Definitive Guide to Hiring in Malawi

Hiring in Malawi

Hiring employees compliantly in Malawi means doing it yourself or using an Employer of Record like Global Expansion. You should be careful using independent contractor agreements in Malawi so that you don’t run afoul of employment laws. To hire an employee compliantly and offer them mandatory benefits and compliant agreements, you can:

(a) Establish your own new legal entity, banking, accounting and payroll service in Malawi; or

(b) use an Employer of Record like Global Expansion who can handle all of the details for you.

Labor Laws in Malawi

Employee Probation Period

• In respect of a skilled worker, parties may agree to add a provision on probation in the employment contract provided that its duration does not exceed 12 months.

Annual Leave in Malawi

• Annual leave is: -
  • eighteen (18) working days if the worker works six days a week; and
  • fifteen (15) working days if the worker works five days a week.

Holidays in Malawi

Maternity Leave Malawi

• A female employee is entitled, within every three years, to at least eight weeks’ maternity leave on full pay.
• In the event of illness, certified by a registered medical practitioner, arising out of pregnancy or confinement, affecting the employee or her child, the employer must grant the employee additional paid leave as the employer may deem fit.

Paternity Leave Malawi

• Malawi does not have any statutory benefits related to paternity leave

Sick Leave in Malawi

• An employee is entitled, after completing twelve months' continuous service, to at least four weeks' sick leave on full pay and eight weeks’ sick leave on half pay during each year.
• During sick leave, an employee is paid the normal wages.

Working Hours in Malawi

• The Minister for Labor may not require or permit a shift worker to work more than 8 hours a day or 48 hours a week.

Overtime in Malawi

• Malawi’s Employment Act of 2000 recognizes three classes of overtime, known respectively as Ordinary, Day Off and Holiday.
• Ordinary overtime is the time worked in a working day in excess of the hours normally worked by the employee.
• Day Off overtime is the time worked by an employee on a day on which he/she would otherwise be off duty.
• Holiday overtime is the time worked on a public holiday.
• For each hour of Ordinary overtime an employee should be paid at the hourly rate of not less than one and one half their wage per one hour.
• For each hour of Day Off overtime an employee should be paid at the hourly rate of not less than twice their wage per one hour.
• For each hour of Holiday overtime an employee should be paid at a rate of not less than twice the normal hourly rate.

Termination of Employment in Malawi

• An indefinite term contract may be terminated by either party after serving a written notice.
• Contract termination notice depends on the wage period.
• The required notice period is one month for workers paid wages on a monthly rate.
• For workers paid fortnightly, the required termination notice is 15 days for workers with less than five years of service and 30-day notice for workers with at least five years of service.
• For workers paid weekly, the contract termination notice ranges between one week (less than 2 years of service) to two weeks (2-5 years) and finally one month (at least 5 years).
• Where the employee terminates the contract without notice in circumstance in which notice was required, and the employer has not waived the right to notice, the employee is required to pay the employer in lieu of notice a sum equal to the remuneration that would otherwise have been given to the employee up to the expiration of the required period of notice.
• Employer is required to provide a contract termination certificate which should include, among others, the reasons for employment termination.
• Employer may not terminate the employment contract without a valid reason connected with the capacity or conduct of the employee or based on the operational requirements of the undertaking.
• Employee must be provided an opportunity to defend himself against the allegations.
• On the termination of contract as a result of redundancy or retrenchment or due to economic difficulties or technical, structural or operational requirements of the employer or unfair dismissal of the employee, workers are entitled to severance payment in the following manner:
  • no severance pay for less than one year of service;
  • two weeks’ wages for each completed year of service: first to fifth year;
  • three weeks’ wages for each completed year of service: sixth to tenth year;
  • four weeks’ wages for each completed year of service: eleventh year and onwards

Notice Period in Malawi

• The required notice period is one month for workers paid wages on a monthly rate.
• For workers paid fortnightly, the required termination notice is 15 days for workers with less than five years of service and 30-day notice for workers with at least five years of service.
• For workers paid weekly, the contract termination notice ranges between one week (less than 2 years of service) to two weeks (2-5 years) and finally one month (at least 5 years).

Severance in Malawi

• On the termination of contract as a result of redundancy or retrenchment or due to economic difficulties or technical, structural or operational requirements of the employer or unfair dismissal of the employee, workers are entitled to severance payment in the following manner:
  • no severance pay for less than one year of service;
  • two weeks’ wages for each completed year of service: first to fifth year;
  • three weeks’ wages for each completed year of service: sixth to tenth year;
  • four weeks’ wages for each completed year of service: eleventh year and onward

Malawi Salary and Wages

13th / 14th Month Salary in Malawi

• No
• There is no statutory requirement to pay the 13th or the 14th month salary.
• However, people that work in higher grades are likely to receive an end of year bonus.

• Sickness benefit: 100% of the employee's daily wage is paid for up to four weeks; 50% for an additional eight weeks.
• Maternity benefit: 100% of the employee's daily wage is paid for eight weeks. Additional paid leave may be provided in case of certified medical complications.
• Malawi does not require social security contributions.
• Under the National Pension Scheme (NPS), an employee contributes a minimum of 5% of the pensionable emoluments while the employer contributes at least 10% of the employee's pensionable emoluments.
• Contributions by the employer are tax deductible up to a maximum of 15% of the employee's pensionable emoluments while those made by the employee are not.
• Upon withdrawal, through retirement, all the benefits are exempt from income tax.
• This is applicable whether they are received as a lump sum or as an annuity.

Immigration Malawi

Value Added Tax (VAT) in Malawi

• The standard rate for VAT in Malawi is 16.5 percent
• No reduced rates are available. Nevertheless, several items are exempt from VAT (machinery and financial services) while other are zero-rated (exercise books, fertilizers, motor vehicles for the transport of goods, salt).

Mandatory Benefits in Malawi

• These are benefits as postulated by law
• These include probationary period, public holidays, annual leave, sick leave, maternity and paternity leave, overtime pay and notice period
• Statutory benefits also include social security benefits

Payroll Accrual in Malawi

Country Accruals Additional Information

Description

Under the National Pension Scheme (NPS), an employee contributes a minimum of 5% of the pensionable emoluments while the employer contributes at least 10% of the employee's pensionable emoluments. Contributions by the employer are tax deductible up to a maximum of 15% of the employee's pensionable emoluments while those made by the employee are not.Upon withdrawal, through retirement, all the benefits are exempt from income tax. This is applicable whether they are received as a lump sum or as an annuity.

Payroll Accruals Additional Information

Accrued Benefits in Malawi

Why use Global Expansion to hire in Malawi

Establishing a branch office or subsidiary in Malawi can be time-consuming, expensive and complex. With such a robust labor market in place, one must pay great attention to detail when structuring employment because Malawi labor laws are complex.

The company also has a responsibility to comply with specific employment practices dictated by Malawi law to maintain its good standing as an equal opportunity employer.

Global Expansion makes it easy for you to expand into Malawi. We'll help you hire your candidate of choice, handle HR matters and payroll, and ensure that you comply with local laws without the burden of setting up a foreign branch office or subsidiary. In addition, you'll have complete control and direction over your employees.

We enable you to stay in control of everything. Our Malawi Global Professional Employer Organization (PEO) and Employer of Record (EOR) solution provides you with peace of mind to focus on running your company and the security to enter new markets.