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Hiring in Zambia
Zambia, officially known as the Republic of Zambia, is a country in East Africa. Lusaka is the capital and the largest city of Zambia. English is the official language and Zambian Kwacha is the official currency. Zambia is a low income country. Agriculture and mining are some of the most important sectors of Zambia. Zambia’s main trading partners South Africa, Congo, Switzerland, China, Singapore, India and UAE. Global PEO or Employer of Record (EOR) play a pivotal role in providing companies with services related to hiring employees, and ensuring compliance with Zambia’s legal and tax regulations. Employment regulations including probation, holidays and termination are covered by the Labor Code. The Labor Code stipulates that employees are entitled to 24 days of annual leave. Residents are taxed on their worldwide income. Global PEO’s or Employer of Record (EOR) facilitate companies by ensuring compliance with Zambia’s Labor Code and tax laws.
statutory labor requirements
Probation Period
- The Employment Code Act of 2019 allows probationary period for a maximum term of 3 months in order to determine a worker’s suitability for appointment.
- The probationary period can be extended for a further period of 3 months, making the total duration as 6 months.
Annual Leave
- The full-time workers are entitled to at least 2 days of annual leave/paid holidays for one month of service.
- The total annual leave is 24 calendar days per year
Public Holidays
- New Year's Day (1st January)
- International Women's Day (9th March)
- Youth Day (in Zambia) (12th March)
- Good Friday (10th April)
- Holy Saturday (11th April)
- Easter Monday (13th April)
- Labor Day (1st May)
- Africa Day (25th May)
- Heroes Day (in Zambia) (6th July)
- Unity Day (7th July)
- Zambia Farmers Day (3rd August)
- Zambian National Day of Prayer (19th October)
- Zambian Independence Day (24th October)
- Christmas Day (25th December)
Maternity Leave
- Employment Code Act of 2019 provides for maternity leave of 14 weeks, up from 12 weeks under the Employment Act of 1965.
- The compulsory post-natal leave is at least 6 weeks.
- In the event of multiple births, maternity leave can be extended to 18 weeks.
Paternity Leave
- Male employees are entitled to 7 days of paternity leave
Sick Leave
- The length of paid sick leave depends on the type of employment contract.
- An employee on the short-term contract is paid full pay for the first 26 working days of the sick leave and thereafter, half pay (50%) for the next 26 working days of the sick leave.
- An employee on the long-term contract is paid full pay during the first three months of the sick leave and thereafter, half pay for the next three months of the sick leave.
Work Hours
- Normal working hours per day are 8 hours and these should not be more than 48 hours per week.
- By including the lunch and prayer time in hours of work, working hours should not be greater than 9 hours a day.
Overtime
- Work done in excess of normal weekly working hours is considered as overtime and is compensated by the premium of at least 150% of the normal hourly wage rate.
- Law does not clearly specify the limits to overtime.
Notice Period
- A worker is entitled to termination notice or payment in lieu of notice except in cases of gross misconduct.
- The notice period is generally specified under the employment contract.
- If it is not clearly provided under the contract of employment, the minimum duration is 24 hours for a contract of employment not exceeding one month; 14 days for a contract of employment ranging between one to three months; and 30 days for a contract of employment of more than three months.
- The notice to terminate a contract of employment of more than six months shall be in writing.
Severance
- Severance Pay is defined under the Employment Code Act of 2019 as “wages and benefits paid to an employee on contract termination.”
- The Act provides for the severance pay in the following cases:
-
- Termination of employment contract of a fixed duration: at least 25% of the employee’s basic pay earned during the contract period;
- Termination of employment due to redundancy: 2 months’ basic pay for each completed year of service;
- Employee’s death in service: 2 months’ basic pay for each completed year of service;
- Medical discharge: at least 3 months’ basic pay for each completed year of service.
13th / 14th Month Pay
- No
- There is no statutory requirement to pay the 13th or the 14th month salary.
- Employees that do not take their 24 days holiday are entitled to cash in in lieu of.
income tax
- Under the Income Tax Act, Zambia has a source-based system for the taxation of income.
- Income deemed to be from a Zambian source is generally subject to Zambian income tax.
- Zambian residents are also subject to income tax on interest and dividends from a source outside Zambia.
- The rates of income tax applicable to an individual for the 2020 charge year are as follows:
|
Taxable income (ZMW) |
Rate of income tax (%) |
|
Up to 39,600 |
0 |
|
39,601 to 49,200 |
25 |
|
49,201 to 74,400 |
30 |
|
Over 74,401 |
37.5 |
deductible expenses
Employee Expenses
- An expense is deductible against taxable emoluments if it is incurred wholly and exclusively for the purpose of that source of income and is not capital in nature.
- This test is difficult to satisfy in practice where an expense is incurred by an employee.
- Capital allowances may be available in limited circumstances.
Personal Deductions
- Alimony payments are not deductible.
- A payment to a public benefit organization that is approved by the Zambian government or owned by the Zambian government is deductible.
- The maximum amount deductible is 15% of taxable income.
- Mortgage interest is not deductible.
|
Deductible Expenses |
|
|
Employee Expenses |
|
|
Personal Deductions |
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immigration
- Foreign nationals must possess visas to enter Zambia unless they are nationals of certain British Commonwealth countries or countries with which Zambia has signed visa-waiver agreements.
- Although certain categories of visitors are automatically granted entry visas at ports of entry, others must obtain visas prior to their arrival in Zambia.
- Transit, tourist/business, re-entry and other short
- Tourist and business visas are issued to foreign nationals intending to visit Zambia for recreational purposes or to do business in the country without taking up employment.
- A tourist visa is valid for a cumulative total of 90 days in a 12-month calendar period.
- A business visa is valid for a cumulative total of 30 days in a 12-month rolling period.
- Foreign nationals who exhaust these validity periods and who still have unfinished business in Zambia may obtain temporary permits for a prescribed fee.
- Foreign nationals must possess work permits to engage in paid employment with a Zambian employer.
- Zambia does not have quotas limiting the number of foreign nationals who may be engaged by employers.
- According to the Zambia Department of Immigration, the permit is issued to foreigners who enter the country to take up employment for a period exceeding 6 months and can be extended for a further period or periods to a maximum of 10 years from the date of its issuance.
- All applicants should remain outside Zambia until the permit is approved.
|
Type of Visa/Permit |
Documentation |
Validity |
Eligibility |
|
Tourist Visa |
|
90 days |
|
|
Business Visa |
|
30 days |
|
|
Work Permit |
|
10 years maximum |
|
value added tax
- Value-added tax (VAT) applies to standard rated supplies of goods and services at 16%.
|
VAT |
|
|
Standard Rate |
16% |
withholding tax
The WHT rates on various types of payments are as follows (the tax is a final tax for non-residents and the rate may be reduced under an applicable tax treaty):
|
Payment |
Residents |
Non-Residents |
|
Dividends |
15% |
20% |
|
Interest |
15% |
20% |
|
Royalties |
15% |
20% |
|
Commissions |
15% |
20% |
|
Rent |
10% |
10% |
|
Repatriation of branch profits |
20% |
20% |
|
Management and consultancy fees |
15% |
20% |
termination
- A contract of employment terminates in the manner stated in the contract of employment or in any other manner (as stated in the Employment Code Act), except that where an employer terminates the contract, the employer must give reasons to the employee for the termination of the employee’s contract of employment.
- Contract termination without valid reason is not allowed.
- Valid reasons include those connected with the capacity or conduct of an employee or based on the operational requirements of an undertaking.
- A worker ‘contract may not be terminated on account of conduct or performance without giving the employee an opportunity to be heard.
- A contract of employment expires:
-
- at the end of the term for which it is expressed to be made;
- on the death of the employee before the end of the term specified in the contract;
- on the employee attaining the applicable retirement age, where the contract of employment is permanent in nature;
- or in any other manner in which a contract of employment lawfully expires or is deemed to expire.
- A worker is entitled to termination notice or payment in lieu of notice except in cases of gross misconduct.
- The notice period is generally specified under the employment contract.
- If it is not clearly provided under the contract of employment, the minimum duration is 24 hours for a contract of employment not exceeding one month; 14 days for a contract of employment ranging between one to three months; and 30 days for a contract of employment of more than three months.
- The notice to terminate a contract of employment of more than six months shall be in writing.
statutory benefits
- These are mandatory benefits as postulated by law
- These include probationary period, annual leave, public holidays, sick leave, maternity leave, paternity leave, overtime pay, notice period, and severance pay
- Statutory benefits also include social security benefits
|
Statutory Benefits |
|
Probationary Period |
|
Annual Leave |
|
Public Holidays |
|
Maternity Leave |
|
Paternity Leave |
|
Sick Leave |
|
Overtime Pay |
|
Notice Period |
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Severance Pay |
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Social Security Benefits |
payments and invoicing
- Income tax is determined by reference to a charge year, being the period of 12 months ending on 31 December.
- The personal income tax return needs to be submitted by 21 June following the end of the tax year.
- For example, the personal income tax return for the 2019 tax charge year must be submitted by 21 June 2020.
- The same deadline applies for paying the balance of income tax that remains outstanding
ease of doing business
- The ease of doing business index is an index created by Simeon Djankov, an economist at the Central and Eastern Europe sector of the World Bank Group.
- Higher rankings (a low numerical value) indicate better, usually simpler, regulations for businesses and stronger protections of property rights.
- According to the World Bank Zambia ranked 85th in the World in 2019 in terms of ease of doing business.
employee accruals
| Christmas Bonus% |
0% |
| Christmas Bonus Over Vacations % |
0% |
| Severance per Year % |
Subject to Contract |
| Vacations % | The total annual leave is 24 calendar days per year (6.59% of annual salary) |
| Notice % |
Employees are entitled to 30 days of notice period for one year of service or more (8.24%) |
| Christmas Bonus Over Notifications% | 0% |
| Vacations Plus% |
0%
|
|
Total percentage of Salary (yearly)
|
The total employment accruals as a percentage of salary per anum are equal to 14.83%
|
employer accruals
Additional information (Country Accruals)
| NAPSA,The minimum monthly earnings used to calculate contributions are 15 kwacha. | |
| The maximum monthly earnings used to calculate contributions are 21,476 kwacha | 5.000% |
| Vacations | 8.49% |
| Description | Both employers and employees are required to make contributions to the National Pension Scheme Authority (NAPSA). The contribution rate is 5% of the employee’s total earnings (a total 10% contribution from both the employer and employee), subject to a limit as prescribed by the authority. The maximum contribution limit for 2020 is 1,149.60 Zambian kwacha (ZMW) per employee per month (i.e. a total of ZMW 2,299.20 from both the employer and employee per month). |
Employer Accruals Additional information
| Employment Accruals | ||
| Annual Leave | The full-time workers are entitled to at least 2 days of annual leave/paid holidays for one month of service. The total annual leave is 24 calendar days per year |
This equals 6.57% (24/365 days) of annual income |
| Maternity Leave | Employment Code Act of 2019 provides for maternity leave of 14 weeks, up from 12 weeks under the Employment Act of 1965. | This equals 26.9% (14/52 weeks) of annual income |
| Paternity Leave | Male employees are entitled to 7 days of paternity leave | This equals 1.91% (7/365 days) of annual income |
| Sick Leave | The length of paid sick leave depends on the type of employment contract. An employee on the short-term contract is paid full pay for the first 26 working days of the sick leave and thereafter, half pay (50%) for the next 26 working days of the sick leave. |
This equals 7.12% (26/365 days) of annual income |
| Overtime | Work done in excess of normal weekly working hours is considered as overtime and is compensated by the premium of at least 150% of the normal hourly wage rate. | Depends on the number of overtime hours worked |
| Severance | The Act provides for the severance pay in the following cases: • Termination of employment contract of a fixed duration: at least 25% of the employee’s basic pay earned during the contract period; • Termination of employment due to redundancy: 2 months’ basic pay for each completed year of service; • Employee’s death in service: 2 months’ basic pay for each completed year of service; • Medical discharge: at least 3 months’ basic pay for each completed year of service. |
This equals 16.66% (2/12 months) of annual income |
| Social Security | Employers must match employees’ contributions to the National Pension Scheme Authority (NAPSA). Employee contributions to the NAPSA are capped at the lower of 5% of annual basic salary or ZMW21 476 per annum |
This equals 5% of annual income |
