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Employment in Papua New Guinea

Papua New Guinea’s terms and conditions of employment are mostly overseen by the Employment Act (Chapter 373) for citizens, and both the Employment Act and the Employment of Non-Citizens Act (Chapter 374) for foreigners. In some cities, including Port Moresby, Lae, Rabaul and Mount Hagen, terms of employment are prescribed under the Common Rules. In case of conflict, the legislation which provides more favourable conditions to the employee is preferred. As a country still in its early stages of development, the law can be confusing and at times obscure. For these and many other reasons the following are only guidelines in the broadest sense, and professional legal services are recommended when employing in PNG.

Key points on employment in Papua New Guinea

There are several key areas to be aware of within PNG’s employment regulatory framework, especially for companies that plan to initiate a full local office and human resources department. These challenges can be mitigated by use of a locally sourced payroll provider who is familiar with all of the local laws and rules for both local employees as well as foreign nationals.

  1. Contracts

    Fixed term contracts are permitted for permanent tasks. The maximum length of a single fixed-term contract is 24 months if the employee is unaccompanied by dependents, or 36 months if they are accompanied, as stipulated by the Employment Act Sections 22(2) and (4). Unlimited renewals are permitted.

  2. Probation Periods

    Papua New Guinea’s Employment Act of 1978 does not specify any probationary period regulations.

  3. Termination Procedures

    Generally, the employment contract is considered terminated upon the date at which both parties agreed it would conclude. If the contact is terminated prior, the notice periods are as follows:

    • One day’s notice if the employee has been employed for less than 4 weeks
    • One week’s notice if the employee has been employed for between 4 weeks and 1 year
    • Two weeks’ notice if the employee has been employed for between 1 and 5 years
    • Four weeks’ notice if the employee has been employed for 5 years or more

    Employment may be terminated immediately, without notice or payment, if the employee:

    • Wilfully disobeys a reasonable or lawful order
    • Misconducts themselves by an act or omission inconsistent with their duties
    • Commits fraud or is guilty of dishonesty
    • Habitually neglects their duties
    • Is imprisoned for a period exceeding 7 days
    • Is continually absent from their employment without leave or reasonable excuse
    • Is convicted of an offence or any other employment law
  4. Statutory Leave

    There are laws that regulate leave periods based on years of service and the type of leave requested, including:

    1. Annual Leave: Employees are entitled to 14 consecutive days paid leave including non-working days occurring within that period of paid leave.
    1. Maternity Leave: Female employees are entitled to not less than 108 days of maternity leave.
    1. Sick Leave: Employees are entitled to six days paid sick leave in each year, which may be accumulative to a maximum of 18 days per year.
  5. Pension and Benefits

    The system of welfare and benefits is still in its early stages of development in Papua New Guinea and therefore is not only complex but also difficult to obtain details of. The general contribution for pension is employer contribution of 8.4% of salary and employee contribution of 6%.

Outsourcing Employment Through a GEO Employer of Record Service

Compliance with local employment requirements is just one of the issues foreign companies face when employing staff in Papua New Guinea. For companies which intend to employ their staff directly through their incorporated PNG entity, professional legal advice is recommended. Shield GEO provides an alternative path for companies to outsource the employment of their staff in PNG.

As a Global Employer Organization (GEO), Shield GEO acts as the Employer of Record and ensures the employment is compliant with host country regulations regarding employment. In addition Shield GEO will handle payroll processing, tax and immigration. Using Shield GEO is the fastest and most cost effective way to deploy local and foreign workers into PNG.

The Shield GEO solution is an attractive alternative where

– the company is looking to employ staff quickly

– the company doesn’t have an appropriately incorporated entity in PNG

– the company wants to work within a defined budget

– the company wants to limit its initial commitment in PNG

– the company needs help with tax, employment, immigration and payroll compliance in PNG

Shield GEO can contract directly with the company to employ and payroll their staff in Papua New Guinea. Shield GEO supplies local employment contracts for the staff which ensure that local statutory requirements are met covering issues such as termination, probation periods, leave entitlements and statutory benefits. Shield GEO is able to advise companies how to cover local employment regulations whilst still providing consistent global employment policies. Understand more about outsourced employment through Shield GEO.



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