Compliant HR, Payroll, Tax & Employer of Record Africa
Located in Central Africa with an area of 28,000 sq. Kms (11,000 sq. Mi) with the only sovereign state who’s has Spanish as an official language. It is bordered by Cameroon and Gabon with its largest city being Oyala which is intended to be the future capital and expected to be complete by 2020. Equatorial Guinea is a member of the Africa Union, Francophonie, OPEC and the CPLP.
It is one of the largest oil producers and third largest exporter in Sub Saharan Africa and is ranked 43rd in the world per capita. This wealth is unevenly distributed an according to the UN less than half the population have access to clean drinking water.
It gained independence in 1968 (12th October) when it became the Republic of Equatorial Guinea. It was in 1955 when Mobil found oil in Equatorial Guinea and the Country subsequently saw rapid growth.
Equatorial Guinea is the smallest African Country to be a member of the united nations with fewer than a million people living there. At present it is one of the only nations with a capital (Malabo) not on the mainland. The president, Teodoro Obiang has been serving since 1979 despite at least 12 attempts to overthrow him.
Spanish, French & Portuguese
Central African Franc CFA
Ministerio de Hacienda y Presupuestos
(Ministere des Finances et du Budget)
1 January – 31 December
West Africa Time WAT (UTC/GMT + 01:00)
Spanish, French & Portuguese
Central African Franc CFA
Ministerio de Hacienda y Presupuestos
(Ministere des Finances et du Budget)
1 January – 31 December
West Africa Time WAT (UTC/GMT + 01:00)
1- Temporary visas
A person who wants to enter Equatorial Guinea must apply for a temporary visa. This visa can be obtained by contacting an Equatorial Guinea Embassy in Belgium, Cameroon, China, Ethiopia, France, Gabon, Morocco, Nigeria, the Russian Federation, Spain or the United States. Foreigners who do not have an Equatorial Guinea Embassy in their countries may obtain a temporary visa in any country where an Equatorial Guinea Embassy is located.
In order to obtain an entry visa in EG, an individual must have a Letter of Invitation (LOI) issued by the Ministry of National Security or Ministry of Foreign Affairs authorizing the person to enter into the country.
US nationals are not required to obtain visas.
2- Work permits and self-employment
Any person that comes in EG to perform any lucrative activity, work or professional activity must have an administrative authorization which shall be issued by way of work permit.
The labour ministry issues the following five types of work permits:
- Permit A (PA) is granted to an employee who will work in a single work location for less than six months. It is not renewable.
- Initial Permit B (IPB) is granted to an individual who will engage in an established profession, working place or activity. It is valid for one year.
- Permit B Renewed (PBR) is granted to individuals holding IPB at the end of the validity period for IPB. It is valid for two years.
- Permit C (PC) is granted to individuals holding PBR at the end of the validity period for PBR. It is valid for three years.
- Permanent Permit (PP) is granted to individuals holding PC at the end of the validity period for PC.
A company must apply for a work permit before the foreign employee begins work in Equatorial Guinea. An application must be filed with the employment office of the city where the employer resides or where the employment contract will be carried out.
Before applying for a work permit, a person must apply for the authorization of recruitment.
Taxable income is defined as Income received and related to an employment contract and/or Income received for activities performed in EG.
The income for both national and expatriate employees working in EG is subject to PIT.
According to the tax code taxable income comprises of:
- Basic salary and overtime
- Bonuses indemnities and allowances; Expenses refunding
- Benefits in kind.
The Calculation, declaration and payment of payroll taxes is done at different stages.
The following amounts must be deducted from the taxable salary:
The employee contribution for INSESO and to the Work Protection Fund and Training Tax
Professional expenses: not to exceed the legal limit of 20% of the taxable salary with a maximum allowable amount of XAF 1,000,000 per year.
Thereafter, the PIT rates below are applied. Equatorial Guinea PIT is Annualised.
ANNUAL TAXABLE SALARY
|From XAF 0 to 1,000,000||0%|
|From XAF 1,000,001 to 3,000,000||10%|
|From XAF 3,000,001 to 5,000,000||15%|
|From XAF 5,000,001 to 10,000,000||20%|
|From XAF 10,000,001 to 15.000.000||25%|
|From XAF 15,000,001 to 20,000,000||30%|
|More than XAF 20,000,000||35%|
The Employer contribution is 21.5% of the base Salary
The Employee Contribution is 4.5% of the base Salary
Work Protection Fund
The Employer contribution is 1% of the Gross Salary
The Employee Contribution is 0.5% of the Gross Salary
This guide to the Labour Law in Equatorial Guinea is a general guide and an overview to law. There are sector specifics that are not mentioned which should be investigated prior to Employing staff. Our team can advise in more detail upon request.
Framework and Governing Law for Employment and Labour.
The governing law for employment issues in Equatorial Guinea is Labour Law (law num. 2/1990). Where the law is silent, the EG Employment Policy (law num. 6/1999) can be used as a reference. For employment matters, the EG Social Security Law and Inseso Regulatory Grant (Social Security Series number 3, 2001) also govern benefits and other rules of the work place.
Company policies and procedures can also be established; however, they must be in compliance with national laws
Any Employment contract is mutaually agreed prior to signing with the Employee able to resign at any time. The Employer may terminate the contract in accordance with article 81 of the National Labour Law. Contracts must be written.
January 1 – New Year
Vary the date – Thursday and Friday
May 1 – Labor Day
June 5 – Birthday of the President
August 3 – Freedom Day
August 15 – Day of the Basic Law
October 12 – Independence Day
December 8 – Immaculate Conception Day
December 25 – Christmas
The authorised types of contracts are “Limited Employment Contract” and “Fixed Term Contracts”. These are written for a specific period with a given start and end date.
The “unlimited contract” is where the Employee continues to work until either the Employer or Employee gives notice to terminate, after giving prior notice. The advice from the government is that the Employee is given a contract for a definite period of time. Expats and support staff hired under foreign companies are to be hired for specific services.
Contracts should include;
- Nature of the contract (limited or unlimited).
- Nature of the work.
- Duration of the contract (for fixed term contracts).
- The location of employment.
- Wages/remuneration payable.
- Date of the employment contract.
- Date of commencement of the employment contract.
Although the Ministry of Labour holds standard templates for contracts, whereby the employer and Employee fill in the missing information it is not mandatory to use them provided all the basic information is included. Each page of any contract must be signed or initialled where applicable, proving clauses have been accepted. An authorised representative of the Employing Company must also sign the contracts.
All contracts (signed) must be registered with the Ministry of Labour within 15 days of signing. Copies must be distributed to the Employee (within 3 days of submitting to the Ministry). A copy must be held on their personal record file and another copy held for company records.
Any Extension to a contract must be communicated verbally and in writing, with at least one month’s prior notice being given to the expiration date. When extending the contract the Employee must sign a new contract with the extension details. The extension can be done via a letter from the Employer and contain the new date of expiration and note that it is a modification of the original contract.
Any probation period under a contract must be for the first 90 days.
Any foreign worker ( with the exception of US Citizens) must obtain a Visa to enter Equatorial Guinea and then subsequently obtain a Valid Work permit and residency permit where required.
Permits valid for one year are renewable. The Permit will not be issued unless the Ministry of Labour has received and approved the contract as written above. Residency Permits are issued by the Ministry of National Security.
Termination or retrenchment.
Employment Termination and reduction in the work force is dealt with under Article 79 – 85 of the Labour Law.
The Company and the Employee are obligated to give notice of at least one week in advance when an Employee has worked a full month. After six months, a full month’s notice must then be given.
Notice can be waived with the consent of both Employer and Employee. The advance notice may also be waived if compensation equating to a full month’s salary or full week is granted as applicable.
Notice and compensation can be further waived where an employee has failed to meet the terms of the contract.
Resignations can be submitted by the Employee, who must in turn write to their supervisor stating the notice period start date and their intended leave date. The company can then confirm the last day of Employment to them in writing or with a witness present.
If a handover is required, the employee may have to remain for further days during the transition.
Dismissals are covered under Article 80 of the Labour Law. Various Violations include “affecting safety of people or equipment” Offending other Employees or obstructing normal company duties. This can lead to termination without prior notice.
The following are examples and in not a complete list;
- Violence, threats, insults or abuse against a fellow employee, the Company or its representatives and managers during work hours and/or on company premises. Acts occurring outside of the workplace and work hours may also be considered severe violations if it is proven that the perpetrator intentionally avoided the workplace to engage in these acts.
- Material losses caused intentionally by the employee or by the employee s negligence or serious fault to any property, work, machinery, vehicles, tools, raw material, products and other objects related to the work.
- Misrepresentation by the employee with false certifications or personal references regarding his/her capacity, conduct or professional aptitudes.
- Theft, robbery or any other crime against property executed by the employee at the workplace, regardless of the circumstances.
- The performance by the employee of immoral acts at the workplace.
- Possession, display and/or distribution of pornographic materials or products.
- The voluntary release by the employee, in detriment of the company, of industrial or fabrication secrets, or issues that are confidential and that the employee knew as a result of his job.
- The open and reiterated denial by the employee to adopt preventive measures and accept the procedures indicated by law, the regulations, and the competent authorities or by the Company, destined to avoid work-related accidents or illnesses, or the destruction of the environment.
- Fraud, lack of loyalty or abuse of trust in the responsibilities granted.
- Sexual or racial harassment of other members of staff or any person on Company premises or on Company business.
Retrenchment (reduction in Work force)
Article 83 of labour law of Equatorial Guinea provides a Company’s the ability to terminate employment contracts due to a reduction in work force or the end of its contract. It also states that the Company may end the contracts of employees due to economic, technological, structural or comparable reasons.
These reasons must be proven and communicated to the employees at least three months in advance.
Any person whose contract has been terminated under these clauses must have preference when the company is able to Employ again.
Article 75 covers severance pay with section one, stating that the Employee will have the right to 45 days salary for every year of service worked and pro-rated for the remaining months.
Section 2 covers domestic workers who are entitled to 15 days salary for each year worked and again pro-rated for the remaining months.
Section 4 states that at the time of the severance pay, the amount will be adjusted taking into consideration the last based salary owned to the worker. The employees are still entitled to their payments when it comes to severance pay, bonus calculations and other company benefits.
The Retirement age is 60 for both Men and Women.
Health & Safety
This is cover under article 27.
The following are general obligations of the employer
- To provide practical training in health and safety to the workers when they use or when they change jobs or have to apply a new technique or using new substances that may cause risk to the worker or his companions or others; in any case take care that no worker is exposed to the action of conditions on physical, chemical, biological, environmental or any other opinion without being warned of the damage that could cause health and ways to prevent it.
- where necessary, provide their workers with protective clothing and equipment appropriate to prevent, as far as is reasonably practicable, risk of accidents or adverse health effects
- avoid and prevent accidents and occupational diseases
- According to the type of risk to which the workers may be exposed, the possibility of medical assistance of the employer, at the discretion of the authorities work, have a medical services and pharmacist care for their workers.
- To communicate without delay to the Institute of Social Security (INSESO) and proceeding with the idea to set a affection, illness or accidents at work and any other pathological conditions that may take place in the work environment and keep a proper record f them.
- To investigate the causes of accidents and occupational diseases and take appropriate preventive measures.
- Take notes of the approaches to them by workers about the environment and working conditions to and adapt the necessary measures
- To favor the participation of workers in the committee of hygiene and security
- Collaborate with the health authorities for the eradication of endemic diseases
This list is again is not complete.
In the absence of specific regulations, Companies operating within the territory of Equatorial Guinea must have specific policies on the following topics which aim to assist in the provision of a safe and healthy working environment.
- Company Safety Policy
- Environmental Policy
- Fire and Evacuation Procedure
- Alcohol & Substance Abuse Policy
- Medical Policy
- Periodic safety meetings
- Environment Health & Safety meetings
Leave and Bonus Pay
Whilst Equatorial Labour regulations dictate certain benefits, Companies are free to add to those benefits where they see fit.
Annual Leave is a full month leave after a full year has been worked.
Maternity leave is 6 weeks prior to birth and 6 weeks after birth. Additional leave may be granted depending on circumstances.
Overtime and Holiday pay
Companies are to observe the official holidays as issued by the government. Employees who work during those periods are entitled to one and a half time + the normal rate. Overtime is paid at 25% above the normal rate.
Those working on rotation will receive a total of 26 weeks off in any 12 months.
It is the Employers responsibility to cover Expat repatriation.
After completing a year of service, local employees are eligible to receive the following bonuses:
- National Independence Day:
- Employees receive 15 days salary (half month monthly salary) to be paid before 12 October each year;
- Christmas Bonus: Employees receive 15 days salary (half month monthly salary) payable before 24 December each year.
Employees who have not completed one year of service at the time of previous payments made will receive an amount prorated on the monthly salary in accordance with the number of months worked.
Unpaid vacation can be carried over to the next year.
The employee can choose to be paid for the vacation days in lieu of actually taking the vacation.
Article 82 covers procedures under dispute resolution. Disputes are adjudicated in the courts with Labour disputes being first referred to the Ministry of Labour.
If either the Employer or Employee is unhappy with the Ministry’s decision and no amicable agreement found, then the Ministry may refer the matter to court. This must be done within 2 weeks of the complaint being filed.
Employer of Record for Equatorial Guinea Africa
Although an Employer of Record often works with a staffing agency, the two are separate business entities. Each has specific roles and responsibilities in their symbiotic relationship. We Handle Employer of Record and Payroll throughout Africa.
An employer of record serves as an employer for tax purposes while an employee performs work for the client, such as a staffing firm or other business. An employer of record handles all personnel functions, including payroll processing and funding; tax deposits and filing; and employment contracts and paperwork. Maintaining a Certificate of Insurance, and Verification forms; unemployment insurance; and workers’ compensation are done. An employer of record also performs background checks and drug screenings; administers benefits; terminates employees; and may handle worker issues. Conversely, a staffing firm recruits employees and assigns them to businesses for worker absences, temporary skill shortages, seasonal work, or special projects. Their main focus is to match temporary, temp-to-hire, long-term, or permanent workers with clients in need.
Using an employer of record allows the client company to free up time and cost-effectively outsource its necessary human resource functions, employee benefits, payroll, workers’ compensation, and compliance issues. The money saved by outsourcing these functions can be used to expand the business, provide steady income for the owner, or fill a variety of other purposes. Onboarding quality talent is done quickly by an employer of record so clients can quickly ramp up staff and staffing agencies can deliver top quality workers to their clients. Most staffing agency owners don’t have the HR training, payroll and accounting skills, compliance knowledge, or risk management, insurance, and employee benefits background to meet the demands of being an employer.
Responsibilities and Liabilities
The client company or staffing agency owner retains control over business operations and responsibility for workplace safety and compliance. The employer of record assumes responsibilities and liabilities for employment issues such as administration, payroll, taxes, benefits, and maintaining employee records. Because the employer of record assumes most of the responsibility for compliance and tax laws, the client or staffing services owner receives peace of mind, knowing their business is being taken care of by qualified professionals.
Whereas an employer of record and staffing agency often work together, they have diverse purposes in the workplace.