Hire Employees in Malawi

Two routes exist. Registering a Malawian company gives you direct employment and permit sponsorship, but requires registration with the Malawi Revenue Authority through Msonkho Online and enrolment with an approved pension fund. Budget one to three months.

An Employer of Record removes that lead time. The EOR is the legal employer in Malawi, runs payroll, remits PAYE and pension, files the monthly P12 returns and the annual P10 reconciliation, and carries the employment liability, while day-to-day direction stays with you.

Engaging someone as a contractor is a third option, but only where the work is genuinely independent. The MRA can reclassify the relationship retroactively where duties are regular and ongoing, triggering back-pay claims for pension, PAYE and severance — see the risk check further down this page.

Malawi is a low-cost hiring market with a demanding compliance rhythm. Salaries are modest by regional standards, but the system runs on tight fourteen-day deadlines and the statutory detail changed materially in January 2026.

Pension and severance are alternatives, not additions. Where an employee is on a pension scheme, severance is not payable — pension replaced severance compensation precisely to avoid double payment. That makes enrolment a structural decision about how the exit liability is carried, and it means a cost model that provisions both is overstating the position.

Break-even rule of thumb: EOR fees begin to exceed the running cost of a small Malawian company somewhere between 15 and 20 employees. Model both before committing — see EOR vs Entity for the full comparison, and plan any later migration so employees keep continuous service.

Employer pension is a minimum of 10% of pensionable earnings under the Pension Act, against a minimum 5% from the employee, giving 15% in total. It is one of the higher employer-side pension obligations in the region, and there is no ceiling — the percentage holds at every salary level.

Enrolment is mandatory for all employees aged 18 to 65 and applies to every employer unless expressly exempted by the Minister. Both contributions must reach an approved pension fund within fourteen days of salary payment.

Because pension displaces severance, the two should never be provisioned together. An employee on a pension scheme receives no severance on termination. Where an employee is exempt from pension, a gratuity applies instead at 5% of monthly salary for each completed month of service, payable on retirement, termination or death.

The TEVET levy funds technical and vocational education and is an employer-only charge on payroll. Workers compensation insurance is separately required, with the premium varying by activity.

Gross monthly salaries for full-time roles in Lilongwe and Blantyre. Add about 10% for employer pension at every salary level, since the contribution is uncapped.

Benchmarks below are gross monthly salaries in Malawian kwacha for full-time roles in Lilongwe and Blantyre. Add about 10% for employer pension; the contribution is uncapped, so the loading holds at every salary level.

Payroll is monthly and the deadlines are tight. PAYE is remitted to the Malawi Revenue Authority within fourteen days after the end of the month in which it was deducted, accompanied by the P12 and P12A returns. Pension contributions must reach an approved fund within fourteen days of salary payment.

PAYE was restructured on 1 January 2026 and many published guides are out of date. The December 2025 reform removed the 25% band, raised the tax-free threshold from MWK 150,000 to MWK 170,000 a month, and reintroduced a 40% top rate on income above MWK 10,000,000 a month. Guides still showing 0%, 25%, 30% and 35%, or a threshold of MWK 100,000, are describing the superseded structure.

Registration runs through Msonkho Online at the MRA. Each employee completes Form E1 to obtain a Taxpayer Identification Number, and the employer issues a Form P9 deduction certificate on cessation of employment. The annual P10 reconciliation follows the tax year.

Taxable benefits must be included in gross pay — housing, vehicles and allowances are all within scope, and fringe benefits tax applies separately. Payroll records must be kept for seven years.

There is no statutory 13th month in Malawi.

The four monthly bands below took effect on 1 January 2026 under the December 2025 MRA reform. The 25% band that appears in older guidance no longer exists.

The Employment Act is the governing statute, supported by the Labour Relations Act, the Pension Act and the Occupational Safety, Health and Welfare Act.

Written contracts are required and must be given to the employee before employment begins. The standard working week is 48 hours, with overtime paid at 1.5 times the ordinary rate.

Annual leave is 15 to 18 working days depending on the working week, and sick leave is four weeks on full pay followed by eight weeks on half pay after twelve months of service.

Minimum wages are adjusted through government gazettes and currently sit at MWK 126,000 a month for general workers, with sector variations.

A written contract is mandatory and must be provided before the employment relationship starts, setting out all terms in detail. Indefinite and fixed-term contracts are both recognised.

Probation may be agreed, during which the statutory notice requirements do not apply in the same way.

Enrol the employee in a pension scheme from the outset. Enrolment is mandatory for everyone aged 18 to 65, and it also determines whether severance or gratuity applies on exit — so it is a decision that shapes the whole employment relationship, not just the benefit package.

The standard working week is 48 hours. Overtime is paid at 1.5 times the ordinary hourly rate.

Employees are entitled to weekly rest and to statutory daily breaks.

Where a collective agreement applies to the sector, it may set wage floors and premium rates above the statutory minimum, so the applicable agreement should be checked before setting terms.

Malawi observes 12 public holidays in 2026. Where a holiday falls at a weekend, substitution follows the published calendar.

Malawi observes 12 paid public holidays in 2026. Dates that fall at a weekend and any substitution rules are set out below; entitlement is separate from annual leave.

Maternity leave is eight weeks on full pay, available once in any three-year period. Paternity leave is two weeks per child.

Sick leave is four weeks on full pay followed by eight weeks on half pay, available after twelve months of continuous service.

Workers compensation insurance covers workplace injury and is an employer obligation separate from pension.

Notice requirements are set by section 29 of the Employment Act and depend on pay frequency and tenure. Notice runs from the moment it is communicated, whether verbally or in writing, and both parties must give it.

Severance applies only where the employee is not on a pension scheme. Where it does apply, the First Schedule sets two weeks of wages for each of the first five years of continuous service, three weeks for each year from the sixth to the tenth, and four weeks for each year beyond ten. It is calculated on base salary excluding allowances and bonuses.

Severance is payable on redundancy, retrenchment, economic dismissal and unfair dismissal, but not for gross misconduct. Where the employee is pension-exempt, gratuity of 5% of monthly salary per completed month of service applies instead.

Disputes are heard by the Industrial Relations Court.

Foreign nationals need a Temporary Employment Permit or a Business Residence Permit, sponsored by the employer and generally requiring evidence that the skills are not readily available locally.

Processing timelines vary and should be confirmed before setting a start date. Foreign employees are subject to pension and PAYE on the same basis as nationals.

Using the pre-2026 PAYE bands is the most immediate risk. The 25% band was removed on 1 January 2026, the threshold rose to MWK 170,000 and a 40% top rate returned. Several current guides still publish the old structure or a MWK 100,000 threshold, and a payroll built on them will withhold incorrectly.

Provisioning severance alongside pension overstates cost. Pension replaced severance compensation, so an employee on a scheme receives no severance. Conversely, a pension-exempt employee attracts gratuity at 5% of monthly salary per completed month, which is easy to overlook entirely.

Both remittance deadlines are fourteen days and they run from different events. PAYE is due within fourteen days of month end; pension within fourteen days of salary payment. Aligning them to one date without checking can put one stream late.

Note also that the MRA can reclassify a contractor retroactively, triggering back pension, PAYE and severance, that records must be kept for seven years, and that an employee concluding contracts locally can create a taxable presence for a foreign entity.

Work backwards from the start date. For a local hire through an EOR, two to three weeks is realistic once the MRA Taxpayer Identification Number, pension fund enrolment and signed contract are in hand. For a foreign national, allow additional time for the employment permit.

Issue the written contract before employment begins — the Employment Act requires it in advance, not on the first day.

Enrol the employee in an approved pension scheme from the outset, load the 2026 PAYE bands rather than carrying older tables forward, and set both fourteen-day remittance deadlines separately in the compliance calendar.