Employer of Record in Solomon Islands

Companies looking to expand into the Solomon Islands market in 2025 can engage local talent through several established methods. Navigating the unique employment regulations and administrative requirements is crucial for compliant and effective hiring. Understanding the available options is the first step towards building a successful team in this dynamic island nation, ensuring your operations are both efficient and fully compliant with local labor laws.

When considering hiring employees in Solomon Islands, companies typically have three main approaches:

• Establishing a local entity: This involves incorporating a legal presence in the Solomon Islands, which requires significant time, capital, and a deep understanding of local corporate and labor laws.
• Utilizing an Employer of Record (EOR): Partnering with an EOR like Rivermate allows your company to hire employees compliantly without establishing your own entity, as the EOR acts as the legal employer.
• Hiring independent contractors: This offers flexibility but requires careful classification to avoid misclassification risks under Solomon Islands labor laws, which could lead to penalties.

How an EOR Works in Solomon Islands

An Employer of Record (EOR) in Solomon Islands legally employs your chosen talent on your behalf, handling all the complex local administrative and compliance burdens. This enables your company to operate as a client, managing the daily tasks and professional responsibilities of your team, while the EOR ensures full legal adherence. The EOR takes care of:

• Payroll processing and remitting salaries in accordance with local regulations.
• Tax withholding and remittance to relevant Solomon Islands authorities.
• Benefits administration, including health insurance, leave entitlements, and other statutory benefits.
• Compliance with local labor laws, including employment contracts, termination procedures, and working conditions.
• Maintaining accurate employment records as required by Solomon Islands law.
• Handling all aspects of employee registration with local government bodies.

Benefits of Using an EOR in Solomon Islands

Engaging an EOR offers numerous advantages for companies seeking to expand into the Solomon Islands without the commitment and complexity of establishing a local entity:

• Accelerated market entry: Hire employees in a fraction of the time it would take to set up your own legal entity.
• Reduced legal and compliance risk: The EOR assumes responsibility for navigating Solomon Islands' labor laws, payroll, and tax regulations, mitigating your company's exposure to non-compliance.
• Cost efficiency: Avoid the significant expenses associated with entity formation, ongoing legal counsel, and local administrative staff.
• Focus on core business: Delegate all HR and legal complexities to the EOR, allowing your internal teams to concentrate on strategic objectives and growth.
• Access to top talent: Recruit and onboard talent in Solomon Islands regardless of your company's physical presence or legal standing in the country.

Rivermate's transparent pricing model eliminates complexity with a single, competitive monthly fee per employee. Unlike traditional PEO providers, our pricing in Solomon Islands 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 Solomon Islands.

Employers in the Solomon Islands must deduct income tax via the PAYE system and remit it monthly to the IRD, with deadlines typically within 15 days after each month. They are also responsible for contributing to the Solomon Islands National Provident Fund (SINPF), deducting 5% of employee salaries and contributing an additional 7.5%, totaling 12.5%. No other payroll taxes are currently mandated.

Income tax rates for residents in 2025 are progressive, with a tax-free threshold of SBD 12,000. Non-residents face a flat 35% tax rate. Employers must use official IRD tables for accurate withholding and maintain records for at least seven years. Annual reconciliation reports are required, alongside monthly SINPF remittances.

Foreign workers are generally taxed at 35%, and companies should consider potential permanent establishment implications and double tax treaties. Employers must also keep detailed records and comply with deadlines to avoid penalties.

Salary compensation in the Solomon Islands varies by industry and role, with higher-paying sectors like finance, construction, and tourism. Typical annual salaries range from SBD 30,000 for retail roles to SBD 300,000 for hotel managers, with specialized roles such as civil engineers earning up to SBD 250,000. The minimum wage is set at SBD 8.00 per hour, enforced by the Labour Ministry, covering most employees under the Labour Act.

Employers commonly supplement base pay with bonuses and allowances, including annual, performance, housing, transportation, medical, and education allowances, which help attract and retain talent. Payroll is generally processed on a bi-weekly or monthly basis, with direct bank transfers being the preferred payment method, alongside deductions for taxes and statutory contributions.

Salary trends indicate increasing demand for skilled workers, inflation-driven wage rises, and a growing emphasis on comprehensive benefits packages. Employers should monitor these trends to remain competitive in attracting talent.

Employees in the Solomon Islands are entitled to various leave types, with key provisions summarized below. The standard annual paid leave is 15 working days per year, must be taken within six months, and employees receive their normal pay during this period. Public holidays include New Year's Day, Good Friday, Easter Monday, Whit Monday, Independence Day (July 7), Christmas (December 25), and Boxing Day (December 26), with paid days off and overtime or substitute days if worked.

Sick leave provides 14 working days annually, requiring a medical certificate for paid leave. Parental leave includes 12 weeks of maternity leave (generally unpaid), 5 days of paternity leave (unpaid), and adoption leave, which varies by employer policies. Additional leave types include bereavement, study, and sabbatical leave, often depending on employer policies.

Employee benefits in the Solomon Islands are vital for attracting and retaining talent, with legal compliance and competitiveness being key considerations. Mandatory benefits include minimum wage, paid public holidays, annual leave, sick leave, maternity leave, severance pay, and workers' compensation insurance, as outlined by the Employment Act. Employers must stay updated on evolving regulations to ensure compliance and cost-effectiveness.

Common optional benefits that enhance employee satisfaction include private health insurance, life insurance, retirement/pension plans, housing and transportation allowances, professional development, and Employee Assistance Programs (EAPs). Private health insurance typically covers medical consultations, hospital stays, and medications, with costs shared between employer and employee. Retirement plans primarily involve the National Provident Fund (NPF), where both parties contribute a percentage of salary, with supplementary plans available.

Employers of different sizes tailor benefits packages accordingly, with larger firms offering more comprehensive options. Cost considerations are crucial, and industry-specific practices influence benefit offerings. Overall, a well-structured benefits program aligns with legal requirements and market expectations, supporting workforce stability and organizational success.

Employment agreements in the Solomon Islands are governed mainly by the Labour Act, emphasizing compliance, fair labor practices, and clarity for both employers and employees. These agreements specify job responsibilities, pay, hours, and termination conditions, ensuring legal adherence and dispute prevention.

There are two main contract types:

Employers should ensure agreements include essential clauses such as probation, confidentiality, non-compete, and termination procedures to align with statutory standards and protect interests.

Remote work in the Solomon Islands is expanding despite developing digital infrastructure, driven by global trends. While there is no specific remote work legislation, existing labor laws such as the Employment Act 1996 apply, requiring clear employment contracts, adherence to health and safety standards, and responsible data handling. Employers must ensure safe work environments, fair treatment, and compliance with regulations, emphasizing communication and performance management.

Flexible arrangements are increasingly adopted, including full-time remote, hybrid, flextime, compressed workweeks, and job sharing. Key data points include:

Data protection is critical, with policies on data security, secure access via VPNs, employee training, breach response plans, and adherence to standards like GDPR. Equipment and expense policies should specify provision, reimbursement, and clear processes, including allowances for internet and setup stipends.

Reliable connectivity and technology infrastructure are vital, requiring high-speed internet, communication tools, remote IT support, cloud solutions, and cybersecurity measures. These frameworks enable effective remote work management, fostering productivity and legal compliance in the Solomon Islands.

Employment termination in Solomon Islands is governed by the Employment Act 1996, requiring employers to follow specific procedures to ensure lawful dismissal and avoid legal disputes. Key aspects include adherence to notice periods, fair grounds for termination, and proper documentation. Employers must provide written notice, clearly stating reasons and effective dates, with minimum notice periods based on service length:

Severance pay is generally due for redundancies or dismissals without cause, calculated as:

Severance Pay = (Years of Service) x (Weeks of Pay per Year)

Typically, 2-4 weeks of pay per year are standard, but entitlement depends on contract or industry practice. Termination grounds include misconduct, poor performance, breach of contract (with cause), or redundancy due to restructuring, technological change, or economic downturn (without cause). Employers must conduct investigations, hold hearings, and maintain records to ensure fairness. Employees are protected against wrongful dismissal, with claims handled by the Labour Court, which can order reinstatement or compensation. To minimize risks, employers should follow transparent procedures, document actions, and seek legal advice when necessary.

Freelancing in the Solomon Islands is expanding, offering businesses flexibility and access to specialized skills, while providing workers greater autonomy. Key legal distinctions between employees and contractors hinge on control, integration, economic dependence, tools provision, and profit potential. Misclassification risks legal and financial penalties.

Contracting practices typically involve written agreements, with common structures including fixed-price, time-based, and retainer contracts. Important contract elements cover scope, payment, confidentiality, IP rights, liability, and dispute resolution. IP ownership can be assigned, licensed, or jointly owned, with clear contract terms essential to prevent disputes.

Freelancers are responsible for their taxes and insurance, including income tax, GST, and securing their own workers' compensation, liability, and professional indemnity coverage. Industries utilizing contractors span construction, tourism, agriculture, IT, consulting, creative arts, and transportation, enabling sector-specific skill access and workforce flexibility.

Foreign nationals seeking employment in the Solomon Islands must obtain a work permit, typically sponsored by a local employer. The country offers various visa types, including visitor, business, work permit, and student visas. The work permit process involves sponsorship and compliance with immigration regulations, which can be complex but manageable with proper guidance.

Key visa details are summarized below:

Employers should ensure compliance with application procedures and sponsorship requirements to facilitate work permit issuance for foreign employees.