Employer of Record in Maldives

Expanding your business operations into the Maldives requires a strategic approach to local employment. While establishing a dedicated local entity is one traditional method, several pathways exist for engaging talent in this unique island nation. Understanding these options is crucial for ensuring compliance and efficient growth, especially when navigating the specific legal and administrative frameworks for 2025.

When considering hiring employees in the Maldives, companies have a few primary avenues. You can opt to establish your own local legal entity, which involves a comprehensive setup process in accordance with Maldivian company laws. Alternatively, you can engage personnel through an Employer of Record (EOR) service, providing a streamlined and compliant solution. A third option is to hire individuals as independent contractors, though this requires careful consideration of classification rules to avoid misclassification risks.

• Establish a local legal entity in the Maldives, which entails company registration, obtaining necessary licenses, and setting up local payroll and HR functions.
• Utilize an Employer of Record (EOR) service, such as Rivermate, which handles all local employment responsibilities on your behalf.
• Engage individuals as independent contractors, provided their work arrangement meets the criteria for contract for services rather than employment.

How an EOR Works in Maldives

An Employer of Record simplifies global expansion by acting as the legal employer for your workforce in the Maldives, while you retain full control over day-to-day management. For 2025, this model ensures compliance with all local regulations without the need for your company to establish a local presence. An EOR takes on the following critical responsibilities:

• Payroll processing and ensuring timely salary disbursement.
• Tax withholdings and remittances to the relevant Maldivian authorities.
• Compliance with local labor laws, including employment contracts, working hours, and leave entitlements.
• Benefits administration, such as social security contributions, health insurance, and other statutory or agreed-upon benefits.
• Onboarding and offboarding processes, including all required documentation.
• HR support and guidance for both the employer and the employee, mitigating potential legal risks.

Benefits of Using an EOR in Maldives

For companies looking to tap into the Maldivian talent pool without the complexities of establishing a local entity, an EOR offers distinct advantages:

• Rapid market entry, allowing you to hire and onboard employees in the Maldives quickly.
• Reduced compliance risk by offloading the responsibility for adherence to local employment laws and tax regulations.
• Cost-efficiency, as it eliminates the significant expenses and administrative burden associated with setting up and maintaining a foreign subsidiary.
• Focus on core business activities, freeing up your internal resources from managing international HR and payroll complexities.
• Access to local expertise and a robust support system for all employment-related matters.

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

In the Maldives, the tax system is territorial, applying only to income sourced within the country, with oversight by the Maldives Inland Revenue Authority (MIRA). Employers must contribute 7% of employee wages to the Maldives Retirement Pension Scheme (MRPS), matching employee contributions, totaling 14%. Additionally, employers are responsible for withholding income tax from employees' salaries based on progressive rates:

Tax payments, including MRPS contributions and withheld income tax, are due monthly by the 15th, with annual reporting required within three months after the fiscal year. Employers must maintain payroll records for at least five years.

Foreign workers residing over 183 days are considered tax residents, but only Maldives-sourced income is taxed. Companies operating locally face a 15% corporate tax rate, and businesses with over MVR 1 million annual turnover must register for GST, which is 6% for tourism and 8% for other sectors. Double taxation treaties may offer relief for foreign workers and companies.

In the Maldives, salary levels are heavily influenced by the tourism and fishing sectors, with competitive wages for skilled roles such as resort managers (MVR 25,000–50,000/month) and chefs (MVR 15,000–35,000/month). Salaries vary by industry and experience, with key positions like software developers earning between MVR 22,000–45,000 monthly, while fishermen earn between MVR 8,000–20,000. Employers must adhere to minimum wage laws, which as of 2025 are sector-dependent: small businesses (MVR 35/hour), medium (MVR 40/hour), and large (MVR 45/hour).

Additional benefits such as annual bonuses (roughly one month's salary), housing, transportation, medical allowances, and Eid bonuses are common, enhancing total compensation. Payroll is typically processed monthly via bank transfer, with detailed payslips required by law. Salary trends forecast increased demand for skilled labor, especially in tourism and technology, leading to upward salary pressure and a focus on attractive benefits. Inflation and government policies may further influence wage adjustments in the near future.

In the Maldives, the Labour Act mandates minimum leave entitlements to promote employee well-being. Employees with at least one year of service are entitled to a minimum of 30 days of paid annual leave, which can be carried forward with mutual agreement. Upon employment termination, accrued unused leave must be paid out. Public holidays, including Islamic holidays (which vary annually), Labour Day, Victory Day, and others, are observed with paid time off.

Employees also receive paid sick leave, typically up to 30 days annually, requiring medical certification for absences over three days. Parental leave includes 60 days of paid maternity leave for women and 3 days of paid paternity leave for men; adoption leave is not legally mandated but may be offered by employers. Additional leave types like bereavement, study, and sabbaticals are available at employer discretion.

Employees in the Maldives are entitled to mandatory benefits under the Employment Act, including minimum wages, paid annual and sick leave, public holidays, maternity and paternity leave, Ramadan allowances, and termination benefits like severance pay. Standard working hours are 48 hours per week, with overtime compensation required beyond this limit. Employers must ensure compliance with these legal requirements to provide a basic safety net for employees.

In addition to mandatory benefits, many employers offer optional perks such as performance bonuses, housing and transportation allowances, health and life insurance, professional development, and recreational activities to attract and retain talent. Health insurance is commonly provided privately, with coverage levels varying and sometimes requiring employee contributions. While there is no mandatory pension scheme, some companies offer provident funds, private pension plans, or gratuity payments upon retirement.

Employers face costs related to health insurance premiums, retirement contributions, and allowances, which vary by coverage and company size. Competitive benefits packages are increasingly expected, especially from multinational corporations, to attract skilled workers. Compliance with labor laws, proper record-keeping, and offering tailored benefits are essential for legal adherence and talent retention in the Maldives.

Employment agreements in the Maldives are vital for defining the employment relationship, covering job duties, pay, working hours, and termination. Employers must adhere to the Maldives Labour Act, including mandatory clauses, permissible probation periods, and restrictions on confidentiality and non-compete clauses, to reduce disputes and ensure legal compliance.

There are two main contract types:

Properly structured agreements aligned with legal requirements are essential for legal protection and a fair working environment.

Maldives is increasingly attractive for remote work, but companies must navigate its legal and infrastructural landscape. Currently, there is no specific remote work legislation; existing labor laws apply equally to remote employees, emphasizing clear employment contracts, standard 48-hour workweeks, health and safety responsibilities, and adherence to termination laws. Employers should ensure compliance and foster a secure work environment.

Flexible work arrangements such as full-time remote, hybrid, flextime, compressed workweek, and job sharing are common options. Data protection is critical, requiring secure network access, encryption, privacy training, and compliance with the Maldives Data Protection Act. Equipment and expense policies should specify company-provided tools, reimbursement procedures, and considerations for home office setup, including potential tax implications.

Reliable connectivity and technology infrastructure are vital. Employers should provide high-speed internet access, communication tools, IT support, and cloud-based solutions to ensure seamless remote operations.

Employers in the Maldives must follow specific legal procedures for employee termination, including adherence to notice periods, severance pay, and valid grounds for dismissal. Notice periods vary by employment duration: 30 days for 1 year or less, 45 days for 1-3 years, and 60 days for over 3 years. Severance pay is mandatory for dismissals without cause or redundancy, calculated as one month's salary per year of service, with pro-rata for partial years. Employers must pay severance within 30 days of termination to avoid penalties.

Terminations can be with cause (e.g., misconduct, theft, poor performance) or without cause (e.g., redundancy, business closure). Proper documentation and evidence are essential for justified dismissals. Procedural compliance includes issuing written notices, conducting fair investigations, providing employee responses, settling all dues, and issuing formal termination letters. Employees are protected against wrongful dismissal and can file complaints with the Employment Tribunal, which can order reinstatement, compensation, or penalties. Common pitfalls include failing to observe notice periods, neglecting severance payments, or dismissing without just cause.

The work landscape in Maldives is shifting towards more independent contracting and freelancing, offering flexibility and specialized skills access for businesses, while providing autonomy for individuals. Understanding the legal, contractual, and tax frameworks is essential for compliance and successful collaborations. Misclassification between employees and independent contractors can lead to legal and financial issues. Key distinctions include control, integration, economic dependence, provision of tools, and relationship duration.

Independent contractor agreements should clearly outline the scope of work, payment terms, confidentiality, intellectual property rights, and governing law. Intellectual property created during engagements should be addressed to ensure ownership clarity. Contractors are responsible for their tax obligations, including Business Profit Tax (BPT) and Goods and Services Tax (GST), with specific registration and filing requirements.

Independent contractors are prevalent in sectors like tourism, construction, IT, media, and professional services, allowing businesses to scale and access expertise as needed. Insurance, though not always mandatory, is advisable to protect against work-related claims.

Foreign nationals seeking work in the Maldives generally need both a visa and a work permit, with employer sponsorship being a key requirement. The main visa types include:

The Employment Visa is the primary route for foreign workers, requiring employer sponsorship, while Business and Special Visas cater to short-term or project-specific activities. Navigating the process involves documentation and government approval, making compliance essential for legal employment.