Global coverage
Available in +150 countries
Employer costs, taxes, minimum wage and leave rules for hiring here, plus the faster route: hire a contractor with Ontop, no local entity needed.
2026
Currency
USD $ (US Dollar)
Employer contributions
~8% employer FSM SS
Minimum wage
USD 2.00/hour (minimum wage)
Payment frequency
Monthly / Bi-weekly
Calendar year (Jan 1 - Dec 31)
Capital
Palikir
Timezone
Multiple (GMT+10/+11)
Employee or contractor
If the work is project-based or you need to move fast, a contractor gets you the same talent with a fraction of the paperwork.
Employee
~USD 1,620 total
/month
For a gross salary of
USD 1,500 gross/month
Setup
Local entity or employer of record, plus tax and social security registration
Employer contributions
~8% employer FSM SS
Mandatory extras
Annual Bonus
Monthly admin
Monthly payroll - SS by 15th - no personal income tax - annual April return
Contractor with Ontop
No local entity
$49
/contractor/month
The agreed rate, plus Ontop from $49 per contractor per month.
Sign a contract, yours or an Ontop template. No local registration on your side.
No employer contributions: the contractor handles their own taxes and social security.
One payment per invoice, in one payroll run.
Paid into their Ontop Global Account in USD.
See the full side-by-side comparison
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A contractor's rate usually covers their own taxes, so compare total cost, not just gross pay. Run your numbers in the contractor vs employee calculator.
Hiring here: the full breakdown
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Payroll guide
Employer costs come on top of gross pay. Use these figures to budget a hire and to compare it with a contractor rate.
Total monthly cost
~USD 1,620 total
Example gross salary
USD 1,500 gross/month
~USD 1,260 net
Net pay to the employee
Tax and employee contributions
Withheld from gross pay
~USD 120 SS
Employer contributions on that salary
Employer contributions
~8% employer FSM SS
Employee contributions
~8% employee FSM SS + gross revenue tax
Total cost above gross
~8% above gross (FSM SS)
Figures are estimates for planning. Rates change with each budget and can vary by sector, so confirm them before you make an offer.
What people earn here, from the legal floor to the main cities, plus the extra pay most employers budget for.
National average
~USD 1,000
Per month
Palikir / Kolonia
USD 1,000 - 3,500
~25%
Weno (Chuuk)
USD 800 - 2,500
~10%
Monthly gross. National average salary per year:
~USD 12,000
Minimum wage
USD 2.00/hour (minimum wage)
Paid:
Hourly
Extra pay
Annual Bonus
Discretionary
December
Collective agreements can set sector minimums above the national one. Check whether one applies to the role before you set the salary. Next step: estimate the full cost of an employee.
Who collects what, how often, and what happens when a payment is late.
Income tax brackets
No personal income tax; gross revenue tax applies to businesses
Tax year:
Calendar year (Jan 1 - Dec 31)
Filing calendar
Monthly SS by 15th
Social security payments
Annual GRT by April 15
Income tax
By January 31
Employee tax certificate
Annual SS Statement
April 15
Annual return
Annual GRT Return
Late payment penalties
Late SS: penalty; late GRT: penalty
Who collects what
FSM Tax Administration
GRT
FSM Social Security Administration
Social security
Department of Resources and Development
Labour law
The time off and paid leave every employee is entitled to by law. Budget for it when you compare an employee with a contractor.
Annual leave
Annual Leave
10 days/year
Public holidays
~10 public holidays
Sick leave
Sick Leave
10 days/year
Maternity leave
12 weeks maternity
Employer-funded
The contracts you can use, and what ending an employment relationship costs.
Permanent
Employment Contract (Permanent)
Fixed term
Fixed-Term Contract
Independent contractor
Independent Contractor
Collective agreements
No general CBA
Ending employment
Severance Pay
How it is calculated
Per FSM Labour Act
Calling someone a contractor does not make them one. If the role works like employment in practice, local authorities can reclassify it, with back contributions and penalties.
The errors that most often trigger back payments and penalties here, and what to do instead.
Four-State Employment Administration
Risk Level: HIGH
FSM comprises four semi-autonomous states - Pohnpei, Chuuk, Yap, and Kosrae - each with some independent administrative requirements. Employers with workers in multiple states should confirm state-specific registration requirements.
Compact of Free Association Work Rights
Risk Level: MEDIUM
FSM citizens have right to work in the US under the Compact of Free Association. US-related employers in FSM may have dual compliance obligations.
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Next topicOntop is the Global Workforce Engine for contractor teams: contracts, compliance documents and payments in 150+ countries.
150+
countries
$49
per contractor per month
1 run
to pay your whole team
USD
Global Account for every contractor
FAQ
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Ontop works with contractors, not employees. As Contractor of Record, Ontop handles contracts, compliance documents and payments for contractors in 150+ countries. To employ someone, you need a local entity or an employer of record. Ontop doesn't act as your employer of record.
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Employers pay contributions on top of gross salary. The cost table on this page shows the rates that apply here and a worked monthly example. A contractor with Ontop costs the agreed rate plus Ontop from $49 per contractor per month.
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Many countries require an extra month or an annual bonus for employees. The salaries section on this page shows the one that applies here and when it is usually paid. Contractors are paid what you agree in the contract.
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Employers withhold income tax and the employee's social security share every pay run, then pay them to the local authorities. The taxes section on this page lists the brackets, rates and filing deadlines that apply here.
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Yes. The contractor vs employee calculator compares the full cost of an employee, employer contributions included, with a contractor rate plus Ontop's monthly fee.
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When the work is project-based, you need to start fast or you don't have a local entity. If the person will work fixed hours, under your direction and only for you, local law may treat them as an employee, so hire them as one.
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Misclassifying employees as contractors, missing tax and social security deadlines, and ignoring collective agreements that set higher wage floors. The mistakes section on this page covers the ones that come up most often here.
Compare employer costs, taxes and contractor rules in nearby countries:
Ready to hire? See Ontop pricing or learn how to build a global team without an employer of record.
Ready to hire? See Ontop pricing or learn how to build a global team without an employer of record.