How to hire and pay contractors in the Bahamas

With qualified contractors distributed locally across tourism and hospitality, construction and trade, retail services, financial services, and professional industries, hiring Bahamas contractors is a cost-effective solution that doesn’t require the commitment of full-time employment.

Furthermore, with platforms like Payoneer Workforce Management (WFM), you can hire and pay contractors in the Bahamas without the hassle of setting up a local legal entity. This convenient solution ensures a smooth and efficient process.

But before you get started, let’s walk through the differences between contractors and employees in the Bahamas, key legal considerations, and how to effectively find, hire, and pay contractors across the Caribbean islands.

How to hire contractors in Bahamas

To hire contractors in the Bahamas, a deep understanding of local classifications, labor laws, and sourcing methods is required. Here’s a step-by-step approach:

1. Understand local labor laws

Understanding the main piece of legislation, the Employment Act of 2001 (EA), is crucial. It establishes the rights and responsibilities of employers and employees, including: 

Topic	Details
Minimum Wage	BSD6.50/hr, BSD260/week, applies to all workers
Working Hours	8 hrs/day, 40 hrs/week
Overtime	50% higher than the regular wage for work exceeding 40 hours per week or 8 hours per day
Termination Notice	1–2 weeks based on tenureWritten notice or pay in lieu of
Redundancy Payment	Redundancy pay must be given on or before the employee’s final working day.If not paid, the employee can recover it as a legal debt through a tribunal.

However, independent contractors are not covered by the Employment Act.

Misclassifying a contractor as an employee or vice versa can bring about various legal and financial issues. That is why the working relationship needs to be clearly defined in a contract as per the local legal framework during the hiring process in the Bahamas.

2. Understand contractor vs. employee classification

The Employment Act of 2001 primarily covers employees, who are people working under a contract of service, typically within the organizational structure of the employer.

Independent contractors work on a contract for services. They are self-employed individuals who offer specialized services to clients or businesses, but have control over the way the work is performed. Due to this categorization:

• Contractors are not eligible for benefits such as paid holidays, sick leave, redundancy pay, or notice of dismissal under the Employment Act (EA).
• They are also required to manage their taxes, NIB contributions, and ensure compliance with any licensing or regulatory regimes.

3. Find contractors in the Bahamas

While there’s no official board to regulate contractors’ work in the Bahamas, you can explore professional networks like LinkedIn or freelancer platforms such as WorkMarket and Upwork. These platforms are where many Bahamas contractors showcase their experience and client feedback. 

How to pay contractors in Bahamas

Paying contractors in the Bahamas is a relatively straightforward process that requires a few simple steps to guarantee smooth, compliant, and efficient transactions, particularly if you’re an international business.

Here’s the right way to do it:

1.  Determine how to pay 

Select a payment method that’s safe, traceable, and easy for you and the contractor. You can use:

• International bank transfers: Transfer funds directly from your local bank account to the contractor’s Bahamian bank account through conventional international wire transfer mechanisms.
• Digital wallets: Utilize internationally accepted digital wallets that enable sending and receiving payments worldwide. 
• Direct deposit to local bank accounts: If you have a local presence or a Bahamian bank account, payments can be directly deposited into your contractor’s local bank account.

If you’re managing multiple contractors, a workforce payment solution like Payoneer Workforce Management (WFM) helps simplify bulk payments and currency conversions.

2. Ensure your Bahamian contractors have the right tax information

Though self-employed contractors in the Bahamas have their taxes to pay, it’s a good practice to obtain and retain:

• National Insurance Board (NIB) number
• Business license or proof of self-employment, as the case may be
• A signed agreement defining project scope, payment terms, and fees

This keeps both parties safe and regulatorily clear in case you’re audited.

3. Pay in Bahamian or US Dollars

The Bahamas’ official currency is the Bahamian Dollar (BSD), which is fixed at 1:1 to the US Dollar (USD). Contractors might prefer to be paid in either of the currencies.

4. Maintain compliant records

It’s essential to maintain comprehensive records for a minimum of 5 years. This practice, although not mandatory, provides a safety net in case of audits or legal reviews, ensuring that both parties are protected.

Why Payoneer WFM is the easiest way to hire and pay contractors in the Bahamas

Cross-border contractor relationship management can be complicated, but with Payoneer Workforce Management (WFM), it gets easier at every step. This is why it’s the perfect solution for contractor hiring and payment in the Bahamas:

• Onboard, manage, and pay contractors in the Bahamas from one dashboard.
• Pay in Bahamian or US Dollars with built-in currency conversion.
• Automate contracts, tax forms, and global payouts with full transparency.

From a startup to a mature business dealing with freelancers or project-based workers, Payoneer WFM is a compliant, scalable, and hassle-free solution designed specifically for managing global contractors.
Book a demo now.

Bahamas contractors FAQs

How are independent contractors classified under Bahamian law?

Bahamas contractors are not considered employees under the Employment Act 2001. They operate under a contract for services, manage their work, set schedules and rates, and are responsible for their taxes and benefits. 

Do I need to set up a local company to hire contractors in the Bahamas?

No, you can hire independent contractors without establishing a local entity. However, hiring can be complex in another country without an Agent of Record (AOR). These solutions help handle contracts, payments, and legal requirements efficiently.

What should be included in a contract with a Bahamas contractor?

Your contract with a Bahamian contractor should clearly outline the full scope of the project, along with specific timelines for deliverables. It must detail the agreed payment terms, including the currency of payment, either Bahamian Dollars (BSD) or US Dollars (USD). 

The agreement should also clarify ownership of the final deliverables, ensuring both parties understand who retains rights to the work produced. Additionally, include termination clauses that define the conditions under which the contract can be terminated and outline a transparent dispute resolution process under Bahamian law to protect both parties in the event of disagreements.