In today’s competitive job market, finding the right talent for your organization can be a daunting task. Hiring employees from a foreign country like the Bahamas can be equally challenging as many local employment standards must be navigated.
As an employer, you have to contend with the nuances of the local employment laws and numerous regulations. Thankfully, there is a solution that can streamline the hiring process for companies looking to expand their business in the Bahamas – an Employer of Record (EOR).
In this article, we’ll review the role and responsibilities of an EOR, discuss how to hire and pay remote employees in the Bahamas through an EOR, highlight the advantages of partnering with an EOR, and more.
Why Hire Talent in the Bahamas?
This beautiful Caribbean region is made up of over 700 islands and is home to a population of highly skilled workers. Bahamians are known for being extremely polite, leading them to thrive in work sectors like hospitality and business.
Although schedules tend to run a little late here — it’s considered impolite to rush people on island time. The Bahamas business culture is largely influenced by American customs, so you can look forward to a familiar sense of professionalism if that’s what you’re used to.
Most people living in the Bahamas are also English speakers, with some Creole spoken among Haitian immigrants to the island nation. Overall, those looking for Bahamas employment opportunities will be pleased to know that communication with local employees will be simple and familiar!
How Can I Legally Hire Employees from the Bahamas?
Engage Independent Contractors in The Bahamas
Opting to engage Bahamian workers as independent contractors can be the most direct approach. Still, companies must carefully consider the differences between a contractor and an employee to ensure adherence to all legal working conditions. Independent contractors are self-employed professionals who provide their services to a company while enjoying the flexibility to set their own work hours and schedules.
Contractors operating in this capacity are treated separately from internal employees and do not receive a fixed salary or work equipment from the company. This affords companies increased flexibility and is a more cost-effective option when hiring for specialized services and time-sensitive projects.
Set Up a Local Entity
When it comes to employment in Nassau, Bahamas, your company needs to have a legal entity operating in the country to hire employees. Creating an entity in the Bahamas allows businesses the opportunity to establish a branch or subsidiary that allows for the direct employment of workers. This grants foreign companies full autonomy in the recruitment of local staff, as well as in managing payroll and establishing a local presence.
It's important to note that the process can be both expensive and time-consuming, requiring a comprehensive understanding of local federal labor, corporate, and payroll laws, along with local regulations. Getting an entity set up is time-consuming and complex, and your efforts may only be worth it if you intend to expand your business into the Bahamian market long-term or establish multiple locations for your company.
Companies considering this option should consult with local legal experts or with a Bahamas employment agency to ensure compliance and potentially help connect employees with the jobs you're looking to fill.
Partner with a Global Employer of Record (EOR)
An EOR service provider, such as Borderless, can be an invaluable resource when hiring employees in the Bahamas. An established EOR acts as a broker for hiring talent outside of the country you legally operate in.
It already has a local entity set up with the legal framework in place to do the hiring for you. Not only are they prepared to help you navigate complex labor laws and regulations, but they also offer a range of services to support your business operations and answer questions you may have.
From payroll and tax management to onboarding and offboarding processes, an EOR service can help streamline your business operations.
Benefits of Working with an EOR in the Bahamas
For companies that are seeking employment opportunities in Nassau, Bahamas, an Employer of Record (EOR) offers many benefits.
Firstly, an EOR can fast-track the hiring process as they already have an established legal and administrative framework. Companies that use an EOR in the Bahamas can be confident that all documentation and contractual agreements will be handled by a team of experienced professionals who understand local labor laws.
Compliance is particularly important in the Bahamas, where labor laws are strictly enforced. Employers who violate employment laws can face serious financial penalties and business disruptions, including fines ranging from BSD $2,000 to BSD $10,000 per offence. In some cases, repeated or severe violations may lead to higher fines or imprisonment.
Using an EOR ensures that your company will remain legally compliant, avoiding unexpected surprises and negative impacts on your reputation. Let’s look at some things an EOR will take care of.
Bahamian Employment Documents
In the Bahamas, a work contract can be verbal or written.
However, under the Local Employment Act, the employee and employer must agree to certain details regarding the position, including job title, compensation, and scope of responsibilities.
Details regarding severance, probation and notice period, and termination should also be covered. In the Bahamas, there is no official probationary period, but certain collective agreements allow probation of 12 months.
As for termination, to avoid a situation where an employee files for a wrongful dismissal case, the employer must provide the employee with sufficient notice or severance compensation equal to four weeks’ income, except for a situation where the employee has committed a work-related offence.
The required notice period in the Bahamas depends on the employee's tenure. Notice periods are as follows:
- Employees who worked 6-12 months: one week
- Employees who worked more than 12 months: two weeks
Vacation, Breaks, and Holidays
On the cultural front, the Bahamas observes a number of national and civic holidays you should consider when building your distributed team.
Holidays that are celebrated by Bahamians include:
- January 1: New Year's Day
- April 7: Good Friday
- April 10: Easter Monday
- May 29: Whit Monday
- June 2: Labour Day
- July 10: Independence Day
- August 7: Emancipation Day
- October 12: National Heroes' Day
Managing and Setting Up Employee Benefits
Employers must provide employees with their entitled benefits to remain compliant. There are several types of statutory benefits in the Bahamas that you must pay as an employer.
These include:
- Paid annual leave
- Parental leave
- Sick leave
- Workers’ compensation insurance
Bahamian workers are also entitled to certain types of paid leave. This includes compassionate or bereavement leave for situations such as accidents, the passing or serious illness of immediate family members, as well as emergencies stemming from fire or flooding. This leave allowance is for a maximum of eight days annually.
In the Bahamas, vacation leave can also be extended by one day for each public holiday occurring within the vacation period. For employees working shifts that coincide with public holidays, they may receive compensatory days off in lieu of such holidays.
Taxes
The Bahamian minimum wage was recently increased from $210 to $260 per week.
Standard taxes such as personal income tax, Capital Gains Tax, Inheritance Tax, or Gift Tax are not applicable in the Bahamas, leading some to consider the Bahamas a tax haven. But this term can be misleading. Tax haven doesn’t mean no tax at all; it generally indicates a lack of personal income tax only.
The Bahamian government still requires citizens to pay into:
- Social Security Contributions
- Stamp Taxes on Real Estate
- Property Tax
As for employers, you will be responsible for contributing 5.9% towards national insurance.
Payment
Employee payments will be made in equal monthly installments on or before the last working day of each calendar month. These monthly payments will automatically be made to all employees registered with your company's payroll in the Bahamas.
This includes additional payments such as 13th-month bonuses, which are not required by law but are frequently offered and considered a best practice, as well as bereavement leave, where employees are eligible for up to eight days of paid leave to attend to pressing personal matters.
It also includes overtime pay for full-time employees who exceed the allowed weekly full-time hours. Standard working hours are eight hours per day and 40 hours per week. Overtime pay is 1.5 times the employee's regular wage and two times when the employee works overtime on a public holiday.
What Are Your Obligations?
Although the EOR is responsible for handling all legal and HR procedures, various aspects of your company's operations will remain your obligation. You'll still be responsible for overseeing and managing your staff just as you would with local hires. This encompasses tasks like recruitment, onboarding, training, supervision, day-to-day communication, progress tracking, and more.
While your relationship with your employees won't undergo significant changes with an EOR, it's crucial to communicate clearly about the legal aspects of their contracts and play a supervisory role throughout the process.
The responsibility for retaining employees rests with you. Consider how you can support your staff in the growth and success of their careers within your organization.
How to Choose an EOR
Now that you understand the basics of Bahamian labor customs, standards of employment, and lifestyle, keep reading for a step-by-step guide on bringing your new Bahamian team on board.
Step 1: Determine Your Hiring Needs
To ensure a successful hiring process in the Bahamas with an EOR, it is essential to start with a clear idea of the positions you need to fill, the skills required, and the type of employment contract you’ll need to draft.
This will guide the rest of the process and make sure that you are identifying candidates that meet your business needs. You can also reach out to local employee placement services for help identifying the kind of employees you are looking for.
Step 2: Choose an EOR Service Provider
It is crucial to research the EOR service providers available in the Bahamas and select one that meets your company’s specific needs. Look for a provider who offers comprehensive services, has local expertise and experience, pricing transparency, and has a proven track record of compliance and solid employee maintenance.
Step 3: Define Employee Onboarding and Management Process
Once your EOR is in place, establish a streamlined onboarding process for your new hires that includes employee management policies, job performance standards, and disciplinary procedures. Ensure that all practices are legally compliant — an EOR can help with that.
Step 4: Jointly Select and Hire Qualified Candidates
Collaborate with your EOR in the recruitment process and conduct interviews to ensure that you are selecting the most qualified candidates for your organization. Ensure that all employment laws and regulations are adhered to throughout the hiring process.
Step 5: Maintain Effective Communication and Record-Keeping
Maintain clear communication with your EOR and your new hires throughout the duration of employment and keep accurate records of all employment-related data and transactions.
How Borderless Can Help
Working with an Employer of Record is a requirement for any business looking to hire workers in the Bahamas without a physical presence. However, it’s important to note that not all EORs are equipped to handle your unique needs and requirements.
Always look for an Employer of Record who has experience hiring and managing workers in your country of interest and is well-versed in the country’s laws and employment practices.
As an experienced global Employer of Record (EOR), Borderless is an excellent solution for companies looking to hire in the Bahamas. By outsourcing your hiring administration tasks to a third-party provider like Borderless, your company can save time and money, and focus on your core business objectives.
Our platform is designed to help our customers grow their teams and hire, manage, and pay remote employees in over 170 countries around the world while ensuring you are fully compliant with local tax and employment laws. Speak with our team at Borderless today to see how we can help you!
Disclaimer: Borderless does not provide legal services or legal advice to anyone. This includes customers, contractors, employees, partners, and the general public. We are not lawyers or paralegals. Please read our full disclaimer here.
