Global HR Compliance in Monaco: Hiring and Firing Workforce

Hiring in Monaco means operating in a highly regulated environment shaped by French legal influence, strict working time controls, and a centralised labour administration. While Monaco has a relatively small domestic workforce, its high-income economy and strong demand for international talent make it a frequent base for executive and specialist hires.

For international employers, structuring employment correctly from the outset is essential. That includes securing the right to work, selecting the appropriate contract type, and complying with national rules on leave, probation, working hours, and tax.

This guide sets out the legal framework for employing staff in Monaco, covering employment contracts, termination, working time, benefits, and the role of Employer of Record (EOR) services for foreign companies without a local entity.

Employment Contracts in Monaco

A written employment contract is not legally required in Monaco, even for permanent or fixed-term roles. The primary requirement is a valid work authorisation, which must be issued before employment begins. The work permit (autorisation de travail) includes only basic information: the employee’s identity, job title, start date, and role classification.

Despite the absence of a formal contract requirement, most international employers use written agreements to clarify terms and protect both parties. This is especially important for including clauses such as confidentiality, non-compete, or exclusivity obligations, which are not otherwise implied.

Fixed-term contracts are permitted but must be justified by objective business needs (such as temporary projects or seasonal demand) and are subject to time limits. Misuse of fixed-term contracts may lead to automatic reclassification as permanent employment.

Working Hours and Overtime

The legal working time in Monaco is 39 hours per week. Any hours beyond this threshold are considered overtime and must be compensated accordingly.

Employers must observe statutory limits on maximum working time:

• No more than 10 hours per day
• No more than 46 hours per week, averaged over 12 consecutive weeks
• A hard limit of 48 hours in any single week
• Up to 60 hours in exceptional cases, with Labour Inspector approval and only for short durations

These limits are mandatory and cannot be waived, even by employee consent. Employers are responsible for tracking working hours and ensuring full compliance.

Overtime Compensation

Employees are entitled to premium pay for hours beyond 39 per week:

• 25% increase for the first 8 overtime hours
• 50% increase for any hours beyond that

Overtime must be calculated weekly, and cannot be banked or averaged unless specifically authorised by collective agreement.

Probation Period

Probationary periods are limited to a maximum of three months. A shorter period may be agreed by contract. In some cases, the probation may be renewed once, but only within the three-month limit.

Any probation arrangement must be clearly defined in writing before employment begins. During probation, either party may terminate the employment with minimal notice, but dismissal must still comply with local procedural rules.

Annual Leave

Employees earn 2.5 working days of paid leave for each month worked, amounting to five weeks of leave per full year. Leave is calculated over a reference period running from 1 May to 30 April.

Only actual work periods count toward leave accrual, though some legally recognised absences (such as certain types of paid sick leave) may also qualify. Maternity leave does not count toward annual leave accrual.

Leave dates must be agreed between employer and employee, taking into account the needs of the business. Employers are not permitted to unilaterally impose leave periods unless justified by operational requirements.

Sick Leave and Medical Absence

Employees on medical leave are entitled to daily allowances paid by the Caisse de Compensation des Services Sociaux (CCSS), the Monegasque social security body. The allowance is typically set at 50% of the employee’s average gross daily earnings over the past 12 months, within a ceiling defined annually.

In addition, under Monaco’s national collective agreement, employees with at least two years of seniority are entitled to supplementary income from the employer during medical leave.

Employers must ensure prompt reporting of absences and maintain proper documentation to support benefit claims and compliance.

Termination Rules and Dismissal Procedures

Although employment contracts are not mandatory, all terminations in Monaco are subject to legal procedure. Employers must:

• Provide clear, objective justification for dismissal
• Issue written notice
• Respect notice periods defined by law or contract

Dismissal without valid grounds or failure to follow procedure can result in reinstatement orders or financial penalties. Employees dismissed without cause may also claim damages for unfair termination.

Notice periods depend on the employee’s length of service and role. In the absence of a contract or collective agreement stating otherwise, statutory minimums apply.

Severance pay may be required based on seniority and dismissal circumstances. Negotiated settlements are common, particularly in sensitive or high-seniority exits.

Employer Contributions and Payroll Compliance

Monaco’s payroll system requires employers to handle all withholding and contributions directly. This includes:

• Income tax (withheld at source in certain cases)
• Social security contributions to the CCSS
• Occupational health and pension contributions

Rates vary depending on salary level and employee status but are similar to those in France. Employers must also register new hires with the Monegasque labour authorities and report all contract starts, amendments, and terminations.

Immigration and Cross-Border Hiring

Monaco has strict work authorisation rules. All foreign employees, including EU citizens, must obtain a valid work permit before starting work. Permits are job-specific and linked to a named employer and position.

Work permits are granted by the Labour Directorate and require proof of qualifications, a job offer, and justification that the role cannot be filled locally. Processing is centralised and must be completed before onboarding.

Cross-border workers living in France or Italy but working in Monaco are subject to specific reporting and tax arrangements. Employers must ensure compliance with both Monegasque and relevant bilateral tax agreements.

Hiring in Monaco with Acumen International

Acumen International enables foreign companies to hire in Monaco without setting up a legal entity. Acting as Employer of Record, we handle:

• Employment contract structuring and onboarding
• Local payroll and social contributions
• Employee benefits administration
• Work permit sponsorship and immigration support
• Compliance with Monaco’s collective agreements and labour code
• Risk mitigation during onboarding, employment, and offboarding

This solution is particularly suitable for:

• Hiring a sales or technical representative in Monaco
• Testing the market with a single employee before local registration
• Onboarding cross-border workers in compliance with Monegasque rules
• Supporting a high-value role requiring full legal employment status.