What Global Companies Need to Know About Mauritius’s Payroll

Business might not be the first thing that springs to mind when you think about Mauritius. You’d be forgiven for conjuring up images of crystal clear seas, white sandy beaches, warm sunshine and stunning mountain vistas. But there’s also plenty to get excited about business-wise on this island paradise in the Indian Ocean.

Tourism is a major part of the Mauritian economy (there’s those white sandy beaches again!) so it’s no surprise that its economy took a major hit because of the pandemic.  Its GDP dropped by more than 20% from 2019 to 2020, and only now is it beginning to recover.

However, tourism isn’t the be-all and end-all in this independent nation of 1.3 million people: clothes manufacturing, fishing, and sugar all play a major part in the economic mix, too. Add in a stable government, a business-friendly timezone and wide use of both English and French, and it can be a very attractive place to do business

If you’re looking at expanding your business into Mauritius, then there’s plenty to understand from a payroll perspective. This guide covers all the basics. 

Getting Started 

Business set-up in Mauritius starts with reserving a business name and registering it on the online portal of the Corporate and Business Registration Department. After this, an electronic registration card is issued, and registrations with the Revenue Authority and the Ministry of Social Integration are taken care of automatically.

After this, you should prepare for inspection by the police, fire service and other public bodies, who will evaluate your premises and advise you of any fees required to be paid to them. You should also register with the Social Security Office, and apply for the business license relevant to your organization.

Opening an in-country bank account is compulsory for foreign businesses in Mauritius. The financial year runs in line with the calendar year.

Employment Considerations

Employment contracts in Mauritius must be put in writing and cover all relevant information about the employment, including compensation, leave, and termination arrangements. Employees must be paid in the local currency, the Mauritian rupee, and employers must follow strict rules in Mauritian law that prevent discrimination at any stage of the recruitment process. Probation periods in Mauritius can range between one and three months. 

The normal working pattern per week in Mauritius is to work 45 hours per week, across five nine-hours shifts. Any work over this amount is paid at an overtime rate of 150% normal salary. Furthermore, if an employee has to complete more than two hours of overtime at the end of any day, an employer has to provide a meal for the employee, or pay them a MUR 85 meal allowance (approximately £1.60; $1.90; €1.90).

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Compensation, Bonuses and Severance

As of 2022, the national minimum wage rate in Mauritius is MUR 10,575 per month (approx. £200; $235, €235), except for employees of ‘export enterprises’, where a rate of MUR 9875 per month applies (approx. £190; $220, €220). The payment of a 13th-month bonus is a legal requirement in Mauritius for all employees who are employed by the company for the full calendar year. At least three-quarters of this should be paid at least five working days before Christmas, with payment completed in full by the last working day of December.

The statutory minimum notice period in Mauritius is 30 days, although longer notice periods can be agreed in individual employment contracts. Severance pay is relatively high, at three months’ pay per year of service (as long as the employee has completed at least one year).

Tax and Social Security

Income tax is levied at three progressively higher rates in Mauritius, but the rates are relatively low. The first MUR 700,000 per year (approx. £13,500; $15,500, €15,500) is taxed at 10%, after which the rate rises to 12%. The highest rate of 15% is levied on earnings about MUR 975,000 per year (approx. £18,500; $21,500, €21,500).

Counterbalancing the low-income tax rates is a significant social security burden, with relative complexity in the rates. In the private sector, different rates apply depending on whether an employee earns more or less than MUR 50,000 per month. If this threshold is not exceeded, the employer pays 3% and the employee pays 1.5%. If it is exceeded, these rates are doubled. Other levies include:

• National Savings Fund: 2.5% employer, 1% employee
• National Pension Fund: 6% employer, 3% employee
• Training Levy: 1% employer

At present, the corporation tax rate in Mauritius is 15% (or 3% for export companies). The VAT rate is also 15%.

Holidays and Leave

There are 15 days of public holiday in Mauritius each year, which encompass a wide range of religions and cultures: Christmas, Diwali, Eid al-Fitr and Chinese New Year are all observed, for example.

Paid leave entitlement starts after six months of service, after which employees receive one day per month over the remaining six months of their first year. After a year of service, entitlement is 20 days per year.

Maternity leave is 12 weeks, split evenly either side of the expected birth date, on full pay. Paternity leave entitlement is five days per calendar year. Other leave entitlements include six days for a marriage (first marriage only), three days for the marriage of an employee’s child, and three days for a bereavement. 

Sick leave entitlement is a maximum of 21 days on full pay per year, as long as the employee has at least six months’ service and provides a medical certificate within the first four days of absence. New legislation was also introduced in 2022 allowing an employee to take care of one of their children who is ill, by using up to five days of their paid leave entitlement.

In Summary

Mauritius is full of potential as a place to do business, but incoming foreign organizations should proceed with caution. So many different cultures come together in Mauritius that it’s important to take them all into account, as you will likely be employing a multicultural workforce. Local expertise can be so useful in helping you get off on the front foot, as well as helping you navigate all the ins and outs of employment law and payroll in Mauritius.

This article is for informational purposes only and not intended to convey or constitute legal or any other advice. It is not a substitute for advice from a qualified professional.