Employer of Record in Timor-Leste

An Employer of Record (EOR) in Timor-Leste allows you to hire employees in the country without setting up your own local company. The EOR acts as the legal employer for your chosen candidate. This means they handle all the administrative and legal parts of employment. You still manage your employee's day-to-day work. An EOR service like Rivermate can simplify your expansion into Timor-Leste.

How an Employer of Record (EOR) Works in Timor-Leste

Using an EOR in Timor-Leste follows a straightforward process. Here is how it works:

1. You find your ideal candidate. You are in charge of recruiting and selecting the person you want to hire in Timor-Leste.
2. The EOR hires the candidate legally. The EOR provides a compliant employment contract and officially onboards your new team member under their local business entity.
3. The EOR manages HR and payroll. They take care of salary payments, taxes, benefits, and social security contributions. This ensures everything follows local labor laws.
4. You manage the daily workflow. Your employee works for you, following your direction and contributing to your business goals. The EOR handles the backend administrative tasks.

Benefits of Using an EOR for Hiring in Timor-Leste

Using an EOR makes hiring in Timor-Leste much simpler and faster. You can enter the market quickly without the time and expense of establishing a legal entity. An EOR ensures your hiring practices are fully compliant with local laws, reducing risk.

Here are some key benefits:

• Fast Market Entry: You can hire employees and start operations in days, not months.
• Compliance Assurance: The EOR stays up-to-date with Timor-Leste's labor laws, so you don't have to.
• Payroll and Tax Management: An EOR handles all payroll calculations, tax withholdings, and payments in the local currency.
• Focus on Your Business: You can concentrate on your core business activities while the EOR manages employment administration.

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

Hiring in Timor-Leste means navigating a specific set of labor laws that protect employees. The country's 2012 Labour Code is the main source of these regulations, and it aligns with international standards. Understanding these rules is key to building a successful team in this Southeast Asian nation.

Employment contracts & must-have clauses

You must provide a written employment contract in Timor-Leste. If you don't, the law presumes the contract is for an indefinite period, and you, the employer, are responsible for any legal consequences.

There are two main types of employment contracts:

• Indefinite-term contracts: These are for permanent roles without a specified end date.
• Fixed-term contracts: These have a set start and end date and are used for specific projects, seasonal work, or temporary needs. They cannot exceed three years, including renewals.

Every contract must include these essential clauses to be compliant:

• Identification of both the employer and employee
• Place of work
• Job title and description of duties
• Start date of employment
• Duration of the contract (if it's a fixed term)
• Salary and how often it will be paid
• Working hours
• Annual leave entitlement
• Probationary period details, if you have one

Probation periods

You can include a probationary period in an employment contract to see if a new hire is a good fit. This must be in writing. During this time, either you or the employee can end the contract without notice and without needing to show a specific reason, unless you've agreed otherwise in writing.

The length of the probation period depends on the contract type:

• Indefinite-term contracts: Up to one month. This can be extended to three months for highly technical or management roles.
• Fixed-term contracts (up to 6 months): 8 days.
• Fixed-term contracts (over 6 months): 15 days.

Working hours & overtime

The standard workweek in Timor-Leste is a maximum of 44 hours, with a typical workday of 8 hours. Any work beyond these hours is considered overtime.

Here’s how you must compensate for extra hours:

• Overtime: 150% of the regular hourly rate.
• Work on a rest day or public holiday: 200% of the regular hourly rate.
• Night work (between 9 p.m. and 6 a.m.): An additional 25% surplus.

Public & regional holidays

Employees in Timor-Leste are entitled to paid leave on public holidays. There are 17 national holidays. If a holiday falls on a weekend, it is not compensated with another day off.

Public Holidays in 2025

Hiring contractors in Timor-Leste

Hiring independent contractors can give your business flexibility. Contractors are not covered by the same labor laws as employees, so they aren't entitled to benefits like paid leave or severance pay. Their work is governed by a commercial contract, not an employment contract.

However, you must be careful about misclassification. This is the risk of treating a contractor like an employee. If a court determines that a worker is a de facto employee, you could face serious penalties. These can include:

• Back payment of taxes and social security contributions
• Payment for any employee benefits that were not provided
• Fines and interest

An Employer of Record (EOR) can help you avoid these risks. An EOR legally employs workers on your behalf. This means the EOR takes on the responsibility for compliant contracts, payroll, taxes, and benefits. You get to manage the employee's day-to-day work without the legal and administrative burden of local employment laws.

In Timor-Leste, your approach to compensation needs to be competitive and compliant. To attract and keep good people, you need a solid understanding of local salary expectations, minimum wage, and benefits. Building a fair and legal compensation plan is key to your success in the country. This means looking at industry standards, the roles you're hiring for, and the economic environment.

Payroll cycles & wage structure

The standard payroll cycle in Timor-Leste is monthly. You will typically pay employees once a month, either at the end of the month or the beginning of the next. Direct bank transfers are the most common and preferred payment method.

When setting salaries, consider the industry, company size, and the employee's experience and responsibilities. While salaries vary, sectors like oil and gas, international development, and telecommunications often offer higher pay.

Overtime & minimums

The national minimum wage in Timor-Leste is USD 115 per month. This applies to all employees in any industry.

The standard work week is a maximum of 44 hours, with a standard daily limit of 8 hours. For any hours worked beyond this, you must pay overtime. The overtime rate is typically 150% of the regular hourly wage.

While not required by law for all companies, a 13th-month salary is a common practice. Many private companies choose to provide this extra month's pay at the end of the year to stay competitive.

Employer taxes and contributions

As an employer, you are responsible for contributions to social security.

Employee taxes and deductions

Employees also contribute to social security and pay income tax. Residents of Timor-Leste are taxed on their worldwide income, while non-residents are only taxed on income from Timor-Leste.

Understanding benefits and leave in Timor-Leste helps you support your team properly. The country's labor laws provide a foundation for employee entitlements. These laws cover everything from paid time off to social security contributions. Knowing these rules is key to staying compliant and keeping your employees happy.

Statutory leave

Your employees in Timor-Leste have a right to several types of paid leave.

• Annual Leave After one year of work, employees get a minimum of 12 to 20 paid vacation days. The exact number can depend on their service length.
• Sick Leave Employees are entitled to paid sick leave if an illness or injury prevents them from working. You will need a doctor's certificate for absences that last more than a few days.
• Maternity Leave Female employees receive 12 weeks of paid maternity leave. Social security may cover the pay during this time if the employee has made enough contributions.
• Paternity Leave Male employees get five consecutive working days of paid leave after their child is born.
• Other Leave Employees can take paid time off for specific family events. This includes up to three days for events like marriage or bereavement and up to five days to care for a sick child under ten.

Public holidays & regional holidays

Employees get a paid day off for national public holidays. If they have to work on a holiday, they are typically paid double their normal rate.

Note: Dates for religious holidays like Eid al-Fitr and Eid al-Adha may vary based on the lunar calendar.

Typical supplemental benefits

To attract and retain talent, many employers offer benefits beyond the legal requirements.

How an EOR can help with setting up benefits

Setting up a benefits plan in a new country can be complex. An Employer of Record (EOR) simplifies this process for you. An EOR acts as the legal employer for your staff in Timor-Leste.

We handle all the administrative tasks. This includes managing payroll, ensuring compliance with local labor laws, and administering both statutory and supplemental benefits. We make sure your employees get the correct leave, holiday pay, and social security contributions. By handling the complexities of local regulations, we free you up to focus on managing your team and growing your business.

When your time with an employee in Timor-Leste comes to an end, you need to follow a clear process. The country's labor laws outline specific steps for both you and the employee. A proper offboarding ensures you meet all legal requirements. This includes providing written notice and paying any final wages and severance owed to the employee.

Notice periods

When you decide to end an employment contract, you must provide the employee with written notice. The length of this notice period depends on how long the employee has worked for you.

• Less than six months: 10 days written notice.
• Six months to one year: 15 days written notice.
• Over one year: 30 days written notice.

If you are terminating an employee for reasons related to market, technology, or structural changes, the notice periods are slightly different:

• Up to two years of service: 15 days notice.
• More than two years of service: 30 days notice.

Employees who choose to resign must give you at least 30 days of written notice. During a probationary period, either you or the employee can terminate the contract without any notice.

Severance pay

In Timor-Leste, severance pay is calculated based on the employee's length of service and their final salary.

For terminations not based on just cause, severance pay may be required depending on the length of service.

How Rivermate handles compliant exits

Navigating the details of employment law in another country can be complex. We handle the entire offboarding process for you. We make sure that every step, from notice periods to final payments, follows Timor-Leste's labor laws.

We will:

• Calculate the correct notice period.
• Determine the right amount of severance pay.
• Ensure all final payments are made correctly and on time.
• Provide you with the peace of mind that the termination is compliant.

Navigating visas and work permits in Timor-Leste requires a clear understanding of the process. For anyone looking to work in the country, securing the right authorization is essential. The process can have multiple steps, and knowing the requirements upfront will make your entry into the Timor-Leste workforce smoother.

Employment visas & sponsorship realities

To work in Timor-Leste, you need a work visa. An Employer of Record (EOR) can help you with this. An EOR can act as your legal employer in Timor-Leste, handling the complexities of hiring, compliance, and payroll. This means you don't need to set up your own legal entity in the country to hire employees.

Here's what you can expect:

• Work Permit Requirement: Any non-citizen planning to work in Timor-Leste must have a valid work permit before starting employment.
• Application Process: The employer, or the EOR on your behalf, applies for the work permit through the Serviço de Migração (Immigration Service).
• Required Documents: You will typically need to provide a valid passport, your employment contract, medical clearance, and proof of your qualifications.

An EOR simplifies the process by managing the paperwork and ensuring everything complies with local laws. They can sponsor work visas for foreign nationals, making it a practical route for companies looking to hire in Timor-Leste without establishing a local entity.

Business travel compliance

If you are traveling to Timor-Leste for short-term business activities, you will likely need a business visa. It's important to understand the limitations of a business visa. You cannot engage in regular employment on a business visa.

Here are some key points for business travel:

• Visa on Arrival: For some nationalities arriving at the Presidente Nicolau Lobato International Airport or the Dili Sea Port, a visa on arrival may be available for tourism and business.
• Business Visa Classes: There are different classes of business visas, depending on the nature and duration of your business activities.
• Compliance is Key: Always ensure you have the correct visa for your intended activities. Working on a visa not designated for employment can lead to penalties.

Using an EOR can help you navigate these complexities, ensuring you and your employees have the right visas for your business needs in Timor-Leste.