BENIN

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Benin Payroll and Employment of Record: Employment Contracts

Benin has three general types of visas:

  • Business
  • Tourist
  • Transient

The requirements vary depending on the type, but most employees will need to acquire a business visa and work permit to remain compliant. Most visas are only valid for 30 or 90 days. Expatriates must apply before entering Benin.

A foreigner must have a work permit that is supported by a fixed-term job contract. The Ministry of Labor in Benin issues work permits with a 12-month validity. 

Annual Vacation

Employees are generally entitled to 24 paid days of annual leave per year after one year of employment, with increases at the following rate: 

    • After 20 years an extra 2 days.
    • After 25 years an extra 4 days.
    • After 30 years an extra 6 days.

Sick

In adherence to Benin’s employment regulations, sick leave entitlements are determined by an employee’s tenure within a company.

    • Employees with 12 months of service are entitled to one month of fully paid sick leave.
    • Those with a tenure ranging from 1 to 5 years are granted three months of fully paid sick leave, followed by an additional three months of half-paid sick leave.

Maternity

  • Female employees are entitled to 6 weeks of paid leave before and 8 weeks after giving birth, with the employer covering half of the cost and social insurance covering the rest.

Paternity

  • In most cases, fathers are entitled to three days of paid paternity leave.

Family

N/A

National Holidays

  • Benin has a total of 13 public holidays which are paid.

Other Paid Time Off

N/A

STATUTORY EMPLOYEE BENEFITS

Unemployment

  • Benin does not have a dedicated unemployment fund. However, the law mandates that employers in the private and quasi-public sectors provide severance pay to employees dismissed after at least one year of service, provided they have not committed any serious misconduct.
  • The severance payment amount is calculated as a percentage of the employee’s monthly salary for each year of service.

Workers Compensation

  • Employer social insurance contributions for work injuries range from 1% to 4% of the gross monthly covered payroll, depending on the risk assessment.
  • These contributions are calculated based on the legally mandated monthly minimum wage.
  • Employers with at least 20 employees are required to make monthly contributions, while those with one to 19 employees contribute quarterly.

Social Security

  • Employees contribute 3.6% of their gross monthly covered earnings, or 10% of their last gross salary earned while in mandatorily covered employment if they are voluntarily insured.
  • Employers contribute 6.4% of their employees gross monthly covered payroll towards social security and an additional 9% towards family allowances.
  • Contributions are based on the legal monthly minimum wage.

Retirement

  • Covered by Social Security.

Health

  • Benin is striving toward universal health care; however, it presently operates under a public/private system.

PRIVATE EMPLOYEE BENEFITS

Workers Compensation

  • Private workers compensation is not yet available in Benin.

Retirement

  • There are a few private pension schemes available in Benin.

Health

  • Private healthcare is available in Benin.

Insurance

  • Life insurance policies are also available in Benin.

PERSONAL INCOME TAX

Tax Year

  • Tax year in Benin is a calendar year.

Tax Tables

Individual income tax Progressive annual rates range from 0% to 30%
Less than XOF 60,000 0%
Between XOF 60,001 and 150,000 10%
Between XOF 150,001 and 250,000 per year 15%
Between XOF 250,001 and 500,000 per year 20%
More than XOF 500,000 per year 30%

Taxation Method

  • Tax in Benin is progressive.

Double Taxation

  • Benin has several double taxation agreements.

Residence Requirements

An individual is regarded as a tax resident in Benin if they satisfy any of the following criteria:

  • In Benin, they have a permanent residence.
  • During a tax year, they stay in Benin for more than 183 days.
  • They either work professionally there or receive income from Benin.

If a person satisfies any of the aforementioned requirements, they are regarded as tax residents and must pay the Benin tax authorities taxes on their global income.

Moreover, depending on the kind of income and the relevant tax treaty rules, if any, between Benin and their place of residency, non-residents who receive income from Benin may also be liable to Benin taxation on such income.

Payroll Calendars

  • Employees are not required to be paid on a set schedule.
  • Payrolls can be done weekly, biweekly, fortnightly, or monthly.

Rebates & Tax Credits

  • The first XOF 60 000 of income is exempt from tax. Social Security contributions are also deductible when calculating income tax.
  • Deductions are also available for dependent children, reducing the tax due as follows:
    • 0% in the case of one dependent child. 
    • 5% in the case of two dependent children. 
    • 10% in the case of three dependent children. 
    • 15% in the case of four dependent children. 
    • 20% in the case of five dependent children. 
    • 23% in the case of six or more dependent children.

Health Insurance

  • Benin is striving toward universal health care; however, it presently operates under a public/private system.

Unemployment

  • Benin does not have a dedicated unemployment fund. However, the law mandates that employers in the private and quasi-public sectors provide severance pay to employees dismissed after at least one year of service, provided they have not committed any serious misconduct.
  • The severance payment amount is calculated as a percentage of the employee’s monthly salary for each year of service.

Social Security

  • Employees contribute 3.6% of their gross monthly covered earnings, or 10% of their last gross salary earned while in mandatorily covered employment if they are voluntarily insured.
  • Employers contribute 6.4% of their employees gross monthly covered payroll towards social security and an additional 9% towards family allowances.
  • Contributions are based on the legal monthly minimum wage.

PAYROLL ELEMENTS

Income

  • Salary, earnings, bonuses, overtime pay, taxable benefits, allowances, and certain lump sum perks are examples of remuneration (revenue from employment). Profits or losses made by a company or trade. Income or profits derived from an individual’s status as a trust beneficiary.

Bonuses

  • Bonuses are not mandatory in Benin.

Allowances

  • Employers in Benin contribute 9% of their employees’ monthly gross salaries to the Social Security Scheme to cover family allowances.
  • These contributions fund benefits such as the family allowance, which is granted to children under 22 who do not get an orphan’s pension, and the prenatal allowance. To be eligible for these benefits, you must meet certain requirements.

Benefits in Kind

  • According to the Benin Labor Code, benefits in kind are considered part of an employee’s total compensation package.
  • Examples include employer-provided housing or lodging, a company vehicle, and food stipends.

Investment Income

Capital Gains Tax

  • Unless new investment is made within three years, capital gains from the sale of business assets are taxed at the ordinary company income tax rate (under conditions). If the taxpayer ceases operations or sells his business during the three-year period, the reinvested capital gains will be taxed immediately.
  • Non-resident corporations’ capital gains are taxed at 30%.

Retirement Funding

  • Covered by Social Security.

Health Insurance

  • Benin is striving toward universal health care; however, it presently operates under a public/private system.

Risk Insurance

N/A

Taxable Income

  • Individuals are taxed on earnings, salaries, leave pay, fees, commissions, bonuses, gratuities, compensation and commutation payable under any employment or service contract.

Allowable Deductions

  • The first XOF 60,000 of employment income is tax-free.
  • Deductions are available for dependent children, reducing the tax due as follows:
    • 0% in the case of one dependent child. 
    • 5% in the case of two dependent children. 
    • 10% in the case of three dependent children. 
    • 15% in the case of four dependent children. 
    • 20% in the case of five dependent children. 
    • 23% in the case of six or more dependent children.

PAYROLL TAXES AND EMPLOYER CONTRIBUTIONS

Payroll Taxes

  • Employers must pay a payroll levy (versement patronal sur salaires) of 4% on the gross value of salaries, wages, allowances, and in-kind benefits.
  • During their first year of operation, newly incorporated businesses are exempt from payroll tax.

Unemployment

  • Benin does not have a dedicated unemployment fund. However, the law mandates that employers in the private and quasi-public sectors provide severance pay to employees dismissed after at least one year of service, provided they have not committed any serious misconduct.
  • The severance payment amount is calculated as a percentage of the employee’s monthly salary for each year of service.

Social Security

  • Employees contribute 3.6% of their gross monthly covered earnings, or 10% of their last gross salary earned while in mandatorily covered employment if they are voluntarily insured.
  • Employers contribute 6.4% of their employees gross monthly covered payroll towards social security and an additional 9% towards family allowances.
  • Contributions are based on the legal monthly minimum wage.

Workers Compensation

  • Employer social insurance contributions for work injuries range from 1% to 4% of the gross monthly covered payroll, depending on the risk assessment.
  • These contributions are calculated based on the legally mandated monthly minimum wage.
  • Employers with at least 20 employees are required to make monthly contributions, while those with one to 19 employees contribute quarterly.

ADMINISTRATION

Income

  • The first XOF 60,000 of employment income is tax-free.
  • Individuals with a tax domicile in Benin are normally taxed on their worldwide income, whereas those who are not domiciled in the country are taxed only on their Benin-sourced income.

Payroll Taxes

  • Employers must pay a payroll levy (versement patronal sur salaires) of 4% on the gross value of salaries, wages, allowances, and in-kind benefits.
  • During their first year of operation, newly incorporated businesses are exempt from payroll tax.

Unemployment

  • Benin does not have a dedicated unemployment fund. However, the law mandates that employers in the private and quasi-public sectors provide severance pay to employees dismissed after at least one year of service, provided they have not committed any serious misconduct.
  • The severance payment amount is calculated as a percentage of the employee’s monthly salary for each year of service:
    • 30% of average monthly salary for the first five years of service.
    • 35% of monthly average salary for 6-10 years of service.
    • 40% of average monthly salary for 10+ years of service.

Social Security

  • Old-Age benefits 

The pension is 30% of the insured’s average monthly earnings for the first 15 years, plus 2% for each additional year beyond 180 months. Early pensions are reduced by 5% for each year claimed before the normal retirement age.

  • Permanent disability benefits 

Permanent disability benefits are similar to old-age pensions, with a constant-attendance allowance of 40% of the disability pension. 

  • Survivor benefits 

Survivor benefits include a spouse’s pension at 40% of the deceased’s pension, an orphan’s pension ranging from 20% to 40%, and a remarriage settlement of six months’ pension. A survivor settlement is paid as a lump sum based on the deceased’s pension with 180 months of coverage.

  • Family Allowances 

Benefits include the family allowance, which is granted to children under 22 who do not get an orphan’s pension, and the prenatal allowance. 

Workers Compensation

  • Temporary disability benefits

An insured worker receives 66.7% of their average daily earnings from the month before the disability began, starting from the day after the disability and lasting up to 12 months. After 12 months, the benefit is calculated based on the insured’s annual earnings in the year before the disability. The benefit is paid until the worker fully recovers or is certified with a permanent disability. An approved doctor needs to assess the degree of disability.

  • Permanent disability benefits

Permanent disability benefits provide a pension based on the insured’s degree of disability. For disabilities assessed at 20% or higher, the pension is 0.5% of the insured’s annual earnings per percentage point of disability up to 50%, and 1.5% per percentage point beyond that. Benefits are adjusted for cost of living changes, and an approved doctor assesses the disability.

  • Survivor benefits

Survivor benefits include pensions for spouses, orphans, and dependent parents, calculated as a percentage of the deceased’s earnings. Funeral grants are also provided. Benefits are adjusted for cost of living changes, with a maximum combined survivor pension of 85% of the deceased’s disability pension.

  • Workers’ medical benefits

These include medical and surgical care, hospitalization, medications, prosthetics, rehabilitation, and transportation costs.

Statutory Benefits

  • In Benin, employees are entitled to the 13 public holidays which are paid. They get 24 days of paid leave, 14 weeks of maternity and 3 days of paternity leave.

Employee Benefits

  • In Benin, employees are entitled to the 13 public holidays which are paid. They get 24 days of paid leave, 14 weeks of maternity and 3 days of paternity leave.

LEGISLATION

  • Constitution of the Republic of Benin 1990.
  • Labor Code, 1998.
  • Hiring, Workforce Placement and Termination of the Employment Contract.
  • General Collective Labor Agreement, 2005.
  • Act No. 98-019 of 21 March 2003 on the Code of Social Security.

STATUTORY BODIES

  • Ministry of Labor, Public Service and Social Security.
  • National Labor Council.
  • Labor Inspectorate.
  • National Social Security Institute.
  • National Employment Agency.