Micronesia EOR & PEO

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Hire in Micronesia

Consisting of around 2,000 islands spread across almost three million square miles of the Northwestern Pacific Ocean, the Federated States of Micronesia are home to a disparate population of just 100,000 people. It has a fluctuating but steadily growing economy and reached a total GDP of $460 million in 2023. Public services, agriculture, fisheries, and tourism are the mainstays of Micronesia’s economy though the country has recently begun exploring opportunities in renewable energy, seabed mineral mining, and other ocean-based industries.

Micronesia has a small but young labor force with varying levels of education. While many different languages and dialects are spoken, the official language of Micronesia as a whole is English. These factors, combined with limited employment options close to home, have led to a long-term trend of younger workers emigrating, though this has slowed in recent years. High demand for new employment opportunities within the islands and a competitive average wage of approximately $1,800 per month make Micronesia an attractive hiring option for global businesses.

Facts & Stats

hire employees in Micronesia

What Is a Micronesia EOR?

An Employer of Record (EOR) is an independent human resources management service. In Micronesia, an EOR allows foreign businesses to gain access to local labor pools and business markets by assisting in every element from recruiting and onboarding to payroll and the administration of leave. As part of its comprehensive suite of services, an EOR will also serve as a local entity on behalf of its clients and assume liability for compliance with local laws and regulations.

Though the two types of service are often discussed interchangeably, it is important to recognize the difference between an EOR and a Professional Employer Organization (PEO). A PEO offers many of the same services as an EOR but does so by working in partnership with its clients. It does not serve as a local entity and does not assume sole responsibility for legal compliance.

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What Are the Benefits of a Micronesia EOR?

Working with a Micronesia EOR unlocks several potential benefits for international businesses seeking to expand into the region. As a local expert, an EOR can help overcome language barriers and cultural differences.

As an alternative to forming a local legal entity, it can speed up the process of starting operations. In addition to this, some of the key benefits of an EOR in Micronesia include:

Simplifying hiring: Hiring in an unfamiliar territory can be challenging, particularly in remote territories like Micronesia, where the population is thinly spread over a large geographical area. By working with an EOR, any foreign business can simplify the hiring process by using a service that has experience in the Micronesian labor market, knows how best to access it, and understands what represents a competitive offer of employment.
Regulatory compliance: One key benefit of a Micronesia EOR is outsourcing legal responsibility to a service that can ensure regulatory compliance throughout all operations. Not only should an experienced local EOR have a thorough knowledge of existing and pending labor laws, but as the legal employer of all Micronesian workers, it will also assume full liability for adhering to the rules of operating within the region.
Cost efficiencies: Recruiting and managing a labor force in a foreign territory can be a costly and complex process. Managing human resources in-house also means committing to significant overheads that remain largely the same regardless of fluctuations in the size of the labor force. By working with an EOR, a company can pay only for the services and headcounts it requires.

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Why Choose Horizons?

Horizons stands out as a Micronesia EOR through:

A strong regional presence in the Asia-Pacific region, meaning senior management are on the ground to deal with any issues.
Client-focused infrastructure. Horizons won’t oversell you on products and services you don’t need. Horizons offers the easiest platform to compliantly hire and pay people worldwide.
Cost-effective solutions. At $499 per employee, per month, no EOR in Micronesia is more affordable. The cost is 100% transparent (onboarding, offboarding, deposit, no extra charges).
A customer-first culture. Horizons is an efficient bootstrapped company. It is not an externally-funded company burning investor cash to aggressively acquire new clients. Horizons is the only EOR that grows with its customer, reflecting the level of care and personal attention provided to each customer. Horizons will carefully advise on the best setup in each country: the type of contract needed, how to structure your benefits, and how to offboard a person while minimizing the risk of conflicts and extra cost
A long-term partnership. Horizons is the only EOR platform with a recruitment arm — a direct response to client demand. If any employee is leaving, or if our clients want to explore a new country, Horizons can recruit new candidates directly for the client. Horizons is:
- The only EOR doing this in-house — no subcontracting
- The only EOR doing this without a retainer — clients are only charged upon success
- The only EOR charging just a 2% fee per month.

Step-by-step Micronesia EOR

How Does a Micronesia EOR Work?

A Micronesia EOR works as an outsourcing service for international businesses wishing to establish a presence and manage a labor force in the region. While the specific arrangement between every EOR and client will be different, most include several key tasks. These include:

Hire your employees: When a foreign business agrees terms with an EOR to establish a labor force in Micronesia, the first step is recruitment. The EOR uses its local expertise to source the best available talent at the most competitive cost, either by consulting its existing roster of talent or issuing fresh advertising for the required roles.
Manage employment contracts and onboarding: After the successful applicants have been recruited, the EOR will firm up the legal arrangements by drafting and issuing contracts of employment. Once signed, the EOR will then manage all onboarding processes until each worker is ready to be handed over and begin working with the client business.
Process payroll and handle employment taxes: Throughout the course of each worker’s employment, an EOR will fulfill its role as official employer by processing payroll, remitting taxes, and handling any social security contributions. While the client business is kept informed at all stages, its only direct involvement is to ensure funds are made available for the EOR to distribute.
Administer benefits: Employees in Micronesia are sometimes entitled to further benefits beyond a simple salary. This can include bonuses, health plans, annual leave, pension contributions, and more. Administering what benefits are due to each worker is also an EOR’s responsibility and should be completed along with payroll.
Take care of exit procedures: Just as an EOR is responsible for recruitment, so must it take care of the termination process when the working relationship reaches its end. This includes ensuring notice and severance pay are issued in accordance with local regulations and the company policy of the client business.

stay compliant with Micronesia labor laws

Labor Laws

A key service provided by an EOR in Micronesia is managing compliance with the employment regulations of the region. In order to meet this responsibility, an EOR should be wholly familiar with all applicable labor laws.

Employment contract types

Labor regulations in the Federated States of Micronesia are made additionally complicated by the fact the territory comprises four different states – Yap, Chuuk, Pohnpei, and Kosrae – each with its own framework of rules and requirements. Whichever state(s) an international business operates in, using written contracts to confirm employment is recommended as best practice.

Project-based

Fixed-term

Indefinite

Working hours in Micronesia

In general, a regular work week in Micronesia is considered to be 40 hours over any number of days. However, this is only a legal requirement in the public sector. For private sector employees, there are no statutory limits on working hours. Therefore, it is vital these details are negotiated, agreed, and included in every contract of employment. Any overtime expectations, rights of refusal, and rates should also be determined before a contract is signed.

Overtime must be compensated in the following way:

Holiday Schedule in Micronesia [2024]

Employees in Micronesia are entitled to paid time off for several public holidays each year. These include six dates which are common to all Federated States of Micronesia, plus up to two more specific to each of the four states.

Date	Holiday name
1 Jan, 2024	New Year’s Day
11 Jan, 2024	Kosrae Constitution Day
1 Mar – 2 Mar	Yap Day
31 Mar, 2024	Culture Day
29 Mar, 2024	Good Friday
21 Aug, 2024	Gospel Day
8 Sep, 2024	Kosrae Liberation Day
11 Sep, 2024	Pohnpei Liberation Day
1 Oct, 2024	Chuuk Constitution Day
24 Oct, 2024	United Nations Day
3 Nov, 2024	Independence Day
8 Nov, 2024	Pohnpei Constitution Day
11 Nov, 2024	Veterans Day
23 Nov, 2024	Presidents Day
28 Nov, 2024	Thanksgiving
24 Dec, 2024	Yap Constitution Day
25 Dec, 2024	Christmas Day

Paid time off

Other forms of paid time off in Micronesia, outlined by the COM-FSM Board Policy 6010, include maternity leave, bereavement leave, and, in some circumstances, time off for a sabbatical. The specifics of entitlement for each depend on the type of employment and the state by which it is governed. It is recommended that all provisions for paid time off be detailed in employment contracts.

Sick leave in Micronesia

Micronesian workers who are suffering from sickness or injury are also entitled to some time off with pay. Again, the details and rules governing this can vary dramatically and should be formally agreed upon by contract before employment commences.

Less than 6 months of sick leave:

(percentage of regular wages owed to the employee)

Over 6 months of sick leave

In order for employees to receive the full wages due to them, workers must present a valid medical certificate from a certified doctor to their employer.

Maternity leave in Micronesia

In Micronesia, maternity and paternity leave policies are not as extensively regulated by a national labor code as in some other countries.

Maternity leave for female employees typically ranges between 6 to 12 weeks. This is the most common practice, with some employers offering more generous leave depending on the contract or employer policies.

Paid maternity leave is not universally guaranteed by law in Micronesia, so it depends on the employer. Government employees or workers in well-established companies may be entitled to paid maternity leave, but in other cases, it might be unpaid or only partially paid.

Annual leave in Micronesia

In addition to public holidays, workers in Micronesia are entitled to annual vacation leave as determined by the College of Micronesia-FSM Board Policy 6010. The amount of annual leave a worker can take depends on the length of service. Minimum mandatory leave begins at 13 days per year during the first five years of service. It then rises to 19.5 days per year up to and including the 10th continuous year of service. Finally, workers serving for ten years or more are offered a minimum of 26 days annual leave plus public holidays each year.

Termination & severance in Micronesia

Another reason that proper employment contracts are essential for both employers and employees in Micronesia is the Federation’s employment-at-will doctrine. This means there is no nationally recognized regulation dictating mandatory notice periods or severance pay. If it is not properly detailed in the contract, all parties are able to walk away from a labor arrangement without notice or compensation. For the protection of both sides, it is vital termination and severance policies are stated clearly in each employee’s contract.

Micronesia's compulsory social security contributions

The compulsory social security contributions are managed by the Social Security Administration of the Federated States of Micronesia (FSM). The contributions fund retirement benefits, disability benefits, and survivor benefits for workers in the country.

Micronesia social security for foreigners

Foreign workers employed in Micronesia are also required to contribute to the social security system if they are working under local contracts. Their contributions are managed in the same way as for local employees.

Individual income tax

Micronesia employs a progressive tax rate system for individual income. Rates ranges from 10% to 30% depending on the salary bracket.

Health insurance

Micronesia does not have a universal or comprehensive national health insurance program that covers all residents. Instead, health services are typically paid for out-of-pocket or through private insurance.

Some basic health coverage might be available through the social security system, particularly for retirees or those with disability benefits, but this coverage is limited.

hassle-free Micronesian compensation & benefits

Compensation & Benefits

Micronesia compensation laws

While public sector workers are protected by minimum wage laws, which guarantee payment of between $1.42 and $2.65 an hour, depending on the state of employment, private sector workers receive no such rights. The only exception is in Pohnpei, where the minimum wage for all employment is $1.75 per hour.

13 month salary in Micronesia

Micronesia has no legal mandate for a 13th-month salary bonus or any other guaranteed bonus payments.

Social security for Micronesian nationals

Rather than pay a percentage of every worker’s salary, as is common in most territories, social security contributions in Micronesia are expected to made at 7.5% of twice the salary of the highest-paid employee every quarter. This payment is currently required to be based on a minimum quarterly salary of $300 and a maximum of $7,000. However, it is set to rise by $1,000 each year to reach a new upper limit of $10,000 from 2028.

Micronesia Employer Of Record Peo

Navigation

Hire in Micronesia

What Is a Micronesia EOR?

What Are the Benefits of a Micronesia EOR?

Why Choose Horizons?

How Does a Micronesia EOR Work?

Labor Laws

Employment contract types

Working hours in Micronesia

Compensation & Benefits

Frequently asked questions

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Frequently asked questions

How does an EOR in Micronesia ensure compliance with local labor laws?

An EOR in Micronesia is an experienced local service that has a full understanding of local labor laws, both at a federal level and for each individual state. By maintaining this knowledge and staying abreast of all developments, it is excellently positioned to ensure compliance with local regulations. In addition, an EOR serves as the legal employer of workers on behalf of its foreign clients and so accepts liability for any compliance failures that do arise.

What are the benefits of using an EOR for hiring in Micronesia?

Working with an EOR for hiring in Micronesia allows a business direct access to the best local talent via an agency that knows the complexities of the region. An EOR also serves as a legal local entity, saving the time-consuming process of establishing this and allowing hiring to commence within days or weeks rather than after months or even years.

Micronesia EOR & PEO

Start hiring in Micronesia

Simple, compliant hiring with Horizons EOR & PEO

Hire in Micronesia

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hire employees in Micronesia

What Is a Micronesia EOR?

Save Money And Time with A Micronesia EOR

What Are the Benefits of a Micronesia EOR?

Horizons is Best IN Class

Why Choose Horizons?

Step-by-step Micronesia EOR

How Does a Micronesia EOR Work?

stay compliant with Micronesia labor laws

Labor Laws

Employment contract types

Project-based

Probationary period

Termination

Severance

Fixed-term

Probationary period

Termination notice period

Severance

Indefinite

Probationary period

Termination notice period

Severance

Working hours in Micronesia

Overtime must be compensated in the following way:

For a regular workday:

For a rest day:

For a statutory holiday:

Paid time off

Under 1 year of employment

1-10 years of employment

10-20 years of employment

20+ years of employment

Sick leave in Micronesia

Less than 6 months of sick leave:

Under 1 year of employment

1-10 years of employment

10-20 years of employment

20+ years of employment

Over 6 months of sick leave

Under 1 year of employment

1-3 years of employment

3+ years of employment

Maternity leave in Micronesia

Annual leave in Micronesia

Termination & severance in Micronesia

Micronesia's compulsory social security contributions

Micronesia social security for foreigners

Individual income tax

Health insurance

hassle-free Micronesian compensation & benefits

Compensation & Benefits

Micronesia compensation laws

13 month salary in Micronesia

Social security for Micronesian nationals

Hire in Micronesia in 24h without your own local entity.

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