Remuneration of an Employee

Remuneration means the gross emolument, which is due in cash to an employee under the terms of his employment. This is before any deductions, whether in pursuance of any law requiring or permitting the making of any deductions or otherwise. It also includes any payment by way of a bonus or an incentive to an employee whether or not that payment is made on a regular basis to the employee.

The following are not considered as a part of an employee's salary:


Effective from 2004, the rate of contribution to be paid to the Fund is 4% by the employee and 4% by the employer, making a total of 8%.

Both contributions must be sent to the VNPF before the last day of the following month, although the 4% contribution must be deducted from the employee's salary each time the employee is paid.

An example of the calculations required to deduct the 4% from the employee's salary is as follows:

'If the employee gets a salary of Vt. 9,755 for the month of January 2018, the deduction would be 4%. By multiplying .04 (or 4%) to Vt. 9,755, the contribution to be paid by the employee would be Vt. 390.2. All fractions (in this case .2) should not be accounted for. The amount of Vt. 390 would then be deducted from the employee's salary.'

The employer adds another Vt.390 (equaling the contribution of the employee) and then pays Vt. 780 in cash or cheque to Vanuatu National Provident Fund along with the completed contribution schedule and the remittance advice.

In the above example, the employer made the deduction in January 2018 and then sent in the contribution on or before 28 February 2018. Therefore the employer, in this case, cannot be penalized for late payment of contributions.

The employer should always send in the contributions as early as possible to avoid any penalties. It is the employer's responsibility to ensure that both contributions are made. If the employer fails to deduct the 4% when paying the contributions for the employees, that deduction cannot be collected at a later date - the deduction is lost and the employer is required by the VNPF Act to make up for the loss. In other words, the employer, if not careful, would be obliged to pay out of his or her pocket for the entire 4% contribution of the employee as well as the employer's own contributions.

  • The value of any remuneration which is paid in kind under the written approval given in accordance with Section 16 (2) of the Employment Act [CAP 160.] and any amendment or re-enactment thereof.
  • Any payments made to an employee for reimbursement of expenses that are incurred by the employee on behalf of the employer.
  • Housing allowance payable under the terms of employment.
  • Severance allowance payable under the Employment Act.
  • Gratuity allowance payable under the terms of employment.