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What global businesses need to know about payroll in Jamaica
Jamaica has a global reputation for being a place where life is more relaxed, whether it’s chilling out by the beach, enjoying a local rum, or listening to some reggae. No surprise, therefore, that tourism is a major part of its economy.
But this Caribbean island of around 2.8 million people, now independent from the United Kingdom for more than 60 years, has so much more going for it from a business point of view. It’s a major producer of bauxite, sugar, and bananas, and its service industry represents more than 70% of its GDP.
As well as strong trade links with the United States, and the advantage of an English-speaking workforce, one real selling point of expanding into Jamaica is that its payroll and employment laws are relatively free of complications. Explore them in detail in this guide.
Getting Started
Companies operating in Jamaica can set up either as a limited-liability company (LLC), public liability company (PLC) or as a branch office. There is a minimum share capital requirement of US$4400 for PLCs; for the other types, the minimum is a token US$1.
From an administrative perspective, there are numerous important processes to carry out when setting up a business in Jamaica:
- Check the availability of the desired company name
- Get company documents stamped
- File company deeds to the Registrar of Companies
- Obtain national insurance, taxpayer registration, and General Consumption Tax registration numbers
These processes should take no more than a couple of business days, and registration fees normally come to around JSD 12,000 (approximately £60, $75, €70).
Employment Considerations
Employment contracts in Jamaica can be written or oral, but a written contract is strongly recommended. Unions and collective bargaining are a feature of Jamaican business, and so some companies may find themselves negotiating terms en masse with unions.
Jamaica is unusual in that all seven days of the week are generally considered to be working days. A full-time working week is 40 hours, and would normally be in five shifts of eight hours each. Anything beyond this counts as overtime, paid at a rate of 150% normal salary, or 200% on Sundays or public holidays. Employees should not work more than 12 hours in any 24-hour period, inclusive of overtime. Employees are generally paid once or twice every month.
Notice periods start at two weeks, rising by another two weeks after each five years of service have been completed. Employees with 20 years’ service or more are entitled to 12 weeks’ notice. Probation periods are normally between three and six months, and are defined by collective bargaining, but there are no legal requirements in this area.
Compensation, Bonuses and Severance
In 2022 and 2023, the national minimum wage in Jamaica nearly doubled in the space of less than 18 months. The new rate, which took effect on June 1 2023, is JSD 13,000 per week (approx. £65, $85, €80), based on a standard 40-hour week. Further rises in the future cannot be ruled out.
Bonuses are common among management and executive roles, whether through individual performance or the overall performance of the company. Some businesses also award bonuses at the end of the year as a token of appreciation.
Severance pay only applies in cases of redundancy, at two weeks’ salary per year for the first ten years of service, and three weeks’ pay per year for every year thereafter.
Tax and Social Security
Jamaica’s income tax system is one of the simplest around. The first JSD 1.5 million earned each year (approx. £7600; $9600; €8900) is exempt, beyond which a rate of 25% is applied. Earnings over JSD 6 million a year (approx. £30,300; $38,300; €35,500) are taxed at 30%.
The corporation tax rate in Jamaica is 33.33% for regulated companies, and 25% for unregulated companies. The rate of General Consumption Tax (GCT) is 15%, although higher and lower rates are applied for certain sectors, including a reduced rate of 10% for the tourism industry.
There are four key social security contributions:
- National Insurance: 3% employer, 3% employee
- National Housing Trust: 3% employer, 2% employee
- Education Tax: 3.5% employer, 2.25% employee
- Human Employment and Resources Training (HEART): 3% employer
Holidays and Leave
Paid leave entitlement in Jamaica is two weeks per year. Employees with at least ten years of service get three weeks per year. Jamaica normally has ten days of public holidays each year; it’s common for holidays that fall on weekends to be observed as public holidays on a weekday, at the discretion of the government.
Maternity leave is 12 weeks for mothers who have completed at least one year of service. Employers pay mothers eight weeks of full salary to cover them for this period. Jamaica has also recently introduced paternity leave of 20 paid working days, which can be taken within six months of the child’s birth.
Paid sick leave entitlement is ten days per year, for employees with at least a year’s service. Those in their first 12 months of employment accrue one day of paid sick leave per 22 days worked; any fractions are rounded up to the next full day.
In Summary
Compared to many other countries in the Caribbean and Latin America, Jamaica’s payroll and employment regulations are very straightforward. Nonetheless, it can’t do any harm to work with a global payroll partner, who can not only ensure your compliance in Jamaica right from the get-go, but also help you with expertise and support in all the other countries you operate in.
This article is for informational purposes only and not intended to convey or constitute legal or any other advice. It is not a substitute for advice from a qualified professional.