If you are a foreigner setting up a business in the Maldives, understanding employment requirements is essential to ensure compliance with local employment laws. Here is an overview of the key requirements outlined by the Employment Act to help you navigate the legal framework and maintain a compliant workforce.
Employment Agreement
Employers must execute an Employment Agreement with each employee they hire. Employment Agreements must contain the following information.
- Employee identification information: name, permanent address, current address, identity card or passport number, date of birth, nationality, emergency contact person’s name, address and phone number.
- Employment status: whether the employment is permanent or temporary.
- Start date: date of commencement of the Employment Agreement.
- Compensation: remuneration and other benefits to which the employee is entitled.
- Salary details: salary amount and method for the calculation of salary.
- Payday: scheduled payday.
- Leave entitlements: leave days.
- Disciplinary measures: disciplinary actions that may be taken against the employee due to their conduct.
- Performance appraisal: method for the employee’s performance appraisal.
- Termination: manner of dismissal from employment.
Written Job Description
Employers must provide each employee with a written job description detailing their duties and the scope of their employment within 1 month of starting their job. However, employers are exempt from this requirement if they hire employees whose total working hours are less than 16 hours per week, who are employed for a period of less than 6 weeks, or for a specific task to be completed within 6 weeks.
A job description must include the following information:
- name, address and nationality of the employer and the type of work carried out by the employer.
- name, permanent address, current address, identity card or passport number, date of birth and nationality of the employee.
- job title and detailed job description, including the type of work.
- place of employment.
- normal working hours.
Probationary Period for New Employees
Employers may require employees to serve a probationary period of up to 3 months from the start date of their employment. If a probationary period is required, it must be specified in the Employment Agreement. Either the employer or the employee may terminate the Employment Agreement within the probationary period without prior notice.
Compensation, Contributions and Pay Cycle
- Minimum wage: employers must comply with the minimum wage set by the government. Minimum wage applies only for Maldivian employees whereas foreign employees are exempt from it. Remunerations that fall within minimum wage include basic salary and fixed allowances. For more information on minimum wage, refer to our article on this topic.
- Permitted deductions from salary: employers may only deduct from an employee’s salary for the time absent from work during official work hours.
- Overtime allowance: overtime work must be agreed upon in advance by the employer and employee in the Employment Agreement. Employers are required to compensate employees for overtime. Employees working overtime on regular working days must be paid 1 ¼ times their hourly salary. For overtime on public holidays and Fridays, employees must be paid 1 ½ times their hourly salary.
- Ramadan allowance: employers must pay a Ramadan allowance of MVR 3,000 (approx. US$ 195) to each Maldivian employee before the start of Ramadan. While this requirement does not apply to foreign employees, employers may choose to provide this allowance to foreign Muslim employees.
- Pension contributions: employers must register Maldivian employees between the ages of 16 to 65 years with the Maldives Retirement Pension Scheme (MRPS). The Employment Agreement must include a clause stating the provision of pension contribution to the MRPS. Each month, both the employer and employee must contribute 7% of the pensionable wage to the MRPS.
- Service charge: employers must distribute 99% of the service charge collected in any given month equally among all of their employees. For information on service charge, refer to our article on this topic.
- Pay cycle: employers are required to pay employees on a monthly basis, except for temporary employees. In the case of temporary employees, they must be paid on a daily basis unless otherwise agreed between the employer and the employee.
Working Hours and Days Off
- Maximum working hours per week: an employee can be required to work up to 48 hours per week, excluding authorized overtime.
- Days off: if employees are required to work for more than 6 consecutive days, employers must grant them a 24-hour rest period designated as a day off. However, employees at tourist resorts, tourist vessels, or uninhabited islands designated for industrial projects may accumulate one-day off for every 6 consecutive days worked and use the accumulated leave together.
- Mealtime: each employee must be given a 30-minute break for meal time if they are required to work consecutively for more than 5 hours, except for those employees exempted under the Employment Act. Employers must not require employees to work during mealtimes.
- Prayer time: employers must grant a 15-minute break for prayer prior to the end of the respective prayer time. An employee working for consecutive 4 hours without a break is entitled to a 15-minute break.
Employees’ Leave Entitlements
- Annual leave: each employee is entitled to 30 days of paid annual leave upon completing one year of employment.
- Sick leave: employers must grant at least 30 days of paid sick leave annually. Employees may use up to 15 days without a medical certificate, provided the leave does not exceed two consecutive days.
- Maternity leave: female employees are entitled to 60 days of maternity leave upon submission of a medical certificate specifying the estimated delivery date from a licensed medical practitioner. Up to 30 days may be taken before the expected delivery date. An additional 28 days can be granted if a medical practitioner certifies the employee’s inability to resume work (due to ill health of the mother or the baby). This leave can be taken before or after the estimated delivery date, and the employer may choose not to pay for this additional duration.
- Paternity leave: male employees are entitled to 3 days of paid leave for the birth of their child, starting from the date of birth.
- Circumcision leave: employees are entitled to 5 days of paid leave for their child’s circumcision.
- Family responsibility leave: employees are entitled to 10 days of paid leave per year to attend to important obligations, such as caring for ill family members.
Disciplinary Measures and Dismissal
- Disciplinary action: employers have the authority to take appropriate disciplinary action if employees fail to adhere to work ethics or their duties. Disciplinary action can include counseling, caution in writing, suspension from work for a period not exceeding 14 days or demotion.
- Dismissal: employees may only be dismissed from employment based on reasonable cause, and it is the employer’s responsibility to demonstrate appropriate cause for the dismissal. Statutory minimum notice periods apply for the termination of employment agreements of indefinite term, ranging from 2 weeks’ notice to 2 months’ notice. Employees may be dismissed without notice only in cases of unacceptable work ethics (such as fraud or when retaining the employee is detrimental to the employer or workplace) or during their probationary period.
RCO Lawyers offers specialized expertise to ensure your business adheres to local regulations seamlessly. Reach out to us now for tailored legal solutions that protect your interests and foster compliance.