Table of Contents

Timor-Leste

Table of Contents

Currency

US Dollar (USD)

Payroll Frequency

Monthly

Employer Taxes

6%

About Timor-Leste

East Timor or Timor-Leste is an island country in Southeast Asia, having won its independence from Indonesia in 2002, after having been originally colonized by Portugal in the 16th century. Along with the Philippines, it is the only other majority-Christian country in Southeast Asia, and also located entirely in the Southern Hemisphere. Most of the country is mountainous and the climate is generally tropical, hot, and humid. Its northern coasts have several coral reef systems that are considered endangered. Its economy used to depend upon exports of commodities such as coffee, marble, petroleum, and sandalwood. Now, it gets a lot of its revenue from oil and natural gas reserves. East Timor’s two main official languages are Portuguese and Tetum.

Employment Relationship

• Permanent Employment

In Timor-Leste, employment contracts that are made for an indefinite term or without a specified term are considered permanent. Contracts that are not made in writing are always considered to be for indefinite period.

• Fixed-Term or Specific-Purpose Contracts

In Timor-Leste, fixed term employment contracts can only be entered into for temporary needs. must be made in writing and clearly establish the justification for its formation. Such contracts can be renewed by written contracts between the parties. A fixed-term employment contract and its respective renewal shall be considered to be a sole employment contract. The maximum duration for fixed-term contracts is 3 years, including renewals. If a fixed-term contract continues after the expiry of its term, it is considered to be made for an indefinite term. A fixed-term contract that is renewed within 90 days of its expiry is considered to be made for indefinite term.

• Temporary Employment Contratcs

There are no provisions regarding temporary employment contracts in Timor-Leste. Fixed-term contracts can be made for temporary or seasonal work.

Probationary Period

Employment contracts can be subject to a probationary period during which any of the parties may terminate the contract without prior notice and without invoking good cause, and there shall be no right to compensation unless otherwise stated in a written agreement. For indefinite term contracts, the maximum duration of probation is 1 month, except where they apply to employees in high technical complexity or responsibility, or to employees exercising confidence-based functions, in which case the probationary period may be established for up to 3 months. In case of fixed-term contracts, probationary period is as follows: 8 days for fixed term contracts of 6 months or lesser duration 15 days for fixed term contracts that exceed 6 months The seniority of an employee is counted from the beginning of probationary period.

Working Hours

The standard daily working hours for employees are 8 hours, limited to a maximum of 44 hours per week. All employees have the right to a remunerated weekly rest period of at least 24 consecutive hours. The working time of employees is defined by their employers or collective agreements.

Holidays / PTO

• Statutory Holidays

• Paid Annual Leave

Employees are entitled to at least 12 days' paid annual leave after the first year of work. The period of leave is defined by agreement between the employee and the employer and it shall be incumbent upon the employer to define it in the absence of an agreement. Where an employer prevents an employee from enjoying their leave within the 12 months from being eligible, the employee will have the right to a compensation corresponding to the double of the remuneration of the unused days of vacation.  In cases of termination of the employment contract, the employee shall have the right to proportional vacations at the rate of 1 day per each month worked. 

• Sick Leave

Employees in Timor-Leste have the right to be justifiably absent from work in case of illness or accidents for up to 12 days a year, 6 days of which are remunerated in full while the remaining 6 days are remunerated at 50% of the daily remuneration value. They must present a medical certificate to avail this benefit.

• Maternity Leave

Female employees in Timor-Leste have the right to paid maternity leave for a minimum period of 12 weeks, 10 weeks of which must be taken after delivery, without loss of remuneration and seniority rights. In case of miscarriage, employees are granted 4 weeks' leave. In case of any medical complications, additional prenatal leave is granted on doctor's recommendation.   Employees are entitled to 100% of their wages for the duration of maternity leave, paid by the employer. Since 2021, Timor-Leste has implemented a social security scheme where maternity benefits are paid by social security, provided the employee has paid at least 6 contributions in the last 12 months.

• Paternity Leave

Male employees in Timor-Leste have the right to a 5-day paid paternity leave after the birth of their children without losing the right to seniority. The period of paternity leave does not affect the salary nor the duration of the length of the vacation period. If during childbirth or within 2 weeks after birth, the employee's spouse or partner dies, they will become entitled to the remaining maternity leave.  Employees are entitled to 100% of their wages for the duration of paternity leave, paid by the employer. Since 2021, the country has implemented a social security scheme where paternity benefits are paid by social security, provided the employee has paid at least 6 contributions in the last 12 months. 

Termination of Employment

• Notice Period

According to Timor-Leste's Labour Code, employers are required to give notice as follows to dismiss employees due to market, technological and structural reasons: 15 days for employees who have worked for less than or equal to 2 years  30 days for employees who have worked for more than 2 years.  Non-observance of the period of advance notice requires the payment of remuneration corresponding to the number of days not observed in the advance notice. If an employee wants to terminate the contract, they have to give a notice of at least 30 days. No notice is required to terminate a contract during probation. Also, dismissing an employee for misconduct requires a disciplinary hearing prior to dismissal and no notice period.  

• Severance Benefits

According to the Labour Code of Timor-Leste, irrespective of the reasons, in case of termination of employment contract, employees shall have the right to a compensation for the length of work in an amount corresponding to 1 month-salary per every 5 years of work at the service of the employer.