How to hire & pay Barbados contractors

Barbados stands out in the Caribbean with a strong base of self-employed professionals, with over one-fifth of its workforce. Its English-speaking, well-educated talent pool and stable business environment make it an attractive hub for companies seeking remote support from the region.

Prior to onboarding contractors in Barbados, it is important to understand the local labor laws, properly classify workers as independent contractors, and follow compliant onboarding practices. There are ready solutions like Payoneer Workforce Management (WFM) to help you hire and pay contractors in Barbados without the hassle of setting up a local entity. 

This guide takes you through all you need to know when it comes to employing and remunerating independent Barbados contractors.

How to hire contractors in Barbados

To employ Barbados contractors, begin by understanding local labor regulations and properly classifying employees as independent contractors, not staff. Here is a step-by-step guide to begin:

1. Understand contractor vs. employee classification

Misclassifying an employee in Barbados can lead to penalties, back wages, and a tarnished reputation. A contractor is generally a freelancer offering services to numerous clients, employing their own equipment, and dictating their work methods.

An employee, however:

• Works solely for the employer
• Adheres to standard working hours and procedures
• May benefit from perks such as vacation, insurance, and pension

To prevent misclassification:

• Employ precise contracts that outline the contractor’s independence
• Don’t set rigid hours or assign company email addresses
• Don’t put contractors into employee benefit plans

2. Understand local labor laws

Barbados has a formalized legal system regarding employment and labor. The Employment Rights Act (ERA) and the National Insurance and Social Security Act regulate worker protections, contributions, and employment relations: 

Topic	Details
Minimum Wage	BBD 5.67-8.50/hour (general minimum wage, subject to industry-specific rates)
Working Hours	8 hrs/day, 40 hrs/week
Termination Notice	1–10 weeks, depending on length of service; written notice or pay in lieu is required
National Insurance Contributions	You must contribute 12.75% of insurable earnings to NIS
Non-Discrimination	Equal pay and fair treatment are required regardless of gender, race, or religion
Record keeping	Maintain wage, time, and employment records for at least 3 years

Although contractors are not qualified for the same rewards as employees, you are obligated to uphold anti-discrimination legislation, health and safety regulations, and minimum wage regulations if applicable.

Legal highlights:

• Contractors need to sign contracts that outline the extent of work, timeline, and payment.
• You should not exert undue control over the scheduling and methods of work for contractors.
• Contractors should pay their own taxes and insurance contributions of 17.1% on earnings of up to a maximum of BBD 5,280 per month unless otherwise negotiated.

3. Find service contractors in Barbados

There are several ways to source skilled talent in Barbados:

• Freelance platforms (e.g., Upwork, Toptal, Fiverr)
• Local recruitment agencies with Caribbean reach
• Professional networks like LinkedIn or niche groups (e.g., IT, creative industries, accounting)
• Referrals from regional talent marketplaces

How to pay contractors in Barbados

Once you’ve onboarded a contractor in Barbados, paying them on time and in compliance with local and international regulations is met through the following steps: 

1. Determine how to pay 

Options to pay Barbados contractors include:

• Bank transfers: Reliable but often expensive and slow
• Digital wallets: Faster, but transaction limits and foreign exchange fees may apply
• Global workforce platforms like Payoneer WFM: Simplifies onboarding, invoicing, and payment in one interface

Ultimately, the transaction speed, the contractor’s preferred currency, and your ability to monitor payment history will determine the best method for paying your Barbados contractors from the US or elsewhere. 

2. Ensure your Barbados contractors have the right tax information

Barbados contractors are expected to pay and file their own income taxes. Nonetheless, you must obtain: 

• Evidence of tax registration (TIN)
• Local ID or business registration certificate
• Signed invoices and contracts for each payment

Note: U.S. businesses might need to obtain Form W-8BEN to exclude foreign contractors from U.S. tax withholding.

3. Pay in Bajan Dollars or US Dollars

Barbados uses the Barbadian Dollar (BBD) as legal tender, which is tied to the US Dollar at an exchange rate of 2:1. Paying in USD is thus relatively easy and favored by most contractors.

Furthermore, here are some of the best practices that we recommend: 

• Verify currency preference with your contractor
• Make sure your payment method has multi-currency support
• Reveal conversion charges in contracts when paying in USD

4. Maintain compliant records

It is a good practice to maintain contractor contracts, payment receipts, tax compliance records, invoices with service descriptions and dates, for use in international audits and internal accounting. 

Most businesses keep them in a secure cloud system with backup access to satisfy compliance laws in various jurisdictions.

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

Payoneer Workforce Management (WFM) provides an effortless solution to hire and pay contractors across borders, such as Barbados.

You can experience features like: 

• Easily collect documents, contracts, and tax forms in one place
• Pay contractors globally in USD or local currency with competitive FX rates
• Automate invoicing and stay compliant with transparent pricing and IRS support

Whether you’re working with one freelancer or multiple contractors in Barbados, Payoneer WFM removes the friction from hiring and paying across borders—securely and legally. 

FAQs on managing Barbados contractors

Am I required to have a Barbados legal entity to employ contractors?

Not necessarily. You can employ independent contractors in Barbados without establishing a local business entity, as long as you meet classification guidelines and tax obligations.

What is the average fee for Barbados contractors?

It depends on the industry. New VAs can charge USD $10–15/hour, while senior software engineers can charge USD $40–60/hour.

Can I remit payment to Barbados contractors through PayPal or Wise?

Yes, but such platforms will charge higher transaction fees and support fewer currencies than specialized platforms like Payoneer. With Payoneer WFM, you can seamlessly onboard, pay, and manage contractors in Barbados while ensuring full compliance and operational efficiency.

What documents do I need to retain for contractor compliance?

Retain contractor contracts, invoices, documentation of tax ID, payment records, and all legal papers applicable to the work executed.