Employer of Record Guide in Papua New Guinea
Expanding your team to Papua New Guinea opens doors to a growing Pacific market, but navigating local employment laws and cultural nuances requires careful planning. Our comprehensive guide helps you hire compliantly while tapping into PNG's emerging talent pool across key industries like mining, agriculture, and technology.
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Papua New Guinea's economy is driven by natural resources and agriculture, with growing demand for technical skills in cybersecurity, engineering, and software development. Understanding the local market dynamics—from Port Moresby's business hub to regional wage variations—is essential for successful talent acquisition in this diverse nation.
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Your EOR guide in Papua New Guinea
From minimum wage structures that vary by region to complex tax brackets and mandatory superannuation contributions, PNG's employment framework requires careful attention to detail. This guide breaks down the essential compliance requirements, payroll obligations, and leave entitlements you need to manage your Papua New Guinea workforce effectively.
Minimum Wage
Papua New Guinea operates under the Employment Act of 1978, with minimum wage rates varying by sector and region.
| Category | Minimum Wage (PGK/hour) | Effective Date |
|---|---|---|
| Urban Areas | K3.50 | January 1, 2024 |
| Rural Areas | K2.80 | January 1, 2024 |
| Agricultural Workers | K2.50 | January 1, 2024 |
| Domestic Workers | K2.20 | January 1, 2024 |
Note: Rates are subject to annual review by the Minimum Wages Board and may vary by province.
Payroll Cycle
- Fortnightly: Most common (26 pay periods per year)
- Monthly: 12 pay periods per year
- Weekly: Less common but permitted
Note: Payment must be made in Papua New Guinea Kina (PGK) unless otherwise agreed in writing.
Individual Income Tax
| Income Bracket (PGK) | Tax Rate |
|---|---|
| Up to K12,500 | 0% |
| K12,501 to K20,000 | 22% |
| K20,001 to K33,000 | 30% |
| K33,001 to K70,000 | 35% |
| Over K70,000 | 42% |
Tax Residency Criteria
Individuals who reside in Papua New Guinea for 183 days or more in a tax year are considered tax residents and must pay PNG income tax on their worldwide income.
Employer Payroll Contributions
Employers in Papua New Guinea must contribute to several mandatory schemes:
| Contribution Type | Employer Rate | Employee Rate | Total |
|---|---|---|---|
| Superannuation | 8.4% | 6% | 14.4% |
| Workers' Compensation | 1-3% (varies by industry) | 0% | 1-3% |
| Estimated Total Employer Cost | ~9.4-11.4% | 6% | ~15.4-17.4% |
Note: Superannuation contributions are mandatory for all employees earning more than K200 per month.
Working Hours
The standard work schedule in Papua New Guinea is 8 hours per day, 40 hours per week, Monday through Friday.
Daily Limits:
- Maximum 8 hours per day (excluding meal breaks)
- Maximum 48 hours per week including overtime
Exempt Categories:
- Senior management positions
- Certain professional roles
- Agricultural workers (seasonal variations apply)
Overtime Pay
- Rate: 1.5× regular hourly rate for hours worked beyond 8 per day or 40 per week
- Maximum: 8 hours of overtime per week without special permits
- Weekend Work: Double time (2×) for work on Sundays and public holidays
- Night Shift: Additional 15% premium for work between 6 PM and 6 AM
Employment Classifications
- Full-time: 40 hours per week with full benefits
- Part-time: Less than 40 hours per week, pro-rated benefits
- Casual: Irregular hours, higher hourly rate (typically 25% loading)
- Contract: Fixed-term employment with specified end date
Annual Leave
- Entitlement: 3 weeks (15 working days) per year after 12 months of continuous service
- Accrual: 1.25 days per month of service
- Loading: 17.5% annual leave loading on base salary
- Payout: Must be paid out on termination if unused
Sick Leave
- Entitlement: 2 weeks (10 working days) per year
- Accumulation: Up to 13 weeks maximum
- Medical Certificate: Required for absences exceeding 3 consecutive days
- Payment: Full pay for first 10 days, then reduced rates
Maternity Leave
- Duration: 6 weeks before birth and 6 weeks after birth (12 weeks total)
- Payment: Full pay for 6 weeks, unpaid for remaining period
- Job Protection: Position must be held open for return
- Eligibility: Must have worked 6 months continuously
Paternity Leave
- Duration: 2 weeks
- Payment: Unpaid (unless company policy provides otherwise)
- Timing: Must be taken within 8 weeks of birth
Bereavement Leave
- Immediate Family: 3 days paid leave
- Extended Family: 1 day paid leave
- Cultural Obligations: Additional unpaid leave may be granted for traditional ceremonies
Long Service Leave
- Entitlement: 2 months after 10 years of continuous service
- Additional: 1 month for each subsequent 5 years
- Payment: Full pay during leave period
Summary
| Leave Type | Duration | Paid? | Funding |
|---|---|---|---|
| Annual Leave | 3 weeks/year | Yes + 17.5% loading | Employer |
| Sick Leave | 2 weeks/year | Yes (first 10 days) | Employer |
| Maternity Leave | 12 weeks | Partially (6 weeks) | Employer |
| Paternity Leave | 2 weeks | No | — |
| Bereavement | 1-3 days | Yes | Employer |
| Long Service | 2 months (after 10 years) | Yes | Employer |
Termination Types
Summary Dismissal (With Cause):
- Immediate termination without notice or pay
- Must involve serious misconduct (theft, violence, gross negligence)
- Requires proper investigation and documentation
Termination Without Cause:
- Requires notice period or payment in lieu
- Must not be discriminatory or in bad faith
Notice Period Requirements
| Length of Employment | Notice Period |
|---|---|
| Less than 1 month | 1 day |
| 1-6 months | 1 week |
| 6 months - 2 years | 2 weeks |
| 2-5 years | 4 weeks |
| 5-10 years | 6 weeks |
| Over 10 years | 8 weeks |
Severance Pay
Redundancy Pay:
- 2 weeks' pay for each year of service (minimum 4 weeks)
- Maximum of 52 weeks' pay
- Only applies to redundancy situations, not misconduct dismissals
Final Pay Requirements
- Must be paid within 7 days of termination
- Includes all outstanding wages, annual leave, and long service leave
- Superannuation contributions must be finalised
Probationary Periods
- Duration: Up to 6 months for most positions
- Notice: 1 week's notice required during probation
- Restrictions: Cannot be used to avoid employment obligations
National Public Holidays
| Holiday | Date |
|---|---|
| New Year's Day | January 1 |
| Good Friday | Varies (March/April) |
| Easter Saturday | Varies (March/April) |
| Easter Monday | Varies (March/April) |
| Queen's Birthday | Second Monday in June |
| Independence Day | September 16 |
| Christmas Day | December 25 |
| Boxing Day | December 26 |
Provincial Holidays
Each province may declare additional holidays:
- National Capital District: Moresby Day
- Western Province: Western Day
- Morobe Province: Morobe Day
Note: Provincial holidays vary and may not be observed nationwide.
Holiday Pay Rules
- Eligibility: Must have worked the day before and after the holiday
- Rate: Normal day's pay for public holidays not worked
- Working on Holidays: Double time (2×) plus day off in lieu
Required Documents
Employment Contract Must Include:
- Job title and description
- Salary and benefits
- Working hours and location
- Termination clauses
- Superannuation arrangements
Government Forms:
- Tax File Number (TFN) application
- Superannuation fund nomination
- Work permit (for foreign workers)
Work Permits for Foreign Workers
Categories:
- Temporary Work Permit: Up to 2 years
- Resident Work Permit: For permanent residents
- Investor Permit: For business investors
Requirements:
- Skills shortage certification
- Labour market testing
- Medical examination
- Police clearance
Background Checks
- Criminal History: Permitted for relevant positions
- Employment Verification: Standard practice
- Educational Qualifications: Must be verified for professional roles
- Medical Examinations: Required for certain industries
Banking and Payment Setup
- Employee must have PNG bank account for salary payments
- Foreign currency payments require Reserve Bank approval
- Direct deposit is standard practice
Onboarding Timeline
| Step | Timeline |
|---|---|
| Job offer accepted | Day 0 |
| Work permit application (if required) | Day 1-30 |
| Employment contract signed | Day 3-5 |
| Tax and superannuation setup | Day 5-7 |
| Bank account verification | Day 7-10 |
| Payroll setup completed | Day 10-14 |
Worker Classification
Employee vs Contractor Tests:
- Control: Level of supervision and direction
- Integration: How integral to the business
- Economic Reality: Who bears financial risk
- Equipment: Who provides tools and equipment
Note: Misclassification can result in penalties and back-payment of entitlements.
Trade Unions and Collective Bargaining
- Strong union presence in mining, construction, and public sectors
- Collective agreements may override minimum standards
- Right to join unions is protected under law
- Industrial disputes are handled by the Industrial Relations Commission
Cultural Considerations
Wantok System:
- Extended family and community obligations
- May affect attendance and leave requests
- Employers should show cultural sensitivity
Language Requirements:
- English is the official business language
- Tok Pisin widely spoken
- Over 800 local languages exist
Religious Observances:
- Predominantly Christian population
- Sunday work may require premium rates
- Religious holidays should be accommodated where possible
Remote Work Considerations
- Limited internet infrastructure in rural areas
- Equipment provision may be challenging
- Regular communication protocols essential
- Consider cultural and technological barriers
Industry-Specific Regulations
Mining and Resources:
- Additional safety requirements
- Fly-in-fly-out (FIFO) arrangements common
- Special visa categories available
Agriculture:
- Seasonal work variations
- Different minimum wage rates
- Weather-dependent scheduling
What the EOR Handles
Borderless AI manages:
- Employment contracts compliant with PNG law
- Payroll processing in PGK
- Tax and superannuation compliance
- Work permit assistance
- Local regulatory updates
- Cultural guidance and support
Built-in benefits packages for Papua New Guinea
When the world is your competition, it pays to incentivize new hires and existing alike. Borderless AI benefits packages typically inlucde:
Medical Insurance
Dental Insurance
Retirement Contribution
Life Insurance
Vision Insurance
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