Payroll and Benefits Guide Timor-Leste
Last updated: Mar 03, 2026
Contribution
| Employer Payroll Contributions | |
| 6% | Social security (old-age, disability, survivors) — employer share -(No separate statutory unemployment/family/health funds in addition to social security) |
| 6% | Total Employer Costs |
| Employee Payroll Contributions | |
| 4% | Social security — employee share — (Minor/voluntary extras only if agreed by contract/CBA) |
| 4% | Total Employee Costs |
Income Tax
Resident individuals: Wage Income Tax (WIT) withheld by employers; non-wage income uses a 0%/10% schedule:
• 0% on annual taxable non-wage income up to USD 6,000
• 10% on annual taxable non-wage income over USD 6,000
Wages (resident employees): 10% WIT withheld at payroll (no progressive bands).
Non-resident individuals: 10% WIT on Timor-Leste-sourced wages (final).
PAYE Withholding: Employers deduct WIT when paying salaries and remit using the monthly return (generally by the 15th of the following month)
Employer taxes
Working Hours
Standard working hours is 44 hours/week, max 8 hours/day; rest break ≥1 hour after 5 hours’ continuous work.
Overtime
| Aspect | Regulation Details | Notes |
| Maximum Ordinary Hours | 8 hours per day and 44 hours per week. | Overtime (Overtime work) is defined as work performed beyond these limits. |
| Daily Overtime Cap | Overtime must not exceed 4 hours per day. | |
| Weekly Overtime Cap | Overtime must not exceed 16 hours per week. | This cap (4 hours/day and 16 hours/week) may be exceeded only in cases of force majeure (e.g., emergency work to prevent major accidents). |
| Consent | Overtime should generally be voluntary, though exceptions exist for urgent or essential work. | |
| Exemptions | Employees in certain executive or managerial positions are generally exempt from the standard overtime provisions. |
Mandatory Overtime Pay Rates (Tiered System)
Overtime compensation is mandatory and is calculated as a tiered minimum premium percentage of the employee’s normal hourly salary rate.
| Day/Condition | Overtime Hours Worked | Minimum Premium Rate (Supplement) | Total Pay Rate |
| Standard Overtime (Tier 1) | First 2 hours of daily overtime. | +50% of the normal hourly rate. | 150% |
| Standard Overtime (Tier 2) | Subsequent hours of daily overtime (3rd and 4th hour). | +100% of the normal hourly rate (Double Pay). | 200% |
| Weekly Rest Day (Sunday) | All hours worked. | +100% of the normal hourly rate (Double Pay). | 200% |
| Official Public Holiday | All hours worked. | +100% of the normal hourly rate (Double Pay). | 200% |
| Night Work Premium (Non-Overtime) | Work performed between 9:00 PM and 6:00 AM. | +25% of the normal hourly rate. | 125% |
Note on Night Work: The $25\%$ premium for night work applies even if the work is within the normal 44-hour week. If night work is also overtime, the applicable overtime premium (150% or 200%) is paid instead of the $25\%$ premium, as the overtime rates already include a higher compensation for inconvenient hours.
Compensation Method
-
Monetary Pay: The payment of the applicable premium rate is mandatory for all overtime.
-
Compensatory Rest (Over-Cycle Work): For work performed beyond the standard work cycle (similar to a rest day/holiday), employees are entitled to additional days of rest corresponding to the days worked, in addition to the $200\%$ premium pay.
Payroll
Timor-Leste generally follows a monthly payroll cycle (WIT withheld monthly).
13th Salary
13th-month pay is not mandated for the private sector, though the Government grants an extra month’s salary to public administration workers by decree.
Leave
Annual Leave (vacation)
Statutory minimum 12 working days per year; if employment ends before 12 months, leave is prorated at 1 day per month.
PTO carryover
In Timor-Leste, statutory annual leave does not have a clear automatic carryover right in the law. Leave is meant to be taken when due, but accrued statutory leave cannot be forfeited. If employment ends before leave is taken, unused leave must be paid out.
Public Holidays
| Date | Day | Holiday | Notes |
|---|---|---|---|
| 1 January 2026 | Thursday | New Year’s Day (Dia de Ano Novo) | Standard holiday |
| 3 March 2026 | Tuesday | Veterans Day (Dia dos Combatentes da Libertação Nacional) | Standard holiday |
| 20 March 2026 | Friday | Idul Fitri / Eid al-Fitr (End of Ramadan) | |
| 3 April 2026 | Friday | Holy Friday / Good Friday (Sexta-feira Santa) | |
| 1 May 2026 | Friday | Labour Day (Dia Mundial do Trabalhador) | Standard holiday |
| 20 May 2026 | Wednesday | Independence Restoration Day (Restauração da Independência) | Standard holiday |
| 27 May 2026 | Wednesday | Idul Adha / Eid al-Adha (Feast of Sacrifice) | |
| 4 June 2026 | Thursday | Corpus Christi (Festa do Corpo de Deus) | |
| 30 August 2026 | Sunday | Popular Consultation Day (Dia da Consulta Popular) | Standard holiday |
| 1 November 2026 | Sunday | All Saints’ Day (Dia de Todos os Santos) | Standard holiday |
| 2 November 2026 | Monday | All Souls’ Day (Dia de Finados) | Standard holiday |
| 12 November 2026 | Thursday | National Youth Day (Dia Nacional da Juventude) | Standard holiday |
| 28 November 2026 | Saturday | Proclamation of Independence Day (Proclamação da Independência) | Standard holiday |
| 7 December 2026 | Monday | Memorial Day / Day of Remembrance (Dia de Luto Nacional) | Standard holiday |
| 8 December 2026 | Tuesday | Immaculate Conception Day (Imaculada Conceição) | Standard holiday |
| 25 December 2026 | Friday | Christmas Day (Dia de Natal) | Standard holiday |
Sick Days
30 paid sick leave days per year, subject to medical certification, with the possibility of contract suspension (but not immediate dismissal) for longer-term illness.
Maternity
12 weeks paid; 10 weeks must be taken after birth; time counts for seniority and does not reduce vacation. Employer pays until social-security cash benefits fully operate.
Paternity
Fathers are entitled to 5 days of paid paternity leave, to be taken after birth. It does not affect salary or vacation.
Parental Leave
Breastfeeding breaks (two × 1 hour daily) up to the child’s 6th birthday; up to 5 days/year to assist a sick/injured child <10 (unpaid unless employer/CBA provides pay).
Bereavement Leave
Included within 3 days/year of justified absences for events such as family death, marriage, and certain community/religious events.
Childcare Leave
Parents of children under the age of 3 are entitled to special paid absences for medical needs or emergencies. Additional short-term unpaid leave may be taken to care for sick children up to age 8, with details defined by collective agreements.
Employer taxes
Termination
Termination Process
In Timor-Leste, termination must comply with the Labour Code.
- Reasons: Disciplinary “good cause” (listed misconduct categories) or market/technological/structural reasons (economic). Workers must be heard before disciplinary dismissal.
- Economic Dismissals – Procedure: Employer notifies affected staff and Mediation Service, negotiates with worker reps, then gives written decision specifying grounds, termination date and compensation. Advance notice: at least 15 days if service ≤2 years; 30 days if >2 years (pay in lieu if not observed).
- Unlawful Dismissal: Court may order reinstatement with back pay; alternatively, compensation from ½ to 6 months’ salary depending on service length.
- Length-of-service compensation: On any termination, employees are also due 1 month’s salary per each 5 years of service.
| Salary payment interval / date | Final payment on termination | Bank account/payment-method requirement |
|---|---|---|
| Remuneration must be paid at regular intervals and the interval between payment must not exceed one month. | Upon termination the employer must pay all remuneration “that can be measured in money” without undue delay; the Labour Code (Art 99) requires payment at contract end or on the date of termination. | Remuneration must be paid in money (legal tender) and may be paid by cash, cheque or bank transfer, provided that those forms are accepted under the Law. |
Notice Period
For economic terminations: 15 days (seniority ≤2 years) or 30 days (>2 years); wage in lieu if not given. (Separate contractual/CBA notice rules may also apply.)
Severance Pay
If dismissal is ruled unlawful: reinstatement with back pay or, if not reinstated, ½–6 months’ salary based on service. Additionally, 1 month per 5 years of service is payable on termination irrespective of cause.
Probation
Maximum probation: up to 1 month (most roles) or 3 months for roles of high technical complexity/responsibility or trust; shorter limits (8 or 15 days) for short fixed-term contracts. Either party may terminate during probation without notice unless otherwise agreed.
Immigration
Foreign nationals must obtain a Work Visa/Permit (generally valid up to 1 year, renewable). The process involves authorization and issuance by the Migration Service/Ministry of Interior; applicants usually also hold/obtain a residence permit for longer stays. Business (Class I) visas do not authorize employment.
Minimum Wage
The national statutory minimum wage in Timor-Leste is USD 115 per month, a rate that has remained unchanged since 2012.
MINIMUM WAGE (PER MONTH)
VAT
Timor-Leste does not have VAT at present; instead, it relies on import duties, excise, and a 5% services tax.
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Public Holidays Calendar
| Date | Day | Holiday | Notes |
|---|---|---|---|
| 1 January 2026 | Thursday | New Year’s Day (Dia de Ano Novo) | Standard holiday |
| 3 March 2026 | Tuesday | Veterans Day (Dia dos Combatentes da Libertação Nacional) | Standard holiday |
| 20 March 2026 | Friday | Idul Fitri / Eid al-Fitr (End of Ramadan) | |
| 3 April 2026 | Friday | Holy Friday / Good Friday (Sexta-feira Santa) | |
| 1 May 2026 | Friday | Labour Day (Dia Mundial do Trabalhador) | Standard holiday |
| 20 May 2026 | Wednesday | Independence Restoration Day (Restauração da Independência) | Standard holiday |
| 27 May 2026 | Wednesday | Idul Adha / Eid al-Adha (Feast of Sacrifice) | |
| 4 June 2026 | Thursday | Corpus Christi (Festa do Corpo de Deus) | |
| 30 August 2026 | Sunday | Popular Consultation Day (Dia da Consulta Popular) | Standard holiday |
| 1 November 2026 | Sunday | All Saints’ Day (Dia de Todos os Santos) | Standard holiday |
| 2 November 2026 | Monday | All Souls’ Day (Dia de Finados) | Standard holiday |
| 12 November 2026 | Thursday | National Youth Day (Dia Nacional da Juventude) | Standard holiday |
| 28 November 2026 | Saturday | Proclamation of Independence Day (Proclamação da Independência) | Standard holiday |
| 7 December 2026 | Monday | Memorial Day / Day of Remembrance (Dia de Luto Nacional) | Standard holiday |
| 8 December 2026 | Tuesday | Immaculate Conception Day (Imaculada Conceição) | Standard holiday |
| 25 December 2026 | Friday | Christmas Day (Dia de Natal) | Standard holiday |
The information on Timor Leste is confusing and incorrect. I know. I live and work here
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