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What global businesses need to know about payroll in Mauritius
According to the most recent Ease of Doing Business Index from the World Bank, Mauritius is the 13th-easiest place to set up and run a business in the world. So just when you thought it was all white sandy beaches, you’ll find that there’s much more to this archipelago in the Indian Ocean and its 1.3 million people.
The authorities have made a concerted effort to diversify since gaining independence from the United Kingdom in 1968. While tourism is still a major part, it’s now far more service-dominated than it used to be. Almost three-quarters of total GDP is service-led, but industries such as clothing, sugar and mining still make major contributions, among others.
Mauritius has both English and French as official languages, and it’s only three hours ahead of CET, so it is a timezone-friendly place to do business, too. To find out all the basics about employment law and running payroll in Mauritius, read on.
Getting Started
Business set-up in Mauritius starts with reserving a business name and registering it on the online portal of the Corporate and Business Registration Department (you will be required to renew this every ten years). After this, an electronic registration card is issued, and registrations with the Revenue Authority and the Ministry of Social Integration are taken care of automatically.
After this, you should prepare for inspection by the police, fire service and other public bodies, who will evaluate your premises and advise you of any fees required to be paid to them. You should also register with the Social Security Office, and apply for the business license relevant to your organization.
Opening an in-country bank account is compulsory for foreign businesses in Mauritius. You’ll need your Certificate of Incorporation, registration card, and a certified copy of board meeting minutes (if your business’s structure has a board). The financial year runs in line with the calendar year.
Employment Considerations
Employment contracts in Mauritius must be put in writing and cover all relevant information about the employment, including compensation, leave, and termination arrangements. Employees must be paid in the local currency, the Mauritian rupee, and employers must follow strict rules in Mauritian law that prevent discrimination at any stage of the recruitment process.
Working hours are relatively long in Mauritius: the standard working week is five shifts of nine hours each, for a total of 45 hours. Work above this is classed as overtime, which is paid at 150% of the employee’s normal rate. Furthermore, if an employee has to complete more than two hours of overtime at the end of any day, an employer has to provide a meal for the employee or pay them a MUR 85 meal allowance (approximately £1.50; $1.85; €1.70).
Probation periods generally range between one and three months, and while there is a minimum notice period of 30 days, longer notice periods can be agreed in employment contracts on an individual basis.
Compensation, Bonuses and Severance
The national minimum wage rate in Mauritius has risen substantially in recent years. As of the start of 2024, it has been raised to MUR 16,500 per month (approx. £285; $360, €335); further increases in the years to come cannot be ruled out.
The payment of a 13th-month bonus is a legal requirement in Mauritius for all employees who are employed by the company for the full calendar year. At least three-quarters of this should be paid at least five working days before Christmas, with payment completed in full by the last working day of December.
Severance pay is relatively high, at three months’ pay per year of service (as long as the employee has completed at least one year).
Tax and Social Security
The income tax bandings in Mauritius were substantially altered in July 2023, and it means that the rates have become much more complex as a result.
Only the first MUR 390,000 earned per year (approx. £6700; $8500, €7900) is now exempt. After this, the first of ten bands apply, starting at 2%, then rising to 4%, 6% and so on, at 2% increments. The highest rate of 20% applies to earnings above MUR 2.39 million per year (approx. £41,200; $53,300, €48,300). While this is more complicated than before, rates overall remain relatively low.
At present, the corporation tax rate in Mauritius is 15% (or 3% for export companies). The VAT rate is also 15%.
Social security rates in Mauritius are as follows:
- General social contribution (CSG): 3% employer, 1.5% employee (both these rates double if the employee earns more than MUR 50,000 per month)
- National Savings Fund: 2.5% employer, 1% employee
- National Pension Fund: 6% employer, 3% employee
- Training Levy: 1% employer
Holidays and Leave
Paid leave entitlement is a total of 22 days per year for employees with at least a year of service. New employees accrue one day per month during the second half of their first year. There are 15 days of public holiday which employees should be paid for: whether holidays on weekends are moved to a nearby weekday is decided by the government on a case-by-case basis.
Maternity leave entitlement is 14 weeks, with seven weeks on either side of the due date, paid in full by the employer. Paternity leave entitlement is five days per calendar year and is also paid. Other leave entitlements include six days for a marriage (first marriage only), three days for the marriage of an employee’s child, and three days for a bereavement.
Medically certified sick leave is 15 days per year on full pay, covered by the employer.
New legislation was also introduced in 2022 allowing an employee to take care of one of their children who is ill, by using up to ten days of their paid leave or sick leave entitlement per 12-month period. This only applies to employees whose monthly salary is no more than MUR 50,000 per month (approx. £860; $1100, €1010).
In Summary
As this guide ably demonstrates, Mauritius is an easy place to do business for virtually any industry. Where the complications can arise is through cultural considerations: many different backgrounds and faiths come together in Mauritius, and you’ll need to treat all of them equally and take all of their preferences into account. This is where the local expertise of a payroll partner can come in so useful, navigating some of the hidden characteristics of doing business in this island paradise.
This article is for informational purposes only and is not intended to convey or constitute legal or any other advice. It is not a substitute for advice from a qualified professional.