Hire in Cabo Verde through our Employer of Record (EOR)

An Employer of Record (EOR) is a third-party organization that takes on the legal and administrative responsibilities of employing workers on behalf of another company. This arrangement allows businesses to hire employees in countries where they don't have a legal entity, effectively expanding their global reach without the need to establish a local subsidiary or navigate complex international employment laws.

For a country like Cabo Verde, an EOR can play a crucial role in facilitating international business operations and attracting foreign investment. By providing a streamlined solution for companies to hire local talent, EORs can help bridge the gap between global businesses and the Cabo Verdean workforce, potentially boosting economic growth and creating new job opportunities in the archipelago.

How Does EOR Work?

The EOR model operates by creating a tripartite relationship between the EOR, the client company, and the employee. Here's a breakdown of how it typically functions:

1. The client company identifies a candidate they wish to hire in Cabo Verde.

2. The EOR becomes the legal employer of record for the worker, handling all formal employment responsibilities.

3. The EOR manages payroll, tax withholding, benefits administration, and compliance with local labor laws and regulations.

4. The client company maintains day-to-day management of the employee's work activities and responsibilities.

5. The EOR bills the client company for the employee's salary plus additional fees for their services.

This arrangement allows companies to quickly and compliantly hire talent in Cabo Verde without establishing a local entity or risking non-compliance with local laws.

Benefits of Using an EOR

Utilizing an EOR in Cabo Verde offers several advantages for both international companies and local workers:

1. Simplified market entry: Companies can test the Cabo Verdean market without committing to establishing a legal entity, reducing risk and initial investment.

2. Compliance assurance: EORs are well-versed in local labor laws, ensuring that companies remain compliant with Cabo Verde's employment regulations.

3. Cost-effective expansion: By eliminating the need for setting up a local subsidiary, companies can save on incorporation costs and ongoing administrative expenses.

4. Quick hiring process: EORs can typically onboard employees much faster than companies could do on their own, accelerating market entry and project timelines.

5. Local expertise: EORs provide valuable insights into local business practices, cultural norms, and employment expectations in Cabo Verde.

6. Risk mitigation: The EOR assumes legal responsibility for employment-related matters, reducing the client company's exposure to potential litigation or compliance issues.

7. Focus on core business: By outsourcing HR and payroll functions, companies can concentrate on their primary business activities and strategic goals in Cabo Verde.

8. Access to benefits: EORs often have established relationships with local benefits providers, allowing them to offer competitive packages to employees.

9. Currency management: EORs handle currency conversion and ensure timely payments in the local currency, simplifying financial operations for international companies.

10. Support for remote work: In an increasingly digital world, EORs facilitate the hiring and management of remote workers in Cabo Verde, tapping into the country's talent pool regardless of physical location.

By leveraging an EOR's services, companies can navigate the unique challenges and opportunities presented by Cabo Verde's business landscape, while contributing to the country's economic development and creating valuable employment opportunities for its workforce.

Cabo Verde's employment landscape is characterized by a youthful population and a growing workforce, with increasing participation rates for women. The country's economy is primarily driven by the service sector, particularly tourism, while also developing its industrial and agricultural sectors. Despite improvements in education, Cabo Verde faces challenges in aligning workforce skills with market demands and addressing emigration trends.

Overview of Labor Laws

Cabo Verde's labor laws aim to protect workers' rights and establish fair employment practices. Key aspects of the labor legislation include:

• Standard working hours of 40 hours per week
• Minimum wage regulations
• Provisions for paid annual leave and public holidays
• Protections against unfair dismissal
• Regulations on workplace safety and health

Employers must comply with these laws to ensure legal and ethical employment practices in Cabo Verde.

Cultural Considerations

Understanding Cabo Verde's unique cultural norms is crucial for successful business operations:

• "Morabeza": This concept of warmth and hospitality influences workplace dynamics, promoting flexibility and positive relationships.
• Family and community values: Employers should be understanding of employees' familial and community obligations.
• Relaxed work pace: The focus is on quality and relationship-building rather than rushed productivity.
• Indirect communication: Cape Verdeans often prefer indirect communication to maintain harmony and avoid confrontation.
• Language: While Portuguese is the official language, knowledge of Cape Verdean Crioulo can help build rapport.

Challenges of Direct Hiring

Direct hiring in Cabo Verde can present several challenges for foreign companies:

1. Skill gaps: Finding workers with specific skills aligned with market demands can be difficult.

2. Language barriers: Communication may be challenging for non-Portuguese speaking employers.

3. Cultural differences: Adapting to local work culture and communication styles may require significant adjustment.

4. Legal complexities: Navigating Cabo Verde's labor laws and regulations can be complex for foreign entities.

5. Administrative burden: Managing payroll, taxes, and social security contributions in compliance with local regulations can be time-consuming.

6. Retention issues: The trend of emigration may lead to challenges in retaining skilled workers.

7. Limited talent pool: The small population size may restrict options for specialized roles.

To overcome these challenges, many companies opt for alternative solutions such as partnering with a global Employer of Record like Rivermate, which can simplify the hiring process and ensure compliance with local laws and regulations.

Cabo Verde's payroll and tax system is designed to ensure both employers and employees contribute to the country's social security system and overall economic development. The system involves various contributions and deductions that are essential for both parties to understand and comply with. This overview will delve into the specifics of payroll and taxes in Cabo Verde, highlighting the responsibilities of employers and employees.

In Cabo Verde, employers are responsible for withholding and remitting certain taxes and contributions on behalf of their employees. Simultaneously, employees are subject to mandatory deductions from their salaries. These contributions and deductions fund social security programs, healthcare services, and other public initiatives.

Employer Contributions

Employers in Cabo Verde have several financial obligations when it comes to payroll and taxes:

1. Social Security Contributions: Employers are required to contribute 16% of an employee's gross income to the social security system. This contribution is in addition to the amount withheld from the employee's salary.

2. Withholding Taxes: Employers must withhold taxes on certain payments made to non-residents. These include:

   • Interest payments
   • Royalty payments (generally subject to a 20% withholding tax)
   • Dividend payments (rates vary depending on beneficial ownership and holding periods)
   • Payments for services to non-residents (may be subject to a 15% withholding tax)

3. Other Tax Responsibilities: Depending on their business activities, employers may also be responsible for:

   • Customs duties (ranging from 0% to 50% for imported goods)
   • Special Consumption Tax (applicable to certain goods at rates between 10% and 150%)
   • Property taxes
   • Stamp duty on specific transactions
   • Ecologic charge for activities with environmental impact
   • Tourism tax for businesses in the tourism sector

Employee Contributions

Employees in Cabo Verde are subject to various deductions from their salaries:

1. Income Tax (Imposto Único Sobre o Rendimento – IUR): This tax is withheld directly from employees' salaries based on a progressive rate structure. The specific tax brackets and rates can be found in Cabo Verde's Tax Code.

2. Social Security Contributions (Instituto Nacional de Previdência Social – INPS): Employees contribute approximately 8.5% of their gross salary to the INPS. These contributions fund social security benefits such as pensions, disability support, and sickness benefits.

3. Other Deductions: Union dues may also be deducted from salaries if applicable.

It's important to note that both employer and employee contributions are subject to change. Employers and employees should regularly consult the latest version of Cabo Verde's Tax Code or seek advice from a tax professional to ensure compliance with current regulations. Understanding these obligations is crucial for maintaining legal compliance and ensuring smooth payroll operations in Cabo Verde.

Cabo Verde offers a comprehensive set of employee benefits, combining mandatory provisions with optional perks to create attractive employment packages. As an Employer of Record (EOR), Rivermate expertly manages these benefits, ensuring compliance with local labor laws while helping companies provide competitive compensation to their workforce. By partnering with an EOR, businesses can navigate the complexities of Cabo Verde's benefit system with ease, focusing on their core operations while leaving the intricacies of payroll and benefits administration to the experts.

Mandatory Benefits

• Paid Time Off:

  • Minimum 22 days of paid annual leave per year
  • Paid leave on all national and officially recognized public holidays

• Parental Leave:

  • 60 consecutive days of initial parental leave for female employees
  • 80% of remuneration as subsidy during this period

• Sick Leave:

  • Up to 30 days of absence due to illness with a medical certificate
  • Potential examination by Health Board for illnesses lasting over 30 days

• Social Security:

  • Mandatory system providing various benefits including pensions and disability coverage
  • Employer contributions required as a percentage of employee salaries

• Other Mandatory Benefits:

  • Maximum probation period of 12 months (except for domestic workers)
  • Overtime compensation of at least 50% more than regular pay
  • Annual overtime limit of 160 hours (extendable to 300 hours with employee consent)
  • Severance payments based on seniority and reason for dismissal

Optional Benefits

• Health and Wellness Benefits:

  • Private health insurance plans
  • Wellness programs or gym memberships

• Financial Benefits:

  • Meal vouchers or subsidized meals
  • Performance-based bonuses
  • Profit-sharing schemes

• Family-Friendly Benefits:

  • Childcare assistance or subsidies
  • Flexible work arrangements (remote work, compressed workweeks)

• Additional Benefits:

  • Transportation allowances
  • Language training programs
  • Professional development opportunities
  • Discounts on company products or services

These optional benefits can vary significantly depending on the employer, industry, and company size. It's always advisable for potential employees to inquire about the specific benefits package during the job application process.

The process of termination and offboarding in Cabo Verde is governed by a comprehensive legal framework outlined in the country's Labour Code. This framework ensures fair treatment of employees while also providing employers with guidelines for lawful termination.

Grounds for Termination

In Cabo Verde, employment contracts can be terminated based on either objective or subjective grounds. Objective grounds include economic reasons, market conditions, or the extinction of a particular job role. Subjective grounds, on the other hand, relate to the employee's conduct or performance, such as serious misconduct or persistent inability to perform duties.

Notice Requirements

When terminating an employment contract, employers must adhere to specific notice periods. These periods vary depending on the type of contract and the employee's length of service:

• For fixed-term contracts, no additional notice is typically required beyond the contract's expiration date.
• For indefinite-term contracts, the notice period ranges from 15 to 60 days, depending on the employee's tenure.

Severance Pay

Employees under indefinite-term contracts are generally entitled to severance pay upon termination, except in cases of dismissal for serious misconduct. The amount of severance pay varies based on the reason for termination and is calculated as a multiple of the employee's basic salary per year of service.

Offboarding Process

While not explicitly outlined in the Labour Code, a proper offboarding process typically includes:

1. Communicating the termination decision to the employee
2. Providing the required notice or pay in lieu of notice
3. Calculating and arranging severance pay, if applicable
4. Retrieving company property
5. Conducting an exit interview
6. Updating internal records and systems

It's important to note that collective bargaining agreements may provide more favorable terms for employees than those stipulated in the Labour Code. Employers should always ensure they're complying with both legal requirements and any applicable collective agreements when terminating employment contracts in Cabo Verde.

Cabo Verde, an archipelago of ten volcanic islands off the coast of West Africa, has been attracting foreign workers due to its growing tourism industry and strategic location. For those considering employment opportunities in this island nation, understanding the visa and work permit requirements is crucial.

Visa Requirements

Foreign nationals planning to work in Cabo Verde typically need to obtain a visa before entering the country. The most common types of visas for work purposes are:

1. Short-stay visa: Valid for up to 90 days and suitable for short-term assignments or business trips.
2. Temporary stay visa: Issued for stays longer than 90 days but less than one year.
3. Residence visa: Required for those intending to live and work in Cabo Verde for more than one year.

To apply for a visa, applicants must submit the following documents to the nearest Cabo Verdean embassy or consulate:

• Valid passport
• Completed visa application form
• Passport-sized photographs
• Proof of accommodation in Cabo Verde
• Return ticket or proof of onward travel
• Proof of sufficient funds
• Employment contract or job offer letter

Work Permit Requirements

In addition to obtaining the appropriate visa, foreign workers must secure a work permit to legally work in Cabo Verde. The process typically involves the following steps:

1. The employer must obtain authorization from the General Directorate of Labor to hire a foreign worker.
2. The employee must apply for a work permit at the General Directorate of Immigration.
3. Once approved, the work permit is usually valid for one year and can be renewed.

Required documents for a work permit application may include:

• Valid passport and visa
• Employment contract
• Educational qualifications and professional certifications
• Criminal background check
• Medical certificate

It's important to note that work permit regulations may vary depending on the specific industry and the applicant's country of origin. Some professions may require additional documentation or approvals from relevant authorities.

Conclusion

Navigating the visa and work permit requirements in Cabo Verde can be complex, but understanding the process is essential for foreign workers. It's advisable to start the application process well in advance of the intended travel date and to consult with the Cabo Verdean embassy or a reputable immigration lawyer for the most up-to-date information and guidance.