covering medical expenses and compensation for injuries or death.

Overall, Cabo Verde emphasizes a proactive approach to workplace safety, requiring both preventive measures by employers and active participation by employees in maintaining a safe working environment.

Cabo Verde's labor dispute resolution system includes specialized labor courts and voluntary arbitration mechanisms. Labor courts, part of the judicial system, handle individual disputes related to employment contracts, work-related accidents, and social security contributions. The arbitration process, used for both collective and individual disputes, involves parties selecting an arbitrator to issue a binding decision.

The Labor Code is the primary law governing labor relations, supported by the Law on Arbitration and the Judicial Organization Law. Compliance audits and inspections are conducted by various government agencies, including the General Inspectorate of Labor and the Tax Authority, to ensure adherence to labor, tax, and sector-specific regulations.

Non-compliance can lead to fines, administrative penalties, and even criminal prosecution. Reporting mechanisms for legal violations include government agencies, an ombudsman, and an anti-corruption hotline. Whistleblower protections exist but are limited and primarily focused on labor violations and corruption.

Cabo Verde has ratified several International Labour Organization (ILO) conventions, influencing its domestic labor legislation. The Labor Code and the Constitution uphold fundamental labor rights, though challenges like child labor and gender disparities in the labor market persist. Advocacy efforts continue to strengthen whistleblower protections and align national laws with international labor standards.

• Indirect Communication: In Cabo Verde, people often communicate indirectly, using phrases like "talvez" (maybe) or "não sei" (I don't know) to avoid direct refusal. Trust and rapport are prioritized before business discussions.

• Formality in the Workplace: The work environment is traditionally formal with a respect for hierarchy, where superiors are addressed formally. However, there is a shift towards more casual interactions, particularly in modern sectors and among the younger workforce.

• Non-Verbal Cues: Non-verbal communication such as gestures, facial expressions, and eye contact is significant in Cabo Verde. Eye contact denotes respect, while physical touch among colleagues indicates warmth.

• Negotiation Practices: Relationship building is crucial in negotiations, with a focus on long-term partnerships rather than immediate gains. Indirect language and non-verbal cues are essential in these discussions.

• Hierarchical Business Structure: The business culture is hierarchical, respecting authority and following a top-down approach in decision-making. However, there is a gradual shift towards more participative leadership styles influenced by global trends.

• National Holidays and Cultural Observances: Public holidays like New Year's Day, Democracy Day, and Independence Day significantly impact business operations, with closures common. Understanding these can aid in planning and scheduling in the Cabo Verdean business context.

• Cultural Sensitivity: Maintaining respect and patience during negotiations and interactions is vital, considering the cultural emphasis on hierarchy and consensus.