Fiji’s market-oriented economy offers investors a dynamic and vibrant business environment. The country provides business-friendly consumer policies and legislations, a literacy rate of about 99%, quality business resources, infrastructure, etc., to attract companies to expand their business in Fiji.
Fiji’s current economy has become an export-led economy driven by a knowledgeable workforce and high technology. Companies can easily establish their business in Fiji to get easy access to the Australian and New Zealand market. The country also ranks 102 out of 190 economies for ease of doing business. It provides excellent support to investors in setting up a business, paying taxes, and enforcing contracts.
Once you set up a business in Fiji, you can hire a talented workforce to expand your business in the country. To entice, recruit, and hold the best talent in Fiji, you should be familiar with how to competently manage every step of the onboarding process, including Fiji’s payroll process.
You require a detailed understanding of payroll tax in Fiji and labor requirements to ensure you provide precise and efficient payroll. The following guide discusses everything you need to know about payroll in Fiji.
How Is Payroll Calculated in Fiji?
Payroll is the process of paying compensation to employees in exchange for their services to the company. It is provided for a set period and on a given date.
It is calculated by considering various aspects such as time tracking, employee salaries, and deducting contributions such as social security contributions, health care funds, and supplementary pension funds.
Essential Elements of Salary Structure in Fiji
While calculating payroll in Fiji, you may come across some aspects:
Cost to Company (CTC)
When a company hires an employee, it incurs an annual amount referred to as Cost to Company. It covers the employee’s net pay, gross pay, payroll deductions in Fiji, additional benefits, etc.
Gross salary
It sums up all the elements contributing to the employee’s compensation package. Moreover, it mentions the total income before considering any payroll deductions in Fiji, such as social security contributions, health insurance, etc.
Net salary
It represents the amount remaining after calculating all deductions from the gross salary. The net pay is credited to the employee’s bank accounts.
Basic salary
It represents the amount an employee obtains after calculating all additions and deductions from the annual package. The employee’s base salary is 35% to 50% of the total compensation.
The basic salary depends on factors like the employee’s designation in the company and the business activities.
Allowances
Allowances are offered by employers depending upon the employee’s designation. These are additional monetary benefits to meet expenses over and above the basic monthly salary. Note that regardless of the industry and the company, all employees are entitled to multiple allowances, including food, travel, and healthcare allowance.
How to Set Up a Payroll in Fiji
A foreign business willing to set up payroll in Fiji must follow the below steps:
Step 1: The foremost step to set up payroll in this country is registering your business with the Commercial Register as a locally-owned or foreign-owned company. Fiji’s most famous form of business is a joint stock/limited company.
Step 2: Next, submit the establishing documents and an application to finish the Fiji payroll process.
Step 3: Register the company with social security authorities and Fiji Revenue and Customs Service (FRCS) for tax contributions.
Step 4: Companies must create a Fiji bank account to complete payroll-related payments.
Step 5: It involves calculating the payroll amount. Employers can calculate social security contributions, taxes, and others in this step.
Step 6: Decide payroll structure and payroll cycle for all the employees.
A Step-by-step Process of Payroll Processing in Fiji
Take a look at all the steps involved in processing the payroll in Italy:
1) Select a payroll system
You should select a payroll system that meets your company’s requirements and outfit your budget. Some of the widespread payroll systems prevalent in Fiji:
- Manual payroll: Manual payroll system is one in which the company’s HR professionals administer the overall payroll system. It is vital to hire a workforce skilled at all aspects of payroll.
- Outsourcing: It enables a third party to administer the company’s payroll functions. The third party can charge a small fee in exchange for their services. You must consider its adherence to the payroll laws.
iii. Payroll software: It implies choosing a payroll system that administers all aspects of payroll to automate the entire payroll system.
2) Set up a payroll policy
This step involves developing specific rules and policies that define your payroll system. Ensure that the payroll policy covers aspects like compensation structure, payroll cycle, etc. All employees should be able to access the created rules and policies easily.
3) Register employees
Once you have decided on the payroll rules and regulations in Fiji, register employees to the payroll system. You can register them by adding their names, date of birth, compensation structure, and other essential details.
It should also define the payroll cycle. With the help of these details, payroll processing becomes simple.
4) Set up all employees’ bank accounts
For employers to release the payment, all employees must have an active account in either a public or private bank in Italy. This is optional, but companies can assist their employees in this step.
5) Verify the timesheets and calculate salary
The next step is the verification of the employee’s working hours and the calculating of their overtime payments. The next crucial task is to calculate the net payable all employees’ salaries and deductions. The net pay must cover the allowances’ payments and compensations.
6) Verify other important information
In this step, employers must carefully check the details, like tax receipts, ledgers, etc., before releasing payment to the employees. There must be no unresolved errors before proceeding with the payroll processing.
7) Offering pay slips
It involves offering a salary slip (either in print or digital copy) to all the employees according to the company’s payroll regulations. The pay slip must include the salary structure and details of the employee and employer.
8) Maintain the transactions’ record
Employers must keep the payroll transactions updated in their payroll register. This payroll register can work as documentary proof to confirm that all payments are timely.
Payroll Contributions
Based on the salary, employers and employees contribute to social security as part of the Fiji payroll requirements.
Employers contribution
Under the Fiji National Provident Fund (FNPF) Act, the employer should contribute 10% to the fund.
For expatriate employees, employers need not contribute to the FNPF. If ex-pats and employers are willing to contribute to the FNPF, they can do so under certain conditions.
Fringe Benefits Tax (FBT) of 20% is to be paid by the employer on the gross-up value of several fringe benefits offered to employees (the effective tax rate: 25%).
Employees contribution
The FNPF is an obligatory superannuation scheme for local employees in Fiji. Under the FNPF Act, the employees should contribute 8% to the fund.
Payroll Cycle
The payroll cycle is monthly in Fiji. Employees typically receive their salaries at the end of the month after calculating their working hours, overtime, and other aspects.
Fiji Payroll Options for Companies
Employers can choose different options to process payroll in Fiji as per their requirements and budget. The HR payroll Fiji options are discussed here.
Internal payroll
Large-scale companies that agreed on a long-term commitment to Fiji can operate on an internal payroll system. However, this option can be expensive since the company must hire the required staff in the HR department.
Remote payroll
This option of the Fiji payroll guide allows a parent company to handle its payroll. Although it is an economical option, the company must know different labor laws in Fiji.
A Fiji payroll processing company
If you opt for this option, you must thoroughly research the market. Moreover, you must select an experienced and trustworthy processing company familiar with payroll rules and regulations in Fiji.
Fiji payroll outsourcing
This option is the most straightforward, most flexible, and most economical approach to handling payroll in Fiji. It discards all the challenges of processing payroll in Fiji and lets you concentrate on the company’s growth. The experts at Multiplier supervise all the components of the Fiji payroll process and guarantee that all these processes meet compliance standards.
Entitlement and Termination Terms
Entitlement terms in Fiji
Entitlement terms are one of the significant Fiji payroll requirements. In Fiji, an employee is entitled to the following benefits.
Annual (or Holiday) leave
The minimum specified entitlement is ten working days of leave per year (excluding casual and piece-rate workers).
Sick leave
Generally, employees are eligible for sick leave after completing three months with the company.
Employees get up to 10 days of sick leave in Fiji. Specific industries support a duty of care to offer medical assistance (as required) rather than entitlement to an agreed number of days of sick leave. So, every employee’s sick leave must be recognized as annual days with the yearly accrual agreed upon as needed. If the employee owes any balance from their last yearly accruals, it must be considered in the leave history.
For example, the industries like manufacturing, milling, mining, etc. support Wage Order Regulations related to minimum leave entitlements, including sick leave accrual. Make sure to set up appropriate entitlements for employees in your industry in Fiji.
Bereavement leave
Those employees who have completed over three months of service are eligible for three days of bereavement leave per year.
Additional benefits
In addition to healthcare, the Fiji social security system entails unemployment, disability, accident insurance, and pension.
Employer social costs incorporate a vast share of employee benefits in Fiji. But you can consult an international PEO platform like Multiplier.
Termination Terms in Fiji
Employment termination is a significant facet to consider for payroll in Fiji when an employee is terminated from their current job.
- Employees who have completed a minimum of 3 months of service are eligible for an annual leave payment equal to 5/6ths of a day’s wage for every completed month of service.
- If they have worked for a year or more in that company, they are also eligible to receive the wage equivalent to the total unused leave accumulated to the date plus 5/6th of a day’s pay for each month they have worked.
- For employees who leave without notice, the employer can count the days of the vacation leave as a part of the wages as severance.
Fiji Payroll Processing Company
Starting a business and operating an employee’s payroll should be used per local laws and regulations. However, the process can be time-consuming. You can attain the maximum possible advantages of payroll rules and regulations in Fiji by associating with a global PEO company like Multiplier.
How Multiplier Can Help with Global Payroll
Fiji’s payroll management entails factors like the payroll cycle, its processing, and more. The payroll process can be laborious and challenging for your business to manage single-handedly. You can exclude these hassles and establish the Fiji payroll process by utilizing the service from a global PEO platform like Multiplier.
Multiplier is distinguished in Fiji for offering EOR solutions to global corporations in 150+ nations. Our experts competently deal with payroll processing, management, employee onboarding, and other related tasks. Furthermore, our SaaS-based PEO services guarantee the proficient functioning of your payroll in Fiji. You can contact us to know in detail about our services.