• Legal system, currency, language

    Constitutional and civil law with certain application of case law. Pesos (ARS). Spanish.


  • Corporate presence requirements & payroll set-up

    A foreign entity cannot hire employees in Argentina without a local corporate presence.

    Employers must pay social security contributions (23% or 27% on top of salaries, depending on the company's activity and revenues). Employees must contribute 17% of their salaries to the social security system (to be withheld by the employer and subject to certain taxable limits). Income tax is also withheld by the employer when paying employees' salaries (maximum rate 35%, subject to a progressive scale).

    Collective bargaining agreements for certain activities provide payments to be made by the employer and/or the unionized employees to the relevant unions.

  • Pre-hire checks


    • Pre-hire medical checks are required pursuant to resolutions issued by the Occupational Hazard Superintendence. If an employee does not complete a pre-hire medical check, the employee will be deemed to have begun work in optimal health; therefore, any injuries or diseases which subsequently arise will be deemed to have happened during the employment relationship.
    • Criminal record checks are required for foreign employees to obtain a work visa.


    Where criminal checks are not required for work visa purposes, they are only permissible (and often done in practice) for specific roles (eg, high-level managerial positions). Reference and educational checks are common and permissible, provided applicant consent is previously obtained.

  • Immigration

    Foreigners from non-Mercosur countries must obtain a temporary residence permit that permits them to enter and work in Argentina. Temporary residency is granted for a maximum period of up to 1 year, extendable for periods of equal or shorter terms. After 3 consecutive years as a temporary resident, foreign employees are entitled to apply for permanent residence.

    Citizens of Mercosur countries can apply for temporary Mercosur residence in Argentina without the need to present a work contract to the authorities. Temporary Mercosur residence is granted for 2 years and enables the individual to work and to apply for permanent residence on expiry of the temporary residence.

  • Hiring options


    Full-time, part-time, fixed-term, indefinite-term employees or trainees.

    The following factors tend to indicate a labor relationship: availability to work for his/her employer; an employer who directs and subordinates the individual; an employer who instructs the services and duties required and creates the individual's schedule. Courts will also look at the extent to which the worker depends economically on the employer.

    Independent contractor

    Contractors should only be engaged where there is no labor relationship, that is, no direction/subordination or economic dependence.

    Misclassification, that is failure to register an individual as an employee, or submission of an incomplete or defective registration, carries the risk of severe sanctions and fines from the authorities (including amounts owed to social security for unpaid contributions). In addition, steep fines are levied upon statutory severance, including the doubling of the amount of severance owed to a (misclassified) employee.

    Agency worker

    Employers can engage workers through agencies. Agencies must be authorized by the authorities to function as an agency.

    The employer will be jointly and severally liable with the agency for all labor obligations arising from the worker's employment.

  • Employment contracts & policies

    Employment contracts

    There is no general, legal requirement to execute employment contracts in a specific form – meaning that they can be in writing, made orally, etc. unless a specific law or collective convention applies and indicates otherwise. Notwithstanding, employers are advised to enter into a written employment contract.

    Probationary periods

    The maximum permitted duration of a probationary period is 3 months. After the end of the 3 month period, the employee will turn into an indefinite term employee.


    The law does not require employers to have specific policies in place. Notwithstanding, there are some policies that are strongly recommended to prevent potential conflict, such as bonus policies.

    Third-party approval

    Third-party approval is not required for employment contracts or any policies.

  • Language requirements

    No statutory language requirements; however, in practice, employment contracts are drafted in Spanish.

  • Minimum employment rights

    Employees entitled to minimum employment rights

    The Employment Contract Law No. 20,744 (LCL) governs the minimum employment rights in Argentina.

    Pursuant to Article 3º of the LCL, the law governs everything related to the validity, rights and obligations of the parties, provided the employment contract is performed in Argentina, even if the contract was entered into abroad.

    The LCL applies to "workers" which covers not only employees working under an employment contract, but also other individuals who personally perform "work" or provide services for the employer.

    For this purpose, "work" should be understood as any legitimate activity that is provided in favor of someone who has the power to direct that work, through the payment of remuneration for those activities and/or services rendered.

    The main factors that will tend to indicate that an individual is an employee rather than a worker or self-employed worker, are:

    • The employee must be available to work for his/her employer
    • The employer will direct and subordinate the employee, appoint the services and duties required and order the employee to comply with a schedule

    Courts will also weigh the extent to which the worker depends economically on the income obtained from the alleged employer.

    Working hours

    The general maximum number of hours is 8 hours per day or 48 hours per week for all employed workers in public or private enterprises. Each extra hour worked above these limits is deemed to be overtime.

    Notwithstanding the foregoing, Article No. 3 of Law No. 11,544, in its subsections a), b) and c) regulates exceptions to the abovementioned maximum limitation on working hours. The limitations do not apply to employees performing duties under the form of a "job team," that is, working in a special coordinating rotation system, nor to employees performing duties in high-level positions (main managers, directors etc.).


    Employees in Argentina are allowed to perform overtime. Overtime will be only compulsory in cases of danger or accidents or imminent force majeure, or by exceptional demands of the national economy or the company (Article No. 203 of the LCL).

    Overtime must be paid with a surcharge of 50%, calculated using the employee's usual salary if the overtime hours were worked during business days, and 100% on Saturday after 1pm, Sunday or holidays. In no event may employees work overtime of more than, 3 hours per day, 30 hours per month or 200 hours per calendar year.


    The national minimum wage (NMW) is updated regularly by the National Council of Employment dependent of the Ministry of Production and Labor. The NMW rate as of December 2018 is AR$11,300.

    Most CBAs also provide for a specific minimum wage applicable to employees subject to the CBA.


    Employees with less than 5 years seniority are entitled to 14 calendar days after 6 months of work. This increases to 21 calendar days for employees with between 5 to 10 years of seniority; 28 days for employees with between 10 to 20 years of seniority, and 35 days for employees with more than 20 years of seniority. For employees with less than 6 months of service, employers must grant 1 day of vacation per worked month. Companies should grant vacation to their employees between October 1 to April 30 of the following year.

    Sick leave & pay

    Sick/accident leave of up to 3 months per year must be provided to employees with less than 5 years of seniority, while 6 months must be granted to employees with seniority of 5 years or longer. For employees with "family dependents" (generally understood to be the immediate family that economically depends on the employee’s wage and labor benefits), these periods are doubled, to 6 and 12 months, respectively.

    Maternity/parental leave & pay

    Pregnant employees may take leave of 45 days prior to giving birth and up to 45 days after giving birth. However, the employee may choose to reduce the leave prior to giving birth, but it may not be less than 30 days, and add those days to the maternity leave period after the birth of the child. In the event of premature birth, the period of the leave that has not been enjoyed before the birth will be added to the leave period after the childbirth. Further, the employee is entitled to earn her gross remuneration (without any withholding contributions made to the social security system), during maternity leave. The ANSES (as defined below) pays the remuneration of employees during maternity leave.

    Fathers are entitled to paid leave of 2 consecutive days for the birth of his child. There is no general regulation providing other parental leave after the birth of a child. 

  • Discrimination

    The law prohibits discriminatory acts or omissions based on race, religion, nationality, ideology, political or trade union opinion, sex, economic position, social condition or physical characteristics.

    In addition, Argentina has ratified international antidiscrimination conventions, such as the Convention of Belem do Pará and the Convention on the Elimination of All Forms of Discrimination against Women.

  • Benefits & pensions

    The Social Security National Administration (Administración Nacional de la Seguridad Social, hereinafter ANSES) is the authority in charge of the administration of the social security system in Argentina, called Sistema Integrado de Jubilaciones y Pensiones (SIJP). Employers and employees are required to make contributions to the SIJP which provides for old age pension and disability benefits.

    To qualify for a statefunded pension distribution, male employees must be 65 years old, while female employees must be 60 years old. In both cases, in order to qualify for pension the employee must have contributed to the SIJP for a minimum of 30 years.

    Employers do not have a legal obligation to provide a private pension scheme for employees, as the employees are entitled to state pensions.

  • Data privacy

    The Data Privacy Law No. 24,766 sets limits to the type of personal data that may be collected by prohibiting the collection of sensitive personal data, such as data that is related to political or religious opinions, and regulates the collection, use, processing and transfer of personal data.

    Employers are allowed to monitor employee's work devices, provided the employee is duly notified in advance, and personal information is safeguarded and not disclosed.

  • Rules in transactions/business transfers

    Where there is an asset transfer that qualifies as a business transfer, all obligations arising from the employment contracts that the transferor has executed with its employees will be taken on by the transferee after the transfer. Employment contracts will continue with the transferee and the employees will retain their seniority with the transferor and the rights arising from it. Therefore, on the execution of the transfer, all employees are automatically transferred to the transferee, after their written consent has been obtained.

    Although in practice both internal consultations and collective consultation with trade unions are held before a business transfer takes place, the transferor and the transferee are not required by law to inform or consult employees on a business transfer. However, in order to perform the transfer of staff, the employee’s written consent must be given prior to the transfer. In the absence of this consent, the employee may terminate the employment, with the right to compensation.

    The transferor and the transferee will be jointly and severally liable for any dismissals that arise due to the transfer.

  • Employee representation

    Argentina is a highly unionized country with approximately 3,100 active trade unions with considerable political power. There are unions in nearly all sectors or industries.

    A trade union must be recognized by the Ministry of Production and Labor. Only recognized and authorized unions can enter into a CBA. Employers cannot recognize an unauthorized union voluntarily, not even for collective bargaining purposes.

    The National Constitution sets out collective labor rights in its Article No. 14 (bis), guaranteeing unions the right to collectively bargain and the right to strike.

    CBAs are very common in Argentina. There are different types of CBAs depending on the territory in which they are going to be enforceable. Some CBAs only govern employees within one specific company, whereas other CBAs govern employees performing certain activities in a geographical region or industry.

  • Termination


    Cause is not required for termination of employment; however, it is required to avoid payment of statutory severance. There is no exhaustive and/or exemplary list of behaviors that constitute cause for dismissal; therefore, whether a dismissal is with or without cause will depend on judicial judgment on a case by case basis. 

    Who is subject to termination laws?

    All employees.

    Prohibited or restricted terminations

    Public employees and union delegates cannot be dismissed without cause and without complying with the statutory procedure for these terminations. All other employees can be dismissed with payment of statutory severance, which will differ based on the case (maternity, illness, etc.)

    Pregnant employees are protected from dismissal. If a pregnant employee is dismissed within the period of 7-1/2 months before or after the date of childbirth, the pregnancy will be considered to be the cause of the dismissal, entitling the employee compensation for the discrimination equivalent to their annual salary, in addition to the applicable severance payment.

    Further, if a dismissal occurs 3 months before the marriage of an employee, or 6 months after it, the dismissed employee will be entitled to a special compensation.

    In order to dismiss employees on sick leave, employers must pay a special severance (full severance payment applicable for dismissal without cause, plus the salary which would be payable for the entire period the illness would be expected to last, according to medical opinion).

    Third-party approval for termination/termination documents

    Under Decree No. 1043/18 (effective as of November 14, 2018), employers wishing to dismiss indefinite term employees without cause must notify the Ministry of Production and Labor at least 10 business days before the decision goes into effect. This Decree is effective through March 31, 2019.

    As this decree was issued recently, there is no administrative or judicial case law interpreting the Decree.

    Mass layoff rules

    Prior to a mass dismissal, an employer must provide notice to the respective trade union that regulates the employer's industry. Collective consultation may be required depending on employee headcount.

    Prior to executing or communicating dismissals or suspensions due to force majeure, economic or technological causes that affects more than:

    • 15% of the employees where total headcount is less than 400
    • 10% of the employees where total headcount is between 400 and 1,000 and
    • 5% of the employees where total headcount is greater than 1,000

    Employers must comply with the Preventive Procedure of Companies Crisis (PPC) before the Ministry of Production and Labor. During this procedure, the company will engage in negotiation with the respective union acting on behalf of their members. The aim of this procedure is to avoid business shutdowns or bankruptcy. After the company files the request at the Ministry of Production and Labor, the Ministry will forward the claim within 2 business days of the filing to the other party for its response. After a response is made, a settlement hearing will be scheduled within the next 5 business days. If a settlement is not reached, the Ministry will open a "negotiating period" that must not extend beyond 10 business days. If the parties still do not reach to an agreement within that period, the PPC process will conclude. Notwithstanding this, in practice, this procedure normally takes longer than the law sets out.


    In order to proceed with termination, employers must give notice to employees before the dismissal. 

    The term of this notice will depend on the seniority of employees:

    • During their probationary period, notice must be given to employees 15 days before termination
    • In order to dismiss employees who have completed the probationary period but who have less than 5 years of seniority, notice must be given 1 month prior to the dismissal and
    • Employees with more than 5 years' seniority must receive 2 months' notice before their dismissal

    Statutory right to pay in lieu of notice or garden leave

    Employers are permitted to pay in lieu of notice. Current legislation does not regulate nor prohibit garden leave.


    An employee who is dismissed without reasonable cause is entitled to statutory severance of 1 month's salary for each year of service, or period longer than 3 months. This amount is calculated using the employee's highest monthly, regular compensation received in the last 12 months of work. This baseline cannot be more than 3 times the "monthly payment," which is the average of all compensation set out in the applicable CBA at the time of the dismissal (this average is periodically published). The Ministry of Production and Labor governs the updating of this average for every authorized trade union.  

    If the employee is not subject to a CBA (typically, senior employees), the limits applicable to the activity in which he/she performs duties will apply. In no case will the amount of the compensation payable be less than 1 month of real salary.

    Currently, in the Vizotti case, the Supreme Court of Justice has raised the basis for calculating compensation subject to a limit, establishing that it will be 67% of the employee's monthly and usual compensation, the amount to be multiplied by the years of service of the employee, based on constitutional reasons and in cases where the application of the legal limit imposes a reduction to the severance payment of more than 33%.

    This severance payment may be reduced or increased in other types of termination (eg, force majeure and lack or reduction of work; death of the employee; employer's bankruptcy; employee's retirement; employee's illness; employee's pregnancy; etc.)

  • Post-termination restraints

    Non-compete, customer non-solicitation and employee non-solicitation clauses are often used, especially when the employer and employee negotiate the terms and conditions of the termination of the employment.

    Restrictive covenants are capable of being enforced post-employment, provided the employee receives compensation for the restrictions. Therefore, consideration is required for valid restrictive covenants. The amount must be fair and in accordance with the salary of the employee, his/her position in the company, the agreements that the company intends to impose and the extent (period and territory) of the restrictive covenant.

    The law does not specifically regulate restrictive covenants. However, most restrictive periods range between 2 years to 5 years. However, under certain circumstances the court has enforced a 10 year post-termination restraint period, based on the business and the amount of consideration paid to the employee.

    Where an employee is in breach of an agreement, the employer can file a claim against the employee in court requesting compensation for damages. The complaint may include injunctive relief to stop the violation immediately. Alternatively, courts may declare the covenant null and void if it has been drafted too widely.

  • Waivers

    Pursuant to the LCL, any executed agreement that suppresses or reduces rights granted by the LCL, labor laws related to specific industries, collective agreements or individual employment contracts, either at the time of their agreement or execution, or the exercise of the rights arising from its termination, shall be null and void.

  • Remedies


    Compensation is available as a remedy for discrimination or harassment. In case the event of a complaint based on harassment, the employee can file a claim requesting the payment of the statutory severance payment applicable to dismissals without cause and an additional amount for the pain and/or emotional distress caused by the harassment.

    Employers are liable for the acts of their employees. Therefore, the employer and the harasser will be declared jointly and severally liable for the payment of any compensation granted to the victim.

    Unfair dismissal

    Employees may challenge a dismissal without cause within 2 years of the dismissal and seek payment of statutory severance, plus interest and court fees. The complaint must be filed before the labor courts.

    Failure to inform & consult

    Not applicable for terminations as there are no consultation obligations.

  • Criminal sanctions

    Breaches of labor law do not entail a criminal breach or sanction unless such a breach or offense is specifically regulated by the National Criminal Code as a crime. In that case, criminal sanctions will be applied for the breach of criminal law and not for the breach of labor law.

  • Key contacts
    Osvaldo Jofre
    Osvaldo Jofre
    Cordova Francos [email protected]

Corporate presence requirements & payroll set-up


A foreign entity cannot hire employees in Argentina without a local corporate presence.

Employers must pay social security contributions (23% or 27% on top of salaries, depending on the company's activity and revenues). Employees must contribute 17% of their salaries to the social security system (to be withheld by the employer and subject to certain taxable limits). Income tax is also withheld by the employer when paying employees' salaries (maximum rate 35%, subject to a progressive scale).

Collective bargaining agreements for certain activities provide payments to be made by the employer and/or the unionized employees to the relevant unions.


A foreign entity can engage employees in Australia subject to business, corporate and tax considerations and proper payroll registration. Personal income tax must be paid by employees on their assessable income. However, employers are obliged to deduct tax from an employee's remuneration (called Pay as You Go or PAYG tax withholding) and also to pay 9.5% of salary (which will gradually be increased over coming years to 12%) into the employee's superannuation account (a form of pension system).


A foreign entity can engage employees in Austria with proper payroll registrations, subject to business and corporate tax planning considerations. Withholdings for pay-as-you-earn (ie, social insurance [employer and employee portion], Severance Payment Funds [1.53% to the so called BV-Kasse], local taxes) and income tax to be done through payroll.


A foreign employer cannot directly engage employees in Bahrain without being registered under the Commercial Registry in the Ministry of Industry, Commerce and Tourism.

Foreign employers are required to register at the Labor Market Regulatory Authority (LMRA). Following the registration process, work permits will be allocated, whereby the number will depend on the type of activity of the establishment, through the Expats Management System (EMS).

As stipulated in the LMRA Law, establishments are required to pay monthly fees on every expatriate employee working for it.

There has been a move towards requiring payment in local currency into local bank accounts through local payroll, but this is not strictly enforced yet.


A foreign entity can engage employees in Belgium with proper registration as employer, proper payroll registrations and proper registration of the employees. Payment of social charges on remuneration, up to approximately 27% employer portion for white collar employees and up to approximately 13.07% employee portion) and income tax at progressive rates according to the amount of income (up to 53.5% updated from time to time), to be done through payroll.


A foreign entity cannot hire employees in Brazil without a local corporate presence. Employers must pay social security contributions and labor charges on top of compensation, which represent an additional cost of approximately 65% on top of salaries. Employees will have income tax (up to 27.5%) and social security contributions (up to 11% of the compensation, subject to a legal cap) withheld at source from compensation.


A foreign entity can engage employees in Canada, but the entity must have proper corporate and payroll registrations. Business and corporate tax planning considerations are often paramount and consideration should be given to creating a corporate subsidiary in Canada as an alternative to registering a foreign entity.

Payroll registration is done through the Canada Revenue Agency (and, if applicable, through Revenue Quebec) by obtaining a business number. Employers must withhold and remit income tax, as well as various social security programs such as the Canada Pension Plan (or in Quebec, the Quebec Pension Plan) and Employment Insurance. In some cases additional taxes and remittances may apply or be required under worker's compensation legislation and as part of the public health care system (eg, in Ontario, the Employer Health Tax).


A foreign entity seeking to hire an employee in Chile does not need to have a corporate presence in Chile. However, in such case, the company will have to appoint a representative in Chile for the sole purpose of acting on its behalf in case of any review by the authorities of labor and social security compliance, usually a payroll provider.


A foreign entity cannot engage employees in China without setting up a representative office or a subsidiary. Once established, payroll has to be set up. Note that representative offices of foreign companies need to engage an agency to engage its workforce.


In principle, a foreign entity cannot directly engage employees in Colombia without setting up a branch or subsidiary. Proper payroll registrations are required (both employer and employees). Social Security (in respect of health, pension and labor risks – see benefits and pensions), payroll taxes, and union contribution withholdings may apply (if employees are unionized) and withholding tax may apply depending on the employee's income.

Czech Republic

Foreign entities can engage employees in the Czech Republic if they have proper registrations with the competent financial authority, social security administration and the health insurance company. The registered entity must pay income tax (15%; deducted from the employee's salary), health insurance (13.5%; 9% is paid by the employer) and social security contributions (31.5%; 25% is paid by the employer). Employers are obliged to maintain a payroll. Independent contractors are responsible for their own taxation.


Foreign companies that are contemplating carrying out business in Denmark, may be set up as limited liability companies (A/S & ApS), branch offices or representation offices. Also, foreign companies may hire individual employees without having a permanent establishment in Denmark. Special payroll and tax schemes may be set up in this regard.

Danish employers are obliged to withhold provisional income tax (so-called A tax) and labor market contributions from the salary paid.


Foreign entities can engage employees in Finland, subject to business and corporate tax planning considerations, as well as compliance with payroll, tax and other requirements.

Proper payroll operations include making income tax, social security and other necessary deductions at source.


A foreign entity can engage employees in France with payroll registrations subject to business and corporate tax planning considerations. Registration as an employer with labor authorities and "Pôle Emploi" via the Declaration Prior to Hiring (DPAE) to be made within 8 days before the effective starting date.

The employee share of social contributions amounts to 25% – 28% of his or her gross monthly compensation.

The employer share amounts to approximately 45% of each employee's gross compensation in companies with fewer than 10 employees, and approximately 50% in companies with 10 employees or more.


A foreign company can engage employees in Germany without local corporate presence, subject to doing business and corporate tax considerations. For employment and payroll purposes, registrations with tax and social security authorities are required.

Employee earnings are subject to withholdings for social security (19.825% employer and employee portion each, up to a ceiling of €6,700 gross per month for the states of the former West Germany and a ceiling of €6,150 for the states of the former East Germany) and wage tax (from 14% to 45%) to be done through payroll.

Hong Kong

A foreign entity can engage employees in Hong Kong subject to business, corporate and tax considerations and proper payroll registration.

Payment of Hong Kong tax is the employee's responsibility. Therefore, Hong Kong employers are not required to withhold tax through the payroll system (subject to exceptional circumstance where an employer is required to withhold final payments of an employee who will leave Hong Kong for 1 month or more after termination).


In order to employ employees in Hungary, the employing entity must have an established branch in Hungary. The employment of employees has to be notified to the tax authority and is subject to tax payment obligations (social security tax and vocational training contribution to be paid by the employer: 21% (but subject to review); contribution payable by the employee but deducted by the employer: 18.5%).


A foreign company without local registration cannot directly engage employees in India. Employers can be formed as sole proprietorship, or as a partnership or an incorporated entity. Offshore entities that wish to do business in India either set up subsidiaries or joint venture companies in partnership with other local or offshore entities; or, with the approval of the Reserve Bank of India, set up a liaison office, branch office or project office. Also, proper payroll needs to be set up to make withholdings and deductions.

Both central and state labor laws impose various procedural requirements on employers, such as obtaining registration, maintenance of registers and records (including muster rolls for employees who present themselves for work), display of notices and filing of returns which are to be available for inspection by inspectors/appropriate government authorities. For ease of doing business in India, the Government of India has permitted start-ups to submit self-certified returns and self-declaration as evidence of compliance with the provisions of the Employees State Insurance Act, 1958 (ESI Act) and Employees Provident Fund and Miscellaneous Provisions Act, 1952 (EPF Act). Certain state governments have also come up with self-certification schemes and simplified requirements for maintenance of records and registers required under various labor laws. The government has also taken measures to implement combined registers and provide e-filing of returns to ensure compliance with certain labor legislation.


A foreign company cannot directly engage employees in Indonesia without having a presence there, for example a corporate or tax presence. A "tax presence" requires there to be a permanent establishment (as defined in the relevant legislation) in Indonesia, and will commonly take the form of a representative office. The most common structure is to establish a local Indonesian subsidiary in the form of a limited liability company.

An employer must set up payroll in Indonesia and make withholdings for income taxes and social charges under the National Social Security (Sistem Jaminan Sosial Nasional or SJSN) program.


A foreign entity can engage in Ireland if it has proper payroll registrations, subject to business and corporate tax planning considerations. Through the payroll, withholdings should be made for income tax (up to 40%), the Universal Social Charge (up to 8%) and Social Insurance (up to 10.95% for the employer and 4% for the employee). Self-employed independent contractors are paid gross and are responsible for their own taxation.


Generally, registration of the employer, either an Israeli subsidiary or a foreign company (branch), is required, in order to set up a bank account for payroll and to open tax and national insurance files for mandatory withholding requirements.


A foreign entity can engage employees in Italy with proper payroll registrations, subject to business and corporate tax planning considerations. Withholdings for social contributions (up to approximately 30% employer portion and up to approximately 10% employee portion) and income tax (up to approximately 43%) to be done through payroll. The employer must give notice to the labor authorities that employment has commenced at least 1 day before the commencement of the relationship.


Foreign entities without a local corporate presence in Japan are generally unable to make proper payroll withholdings. Instead, a local corporate presence is generally required to engage employees in Japan.

Employers are required to withhold national income taxes from employees' salary each month and make certain social insurance contributions.


An incorporated/registered entity can engage in business, subject to proper registration as provided under the relevant laws applicable to the business model. The entity must also register with the Kenya Revenue Authority (KRA) and obtain a tax Personal Identification Number (PIN) which is a mandatory requirement for most transactions including opening a bank account and entering a leasing agreement.

The entity will also be required to register for the following mandatory employer obligations:

  • National Social Security Fund (NSSF)
  • National Hospital Insurance Fund (NHIF)
  • Pay As You Earn (PAYE) Employer Obligation and
  • National Industrial Training Levy Contributor (NITA)
  • National Housing Development Fund (NHDF). This is expected to come into effect on January 1, 2019

See "Benefits and pension" chapter for more details.


A foreign entity cannot directly engage employees in Kuwait. It would have to set up its own legal entity in Kuwait by partnering up with a Kuwaiti partner (individual or company) which must own at least 51% shares. Once such an entity has been established it can employ foreign nationals, who need both a residence permit and a work permit, and local nationals, who require a work permit only. The only way around this would be to have a secondment type arrangement, whereby the foreign company appoints a local entity as its commercial agent and the local entity then sponsors the local or foreign national employees of the foreign principal for their work permit and the foreign or local national then carries out the operations of the foreign principal in Kuwait.


A foreign entity can engage employees in Luxembourg with proper payroll registrations, subject to several corporate and tax considerations.

Income tax and the employee's portion of the social security contributions are withheld from the remuneration paid out by the employer. The global rate of the social security contributions varies from 24.32% to 27.20% depending on the absentee rate within the company. The employee's portion varies from 12.20% to 12.45%.


A foreign company can engage employees in Malaysia without local corporate presence subject to administrative, accounting, and tax considerations. The Companies Act also requires foreign corporations to be registered as a foreign company under the Companies Act before "carrying on a business in Malaysia," but the engagement of employees in Malaysia does not necessarily mean a foreign company will be regarded as carrying on a business in Malaysia. As an alternative to incorporating a Malaysian company, a foreign company can also opt to register a branch office or representative office.

There are several arrangements commonly used by foreign companies which engage employees in Malaysia in relation to payroll:

  • Running the payroll directly from the foreign entity/location
  • Running the payroll through an entity set up in Malaysia
  • Outsourcing the payroll to a third party service provider in Malaysia

The most suitable option for a business will depend on the nature of the business, activities carried out by the employees, and accounting and tax considerations.

Employees are responsible for the declaration and payment of income tax, but local employers will be required to make deductions from salary for income tax and employer contributions to the Employees' Provident Fund (EPF), Social Security Organization (SOCSO) and Employment Insurance Scheme (EIS).


A foreign entity cannot directly engage employees in Mexico without setting up a branch or subsidiary. Proper payroll registrations are required. Social Security, tax, and union contributions withholdings may apply, depending on the employee's category and income.


A foreign entity cannot hire employees in Morocco unless it has a branch or a subsidiary registered in Morocco. Withholding for pay-as-you-earn (eg social security fund — up to approximately 25% employer contribution and up to approximately 7% employee contribution) and income tax (up to 38%) to be done through payroll.


A foreign entity cannot engage directly employees in Mozambique. It is necessary to establish a legal presence by means of incorporation of a company (subsidiary) or registration of a foreign commercial representation (branch).

Labor and tax obligations must be complied with by all registered entities. Employers (and employees) must register for social security and pay monthly contributions of 7%, of which 3% is deducted from the employee's salary and 4% is borne by the employer. Foreign employees must be registered for social security by the employer; however if these employees prove to the employer and social security that they are covered by the social security system of another country, they can be exempt from this contribution in Mozambique. Personal income tax is applicable to all employees and is withheld through payroll and paid over to the revenue authorities. The rates are established on a steeply graduated basis depending on the amount of the income (ie, salary), with a maximum effective rate of 32%.


A foreign investor investing in Myanmar may either incorporate a subsidiary or register an overseas corporation of a company incorporated outside Myanmar. A Myanmar subsidiary may be wholly foreign owned or may be a joint venture with a Myanmar company. Foreign employers usually cannot directly engage employees in Myanmar without local corporate presence.

Employers must pay social insurance at the rate of 3%, of which 2% is to be paid into the Health and Social Care fund and 1% into the Employment Injury Benefit fund. Personal income tax must be paid by employees on their assessable income. The employer is responsible for calculating each employee's personal income tax liability, withholding it from the employee's pay check and remitting this amount to the tax authorities on the employee's behalf. 


Foreign entities can directly engage employees in the Netherlands, subject to doing business and tax considerations. Registration with the Dutch tax authorities as an employer (to make mandatory payroll deductions) is required.

New Zealand

A foreign company employing staff in New Zealand is required to register with the Inland Revenue Department (IRD) as an employer and set up an IRD number, except in a limited range of exceptions.

Employment income is subject to tax at source in that the employer must withhold the tax and return this to the IRD under the ''pay-as-you-earn" (PAYE) regime.


Foreign entities not registered in Nigeria cannot carry on business or exercise the powers of a registered company. The powers of a registered company include the employment of staff.

Payroll deductions from employees' salary in Nigeria are:

  • 8% of an employee's monthly salary as pension
  • Personal income tax (pay-as-you-earn)
  • 2.5% of the monthly salary of an employee with a basic minimum salary of NGN3,000.00 per annum to the Federal Mortgage Bank of Nigeria


Any entity conducting business activity in Norway has both a duty and a right to be registered in the Norwegian Register of Business Enterprises. Following its registration, the entity will be provided with a Norwegian company registration number which among other things is necessary in order to fulfill certain statutory obligations, for example, the payment of tax deductions and employer's contributions.

All employers pay statutory social security contributions to the National Insurance scheme. The common rate is 14.1%. Norwegian employers are obliged to withhold income taxes and pay the employee's tax to the taxation authorities.


There are 3 main legal structures available to companies that wish to establish a presence in Oman − a sole proprietorship, a corporate entity or through a commercial agent. It is not possible to employ staff in Oman without an established entity.


A foreign company cannot directly engage employees in the Philippines, unless it establishes a subsidiary or branch in the Philippines. Corporate employers are required to be registered with the Securities and Exchange Commission for corporations and partnerships, the Department of Trade and Industry for single proprietorships, and with the Philippine Social Security System (SSS) (Republic Act No. 8282, Social Security Act of 1997), PhilHealth (Republic Act 7875 National Health Insurance Act of 1995, as amended by Republic Act 9241), Pag-ibig (Republic Act 9679, Home Development Fund Law of 2009), and the Bureau of Internal Revenue (BIR) for the withholding of income taxes and national insurance contributions.



A foreign entity can engage employees in Poland without having a local corporate presence. Engaging a Polish employee who will perform work in Poland requires registration with the social security authorities. Income of this Polish employee will be subject to Polish income tax and social security contributions. In order to conduct business activities in Poland, a foreign entity may need to establish a local corporate presence (branch or representative office) in Poland, registered in the National Court Register.


A foreign entity can engage employees in Portugal with proper payroll registrations, subject to business, corporate and tax considerations. The employer is responsible for withholding from an employee's pay, and delivering to the tax authority, income tax and contributions to Portuguese Social Security. The level of income tax is defined each year by the government and varies in line with the employee's salary.


A foreign entity cannot directly engage employees in Qatar. It would always need to have at least a subsidiary, branch or trade representative office to engage a local or expatriate employee, because such individuals are required to be registered with the Labor Department at the Ministry of Administrative Development, Labor and Social Affairs (Ministry of Labor).

At present, employees working in Qatar are not subject to income tax, and therefore there are no tax withholding obligations imposed on the employer in the context of an employment arrangement.

There are also no social security requirements, save for in respect of certain companies which are required to contribute to the local General Retirement and Pension Authority on behalf of their local Qatari national employees.


Typically, foreign entities set up a Romanian presence in order to conduct business in Romania, which may engage employees under individual employment agreements, but which are required to have registered with both the fiscal authorities and also the labor authorities which handle all employment and payroll-related registrations.

Although it is not the typical scenario envisaged by the Romanian Labor Code, and it might trigger some practical difficulties (mainly from a payroll and tax perspective), there is no express legal provision prohibiting foreign companies with no Romanian presence from executing individual employment agreements directly with Romanian individuals. Thus, a foreign entity can engage staff in Romania, subject to business, corporate and tax considerations.


A foreign entity cannot directly engage employees in Russia, and can only operate in Russia after corporate registration. Personal income tax to be withheld through payroll.

Saudi Arabia

Only Saudi registered entities may hire employees in the Kingdom of Saudi Arabia (Saudi Arabia or KSA). Non-GCC employees will need to have a sponsor for immigration purposes, and only a Saudi registered entity may sponsor non-GCC employees.

An employer must set up local payroll in Saudi Arabia.


A foreign company generally cannot carry on business in Singapore without registering a subsidiary, branch or representative office. "Carrying on business," as defined under Singapore's Companies Act (Cap. 50), includes the administration, management or otherwise dealing with property situated in Singapore as agent, legal personal representative, or a trustee, whether by employees or agents or otherwise; and does not exclude activities carried on without a view to any profit. There are some exceptions to this. For example, purely holding director/shareholder meetings, effecting sales through an independent contractor, investing in funds or holding property, or if the foreign company carries on such other activity as the Minister may prescribe, do not amount to "carrying on business."

Payroll should be set up to comply with the Employment Act (Cap. 91) (EA), Central Provident Fund (under the Central Provident Fund Act (Cap. 36)) and tax obligations and required payroll records. Employers also have income tax withholding obligations with respect to foreign employees.

Slovak Republic

A foreign company can engage employees in Slovakia without a local corporate presence. However, registrations with tax, social security and health insurance authorities are required for payroll purposes.

Employee earnings are subject to withholdings for

  • Tax purposes (19%-25%)
  • Contributions to social insurance (9.4% by the employee - maximum of EUR 627.73/month; 25.2% by the employer - maximum of EUR 1,629.42/month plus the amount of accident insurance which amounts to 0.8% from the actual salary of the employee)
  • Health insurance (4% - 2% by the employee; 10% - 5% by the employer). The smaller percentages apply in the case of a disabled employee

South Africa

A foreign company must register as an "external company" with the Companies and Intellectual Property Commission before it can enter into employment contracts in South Africa, and is required to pay corporate income tax. Companies (including external companies) are obliged to register and deduct tax from an employee's salary, and, in addition, have reporting duties to the South African Revenue Services. The maximum personal tax rate is currently 45%.

Employers are required to contribute to prescribed employee benefit funds and make contributions to an unemployment benefit fund. Employee contributions to the unemployment benefit fund are deducted and paid on their behalf by the employer.

South Korea

Foreign companies may directly engage employees in Korea; however, because of potentially negative tax implications, it is uncommon for foreign companies to do so. There are four ways for foreign nationals to engage in business activities in Korea:

  • Establishing a local corporation
  • Opening a private business
  • Opening a branch
  • Opening a liaison office

Payroll withholdings are required.


A foreign entity can engage employees in Spain with proper payroll registrations, subject to business, corporate and tax considerations. Withholdings for income tax and social security are to be done through payroll.


A foreign company can engage employees in Sweden with proper payroll registrations, subject to business, corporate and tax considerations. Employers are obliged to pay social security charges on top of gross salary and most benefits. The social security charges amount to approximately 31% to be borne by the employer. The Swedish personal tax system operates with a progressive rate varying from approximately 28% to 57%.

The employer shall deduct from the gross salary and deliver each employee's personal tax to the Swedish Tax Authority.


A foreign entity can generally engage employees in Switzerland, subject to business and corporate tax planning considerations, and provided the employee can validly work in Switzerland.

Social charges vary according to canton and the employer's chosen pension fund scheme. Employer's contributions have to be paid in addition to the gross salary, at approx. 12-20% of the gross salary. Employee's contributions have to be deducted from the employee's gross salary, at approx. 10%-17% of the gross salary. The employer has to deduct each employee's tax at the source, where applicable.


Foreign companies cannot directly engage employees in Taiwan, but can set up branches, subsidiaries and representative offices, all subject to different registration procedures.

Withholdings for taxes, labor insurance, pension, and health insurance.


A foreign entity can engage employees in Thailand subject to certain business and tax considerations and proper payroll registration through a local entity acting on behalf of the foreign entity.

The employer must withhold tax at source, file a withholding tax return (Form PND 1, 2 or 3 as the case may be) and remit the amount of tax withheld to the District Revenue Office.


A foreign company without local corporate registration cannot directly engage employees in Turkey. When a foreign entity engages in commercial activities in Turkey, these activities should be performed through a branch office or a company. The employees should be registered under the payroll of the branch office or the company. If a foreign entity will only engage in market research in Turkey and not in any commercial activity, the activities can be performed through a liaison office. The employees should be registered under the payroll of the liaison office.

All employers should register the employees with the Social Security Institution as of their first day of employment and make the statutory contributions.


A foreign entity must have a local corporate presence in Uganda before engaging employees. The entity will be required to register for tax and social security where it employs 5 or more employees. Up to 4 employees may be engaged without social security registration. There is, however, an option of voluntary registration. The employees would still be required to register for tax. Employee earnings are subject to pay-as-you-earn tax of up to 30% of the earnings and social security contributions of 15%, 10% being the employer's contribution and 5% being the employee's contribution.


A foreign entity cannot engage employees in Ukraine without a local corporate presence. Furthermore, the engagement of employees in Ukraine without a local corporate presence may give rise to a permanent establishment risk.

United Arab Emirates

A foreign entity cannot directly engage employees in the UAE. It needs to have at least a branch or representative office to engage any employees, including local nationals. This is because all employees need a work permit (or employment ID card in the free zones) in order to work in the UAE (which requires a local sponsor). The only other way around this would be to have a secondment arrangement, whereby a local entity sponsors the employee for their work permit, but the individual is then seconded out to the foreign entity or provide services under a services agreement. This structure may not be legal under relevant immigration and licensing laws.

United Kingdom

A foreign entity can engage in the UK with proper payroll registrations, subject to business and corporate tax planning considerations. Withholdings for pay-as-you-earn (eg, social charges — up to 13.8% employer portion and 12% employee portion up to a certain threshold and 2% thereafter) and income tax (up to 45%) to be done through payroll. Self-employed independent contractors are paid gross and are responsible for their own taxation.

United States

A foreign entity can engage employees to do business in the US subject to certain business and tax considerations and registration as an entity qualified to do business in any state where it has employees and/or is engaged in business. All US employers are required to obtain a federal Employer Identification Number (EIN), to pay applicable payroll taxes and withhold certain tax contributions from their employees. Employers may be required to register employees with the specific state in which they are employed (regulations vary from state to state). Certain states (eg, California) have requirements regarding what information must be provided to employees with their pay (including itemized deductions and reports of hours worked, among other information).


A foreign entity can engage employees in Venezuela only if it sets up, at least, a representative office, and obtains payroll and labor registrations. Withholdings for pay-as-you-earn (eg, social charges from 9% to 11%, with a ceiling of 5 minimum wages and income tax of up to 34%) to be done through payroll.


A foreign entity without a license to operate in Vietnam cannot directly hire Vietnamese employees.

Employers must pay social insurance in respect of Vietnamese employees (17.5%, including 3% to the sickness and pregnancy fund, 0.5% to the work-related accidents and occupational disease fund, and 14% to the retirement and survivor ship fund), health insurance (3%) and unemployment insurance (1%), as well as trade-union fees (2%), and withhold the employee portion of the social insurance (8%), health insurance (1.5%), unemployment insurance (1%), trade-union fees (1%, if the employee participates in the grass-roots trade union). The social insurance and health insurance contributions are capped at 20 times the basic monthly salary, which is VND 1,490,000 (approximately US$64), while the unemployment insurance contribution is capped at 20 times the regional minimum salary, which varies depending on the region. Personal income tax must be paid by employees on their assessable income, but the employer must make tax declarations, deduct and remit tax to the state budget, and achieve tax finalization for all kinds of taxable income.

In term of compulsory insurance contributions for foreign employees who have a work permit or practicing license; and an employment contract with an indefinite term or a term of one full year or more, Vietnam-based employers currently pay social insurance premiums of 3.5% together with health insurance contributions of 1%. The foreign employee will pay 8% of their monthly wage to the superannuation and survivorship fund from January 1, 2022.

The employer must consult any organization representing workers at the enterprise (most commonly a trade union) before establishing, amending or supplementing the payroll and sending the payroll information to the district state administrative body for labor. The obligation to send payroll information to the local Department of Labor, Invalids and Social Affairs (DOLISA) arises when the payroll is first drawn up and after each future amendment. An employer with fewer than 10 employees is exempt from submitting wage scales, wage tables and labor norms to the local labor authority at the district level.