November 2021 – Minimum Wage

 

EMPB No. 3.1 | 9th November 2021

EMPLOYMENT BULLETIN

REGULATORY UPDATE: MINIMUM WAGE ORDER

The Sixth Amendment to the Employment Act ratified by the President of the Maldives on 25th September 2020 mandated the Government of Maldives to introduce a minimum wage by end of 2021.

The Minister of Economic Development has issued the Minimum Wage Order on 8th November 2021 (“Minimum Wage Order”), introducing minimum wage rules in the Maldives.

A translation of the Minimum Wage Order is available at: https://bit.ly/3mWi9jR

This bulletin provides a snapshot overview of the minimum wage rules applicable pursuant to the Minimum Wage Order.

INTRODUCTION

Who is entitled to minimum wage?

  • Maldivian citizen employees are entitled to minimum wage.
  • Foreign employees are excluded from minimum wage requirements.

When does it apply?

  • Effective from 1st January 2022.

Minimum Wage Rates

Employer CategoryHourly RateMonthly Minimum Wage
Micro Enterprise (under 6 employees, low revenue/profit)

  • less than 6 employees;
  • annual revenue below MVR 500,000 (approx. USD 32,425); and
  • annual profit below MVR 75,000 (approx. USD 4,864).
No minimum wage applicableNo minimum wage applicable
Small Enterprise (6–30 employees)

  • 6 to 30 employees;
  • annual revenue between MVR 500,001 (approx. USD 32,426) and MVR 5,000,000 (approx. USD 324,254); and
  • annual profit between MVR 75,001 (approx. USD 4,864) and MVR 750,000 (approx. USD 48,638).
MVR 21.63 (approx. USD 1.40) per hour.MVR 4,511 (approx. USD 293) per month.
Medium Enterprise (31–100 employees)

  • 31 to 100 employees;
  • annual revenue between MVR 5,000,001 (approx. USD 324,254) and MVR 20,000,000 (approx. USD 1,297,017); and
  • annual profit between MVR 750,001 (approx. USD 48,638) and MVR 3,000,000 (approx. USD 194,553).
MVR 33.65 (approx. USD 2.18) per hour.MVR 7,018 (approx. USD 455) per month.
Large Enterprise, namely a business enterprise which is not a micro enterprise, small enterprise or medium enterprise. Generally, resort owning entities and banks will fall under this categoryMVR 38.46 (approx. USD 2.18) per hour.MVR 8,021 (approx. USD 520) per month.
Public Sector, which includes authorities, institutions and offices within the State and Government of MaldivesMVR 33.65 (approx. USD 2.49) per hour.MVR 7,000 (approx. USD 454) per month. (based on 30 hours work)

What are the payments that can be included in calculating minimum wage?

  • The following shall be included when calculating the minimum wage:
  • The basic salary as provided under the employment contract, before the following deductions:
    • Deductions made by the employer as a result of employee absenteeism.
    • Deductions from the employee’s salary to the Maldives Retirement Pension Scheme.
    • Employee withholding tax deductions made pursuant to the Income Tax Act.
  • Fixed allowances payable on a monthly basis and which form part and parcel of the salary structure.

What are the payments exempted when calculating minimum wage? For example, can service charge be included in minimum wage calculations?

Employers are not permitted to include the following payments or benefits, as part of minimum wage calculations:

  • Service charge.
  • Overtime pay.
  • Ramadan allowance paid to Muslim employees.
  • Seasonal or ad-hoc allowances and bonuses given to employees.
  • In-kind benefits.
© SHC Lawyers LLP. This document is a general guide and not legal advice.

 

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