Maldives employment in 2026 cannot be budgeted as salary plus a 7% pension contribution. Maldives payroll, Maldives employment law and a Maldives EOR arrangement all depend on whether the employee is Maldivian or foreign, the employer’s official MSME classification, whether the workplace is an office or resort, and whether accommodation, meals and inter-island transport are required.

The Ninth Amendment to Employment Act 2/2008 took effect on 14 March 2026, changing ordinary termination notice, extending paid childcare or breastfeeding breaks and adding International Labour Day to the statutory holidays. The 2021 Minimum Wage Order still distinguishes employer categories and excludes expatriate employees, while the Maldives Retirement Pension Scheme remains compulsory for local employees aged 16 to 65.

1. Maldives Employment Compliance at a Glance in 2026

Minimum wage, pension and Ramadan allowance have different coverage. Excluding expatriates from the Minimum Wage Order does not permit underpayment: the signed contract, work-permit conditions and all other applicable employment protections remain enforceable.

2. Three Employment and Payroll Changes Requiring Action in 2026

1. Ordinary termination notice changed on 14 March 2026.

For indefinite-term employees, the Ninth Amendment generally sets two weeks for service not exceeding one year, one month for service over one but under five years, and two months for service exceeding five years.

The amendment permits a different contractual notice period, so employers must review both the statute and employment contract. These rules do not replace the longer special notice requirements for a good-faith redundancy.

2. Paid childcare or breastfeeding breaks now continue until age two.

After returning from maternity leave, a female employee is entitled to two fully paid 30-minute breaks each day. The 2026 amendment extended this right until the child reaches two years.

Employers should treat the breaks as paid working time and should not deduct them from lunch breaks, annual leave or salary.

3. International Labour Day became a statutory public holiday.

The amendment added 1 May to the holidays under Section 97 of the Employment Act. Hotels, resorts, restaurants, transport providers and 24-hour support operations should update holiday calendars, rosters and payroll codes.

Extra closure days granted to government offices or schools do not automatically become statutory private-sector holidays.

3. Maldives’ Employment Law and Regulatory Framework

Common workplaces include offices in Malé or Hulhumalé, resorts, hotels, restaurants, engineering facilities, customer-support operations, sales teams, IT roles and project sites.

Island employment adds accommodation, food, boat transport, healthcare and emergency-evacuation considerations that do not appear in a city-office cost model.

4. Recruitment, Offers and Onboarding

Recruitment should establish the work island, employee nationality, employer MSME classification, industry and contract type.

An employer should not make an unconditional expatriate start-date promise until quota, sponsoring entity, work permit, accommodation and compensation are feasible.

The Employment Act prohibits improper discrimination based on protected characteristics including race, colour, nationality, social standing, religion, political beliefs, sex, marital status, family responsibilities and disability.

Selection requirements should relate to genuine job needs.

5. Employment Contracts, Contract Types and Probation

The contract should identify:

1. The parties
2. Permanent or temporary status
3. Start date
4. Remuneration and benefits
5. Wage calculation and payday
6. Working hours
7. Leave
8. Discipline and performance assessment
9. Notice and termination rules

The employee should receive a signed copy. The job description should state the title, duties, workplace and normal hours.

Section 14 permits an agreed probation period of up to three months. Probation is not automatic and must be written into the contract.

Either party may generally terminate during probation without advance notice, but an employer should still document its assessment and decision. Earned salary, overtime, service charge, pension and tax must be settled normally. Service remains continuous after confirmation.

6. Wages, Minimum Wage and Gross-to-Net Payroll

Minimum-wage coverage

The Minimum Wage Order expressly excludes expatriate employees. For local employees, the hourly floor depends on the employer’s official MSME classification.

Only basic salary and qualifying fixed, contractual monthly allowances normally count in the minimum-wage comparison.

Overtime, Ramadan allowance, tourism service charge, variable allowances, seasonal bonuses and in-kind food or accommodation should not be used to fill a shortfall.

Wage administration

Deductions require a statutory basis, court order or legally permitted written employee consent. Accommodation, goods or loan deductions must stay within the agreement and legal limits.

Illustrative local-employee payroll example

Assume a Maldivian office employee in Malé receives MVR20,000 basic and gross monthly salary and no tourism service charge.

7. Working Time, Overtime and Records

Overtime should be agreed and approved, but work actually directed, known or accepted by the employer should not be rejected solely because an internal approval form is missing.

If the normal hourly wage is MVR50:

1. Four ordinary-day overtime hours: MVR50 × 1.25 × 4 = MVR250
2. Four Friday or statutory-holiday overtime hours: MVR50 × 1.5 × 4 = MVR300

Specific exceptions may cover emergency personnel, ocean-going vessel or aircraft crews, mosque staff, on-call workers and senior management. A title alone does not prove senior-management status.

8. Public Holidays, Annual Leave and Other Statutory Leave

Statutory leave

Annual-leave timing is agreed between employer and employee, but leave should begin no later than 12 months after entitlement arises.

A statutory holiday falling on a day the employee would normally work during annual leave adds one day. Annual leave cannot normally be sold, waived or forfeited during employment. Earned unused leave is settled on termination.

Annual, sick and maternity leave should not overlap with notice.

2026 statutory public holidays

Extra days granted to government offices, schools or public institutions do not automatically become paid statutory holidays for every private employer. A contract or company policy may provide more generous leave.

9. Employer Social Security, Mandatory Benefits and Tax

Maldives Retirement Pension Scheme

Employers register, submit and pay through Koshaaru, generally by the 15th of the following month, subject to Pension Office instructions.

Fixed allowances and tourism service charge should not be added to pensionable wages without a legal basis. An employer may voluntarily fund some or all of the employee’s share but should document the arrangement.

Employee Withholding Tax

EWT is generally calculated on monthly cash and non-cash remuneration after deducting the employee’s MRPS contribution.

Registration is required where estimated average monthly remuneration exceeds MVR60,000 in any 12-month period or remuneration exceeds MVR60,000 in two consecutive months.

Once that trigger applies, the employer must also assess registration of employees averaging MVR30,000. A 0% bracket does not remove payroll-record duties.

Illustrative EWT calculation

A local employee earns MVR120,000 basic salary and contributes MVR8,400 to MRPS. Remuneration subject to EWT is MVR111,600.

MVR40,000 × 5.5% + MVR11,600 × 8% = MVR3,128

The final amount must use the current MIRA formula and treatment of cash and non-cash benefits.

10. Local Employees and Foreign Employees

Since 23 November 2025, passport work-visa stickers are no longer recognised. The approved electronic Work Visa is the valid form.

A new expatriate arrives on a valid Entry Pass linked to a Work Permit. The employer or authorised representative must obtain the work e-Visa through the Xpat Online System within 15 days after arrival.

For a foreign employee on MVR20,000 basic salary, the Minimum Wage Order and compulsory MRPS do not apply. Employers must still budget permit fees, insurance, medical checks, accommodation, meals, transport, flights and repatriation.

If both parties opt into MRPS, the employer’s 7% adds MVR1,400. The employee contribution must be agreed before payroll deduction.

11. Remote Work, Data Privacy and Record Retention

A remote-work agreement should state:

1. The employee’s regular island or country
2. Approved workplace
3. Equipment and expenses
4. Information-security requirements
5. Confidentiality and intellectual property
6. Working hours and availability
7. Restrictions on changing location

Long-term work outside the Maldives requires a new assessment of the actual work country’s employment, tax, social-security and immigration rules.

HR records should be limited to legitimate needs, access-controlled and securely retained. Passport, medical, banking and disciplinary information requires particular protection.

In an EOR arrangement, the client may allocate daily work, but formal pay changes, discipline and termination should be implemented through the legal employer.

12. Termination, Severance and Final Settlement

An ordinary dismissal requires reasonable cause. For performance or conduct, a proportionate process normally includes:

1. Investigation
2. The employee’s explanation
3. Coaching or warning
4. A reasonable improvement period where appropriate
5. A reasoned written outcome
6. A sanction proportionate to the issue

Summary dismissal should be reserved for conduct serious enough to make continued employment impossible.

Closure, operational change or financial deterioration may support a good-faith redundancy, but the employer should prove the business reason, rational selection and absence of targeting.

Pregnancy, short illness, exercise of statutory rights, union activity or a complaint is not a reasonable dismissal ground.

The Ninth Amendment permits a different contractual ordinary-notice period, so the signed contract must be checked.

Notice must be written and should not overlap annual, sick or maternity leave. An employer can release the employee immediately by paying the wages and benefits that would have arisen during notice, but payment in lieu does not replace reasonable cause.

The Employment Act does not provide one universal service-based severance payment for every ordinary termination. The Employment Tribunal may award compensation or reinstatement for unreasonable dismissal.

Final settlement should cover:

1. Salary through the last day
2. Unpaid overtime
3. Allocated tourism service charge
4. Earned unused annual leave
5. Fixed benefits
6. Pay in lieu of notice
7. MRPS and EWT treatment
8. Other contractual or statutory amounts

Section 57 generally requires payment within seven days after dismissal or expiry.

Illustrative final-settlement example

Assume a local indefinite-term employee earns MVR20,000 basic salary, has 18 months’ service, and is reasonably dismissed after a performance process with one month’s pay in lieu. The employee worked 20 days in the final month and has 10 earned unused annual-leave days.

MRPS and EWT must be classified according to the legal nature of each payment. If the exit is a redundancy, 18 months’ service ordinarily attracts two months’ special notice, changing the payment-in-lieu amount.

13. Hiring Model: Entity, EOR or Payroll Outsourcing

A Maldives EOR can be assessed but should never be represented as automatically solving foreign-worker quota or sponsorship.

The provider should be able to:

1. Sign local employment contracts
2. Pay and document wages
3. File EWT
4. Enrol eligible employees in MRPS
5. Administer tourism service charge
6. Lawfully employ or sponsor the role on the relevant island
7. Manage discipline and termination

Tourism and island roles also require clear allocation of service-charge administration, accommodation, boat transport, occupational safety, medical support and repatriation.

The client should not direct an immediate dismissal that bypasses reasonable cause and statutory procedure.

14. Common Maldives Employment Risks for Chinese Companies