Palau EOR & PEO

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Hire in Palau

An archipelago of over 300 islands in the Pacific Ocean, Palau is a diverse country with a wide range of ethnicities and religions among its 18,000-strong population. In addition to the Indigenous Palauan, officially recognized languages spoken within the country include English, Japanese, Sonsorolese, and Tobian. It has a slowly growing economy with a 2023 GDP of just over $263 million and an average monthly salary of approximately $1,500. Education is highly valued, particularly in vocational areas relevant to the country’s key industries of agriculture, fishing, and tourism.

Facts & Stats

hire employees in Palau

What Is a Palau EOR?

When a business wishes to hire workers in a nation that is not its own, it must negotiate a series of legal requirements and cultural challenges. These can include establishing a local entity within that country, learning the nuances of the local labor market, and overcoming language barriers. A Palau Employer of Record (EOR) is an expert service that acts as a local identity, recruiter, and human resources manager on behalf of those foreign businesses. For a fee, an EOR not only assumes full responsibility for all hiring obligations and liability for compliance with local regulations but also serves as a local entity.

This role as a legal local entity on behalf of foreign employers is key to what makes an EOR different from a Professional Employer Organization (PEO). While this second service is often discussed as though it is interchangeable with an EOR, it does not take on the role of a local entity, meaning any foreign business using a PEO must also go through the costly and complex process of establishing its own independently before a single worker can be hired.

Save Money And Time with A Palau EOR

What Are the Benefits of a Palau EOR?

An EOR in Palau will streamline every part of hiring and maintaining a labor force within the county on behalf of a foreign business. By working with an EOR, a global company can begin hiring immediately. It can then proceed with its business plans, knowing all recruitment and staffing needs within Palau are safe in the hands of experienced local experts.

Among the many benefits of working with a Palau EOR are:

Compliance cover: In Palau, an EOR acts as the official employer of all local workers. It then assigns each worker to roles within its foreign client’s company while maintaining responsibility for handling all employment administration. Through this arrangement, the EOR assumes full responsibility for ensuring compliance with local labor laws and regulations. In the unlikely event of a dispute, the foreign company is protected, and liability for resolution falls upon the EOR.
Best talent: As a local expert, a Palau EOR will understand the country’s labor market and how to find the best talent within it. This not only means having an established understanding of the available talent pool and how to access it, but also a thorough knowledge of what makes a competitive compensation package, where to find the right skills for each role, and what cultural barriers need to be negotiated to guarantee the best working relationships.
Speedy service: Without an EOR, the process of establishing a local identity, learning the local markets, and advertising for candidates could take months before a single employee is hired. With an EOR, a business can begin recruiting as soon as the ink on their client agreement is dry and have an entire labor force in place in a matter of weeks. These efficiencies are also replicated when it comes to hiring more people or replacing those whose contracts have expired or have been terminated.

Horizons is Best IN Class

Why Choose Horizons?

Horizons stands out as a Palau 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 Palau 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 Palau EOR

How Does a Palau EOR Work?

At its most simple, a Palau EOR is a service that connects local workers to foreign employers while navigating all the labor laws and regulations dictating how that relationship should be managed. The EOR acts as the official employer of workers within Palau, handling all of their onboarding, payroll, and entitlements, while assigning them to roles within the business of their foreign clients. Palau workers receive new opportunities while foreign businesses gain the benefits of a Palau labor force without complications.

Among the many aspects of providing that service, a Palau EOR will:

Hire your employees: The first service a Palau EOR will provide for a client is hiring workers. It does this either by advertising for applications and assessing candidates individually or by approaching those who have already registered interest in hearing about opportunities that occur. Whichever method is used, the EOR will quickly find the best talent for each role at the most competitive cost.
Manage employment contracts and onboarding: When the successful candidates for each position have been found, the Palau EOR will complete the onboarding process. This includes agreeing terms and drafting contracts alongside any other requirements stipulated by local regulations or client contracts. Once this is done, the workers are assigned roles with the client company.
Process payroll and handle employment taxes: Though local workers carry out their duties on behalf of the foreign company, the Palau EOR continues to be their official employer. This means directly handling all payroll and tax obligations throughout the employment cycle. The foreign business’ only involvement in this is to release the necessary funds and fees required by the EOR.
Administer benefits: As with most of the world, employees in Palau are entitled to a series of benefits in addition to their salaries. These might include paid leave, social security contributions, bonuses, and overtime. As their legal employer, the EOR is responsible for administering these throughout their employment.
Take care of exit procedures: When a Palau worker’s employment ends, the EOR handles all protocols regarding their exit from the contract. This might mean ensuring adequate notice is given or that severance is paid. The exact form of these procedures depends on the applicable labor laws and the contractual agreements made when the employment began.

stay compliant with Palau labor laws

Labor Laws

Regardless of the work being done for a foreign business, every employment in Palau must remain in compliance with local labor laws. These are in place to protect both employees and employers, and it is the responsibility of the EOR to ensure they are adhered to and that any disputes are handled in accordance with the relevant regulations.

Employment contract types

There are no standard contract formats required by law in Palau, but every employment contract is expected to contain certain clauses. These include the basic information about each party concerned, the compensation and benefits package, the working hours and conditions, the processes for dispute resolution and termination, and the ownership of any intellectual property created within the working relationship.

Title 13 of the Palau National Code (PNC) also states that hires involving non-resident workers should also have up to two supplementary agreements in place, a Non-Resident Worker Employment Agreement and a Non-Resident Worker Employment Agreement Between the Employer and the National Government.

Project-based

Fixed-term

Indefinite

Working hours in Palau

In Palau, there are no mandated maximum working hours or rules regarding overtime pay. Therefore, it is essential that all terms of employment are outlined, agreed upon, and detailed in signed contracts before employment begins. A general rule of thumb is that a standard Palau working week should be 40 hours, with any additional hours paid at a higher rate. Workers who feel the time they are expected to work is unreasonable are entitled to raise objections through a grievance process defined by the Division of Labor Rules and Regulations.

Overtime must be compensated in the following way:

Holiday Schedule in Palau [2024]

Workers in Palau should be given paid leave for several public holidays each year. In 2024, this totals 13 days, including New Year in January, Presidents’ Day in June, Constitution Day in July, Labor Day in September, and Independence Day in October. Other public holidays granted in Palau are Youth Day, Senior Citizens’ Day, Family Day, Thanksgiving, and Christmas.

Date	Holiday name
1 Jan, 2024	New Year’s Day
15 Mar, 2024	Youth Day
5 May, 2024	Senior Citizens Day
1 Jun, 2024	President’s Day
9 Jul, 2024	Constitution Day
2 Sep, 2024	Labor Day
1 Oct, 2024	Independence Day
24 Oct, 2024	United Nations Day
22 Nov, 2024	Family Day
28 Nov, 2024	Thanksgiving
25 Dec, 2024	Christmas Day

Paid time off

The amount of paid time off employees are eligible to receive is based on how long they have been employed at their current company:

Sick leave in Palau

Employees are entitled to between 3 and 24 months paid leave to address medical ailments and treatment. The exact amount of time off will be based on how long the employee has been with the company. Sick pay should never drop below 80% of the local minimum wage.

Workers compensation for injuries or illnesses incurred while working cover employees with legal entitlements of up to one year’s leave at full pay to receive medical treatment.

Take a look at the chart below to learn more about the specifics of sick leave standards in Palau:

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 Palau

Paid time off in instances such as maternity, paternity, and bereavement is not mandated by law in Palau. When this is to be offered, it is at the discretion of the employer unless negotiated and explicitly stated within the individual employee contract.

Annual leave in Palau

The amount of annual leave due to a worker in Palau is agreed upon at the time of hire and detailed in each individual contract. This leave is to be accrued throughout the worker’s service, depending on the hours worked. No minimum leave is guaranteed, but the maximum accrual of leave is set at 360 hours each year, no matter how many hours a Palau employee works.

Termination & severance in Palau

As with many employment processes in Palau, the exact period of notice and severance pay required to be offered when terminating an employment contract may change depending on the circumstances. In general, however, it is expected that privately contracted employees will be given 60 days written notice for no-fault terminations. Severance should then be paid in line with agreements made at the time of hire. Like many other aspects of employment in Palau, it is important this matter is considered, agreed upon, and clearly laid out from the beginning in order to prevent disputes and grievances down the line.

Palau's compulsory social security contributions

The Palau Social Security Administration oversees the collection of contributions and the distribution of benefits. Social security system provides benefits such as retirement, disability, and survivor benefits.

Certain categories of employees may be exempt from compulsory social security contributions, but these exemptions would be specified by Palauan social security regulations or employment agreements.

Palau social security for foreigners

Social security contributions in Palau generally apply to foreigners working in the country. Both local and foreign employees are required to contribute to the social security system, ensuring that they are eligible for benefits such as retirement, disability, and survivor benefits.

Individual income tax

The income tax system is relatively straightforward. 0% tax rate for the first $10,400 and 9.3% for anything above that. These rates and structures ensure a progressive tax system where higher income earners contribute a larger proportion of their earnings.

Health insurance

Palau does not have a national health insurance system. However, public health services are available through the Palau Ministry of Health. Citizens and residents can access healthcare services at public hospitals and clinics.

Many residents opt for private health insurance to cover additional medical expenses or to receive services from private healthcare providers. Private insurance plans can vary and are offered by various local and international insurance companies.

hassle-free Palauans compensation & benefits

Compensation & Benefits

Palau compensation laws

At the start of 2024, the minimum wage which must be paid to all workers in Palau is $3.50. However, proposals made by the Palauan Congress in House Bill 11-49-5S, HD2, suggest this is likely to rise in October 2024 by $0.75 to $4.25 per hour. Some wages in Palau are paid monthly, while bi-weekly payments are also a popular option.

13 month salary in Palau

No 13th-month salary payments, allowances, or bonuses are required to be paid by law in Palau. Any performance-based bonuses should be negotiated directly.

Social security for Palauans nationals

Both employers and employees are expected to contribute 7% of salaries to a mandatory social security program designed for retirement and sickness benefits. Many workers may also enter into an agreement with their employers to make top-up payments for additional health, wellness, and security services.

Palau Employer Of Record Peo

Navigation

Hire in Palau

What Is a Palau EOR?

What Are the Benefits of a Palau EOR?

Why Choose Horizons?

How Does a Palau EOR Work?

Labor Laws

Employment contract types

Working hours in Palau

Compensation & Benefits

Frequently asked questions

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Frequently asked questions

How does an EOR in Palau manage employee benefits?

An EOR will maintain a thorough knowledge of all employment laws and worker expectations when operating as an employer in Palau. This will allow it to manage any mandated and contracted employee benefits and entitlements throughout the course of any employment cycle.

What are the compliance challenges of using an EOR in Palau?

When using an EOR in Palau, the foreign business is not liable for managing compliance with local laws. As the local expert and official employer, all compliance becomes the responsibility of the EOR, and any requirement for settlement or dispute resolution will become part of their service to the foreign client.

Palau EOR & PEO

Start hiring in Palau

Simple, compliant hiring with Horizons EOR & PEO

Hire in Palau

Facts & Stats

EOR Platform

EOR Cost

Time-to-hire

Contracts

Local benefits

180+ Countries

hire employees in Palau

What Is a Palau EOR?

Save Money And Time with A Palau EOR

What Are the Benefits of a Palau EOR?

Horizons is Best IN Class

Why Choose Horizons?

Step-by-step Palau EOR

How Does a Palau EOR Work?

stay compliant with Palau 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 Palau

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 Palau

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 Palau

Annual leave in Palau

Termination & severance in Palau

Palau's compulsory social security contributions

Palau social security for foreigners

Individual income tax

Health insurance

hassle-free Palauans compensation & benefits

Compensation & Benefits

Palau compensation laws

13 month salary in Palau

Social security for Palauans nationals

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

Frequently asked questions

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