Navigating the complex labour laws governing employment practices is essential when running Liberia payroll. However, building an in-house compliance team may not be the most efficient way to manage your remote team’s payroll in Liberia.

Regardless of size, global companies need help to secure in-country expertise for localised payroll service. This is where a partner like Workforce Africa provides significant value in supporting global firms to maintain compliance when handling payroll in Liberia, addressing every intricate detail, including;

• Salary computation requirements,
• Taxation legislation specifics (social security, employee income tax, corporate tax, VAT and other employee deductions.
• Benefits administration, and more (health insurance, pension, paid leaves, holiday compensation.

Workforce Africa simplifies hiring and payroll compliance for offshore talent management in Liberia. No need for a subsidiary or entity setup. From contracts and onboarding to taxes, payroll, and admin tasks, partnering with us – a payroll firm in Liberia will help you focus on growth for greater levels of success.

1. Employment Contract Termination

In Liberia, either the employer or the employee may terminate a fixed-term employment contract for various reasons, including misconduct, expiration of the contract, mutual agreement, cancellation, or a judicial decision. When termination is based on mutual agreement, the decision must be formally documented in writing. In cases of redundancy or economic dismissal, employers are required to provide notice and severance pay equivalent to four weeks’ salary for each completed year of service.

2. Liberia Country Overview

The Republic lies in West Africa. It is predominantly an English-speaking country. Two critical cities in Liberia are Monrovia, the capital and the economic hub, and Ganta. These urban centres act as transit points to ecotourism destinations and major tourist centres. With a population exceeding 5.5 million people, Liberia boasts a significant demographic presence.

In recent years, key industries experiencing growth include renewable energy and agriculture. Liberia boasts a market-based, diversified economy comprising mining, forestry, and digital services. Considerations such as the low labour cost and abundant natural resources make Liberia attractive for businesses seeking expansion opportunities.

Although Liberia possesses a highly skilled workforce, hiring and establishing a team can be time-consuming and challenging. However, partnering with an Employer of Record (EOR) or Professional Employer Organisation (PEO) in Liberia facilitates swift market entry. It manages all legal complexities associated with operations in the country.

3. Payroll Processing in Liberia

Local labour laws in Liberia govern payroll processing, with each employee’s salary potentially calculated differently. Due to compliance concerns, processing payroll at scale can become complex, cumbersome, and risky. Here are the phases of payroll processes global businesses should understand:

• Pre-payroll Phase: Your organisation’s unique approach to payroll compliance shapes its policies and processes, including payroll preparation. Global firms must prioritise essential business elements in the pre-payroll phase, such as accurate business profile documentation and tailored work location policies, which is crucial. Customise leave and work policies to align with local standards in Liberia to ensure compliance and transparency while collaborating closely with compliance teams or partners to help adhere to statutory requirements throughout the payroll management process for your remote team. In this phase also, standardising compensation packages to conform with local payment norms, such as payment cycles, which enhance compliance and meet employee expectations, is necessary.
• Payroll Calculation Phase: Streamlining input collection and validation processes ensures accurate wage calculations in this phase of payroll processing. This phase involves the actual calculation of wages, with a primary focus on this task. Utilising software automation and digital document submission tools makes payroll calculations efficient and reduces the risk of human error in this process.
• Post-payroll Phase: The post-payroll phase in Liberia refers to the period after payroll processing, where employers review and settle any outstanding issues related to employee compensation, benefits, and taxes. This phase typically includes: salary payment, compliance reporting, benefit administration, audit and reconciliation. The post-payroll phase is crucial in Liberia as it ensures that employers comply with regulatory requirements, maintain a good employer-employee relationship, and reduce the risk of penalties or fines associated with non-compliance.

4. Payroll Components in Liberia

Here are some aspects comprehensively needed to navigate Liberia’s payroll compliance:

• Salary / wages
• Overtime premiums
• National Social Security & Welfare Corporation (NASSCORP) contributions
• Mandatory private healthinsurance premium
• PAYE (progressive)
• Paid leave & publicholiday pay
• Severance & endofservice benefits

5. Navigating Liberia Payroll Compliance

Employment in Liberia is primarily governed by the Decent Work Act 2015, along with relevant provisions from other applicable laws and regulations. The Labor Law outlines critical aspects of payroll processing and compliance with crucial employment practices:

A. Salary and Minimum Wage

The statutory minimum daily wage in Liberia is USD $3.50 for unskilled workers and USD $5.50 for skilled workers.

B. Working Hours

Standard working hours are 8 hours per day and 48 hours per week. Employers may require up to 5 additional hours per week, provided that overtime is compensated at 150% of the regular hourly rate (a 50% premium).

C. Social Security Contributions (NASSCORP):

• Employer contribution: 6% of total earnings
• Employee contribution: 4% of gross salary

D. Health Insurance Scheme

Employers are mandated to provide a medical insurance plan that covers the employee and three to four legal dependents.

E. Personal Income Tax (PAYE) – Monthly Table

• Taxable Income (LRD) Rate
  • 0 %: 0 – 70,000
  • 15 %: 70,001 – 200,000
  • 25 %: 200,001 – 500,000
  • 30 %: 500,001 +
• Value Added Tax (VAT): 7 % on most supplies
• Corporate Income Tax: 25 % (30 % for mining/petroleum).
• Income Tax (PAYE): Personal income is taxed progressively, with rates ranging from 0% to 35%, depending on the income level.

F. Payroll Taxes Summary

G. Paid Leaves

• Annual Leave: Employees are entitled to the following annual leave based on the length of continuous service:
  • 1 week after 12 months
  • 2 weeks after 24 months
  • 3 weeks after 36 months
  • 4 weeks after 60 months
• Sick Leave: Employees are entitled to 5 days of paid sick leave per year.
• Maternity Leave: Female employees are entitled to 14 weeks of paid maternity leave, with a minimum of 6 weeks to be taken after childbirth.
• Paternity Leave: Male employees are entitled to 5 unpaid days of paternity leave, to be taken within the first month following the birth of a child.
• Bereavement Leave: Employees may take up to 5 paid days of leave in the event of the death of an immediate family member.
• Paid Public Holidays: In Liberia, the 12 paid holidays are as follows:
  • New Year’s Day (1 Jan)
  • Armed Forces Day (11 Feb)
  • Decoration Day (2nd Wed Mar)
  • J.J. Roberts Birthday (15 Mar)
  • Fast & Prayer Day (2nd Fri Apr)
  • Unification Day (14 May)
  • Independence Day (26 Jul)
  • Flag Day (24 Aug)
  • Thanksgiving Day (1st Thu Nov)
  • Tubman’s Birthday (29 Nov)
  • Christmas Day (25 Dec)

6. Payroll Outsourcing in Liberia

Payroll in Liberia also encompasses termination and probationary periods law. Employees are not generally eligible for severance pay, except the termination is unjustified, or the employer voluntarily decides to make severance payment.

Collaborate with an Africa employer of record and payroll solutions provider such as Workforce Africa to strategically outsource your payroll operations while ensuring compliance with local labour regulations. Additionally, leverage our flexible service offerings to expand your international teams as needed.