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Employer of Record in Cape Verde

Employer of Record in Cape Verde

Skuad’s Cape Verde Employer of Record (EOR) services offer a quick solution to grow your business without setting up a physical entity. Our unified and automated global human resource (HR) platform hires the best talent through our subsidiary and fulfills crucial tasks such as onboarding, payrolls, taxes, compliances, employment contracts, legal laws, work permits, and visa proceedings, all in compliance with the local laws. You can leverage our global network and expedite your expansion in Cape Verde. To learn more, book a demo with Skuad.

Cape Verde at a Glance

Population: 5,55,987 people (2019)

Currency: Cape Verde escudo (CVE)

Capital: Praia

Languages: Portuguese

Gross Domestic Product (GDP): USD 1.98 billion (2021)

Employment in Cape Verde

Before expanding your business, you must be fully aware of all the rules and regulations of employment in Cape Verde. Cape Verde’s employment laws apply to both residents and foreigners. These laws are no different from any other country, but there might be a few differences in the entitlements. Also, it is better to get in touch with a global payroll service provider with extensive knowledge of the labor laws of Cape Verde to minimize risks and simplify your expansion process.

The following table presents the various aspects of employment in Cape Verde.

Entitlements Explanations
Statutory working hours The statutory working hours are 44 hours per week.
Overtime eligibility

If employers provide a half-day rest or a 24-hour rest period, the daily work hours will be extended. Employees are allowed overtime work of up to two hours a day. Overtime is provided only at the cost of not hiring new employees or if there’s urgent work.

The standard overtime limit is 160 hours per annum, but if employees agree, it can be extended up to 300 hours.

Paid public holidays Public holidays in Cape Verde are as follows:
  • New Year's Day (January 1)
  • Democracy Day (January 13)
  • Heroes’ Day (January 20)
  • February Carnival (variable)
  • Ash Wednesday (variable)
  • Labor Day (May 1)
  • Children’s Day (June 1)
  • Independence Day (July 5)
  • Assumption Day/Day of Our Lady of Grace (August 15)
  • National Day (September 12)
  • All Saints’ Day (November 1)
  • Christmas Day ( December 25)
Holiday pay Employees will not receive any pay during public holidays. However, if they work on a public holiday, they will get 100% of their standard wage.
Medical leave

Medical leaves are supervised by the National Social Insurance Institute. Employees are observed and kept under social security for up to 1,095 days.

The employer pays full wages for the first three days of sick leave. Social security pays 70% of the wages for more than three days of sick leave. If the employee is sick for more than a month, the payment will be analyzed again.

Maternity leave

The National Social Insurance Institute also assists pregnant women. Employees are entitled to 60 days of paid maternity leave. If the employee is not eligible for social security insurance, the employer must pay the full amount.

Employees are eligible for maternity benefits through social security insurance if they have been engaged in at least four months of service and an additional 30 days of service before it.

Male employees are also entitled to paternity leave within 120 days of pregnancy in case the mother cannot take care of the child.

A minimum of 30 days’ leave is provided to the father if the mother dies.

Annual leave accrual entitlement Employees are entitled to 22 days of annual leave only after six months of service during a year. However, employees who have worked for less than six months can avail themselves of annual leave once they have completed their six months of service. Unused leaves will be added to the next year for a maximum of 44 days with the employer’s consent.
Leave expiry Leaves do not expire in Cape Verde. Unused leaves will be added to the next year for a maximum of 44 days with the employer’s consent.
Leave cash out Employees are entitled to cash out their annual leaves upon termination.
Accrued leave at termination

Accrued annual leave is paid upon termination only if the employees didn’t use their annual leaves before the termination of their service. Also, the annual leave compensation is based on the employee’s years of service.

If any employee is not given the annual leave compensation they are due, they can send a complaint to the General Labor Inspector.

Employee protection and anti-discrimination provisions

According to the Gender-Based Violence (GVB) law, sexual harassment is strictly prohibited by employees who hold influential positions at the workplace.

According to the Labor Code, employers who indulge in/encourage sexual activities are fined for two years’ worth of the minimum wage of a civil servant.

Based on the Penal Code, sexual harassment is a punishable offense and culprits will be imprisoned for up to one year along with a fine of wages for 100 to 250 days.

According to the constitution of Cape Verde, everyone is equal before the law and no one must be discriminated against based on color, gender, race, ancestry, origin, language, religion, social, or economic status at the workplace.

According to the Penal Code, discrimination is a punishable offense and the culprit will be imprisoned for up to two years or a fine of daily wage for 100 to 300 days.

Confidentiality of personal information According to the data protection law of Cape Verde,
  • The personal data of employees must be processed legally for a good cause.
  • It must be accurate and updated if necessary.
  • Employers must collect this information only for legitimate purposes.
  • The personal information of employees must be confidential and protected.

To learn more about Cape Verde’s employment policies to ensure your expansion efforts fall within the legal requirements, book a demo with Skuad experts today. We can meet all your HR needs while complying with the local laws.

Contractors vs. Full-time Employees

When you decide to expand your entity overseas, you might be confused about whether to hire contractors or full-time employees. The primary differences between a contractor and a full-time employee lie in tax liabilities, payroll, employer–employee relationship, and work benefits.

A contractor is an independent worker who operates separately. On the other hand, a full-time employee works for the organization and receives all company benefits such as insurance and paid leaves. The table below lists the differences between contractors and full-time employees.

Contractors Full-time Employees
Contractors are responsible for paying their own taxes. Full-time employees need not pay their taxes as the company takes care of them.
Contractors can have flexible work hours. Full-time employees have fixed work hours.
Contractors receive payment based on their services. Full-time employees receive regular payment.
Contractors work for only a short term. Full-time employees are engaged in the long term.
Contractors do not receive any company benefits. Full-time employees receive company benefits.
Contractors do not receive training. Full-time employees receive training.
Contracts have to invest in tools to provide services. Full-time employees are provided with the necessary tools by the company.
Contractors need not follow any organizational rules that do not affect their work, as outlined in their contract. Full-time employees must obey the rules of the employer.

Based on the above table, it is clear that both contractors and full-time employees are useful for different projects. Often, hiring contractors and turning them into full-time employees adds to the growth of your company in the long run.

Benefits of Transforming a Contractor into a Full-time Employee

Contractors who become full-time employees can,

  • Expand your business within a short time
  • Become a long-term employee and stay loyal to the organization
  • Get rid of misclassification issues overseas
  • Save a lot of time and money
  • Be onboarded easily as the recruitment process is simpler

Whether your business requires contractors or full-time employees, Skuad’s EOR solution for Cape Verde can take care of all your hiring needs. To know more, book a demo with Skuad experts.

Employment Contract Law in Cape Verde

The most effective way of recruiting employees is through an employment agreement. Based on Cape Verde’s employment laws, the employment agreement in Cape Verde can be in the written or oral formats. However, it is strongly recommended to opt for a written contract in the local language, Portuguese. Also, it is advised to include various employment terms in the contract such as salary, benefits, daily working hours, maternity leave, public holidays, and termination to avoid miscommunication with the applicants. It is also important to gather social security numbers and tax identification numbers (TIN).

Further, you should decide whether to hire residents or foreign employees. If you decide to hire foreign employees, you should go through the work visa and residence application process. Hence, it is your responsibility as an employer to make your employees understand all the terms before signing the employment contract.

Hiring in Cape Verde

Before you hire employees in Cape Verde, you must have a well-detailed plan regarding the recruitment process as it may affect the company’s success. Designing a professional job description is a key step because it attracts the right applicants for the job position.

Therefore, it is important to state details regarding factors such as educational qualification, job requirements, experience, salary, skills required, daily tasks, and other benefits while creating the job description. Also, include your company’s achievements, goals, and what you can offer to the employee to learn more about your company. Finally, make sure that these factors obey local rules and regulations.

Things to Remember Before You Hire Employees in Cape Verde

The recruitment process in Cape Verde is complicated. Some questions to address before hiring employees are,

  • What are the required qualities in an ideal employee?
  • How effectively can you advertise for your vacancies?
  • How is your interview structured and what is the process?
  • How is your interview structured and what is the process?

Onboarding Process

After the recruitment is completed, the onboarding process will help the employees to get adjusted to their new workplace and conditions. Also, this is the perfect time to go through employment contracts. Providing a training program will ensure that employees acclimatize to their schedule, tasks, and functioning of the company. It is important to educate employees about machinery/software to ensure safety at the workplace.

Best Job Searching Platforms in Cape Verde

Employers use the following websites and portals to post their job openings.

The table below shows the advantages and disadvantages of job searching platforms.

Advantages Disadvantages
Reach a wider audience across the globe. Receive fake and unsuitable applications
Easy to use and manage the applicants Is an informal way of recruiting employees
Accessible 24x7 Can lead to miscommunications
Saves time and money Limited vacancies and huge competition
Simplifies the vetting process May cause technical issues

For an international entity, it may be quite difficult to hire employees in Cape Verde due to the time-consuming, detail-oriented process. However, you do not need to worry about compliance as Skuad’s EOR solution for Cape Verde can take care of finding, recruiting, and onboarding the best, most suitable talent from the country. Talk to Skuad experts to learn more.

Probation & Termination

Probation Period

The standard probation period in Cape Verde depends on the type of employment contract.

  • In an indefinite contract, employees performing management functions will go through a probationary period of six or 12 months.
  • Employees under a fixed contract will have a probation period of two months, provided it is not more than a quarter of the total duration of service.

Termination of Service

Topic Explanation
Notice for termination of employment
  • The termination of employment in Cape Verde is different for each case. An employer can terminate the employment contract at the end of the fixed term when both parties agree. In this case, severance pay is not provided.
  • However, an employer has the right to terminate the employee’s contract due to acts of misconduct, such as,

    1. Bad behavior
    2. Intoxication during working hours
    3. Frequent disobedience
    4. Repeated conflict
    5. Not fulfilling duties
    6. Lack of proper hygiene
    7. Being irregular to work

  • In case of termination due to misconduct, the employer must send 40 days of notice before terminating the employee. The employee has five days to respond to the notice. Further, the reason for termination must be provided if the employer still wants to terminate the employee.
  • Employees are entitled to receive severance pay if the notice is late.
  • Employees on a fixed-term contract will be given 10 days of notice before termination.
  • If the employer does not send any notice, the fixed-term contract will be renewed for the same period.
  • However, no notice is provided if the employees’ contract is terminated due to their retirement or by mutual consent.
  • Employees must send a notice to the employer 15 days in advance before termination. The notice period is 15 days for each year of service.

For more information about probation and termination, book a demo with Skuad experts and we can clear your doubts.

EOR Solution in Cape Verde

Skuad’s Cape Verde EOR solution is a quick way to grow your business without setting up a subsidiary. Skuad hires exceptional talent and manages their responsibilities, including onboarding, payroll, taxation, work visa, and employment contracts in 100% compliance with the local employment laws.

General Employer of Record Service Terms

Taxes that apply to invoices The tax rate is 16.5% to 27.5%, depending on the annual income of the employee.
Minimum duration of service The minimum duration of service is 183 days or more.
Currency accepted The currency required is Cape Verdean escudo (CVE).

Outsourcing Employment through an Employer of Record

As an international company, you must decide whether to recruit in-house or utilize an EOR solution to manage their responsibilities such as employment contracts, payroll, and taxes. Outsourcing employment has various advantages.

  • An experienced global HR team will manage all the HR tasks and help in achieving success.
  • The EOR organization takes complete responsibility for any legal and administrative issues so that you can focus on your company’s growth.
  • Skuad ensures 100% compliance with all the laws and guides you through every process.

Skuad ensures 100% compliance with all the laws and guides you through every process.

Types of Visas in Cape Verde

There are four main types of visas in Cape Verde.

Visa Category Explanation
Transit Visa Transit visas are for people who travel through the country to move to another location. This visa is only limited to four days with one extension.
Temporary Visa Temporary visas are of two types: single-entry and multiple-entry. These visas are for people who visit the country for a short period of up to 30 days for medical treatment, professional activity, or cultural travel.
Official Visa Official visas are for people who are eligible for official/diplomatic activities such as law, military, and medical services in the country. These visa holders are entitled to multiple entries for up to 30 days.
Tourist Visa Tourist visas are for people who visit the country and stay for up to 90 days, providing the chance for one extension.

Talk to us and get more information and guidance related to types of visas in Cape Verde. Skuad can handle all your visa requirements and ensure the expansion process is not delayed.

Work Permits

There is no concept of work permits in Cape Verde. The immigration process only involves work visas. The documents required for a work visa for employment in Cape Verde are listed below.

Requirements for a Work Visa in Cape Verde

Documents Details
  • A passport copy
  • A certificate from the Judicial Police
  • Two passport size photos
  • A certificate of health
  • A copy of the COVID negative test result
  • A certificate from the Public Order of Police
  • A bank statement showing financial stability
  • Proof of rental agreement or property ownership
  • The certificate from the Judicial Police and Public Order of Police is required to show that the employee did not commit any crime in the country.
  • In the immigration process, the officer may ask for the criminal record from the employee’s country of residence.
  • All these certificates must be translated into Portuguese and be issued within the previous six months.

Connect with Skuad experts to know more about expanding to Cape Verde.

Payroll & Taxes in Cape Verde

Things You Must Know to Set Up Payroll in Cape Verde

Before setting up a payroll, it is important to know about different types of payroll in Cape Verde. set up a physical entity in Cape Verde. Establishing an entity ensures that you can easily carry out various processes such as recruiting employees, taxes, payrolls, and benefits.

However, this process requires significant time, money, and local government clearance. The table below shows different payroll options in Cape Verde.

Payroll Options Explanation
Remote processing Remote processing is for companies with a limited amount of resources. A remote payroll department will manage the payroll of your employees abroad.
Internal payroll processing Internal payroll processing is for companies with an overseas branch and huge staff. It ensures complete control over the payroll but requires many resources.
Payroll processing company Partnering with a local payroll company ensures safety as these are experts in local payroll laws. However, you are still responsible for their mistakes.
Payroll outsourcing Payroll outsourcing is engaging with a third-party organization to manage the payroll processes of your employees. You are not held legally liable in case of issues.

You should carefully choose which payroll option suits you depending on your company and expansion plans. Also, it is required to register with Cape Verde’s tax authority and collect tax IDs and social security numbers of your employees to deduct income tax..

Taxes in Cape Verde

The table below shows the payroll tax rates in Cape Verde.

Tax Explanation
Income tax rates According to annual income.
Gross income Tax Rate (%)
CVE 0 to 80,000 15
CVE 80,000 to 1,50,000 21
CVE 1,50,000 and more 25
Corporate tax Local companies must pay a corporate tax of 22%.
Employers’ social security and statutory contributions Employers pay 15% of their earnings to the social security fund.
Employees’ social security and statutory contributions Employees pay 8% of their earnings to the social security fund.
Medical insurance Employees are entitled to medical insurance and health benefits through the social security program.

To manage payroll and taxes while expanding in Cape Verde, it is prudent to partner with an EOR service. Skuad’s Cape Verde EOR solution can take care of all HR-related tasks for you while ensuring compliance with the local laws, including those on taxation and payroll. To learn more, get in touch with Skuad experts.

Incorporation: How to Set Up a Subsidiary in Cape Verde

There are endless business opportunities in Cape Verde. However, setting up an entity in Cape Verde is cumbersome as each region has its own set of subsidiary laws. Therefore, it is important to choose a region with favorable laws. It is advised to hire a global expert to get familiar with the rules and regulations.

Steps For Setting Up an Entity in Cape Verde

  • Choose your company name.
  • Register your company through an online registration system.
  • Publish incorporation notice on the Commercial Registry Department website.
  • Acquire the Tax Identification Number (TIN).
  • Apply for a municipal license.
  • Register your employees with the Social Security Office.
  • Submit a notice to the labor inspectorate.
  • Start the employment operations.

Any misstep while expanding can cause you to veer off your timeline for getting your business running in Cape Verde. Skuad offers an easy alternative to all your HR needs by taking over the HR tasks of establishing a subsidiary as your EOR partner. To learn more, book a demo with us today.

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