Aruba PEO & Employer of Record Services
Global PEO Services (GPS) helps companies hire employees in Aruba without establishing a legal entity. All human resources, benefits, payroll, and tax needs for the employees are managed by the Global PEO, while the new hires and headquarter teams focus on your business goals.
When hiring employees in Aruba, establishing a subsidiary or branch office is not always the best route, as it’s often a lengthy and expensive process. Hiring via a Professional Employer Organization (PEO), or Employer of Record (EOR), is a faster and often more effective option – especially when starting up in a new country.
Global PEO Services hires the employees on your behalf, legally contracting them through our subsidiary in accordance with Aruba labor laws. As a result, the burden of compliance is on us and the employees can begin work for your company in a matter of days. PEOs/EORs provide you with a streamlined option for hiring employees, testing markets, and responding to growing business needs in Aruba. With Global PEO Services, you get control without taking on legal entity liabilities, contractor risks, or sacrificing on talent or speed to market.
Aruba - Country Overview
Aruba’s economy is an open system with tourism accounting for a majority of economic activity. The rapid growth of the tourism sector has resulted in a substantial expansion of other activities including construction which continues to boom, especially in the hotel sector. Other major industries include oil refining and storage, offshore banking, livestock, aloe cultivation, and fishing. The government is focusing on expanding finance, technology, and communications.
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Working Hours in Aruba
Regular work schedule has 8.5 hours per day in a 5-day work week and a maximum of 42.5 hours in a week. In a 6-day work week, employees are permitted to work 8 hours per day and up to 45 hours in a week.
In a 4-day work week, employees are permitted to work 9 hours per day and up to 36 hours in a week.
Overtime work is defined as any work performed over and above 42.5 hours a week. For a work schedule (Monday to Saturday), overtime pay is 150% of the regular hourly pay. For overtime work performed on holidays, Saturdays and other days of rest, the rate is 200% of the regular pay.
Employee Leave in Aruba
The public holidays specified in the Labor Ordinance are:
- Jan. 1: New Year’s Day
- Jan. 25: Day of Betico
- The day after Mardi Gras
- March 18: National Anthem and Flag Day
- Good Friday
- Easter Monday
- April 30: Queen’s Day
- May 1: Labor Day
- Ascension Day
- Dec. 25: Christmas Day
- Dec. 26: Boxing Day
Employers must give employees annual leave equal to at least 3 times the number of working days per week. Employees who work 6 days a week are entitled to a minimum of 15 days’ annual leave.
Employers must provide employees up to 6 weeks of sick leave and pay full remuneration. After 6 weeks, employers can pay 80% of the salary if the employee is covered by the health insurance of Social Security Bank (SVB).
Employers must provide pregnant employees paid maternity leave of a maximum 12 weeks (4 to 6 weeks before the childbirth and 6 to 8 weeks post childbirth) at full pay.
Employers must provide male employees 2 days’ paid paternity leave which must be taken within 4 weeks after the childbirth provided the employee is married and has a long-term situation with the child’s mother.
Employee Benefits in Aruba
Pension and Social Security
The mandatory pension age is below:
- 2019: 62 years;
- 2020: 62.5 years;
- 2021: 63 years;
- 2022: 63.5 years
- 2023: 64 years;
- 2024: 64.5 years, and
- 2025: 65 years.
Beginning from Jan. 1, 2019, for employees who are at least the mandatory pension age, the total general health insurance rate assessable on an employee’s:
- annual income of up to Afl. 30,000 is 6.5%,
- annual income in excess of the Afl. 30,000 threshold is at 10.5%.
The applicable total rates for employee and employer portions are 6.5% and 10.5%, effective as of January 1, 2019, though yet to have been specified by the government of Aruba.
The Department of Tax often refers to the general old-age insurance, as well as the general widows and orphan insurance contributions, as having a combined rate of 5% for employees.
Employers and employees are also required to contribute a percentage of salary toward a pension fund (pensioenfonds, abbreviated as PF).
The mandatory pension fund contribution rate for employees as well as employers is 3%.
Employers and employees contribute to a social security plan. The rates of social security contribution for employers that are determined based on wages paid to employees, are as follows:
- General old-age insurance: 10%;
- General health insurance: 8.9%;
- Sickness insurance: 2.65%;
- General widows and orphan insurance: 0.5%;
- Accident insurance: 0.25% to 2.5%, with an employer’s applicable rate in this range based on risk factors; and
- Severance payment insurance: Afl. 40 per employee per year.
The general old-age insurance and general widows and orphan insurance contributions have a combined rate of 10.5% for employers.
The social security contribution rates for employees are as follows:
- General old-age insurance (algemene ouderdomsverzekering or AOV): 4.5%;
- General widows and orphan insurance (algemene weduwen en wezenverzekering, or AWW): 0.5%;
- General health insurance (algemene ziektekostenverzekering, abbreviated or AZV): 1.6%.
The general health insurance rates for the employer and employee often are collectively referred to as the total general health insurance rate.
The contributions to these three plans have an employer’s part called werkgeversdeel and a worker’s part called “werknemersdeel.”