Hiring in Papua New Guinea in 2026 requires employers to apply the new K5.00 hourly minimum wage, calculate salary and wages tax under the current framework, manage statutory superannuation and keep reliable working-time and leave records. Chinese companies using direct employment or an Employer of Record (EOR) must also check industrial awards, work permits, workers’ compensation and the legal employer’s total headcount.

Papua New Guinea employment compliance is governed principally by the Employment Act 1978, applicable industrial awards and collective agreements, the superannuation regime, tax legislation and occupational safety rules. The correct result depends on the employee’s classification, service, shift pattern, tax residence, work location and the terms of any superior award, agreement or contract.

1. Papua New Guinea Employment Compliance at a Glance in 2026

2. Three Employment and Payroll Changes Requiring Action in 2026

Minimum wage rises to K5.00 per hour

The national minimum wage increased from K3.50 to K5.00 per hour on 1 January 2026. This is an hourly floor rather than a universal monthly salary. Employers must still apply any higher industrial award, collective agreement or contractual rate.

Payroll tax enters the Income Tax Act 2025 framework

The Income Tax Act 2025 took effect on 1 January 2026. Payroll teams should use the current Internal Revenue Commission (IRC) salary and wages tax tables and reassess residence, non-cash benefits, bonuses and lump-sum payments instead of carrying forward an old withholding table.

Superannuation coverage depends on legal-employer headcount

An employer with at least 15 employees generally contributes 8.4% for covered employees after 3 months of continuous service and deducts the employee’s 6%. The test applies to the actual legal employer’s PNG workforce, not merely one client or project team.

3. Papua New Guinea’s Employment Law and Regulatory Framework

Mandatory law, an applicable industrial award or collective agreement, and the employment contract must be applied in layers. An employer cannot use the national baseline to reduce a superior entitlement already created by another binding instrument.

Employment status follows the facts, including control, remuneration, continuity, equipment and scheduling. Calling a regularly supervised individual a consultant does not remove employment, tax, safety or workers’ compensation exposure.

4. Recruitment, Offers and Onboarding

Recruitment materials should identify the employer, job, location, contract type, pay structure, shift and required qualifications. Medical checks should relate to the role or a genuine safety requirement. An employment offer does not itself authorise a foreign national to work.

5. Employment Contracts, Contract Types and Probation

Section 14 of the Employment Act requires employees to be informed of matters including the employer, workplace, occupation, duration, remuneration, deductions and payment method. Although oral contracts may be recognised, employers should use a signed written agreement.

There is no single nationwide statutory maximum probation period for ordinary private-sector employees. The written contract should state its duration, objectives, review dates, confirmation, extension conditions and notice. Probation does not waive minimum wage, tax, superannuation, safety or workers’ compensation duties.

Section 34’s minimum notice rules do not automatically apply during the first 2 years of a written contract unless the parties agree that they do. Both probationary and post-confirmation notice clauses should therefore be explicit.

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

From 1 January 2026, the national minimum wage is K5.00 per hour. Any higher industrial award, collective agreement, contract or policy prevails. Overtime premiums and genuine expense reimbursements should not be used to fill a base-wage shortfall.

The 44-hour figure is a mathematical illustration, not permission to schedule a non-shift employee for 8.8 ordinary hours on each of 5 days. Non-shift overtime is generally tested after 8 hours a day.

Illustrative monthly payroll

A resident finance specialist earning K5,000 a month has annual taxable salary of K60,000. The illustrative annual tax is K13,350, or a monthly planning average of K1,112.50. If superannuation applies, the 6% employee deduction is K300, producing illustrative net pay of K3,587.50. Actual withholding must use the current IRC pay-period table.

7. Working Time, Overtime and Records

Time off may replace some overtime only where statutory conditions are met and the arrangement is documented. Work on Good Friday or Christmas Day may also require equivalent time off within 7 days.

At K10 per hour, 5 hours of Sunday work produces illustrative overtime pay of K100. Five hours on a public holiday produces an additional K50 beyond normal holiday pay, subject to any superior award or agreement.

8. Public Holidays, Annual Leave and Other Statutory Leave

Annual leave is generally 14 consecutive days after 12 months of continuous service, including non-working days. A public holiday falling during leave on what would otherwise be a working day generally extends the leave by one day. By agreement, leave may accumulate for up to 4 years.

After at least 6 but fewer than 12 months’ service, termination leave pay is generally calculated at 1 day for each completed month. Seven completed months therefore produces an illustrative statutory base of 7 days’ pay.

Casual and piece-rate workers may be excluded from parts of the paid public-holiday and leave framework. Employers must confirm the genuine classification and any industrial award rather than use a label to avoid entitlements.

9. Employer Social Security, Mandatory Benefits and Tax

Nasfund states that contributions should generally be remitted within 14 days after month-end. The statutory pay base can include salary, wages, paid leave and commission, while treatment of overtime, bonuses, compensation and salary-sacrifice items should be confirmed under the fund rules.

For covered monthly salary of K5,000, employer superannuation is K420 and employee superannuation is K300. Salary plus the employer contribution equals K5,420 before workers’ compensation, training levy, overtime, benefits and termination reserves.

Training levy should not be priced as a fixed 2% monthly charge for every employee. The employer should verify the current annual payroll threshold, qualifying national-employee training expenditure, form and IRC treatment.

10. Local Employees and Foreign Employees

A foreign employee must obtain work and residence authorisation matching the legal employer, occupation, location and activities before starting work. An EOR contract cannot replace immigration approval or guarantee that a permit will transfer to a new employer.

Foreign nationals working in PNG still require analysis of employment law, salary and wages tax, superannuation, workers’ compensation and occupational safety. Offshore salary, housing, vehicles, school fees, remote-site allowances and tax equalisation should be aligned across the contract, assignment document, permit application and payroll.

Non-residents generally do not receive the resident K20,000 tax-free threshold. Their tax commonly starts at 30% from the first taxable kina before progressing through higher bands. Each expatriate benefit requires separate tax review.

11. Remote Work, Data Privacy and Record Retention

Remote work does not remove the legal employer’s wage, working-time, superannuation, tax, workers’ compensation or safety duties. A remote-work agreement should cover approved location, equipment, internet and electricity costs, availability, timekeeping, overtime approval, customer data, cybersecurity and incident reporting.

Personnel files should be limited to genuine business and statutory needs, with access rules, retention periods and secure disposal. Health information, customer-system access and cross-border data transfers require additional legal and security review.

12. Termination, Severance and Final Settlement

Employers must distinguish termination on notice, summary dismissal, fixed-term expiry, early fixed-term termination, redundancy and mutual separation. The general Employment Act baseline does not provide one universal list of permitted reasons for all private employees, but discrimination, pregnancy protection, awards, agreements, contract and common-law obligations still matter.

Notice should generally be equal for both parties and written where the contract is written. Section 34 does not automatically apply during the first 2 years of a written contract unless agreed. Payment in lieu addresses notice only; it does not cure discrimination, protected-status violations, unjustified summary dismissal or breach of contract.

Summary dismissal requires sufficiently serious conduct, such as wilful disobedience of a lawful instruction, serious misconduct, dishonesty, habitual neglect or persistent unjustified absence. The employer should investigate promptly, explain the allegation, allow a reasonable response and document the decision.

There is no single automatic statutory severance formula for every ordinary termination. An industrial award, collective agreement, contract, redundancy plan or settlement may require additional pay.

Illustrative final settlement

For monthly salary of K5,000, 3 years and 7 months of service, 2 weeks’ notice paid in lieu and 7 completed months of unused anniversary leave accrual, the illustration is K5,000 salary + K2,307.69 notice + K1,615.39 leave = K8,923.08 gross. Actual pay depends on termination date, pay cycle, leave taken, tax and the governing instrument.

13. Hiring Model: Entity, EOR or Payroll Outsourcing

EOR changes the contractual employer and division of delivery work, but it does not eliminate PNG labour, tax, superannuation, workers’ compensation or site-safety duties. Pay reductions, deductions, discipline and termination should be formally assessed and implemented by the legal employer.

A customer’s instruction to end an assignment is a commercial direction, not legal notice to the employee. The legal employer must decide whether reassignment, notice termination, fixed-term expiry or mutual separation is appropriate.

14. Common Papua New Guinea Employment Risks for Chinese Companies