Timor-Leste EOR & PEO

An EOR works by acting as a sole employer without taking over the management and performance of employees. This way, businesses are protected against violating the local labor laws that govern hiring, benefits, the minimum wage, and contract termination. The EOR in Timor-Leste provides HR services such as processing payroll and administering benefits, but they focus on keeping businesses compliant in the following ways:

1. Hire your employees: Employees in Timor-Leste are workers who are looking for jobs with an international employer. The EOR assists foreign businesses by helping recruit employees who are part of the EOR’s pool of skilled and talented individuals. Based on the requirements issued by the employer, the Timor-Leste EOR will negotiate the terms and benefits of the contract with the potential employee concerning leave, wages, and working hours.
2. Manage employment contracts and onboarding: In Timor-Leste, employees can receive a written or verbal contract, depending on the terms of employment. Individual employment contracts are common practice and outline the employee’s duties and benefits. The employer will negotiate the employment conditions to be included in the contract, but the worker will sign an agreement with the EOR, who is considered the legal employer in the country.
   
   In addition to overseeing employment contracts, an EOR helps with the onboarding process. Discussing benefits and including mandatory conditions such as hours worked and being aware of the country’s minimum wage can make employees feel comfortable and ensure compliance with labor law.
3. Process payroll and handle employment taxes: Employees who are hired under a fixed-term contract must receive remuneration at the same time every month. Workers who are hired under variable terms are typically paid in two parts; however, the interval between payments cannot exceed one month. An EOR will ensure that payroll is processed on time to prevent disgruntled employees and issues with employment regulations.
   
   In addition to payroll, employment taxes, such as income tax are managed. Employees who are residents of Timor-Leste must pay an income tax rate of 10% for earnings over $6,000. Earnings below $6000 will not be eligible for income tax.
4. Administer benefits: Employee benefits in Timor-Leste include additional compensation for night work, annual bonuses, and monthly social security contributions of 6% of their wages toward the scheme. Employers are educated on mandatory benefits for workers by an EOR, and these benefits are issued to employees within the stipulated time frame.
5. Take care of exit procedures: There may come a time when the employer has to restructure the workforce or is dissatisfied with an employee’s performance. This calls for exit procedures, such as terminating an employment contract. A Timor-Leste EOR will guide the company on the legal steps that must be followed regarding written notices and severance pay. The reasons for rescinding an employment contract are described in the Labor Code of 2012.