Libya PEO & Employer of Record

WeHG presents an International PEO and global Employer of Record maintenance in Libya to companies willing to enter the Libyan market or hire local/expat employees in this area.

Typical approach requires establishing a subsidiary in Libya.  However, our solution allows you to start the procedures in Libya within days hence save time and money.  WeHG would hire candidates on your behalf while you maintain total operational control of their work. So legally they would be our employees, on our local payroll, 100% compliant but will work on your behalf.

Libya fast facts

Population, million: 6
Land area: 1,759,541 km²
Capital: Tripoli
Local currency: Libyan dinar (LYD)

GDP per capita:$ 4,746
GDP in currency:$ 31.531 billion

Libya, country located in North Africa. Most of the country lies in the Sahara desert, and much of its population is concentrated along the coast and its immediate hinterland, where Tripoli (Ṭarābulus), the de facto capital, and Banghāzī (Benghazi), another major city, are located.

Libya comprises three historical regions—Tripolitania in the northwest, Cyrenaica in the east, and Fezzan in the southwest. The Ottoman authorities recognized them as separate provinces. Under Italian rule, they were unified to form a single colony, which gave way to independent Libya. For much of Libya’s early history, both Tripolitania and Cyrenaica were more closely linked with neighbouring territories than with one other.

Hiring, Negotiating and Doing Business in Libya

Necessity of written employment contract

Foreign employees cannot expect a work contract in Libya unless they have a work permit and a residence permit issued by the competent Libyan authorities. The contract is in the form of a written undertaking that must include:

• the duration of the undertaking,
• the rights and obligations of the employee,
• the number of hours worked daily and weekly,
• holidays,
• length of leave periods,
• the salary as well as overtime payments,
• accommodation,
• insurance.

Different forms of engagement: employment, contracting, work with private entrepreneur

As noted above, employment is a right of Libyan nationals and companies are required to ensure that a minimum percentage of their workforce is made up of Libyan nationals. In many cases, this minimum can be as high as 75% Libyan nationals, although certain companies are only required to ensure that 30% of their workforce is made up of Libyan nationals.

Exceptions to the nationalisation quotas are allowed in certain cases, such as specialist roles, where it is in the public interest to allow a relaxation of the rules. However, this requires a resolution from the Ministry of Labour allowing the reduction in Libyan national employment.

All expatriate employees must be registered with the Ministry of Labor and hold an employment permit and residence visa. As part of the application process, the employees must enter a valid employment contract. In addition, expatriate employees must have one of several specified job titles in order to be permitted to work in Libya. Certain jobs are reserved for Libyan nationals or those granted similar rights by the state.

Libya Employment Contract

Types of employment agreements

All employees must enter into a prescribed form employment contract which is registered with the Ministry of Labour. There are two different forms of the employment contract, depending upon whether the employee is a Libyan national or expatriate.

As a general rule, the Libyan Labour Law sets out the minimum employment entitlements and standards. These can be exceeded to the employee’s benefit, by agreement between the parties, but cannot be reduced or excluded to the employee’s disadvantage.

Contracts may be for either fixed or unlimited terms in accordance with the Libyan Labour Law. The maximum duration for a fixed term contract is two years, which may be renewed once, after which the employment becomes an unlimited term contract with minimum notice provisions.

Libya working hours

The banks are open from Sunday to Wednesday from 8 am to 1 pm, then from 4 pm to 6.30 pm. On Thursday, banks are open from 7 am to 2 pm.

With the exception of certain professions, the maximum normal working hours is 48 hours per week and ten hours per day.

Friday is the statutory day of rest each week.

Overtime

Overtime should not exceed three hours per day and is payable with a 50% uplift on the normal hourly wage.

Vacation leave in Libya

The minimum requirements are 30 days paid of annual leave per year and 45 days if the person is over 50 years of age or after 20 years of employment.

Libya Maternity Leave

Every women worker is entitled to 62 days’ maternity leave at full pay.

A pregnant worker may, upon the presentation of a medical certificate from the competent service, begin the above-mentioned leave 30 days before the projected date of confinement and may take the remaining days after confinement.

A working mother may, with the consent of her employer, take a special unpaid maternity leave for a period of up to one year in order to take care of her child, provided the child has not reached one year of age.

A woman worker with one or more children under the age of six may be absent from work without pay for a period of up to 3 days whenever one of her children is sick and needs her care.

Libya Severance Laws

An individual employed under an unlimited term contract must be given at least 30 calendar days’ notice of termination. Where an employee is subject to a fixed term, either party may only terminate the contract where certain specific circumstances arise. In each case, where the reason for termination is not valid, the defaulting party may

be liable to pay compensation to the other party, to be determined by the Court.

An employer is obliged to pay an end of service gratuity to expatriate employees who are not covered by the Social Security Fund. End of service gratuity is calculated by reference to length of service.

The Libyan Labour Law contains an exhaustive list of reasons from which either party may terminate employment without notice, due to the conduct of the other party.

Libya Tax

The taxation policy in respect of the projects undertaken within the scope of the Law No. 9/2010 is as follows:

• The project shall be exempted from income tax for a period of five years from the date of commencement. This period may be extended for an additional period of three years. Losses incurred during the exemption years can be carried forward to the subsequent years.
• The project shall be exempted from stamp duty specified on commercial contracts and documents. Exemptions mentioned above shall not include the fees relating to services such as port, storage and handling fees.

There is no social security legislation applicable to expatriate employees. However, an employer is required to make payments to the social security fund in respect of Libyan nationals:

• Employee’s contribution – 3.75%
• Employer’s contribution – 10.50%

Health Insurance Benefits in Libya

The employee is entitled to 45 days of sick pay if continuous, and 60 days in total, per year.

Additional Benefits in Libya

The Investment Law is designed to encourage the investment of national and foreign capital in Libya. Tax benefits are granted to companies that can contribute to the diversification of the local economy, the development of rural areas, the increase of employment, etc. The tax exemptions applicable to companies registered/governed by the Investment Law include a five-year exemption from income tax; an exemption from tax on distributions and gains arising from a merger, sale or change in the legal form of the enterprise; an exemption for profits generated from the activities of the enterprise, provided the profits are reinvested; an exemption from customs duties on machinery and equipment; and an exemption from stamp duty. A free zone has been established in Misrata (Qasr Hamad port area).

General market practice benefits/additional allowances

Libya is well endowed with hydrocarbon resources. Its proven crude oil reserves were 48 billion barrels at the end of 2018, the ninth largest globally and the largest in Africa, accounting for 38% of the continent’s reserves. Only 25% of Libya’s territory has been explored for hydrocarbons. These resources provide ample financial leverage, a positive long-term fiscal outlook, and very low debt. Unlike other post-conflict countries, Libya has the financial resources to rebound quickly. If well and efficiently managed, the resources could power economic and social recovery and reconstruction. Reconstruction, along with improved political stability and security, could diversify the Libyan economy from oil and offer better prospects for an inclusive society.

Economic diversification is a key priority. Over 2014– 18, the oil, gas, and related extractive sectors accounted for more than 65% of GDP, more than 95% of export earnings, and 96% of the budget. So, the Libyan economy remains extremely vulnerable to oil production shocks and oil price fluctuations. Rapid diversification from hydrocarbon resources is essential for a stronger, resilient, and more inclusive economic growth.

The private sector also faces challenges in recruiting skilled and qualified individuals. According to the 2018 Human Development Report, Libya’s Education Index ranked the country 119 of 189 countries. This problem is likely to be exacerbated over the next decade, since conflicts interrupt schools and universities.

Libya’s real GDP growth slowed to an estimated 4% in 2019, due to lower oil prices. Inflation, after declining in 2018 and the first quarter of 2019, rebounded to an average above 10% in 2019 because of the intensified conflict in Tripoli.

A foreign investor may choose to establish a wholly foreign owned LLC in Libya if the initial share capital deposited is higher than US$3.7 million. Such an entity can operate in certain sectors of the Libyan economy, including i) industry ii) heath care iii) tourism iv) services and v) agriculture. If the company corporate structure includes a Libyan partner holding 50% shares, the capital requirement will be reduced to US$1.5 million;

An LLC can be setup with 1 director and 1 shareholder. While the company can be 100% foreign owned, the director must be a Libyan national. Furthermore, our Client will be required to lease office space in Libya before company incorporation.

Libya Holidays

There’re 7 public holidays:

• Jamahiriya Day
• British Evacuation Day
• Army Day
• National Day 
• Italian Evacuation Day
• 1911 Deportation Memorial Day
• Independence Day

Why Choose WeHireGlobally

WeHG takes care of all the onboarding hurdles, payroll, compensation and benefits, tax filing, and termination of employment. Our Employer of Record solution allows you to manage your overseas teams efficiently while minimizing cost and risk.