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$249/month
$49/month
2% of gross salary / month
An archipelago of over 300 islands in the Pacific Ocean, Palau is a diverse country with a wide range of ethnicities and religions among its 18,000-strong population. In addition to the Indigenous Palauan, officially recognized languages spoken within the country include English, Japanese, Sonsorolese, and Tobian. It has a slowly growing economy with a 2023 GDP of just over $263 million and an average monthly salary of approximately $1,500. Education is highly valued, particularly in vocational areas relevant to the country’s key industries of agriculture, fishing, and tourism.
Hire in Palau, and pay employees through our platform or app.
Our Palau EOR solution is the most affordable on the market.
Fast Palau onboarding, hire in as little as 24 hours.
We draft compliant Palau labor contracts.
We manage all Palau mandatory benefits.
It doesn’t stop with Palau — we hire employees globally.
When a business wishes to hire workers in a nation that is not its own, it must negotiate a series of legal requirements and cultural challenges. These can include establishing a local entity within that country, learning the nuances of the local labor market, and overcoming language barriers. A Palau Employer of Record (EOR) is an expert service that acts as a local identity, recruiter, and human resources manager on behalf of those foreign businesses. For a fee, an EOR not only assumes full responsibility for all hiring obligations and liability for compliance with local regulations but also serves as a local entity.
This role as a legal local entity on behalf of foreign employers is key to what makes an EOR different from a Professional Employer Organization (PEO). While this second service is often discussed as though it is interchangeable with an EOR, it does not take on the role of a local entity, meaning any foreign business using a PEO must also go through the costly and complex process of establishing its own independently before a single worker can be hired.
An EOR in Palau will streamline every part of hiring and maintaining a labor force within the county on behalf of a foreign business. By working with an EOR, a global company can begin hiring immediately. It can then proceed with its business plans, knowing all recruitment and staffing needs within Palau are safe in the hands of experienced local experts.
Among the many benefits of working with a Palau EOR are:
Horizons stands out as a Palau EOR through:
At its most simple, a Palau EOR is a service that connects local workers to foreign employers while navigating all the labor laws and regulations dictating how that relationship should be managed. The EOR acts as the official employer of workers within Palau, handling all of their onboarding, payroll, and entitlements, while assigning them to roles within the business of their foreign clients. Palau workers receive new opportunities while foreign businesses gain the benefits of a Palau labor force without complications.
Among the many aspects of providing that service, a Palau EOR will:
Regardless of the work being done for a foreign business, every employment in Palau must remain in compliance with local labor laws. These are in place to protect both employees and employers, and it is the responsibility of the EOR to ensure they are adhered to and that any disputes are handled in accordance with the relevant regulations.
There are no standard contract formats required by law in Palau, but every employment contract is expected to contain certain clauses. These include the basic information about each party concerned, the compensation and benefits package, the working hours and conditions, the processes for dispute resolution and termination, and the ownership of any intellectual property created within the working relationship.
Title 13 of the Palau National Code (PNC) also states that hires involving non-resident workers should also have up to two supplementary agreements in place, a Non-Resident Worker Employment Agreement and a Non-Resident Worker Employment Agreement Between the Employer and the National Government.
No probationary period.
At completion of the project.
Not applicable
Not applicable
1 to 4 weeks
Not applicable
Typically 3 to 6 months
1 to 4 weeks
1 month salary per year of service
In Palau, there are no mandated maximum working hours or rules regarding overtime pay. Therefore, it is essential that all terms of employment are outlined, agreed upon, and detailed in signed contracts before employment begins. A general rule of thumb is that a standard Palau working week should be 40 hours, with any additional hours paid at a higher rate. Workers who feel the time they are expected to work is unreasonable are entitled to raise objections through a grievance process defined by the Division of Labor Rules and Regulations.
150% of the standard hourly rate
200% of the standard hourly rate
200% of the standard hourly rate
Workers in Palau should be given paid leave for several public holidays each year. In 2025, this totals 13 days, including New Year in January, Presidents’ Day in June, Constitution Day in July, Labor Day in September, and Independence Day in October. Other public holidays granted in Palau are Youth Day, Senior Citizens’ Day, Family Day, Thanksgiving, and Christmas.
| Date | Holiday name |
|---|---|
| 1 Jan 2025 | New Year’s Day |
| 15 Mar 2025 | Youth Day |
| 5 May 2025 | Senior Citizens Day |
| 1 Jun 2025 | President’s Day |
| 9 Jul 2025 | Constitution Day |
| 1 Sep 2025 | Labor Day |
| 1 Oct 2025 | Independence Day |
| 24 Oct 2025 | United Nations Day |
| 27 Nov 2025 | Thanksgiving |
| 28 Nov 2025 | Family Day |
| 25 Dec 2025 | Christmas Day |
The amount of paid time off employees are eligible to receive is based on how long they have been employed at their current company:
no leave entitlement
10 to 15 days of paid leave annually
10 to 15 days of paid leave annually
10 to 15 days of paid leave annually
Employees are entitled to between 3 and 24 months paid leave to address medical ailments and treatment. The exact amount of time off will be based on how long the employee has been with the company. Sick pay should never drop below 80% of the local minimum wage.
Workers compensation for injuries or illnesses incurred while working cover employees with legal entitlements of up to one year’s leave at full pay to receive medical treatment.
Take a look at the chart below to learn more about the specifics of sick leave standards in Palau:
(percentage of regular wages owed to the employee)
no leave entitlement
no specified maximum duration
no specified maximum duration
no specified maximum duration
Benefits depend on medical reassessment and the terms of the employment contract.
Benefits depend on medical reassessment and the terms of the employment contract.
Benefits depend on medical reassessment and the terms of the employment contract.
In order for employees to receive the full wages due to them, workers must present a valid medical certificate from a certified doctor to their employer.
Paid time off in instances such as maternity, paternity, and bereavement is not mandated by law in Palau. When this is to be offered, it is at the discretion of the employer unless negotiated and explicitly stated within the individual employee contract.
The amount of annual leave due to a worker in Palau is agreed upon at the time of hire and detailed in each individual contract. This leave is to be accrued throughout the worker’s service, depending on the hours worked. No minimum leave is guaranteed, but the maximum accrual of leave is set at 360 hours each year, no matter how many hours a Palau employee works.
As with many employment processes in Palau, the exact period of notice and severance pay required to be offered when terminating an employment contract may change depending on the circumstances. In general, however, it is expected that privately contracted employees will be given 60 days written notice for no-fault terminations. Severance should then be paid in line with agreements made at the time of hire. Like many other aspects of employment in Palau, it is important this matter is considered, agreed upon, and clearly laid out from the beginning in order to prevent disputes and grievances down the line.
The Palau Social Security Administration oversees the collection of contributions and the distribution of benefits. Social security system provides benefits such as retirement, disability, and survivor benefits.
Certain categories of employees may be exempt from compulsory social security contributions, but these exemptions would be specified by Palauan social security regulations or employment agreements.
Social security contributions in Palau generally apply to foreigners working in the country. Both local and foreign employees are required to contribute to the social security system, ensuring that they are eligible for benefits such as retirement, disability, and survivor benefits.
The income tax system is relatively straightforward. 0% tax rate for the first $10,400 and 9.3% for anything above that. These rates and structures ensure a progressive tax system where higher income earners contribute a larger proportion of their earnings.
Palau does not have a national health insurance system. However, public health services are available through the Palau Ministry of Health. Citizens and residents can access healthcare services at public hospitals and clinics.
Many residents opt for private health insurance to cover additional medical expenses or to receive services from private healthcare providers. Private insurance plans can vary and are offered by various local and international insurance companies.
At the start of 2024, the minimum wage which must be paid to all workers in Palau is $3.50. However, proposals made by the Palauan Congress in House Bill 11-49-5S, HD2, suggest this is likely to rise in October 2024 by $0.75 to $4.25 per hour. Some wages in Palau are paid monthly, while bi-weekly payments are also a popular option.
No 13th-month salary payments, allowances, or bonuses are required to be paid by law in Palau. Any performance-based bonuses should be negotiated directly.
Both employers and employees are expected to contribute 7% of salaries to a mandatory social security program designed for retirement and sickness benefits. Many workers may also enter into an agreement with their employers to make top-up payments for additional health, wellness, and security services.
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An EOR will maintain a thorough knowledge of all employment laws and worker expectations when operating as an employer in Palau. This will allow it to manage any mandated and contracted employee benefits and entitlements throughout the course of any employment cycle.
When using an EOR in Palau, the foreign business is not liable for managing compliance with local laws. As the local expert and official employer, all compliance becomes the responsibility of the EOR, and any requirement for settlement or dispute resolution will become part of their service to the foreign client.
Holiday Schedule in Palau [2025]
