Employer of Record in Cabo Verde

Expanding your team into Cabo Verde in 2025 requires navigating local employment regulations and establishing a compliant hiring framework. Businesses looking to tap into the skilled workforce of this Atlantic nation have several avenues for onboarding talent, each with its own set of administrative and legal considerations. Understanding these options is crucial for a smooth and successful international expansion.

To legally hire employees in Cabo Verde, companies typically consider these primary approaches:

• Establishing a local legal entity: This involves setting up a subsidiary or branch office within Cabo Verde, a process that can be time-consuming and resource-intensive, requiring registration, local banking, and ongoing corporate compliance.
• Utilizing an Employer of Record (EOR): Partnering with an EOR like Rivermate allows your company to hire employees in Cabo Verde without needing to establish a local entity. The EOR acts as the legal employer, handling all local compliance while your company retains full control over day-to-day management.
• Hiring independent contractors: For short-term projects or highly specialized tasks, engaging individuals as independent contractors might be an option. However, it's critical to ensure these arrangements strictly adhere to Cabo Verde's independent contractor definitions to avoid risks of misclassification and potential penalties.

How an EOR Works in Cabo Verde

An Employer of Record (EOR) service simplifies international hiring by taking on the legal and administrative responsibilities of employing staff in Cabo Verde. This comprehensive approach ensures full compliance with local labor laws and tax regulations, allowing your company to focus on its core business objectives. An EOR specifically handles:

• Payroll processing and ensuring timely salary payments.
• Calculating and remitting all local taxes and social security contributions.
• Drafting compliant employment contracts that adhere to Cabo Verde's labor code.
• Managing employee benefits, including health insurance, social security, and pension schemes.
• Ensuring adherence to working hours, leave entitlements, and termination procedures.
• Providing ongoing HR support and navigating any employment-related disputes.
• Mitigating legal and financial risks associated with non-compliance in Cabo Verde.

Benefits of Using an EOR in Cabo Verde

For companies looking to quickly and compliantly hire in Cabo Verde without the complexities of establishing a local entity, an EOR offers significant advantages:

• Rapid market entry: Hire employees in weeks, not months, by bypassing the entity setup process.
• Guaranteed compliance: The EOR assumes responsibility for all local labor law, tax, and payroll compliance, significantly reducing your company's risk.
• Reduced administrative burden: Offload complex HR, payroll, and legal tasks, freeing up internal resources.
• Cost-effectiveness: Avoid the substantial costs and ongoing overhead associated with establishing and maintaining a foreign subsidiary.
• Flexibility and scalability: Easily scale your team up or down in Cabo Verde as business needs evolve, without the fixed commitment of a local office.
• Access to local expertise: Leverage the EOR's in-depth knowledge of Cabo Verdean employment practices and regulations.

Rivermate's transparent pricing model eliminates complexity with a single, competitive monthly fee per employee. Unlike traditional PEO providers, our pricing in Cabo Verde includes comprehensive HR support, benefits administration, compliance management, and access to our proprietary dashboard for real-time workforce analytics. No hidden costs, no setup fees—just straightforward pricing that scales with your business needs while ensuring full legal compliance in Cabo Verde.

Employers in Cabo Verde must contribute to social security (14%), and may also pay for professional training and work accident insurance, with rates varying. They are responsible for withholding income tax (IRPS) from employees' salaries based on progressive rates:

Employers must remit these withheld taxes monthly, alongside social security contributions. Employees can claim deductions for healthcare, education, housing, and social security contributions, reducing taxable income. Tax compliance involves timely filing of monthly returns and annual income declarations. Foreign entities and workers may face additional rules, including tax treaties, residency criteria, and expatriate allowances.

Cabo Verde's salary landscape varies significantly by industry, role, and location, with Praia generally offering higher wages. Key salary ranges include hotel managers (80,000–150,000 CVE/month), doctors (90,000–200,000 CVE/month), and project managers in renewable energy (90,000–180,000 CVE/month). Salaries are influenced by experience, education, and company size, and employers should benchmark against these figures to remain competitive.

The country enforces a minimum wage of 15,000 CVE per month as of 2025, with some sectors or collective agreements setting higher standards. Compensation packages often include bonuses such as Christmas, vacation, performance-based incentives, and allowances for transportation, housing, or meals. The typical payroll cycle is monthly, with salaries paid mainly via bank transfer, and employers must provide detailed payslips to ensure compliance with tax and social security regulations.

Salary growth is expected to continue, especially in tourism, renewable energy, and IT sectors, driven by economic growth and rising living costs. Employers should adapt compensation strategies accordingly to attract and retain skilled talent.

Employees in Cabo Verde are entitled to a minimum of 22 days of annual vacation leave, with leave timing mutually agreed upon and salary maintained during the period. Public holidays in 2025 include key dates such as New Year’s Day, Labour Day, Independence Day, and Christmas, providing additional days off.

Sick leave requires a medical certificate, with pay typically supported by social security, though specifics may vary. Parental leave includes 60 days of maternity leave, 5 days of paternity leave, and adoption leave of similar duration, with pay often partially supported by social security. Other leave types like bereavement, study, and sabbatical are available under certain conditions.

Employers in Cabo Verde are legally required to provide benefits such as paid time off, public holidays, sick leave, maternity and paternity leave, severance pay, a 13th-month salary (Christmas bonus), and family allowances. These mandatory benefits ensure basic employee protections and financial security. Additionally, many companies enhance their offerings with optional benefits like private health insurance, life insurance, pension plans, meal and transportation allowances, and professional development programs to attract and retain talent.

Health coverage varies from the basic services provided by the national system to private insurance, which is highly valued for broader access and shorter wait times. While the state pension system offers retirement benefits, supplementary private pension plans are common to improve retirement security. Benefit packages tend to be more comprehensive in larger firms and multinational corporations, especially in sectors like finance, technology, and tourism, where competitive perks such as stock options, flexible work, and accommodation allowances are prevalent.

Employment agreements in Cabo Verde are essential for defining legal working relationships, ensuring compliance with labor laws, and preventing disputes. The law recognizes various contract types, including fixed-term, indefinite, part-time, and intermittent contracts, each suited for specific employment scenarios. Fixed-term contracts are limited in renewal, while indefinite contracts offer greater job security. Employers should carefully select the appropriate contract type based on their needs.

Key clauses required in employment agreements include identification details, job description, work location, start date, remuneration, working hours, leave entitlements, termination conditions, and references to collective agreements if applicable. These clauses ensure clarity and legal compliance, protecting both parties' rights.

Employers must include essential clauses such as identification, job details, remuneration, work location, and termination conditions to ensure legal validity and clarity in employment agreements.

Cabo Verde is increasingly adopting remote work, supported by a stable political environment, improving internet infrastructure, and an attractive lifestyle. Companies must ensure compliance with evolving labor laws, formalizing remote arrangements through clear contracts that specify working hours, performance, and equipment provisions. Employers have obligations similar to on-site staff, including providing a safe work environment, necessary tools, and adhering to wage and social security regulations.

Flexible work options such as flextime, compressed workweeks, job sharing, and full or hybrid remote work are common. Data protection is critical; companies should implement security measures like encryption, VPNs, employee training, access controls, and incident response plans to ensure compliance with national laws. Equipment and expense policies should clarify provisions for company devices, reimbursements for internet and utilities, and possibly home office allowances. Reliable connectivity and appropriate technology tools—video conferencing, cloud solutions, and technical support—are vital for effective remote operations.

In Cabo Verde, employment termination must comply with specific legal procedures, including notice periods, severance pay, and valid grounds for dismissal. For indefinite contracts, notice periods depend on tenure: less than 1 year requires 15 days, 1–5 years 30 days, and over 5 years 60 days. Severance pay, applicable when terminated without just cause, is calculated based on the employee's salary, typically around 30 days per year of service, with eligibility limited to dismissals not due to misconduct or resignation.

Terminations can be with or without just cause. Just cause involves serious misconduct (e.g., theft, insubordination), while without just cause includes redundancy or restructuring, requiring notice and severance. Employers must follow procedural steps such as providing written notices, documenting reasons, and settling owed entitlements. Employees are protected against wrongful dismissal through judicial review, potential reinstatement, and prohibitions against discrimination. Proper documentation and legal compliance are essential to mitigate risks.

Cabo Verde's economy is increasingly adopting flexible work arrangements, with independent contracting and freelancing gaining traction across various sectors. This shift aligns with global trends towards project-based work, offering businesses and individuals greater flexibility. For employers, understanding the legal and operational nuances of engaging independent professionals is crucial for compliance and effective collaboration. Key considerations include correct worker classification, contract compliance, tax management, and intellectual property rights.

Distinguishing between employees and independent contractors in Cabo Verde is essential, as misclassification can result in significant penalties. Factors such as subordination, integration, economic dependence, tool provision, risk, and exclusivity help determine the relationship type. Contracts must clearly define the scope of work, payment terms, and intellectual property rights to ensure the independent nature of the arrangement. Independent contractors are responsible for their own tax obligations and insurance, including income tax, VAT (if applicable), and social security contributions.

Independent contractors are prevalent in sectors like tourism, IT, creative industries, consulting, construction, and education. These sectors benefit from the specialized skills and flexible labor that freelancers offer. Employers must ensure that contracts are carefully drafted to reflect the nature of the relationship and avoid employment implications.

Cabo Verde offers various visa types for foreign workers, primarily residence permits that allow living and working in the country for 1-2 years, renewable. The application process involves multiple steps, requiring compliance with specific legal and documentation requirements, making careful navigation essential for employers and employees.

Key visa types include work permits linked to residence permits, with the main focus on employment-based residence authorization. The process emphasizes adherence to immigration laws to ensure legal employment status.