Minimum Wage

As of January 1, 2024, the minimum wage in Cape Verde is set at 15,000 CVE per month. This represents an increase from the previous minimum wage of 13,000 CVE. The minimum wage applies across various sectors and is crucial for establishing a baseline standard of living for workers.

Minimum Wage	Amount (CVE)
Monthly Minimum Wage	15,000

Income Tax

Cape Verde employs a progressive personal income tax system. Taxable income up to 220,000 CVE is exempt from tax. The following tax brackets apply to taxable income above this threshold:

• 16.5% on income from 220,001 to 960,000 CVE
• 30% on income exceeding 960,000 CVE

Employers are responsible for withholding the appropriate amount of income tax from employees’ salaries and remitting it to the tax authorities.

Income Tax Rate	Income Bracket
0%	Up to 220,000 CVE
16.5%	220,001 to 960,000 CVE
30%	Over 960,000 CVE

Payroll Cost

The payroll cost for employers in Cape Verde includes not only the employee’s salary but also mandatory contributions to social security and other funds. Employers contribute approximately 8% of an employee’s gross salary to the National Institute of Social Security (INPS), which covers pensions and health benefits.Additional contributions may include:

• 1% for occupational accident insurance
• Variable rates based on specific industry requirements

Payroll Cost Component	Description
INPS Contribution	Approximately 8%
Occupational Accident Insurance	1%

Overtime Pay

In Cape Verde, the standard working week is typically 44 hours, and employees are entitled to additional compensation for overtime work. Overtime pay is calculated as follows:

• 125% of the normal hourly rate for overtime worked beyond standard hours.
• Employees can work up to an additional 12 hours of overtime per week.

Overtime Pay Regulation	Description
Regular Overtime Rate	125% of normal hourly rate
Maximum Overtime Hours	Up to 12 hours per week

This comprehensive overview covers minimum wage requirements, income tax obligations, payroll costs, and overtime pay regulations in Cape Verde. Understanding these aspects is essential for employers navigating the employment landscape in this country.

Regular & Maximum Working Hours

In Cape Verde, the standard working week is set at 44 hours, typically spread over 5 or 6 days. Employees are expected to work a maximum of 8 hours per day if working five days a week or 7.33 hours per day if working six days. Any work performed beyond these hours is considered overtime and must be compensated accordingly.

Working Hours	Description
Standard Work Week	44 hours
Standard Work Day	8 hours (5 days) / 7.33 hours (6 days)
Maximum Work Week	48 hours (including overtime)

Leave

Cape Verde provides various types of leave to support employee well-being and work-life balance. The main types of leave include:

• Annual Leave: Employees are entitled to a minimum of 22 days of paid annual leave after one year of service. This leave can be taken in parts, but one part must consist of at least 12 consecutive days.
• Sick Leave: Employees are entitled to up to 30 days of paid sick leave per year, requiring a medical certificate for verification.
• Maternity Leave: Female employees are entitled to 60 days of paid maternity leave, with compensation at 80% of their regular wage.
• Paternity Leave: Male employees can take up to 120 days of paternity leave under specific circumstances, such as when the mother is unable to care for the child.

Leave Type	Description
Annual Leave	Minimum of 22 days paid leave
Sick Leave	Up to 30 days paid leave
Maternity Leave	60 days paid leave at 80% of regular wage
Paternity Leave	Up to 120 days under specific conditions

Holidays

Cape Verde observes several public holidays throughout the year. Employees are entitled to paid time off on these holidays, which include:

• New Year’s Day: January 1
• Democracy Day: January 13
• Heroes’ Day: January 20
• Good Friday: Date varies
• Labor Day: May 1
• Youth Day: June 1
• Independence Day: July 5
• Assumption of Mary: August 15
• All Saints’ Day: November 1
• Christmas Day: December 25

Public Holiday	Date
New Year’s Day	January 1
Democracy Day	January 13
Heroes’ Day	January 20
Good Friday	Date varies
Labor Day	May 1
Youth Day	June 1
Independence Day	July 5
Assumption of Mary	August 15
All Saints’ Day	November 1
Christmas Day	December 25

This comprehensive overview covers regular and maximum working hours, various types of leave, and holiday observances in Cape Verde. Understanding these aspects is essential for employers looking to create a compliant and supportive work environment.

Termination Requirements

In Cape Verde, the termination of employment contracts is governed by the Labour Code, which outlines specific legal requirements to ensure fairness. Employment contracts can be terminated for various reasons, including:

• Mutual Agreement: Both employer and employee agree to terminate the contract.
• Redundancy: Termination due to economic reasons or organizational changes.
• Misconduct: Dismissal for serious violations of company policies.
• Incompetence: Termination based on performance issues.

Employers must follow due process when terminating an employee to avoid potential legal disputes.

Termination Grounds	Description
Mutual Agreement	Both parties consent to end the contract
Redundancy	Economic or organizational reasons
Misconduct	Serious violations of company policies
Incompetence	Performance-related issues

Notice Period

The notice period required for terminating an employment contract varies depending on the length of service and type of contract. Generally, the notice periods are as follows:

• Indefinite-Term Contracts:
  • Less than 1 year: 30 days
  • 1 to 5 years: 60 days
  • More than 5 years: 90 days
• Fixed-Term Contracts: Typically, a notice period of 10 days is required unless specified otherwise in the contract.

Contract Type	Length of Service	Notice Period
Indefinite-Term	Less than 1 year	30 days
Indefinite-Term	1 to 5 years	60 days
Indefinite-Term	More than 5 years	90 days
Fixed-Term	Any duration	10 days

Severance Pay

Employees in Cape Verde are entitled to severance pay upon termination, except in cases of dismissal for serious misconduct. The amount of severance pay is calculated based on the length of service and is as follows:

• Less than 1 year: No severance pay
• 1 to 5 years: One month’s salary
• 6 to 10 years: Two months’ salary
• 11 to 15 years: Three months’ salary
• More than 15 years: Four months’ salary

Length of Service	Severance Pay
Less than 1 year	No severance pay
1 to 5 years	One month’s salary
6 to 10 years	Two months’ salary
11 to 15 years	Three months’ salary
More than 15 years	Four months’ salary

Probation Periods

The probation period for employees in Cape Verde typically lasts up to 6 months. During this time, either party can terminate the contract with a shorter notice period. The probation period can be extended once, but only with mutual agreement.

• For managerial positions, the probation period may extend up to 8 months.

Role Type	Standard Probation Period
General Employees	Up to 6 months
Managerial Roles	Up to 8 months

This detailed overview covers termination requirements, notice periods, severance pay, and probation periods in Cape Verde. Understanding these aspects is essential for employers navigating the employment landscape in this country.

Misclassification of Workers

In Cape Verde, correctly classifying workers as either employees or independent contractors is crucial for compliance with labor laws. Misclassification can lead to significant legal and financial consequences, including penalties and back taxes. The distinction between employees and independent contractors primarily revolves around the level of control, benefits, and tax responsibilities.Key Differences:

• Control: Independent contractors have more control over how they complete their work, while employees are subject to direct supervision.
• Benefits: Employees are entitled to various benefits such as paid leave and social security contributions, whereas independent contractors are not entitled to these benefits.
• Tax Responsibilities: Employees have taxes withheld by their employer, while independent contractors are responsible for their own tax filings.

Classification Factor	Employee	Independent Contractor
Level of Control	High	Low
Benefits	Entitled to various benefits	No entitlement to employee benefits
Tax Responsibilities	Employer withholds taxes	Responsible for own tax filings

Legal Framework

The legal framework governing contractors in Cape Verde is primarily established by the Civil Code. Under this legislation, an individual is classified as a contractor if they meet certain criteria:

• Determine their own work schedule and location.
• Work without direction or supervision from the employer.
• Supply and use their own tools, materials, and equipment.
• Have the ability to perform work for other clients simultaneously.
• Set their own pay rate.

Understanding these criteria is essential for both employers and contractors to avoid misclassification.

Legal Aspect	Description
Work Schedule	Contractor sets their own hours
Supervision	No direct oversight from the employer
Tools and Equipment	Contractor provides their own
Multiple Clients	Ability to work for various clients
Payment Rate	Contractor determines their compensation

Tax Responsibilities

Independent contractors in Cape Verde are considered self-employed for tax purposes. They must register with the tax authorities and are responsible for filing their own tax returns. Key tax responsibilities include:

• Tax Registration: Contractors must obtain a taxpayer identification number (TIN).
• Self-Assessment: Contractors are required to file annual tax returns based on their earnings.
• Social Security Contributions: While not mandatory, it is advisable for contractors to contribute to social security for retirement and health benefits.

Tax Responsibility	Description
Self-Assessment	Required to file annual tax returns
Tax Registration	Must register with local tax authorities

Compliance Considerations

Ensuring compliance with local laws is crucial when hiring independent contractors. Misclassification can lead to penalties, including back payments for social security contributions. Factors considered when determining the nature of the working relationship include:

• Degree of Control: The extent to which the employer controls how work is performed.
• Provision of Tools: Whether the employer provides tools and equipment necessary for work.
• Exclusivity: Whether the contractor works exclusively for one client or multiple clients.

Compliance Factor	Employee	Independent Contractor
Control over Work	High	Low
Provision of Tools	Yes	No
Exclusivity	Often required	Not required

This detailed overview covers misclassification issues, legal frameworks, tax responsibilities, and compliance considerations related to independent contractors in Cape Verde. Understanding these aspects is essential for employers looking to create a compliant working environment while minimizing legal risks.