Employer of Record in Madagaskar

How an Employer of Record Works in Madagascar

An Employer of Record (EOR) in Madagascar provides foreign companies with a way to quickly and legally hire in the country without having to establish a local entity. The EOR becomes the legal employer in the country, hiring employees on behalf of the company and dealing with onboarding, compliance, and managing the employment relationship.

Rivermate provides EOR services in Madagascar, and our HR experts use their extensive knowledge of the country to make hiring straightforward.

Madagascar labor market: At a glance

The hiring market
Greatest hiring activity:	Antananarivo
Hiring timelines:	Quick for local hires once documentation has been provided.
In-demand sectors:	Tourism, manufacturing, construction, tech, outsourced services.
Sectors with skills shortages:	Technology, outsourcing, textiles.

The salary market
Employer tax contributions:	About 19% of gross salary, which is applied to a monthly ceiling of eight times the minimum wage, currently MGA 2,520,000.
Minimum wage:	MGA 315,000 for non-agricultural workers.
Average gross annual salary:	No official figures.
Income tax brackets:	Up to MGA 350,000: 0% MGA 350,001–400,000: 5% MGA 400,001–500,000: 10% MGA 500,001–600,000: 15% MGA 600,001–4,000,000: 20% Over MGA 4,000,000: 25% Every employee must pay a minimum of MGA 3,000 per month.

What it costs to hire an employee in Madagascar

When hiring in Madagascar, there are several costs involved that you should know about, from statutory contributions to paid leave. Here are some of the main factors to keep in mind.

Salary

The salary of the worker will depend on various factors, like their role, seniority, and sector. There is a minimum wage in place for non-agricultural workers, which is currently equal to MGA 300,000 per month. However, this increases to MGA 315,000 from October 2026.

Contributions

Contributions made by the employer are about 19% of gross salary (up to the ceiling below), and this is made up of:

• Social security (CNaPS): 13%
• Health and maternity: 5%
• Vocational training: 1%

There is a ceiling in place, which is currently equal to MGA 2,520,000 per month, and the contributions are only calculated on pay up to this amount. As such, the 19% figure doesn’t apply to any salary above it.

There is a progressive income tax in place, and this ranges from 0% to 25%, with income tax payments due on the 15th of the following month.

Leave

Employees receive about 30 days of paid leave each year after they have 12 months of service, and this accrues at a rate of 2.5 days per month. The first 15 days of leave have to be taken in one block, and this generally happens within the first three months, but this is subject to what's been agreed. The rest of the employee’s leave can normally be divided up and taken before the year comes to an end, subject to any agreements. It could also be accumulated for up to three years.

For maternity leave, employees can receive 14 weeks on their full salary, and half of this is paid by the employer while CNaPS pays the other half. Fathers get three days of paternity leave on full pay, and this is paid by the employer. Employees can also receive up to 10 days of leave a year for family events.

Bonuses

The 13th-month salary is a common bonus that’s usually paid in December. However, this isn’t a mandatory bonus and it depends on the employer. For example, sometimes it may only be paid to those employees who have been in service for 12 months or longer. There are also some common allowances that may be provided, including transportation, phone, and meal allowances.

Work permits

When hiring foreign nationals, they’ll need a work permit. The national investment agency (EDBM) has an online portal, and the employer applies through this. Employment authorization takes between five days and a week, and a fee applies.

Termination

There are various costs involved in terminating an employee, including notice pay, which is required unless termination is due to gross misconduct. Severance pay for closure of the business or economic dismissals is equal to 10 days’ pay for every year of service, and this is capped at six months’ pay.

Madagascar employer cost calculator

Get a clear idea of hiring cost in Madagascar using our employment cost calculator.

What hiring in Madagascar really looks like

Market condition	What an employer needs to know
Talent availability	French-speaking talent is available, especially in general roles and customer service.
Remote work	Fairly common, but not expected as a standard. Telework is legally recognized.
Language	French and Malagasy are the official languages, but French is the main business language.
Key employer challenge	Dismissals can be complex, and clear documentation should be kept from the start of employment.

Madagascar is a good destination for international employers, especially those building remote teams. French is the dominant business language, but French and Malagasy are the official languages. Contracts are written in Malagasy and/or French, and an English-only contract is unlikely to comply with the Labor Code. English-speaking professionals can be found, especially in tech roles and in international businesses.

Antananarivo (Tana) is the capital and the largest business center. Many businesses focus here, but hiring is not limited to the city. Other cities include Toamasina (Tamatave), the main port; Mahajanga (Majunga), a regional port; and Antsirabe, an industrial city.

Remote work is fairly common in Madagascar, especially in tech, but it is not expected as a standard, and more traditional arrangements are still common. Telework is legally recognized, and the parties need to decide on issues like equipment and monitoring working time. The employer must also explain the rules around IT usage.

Diverse industries are important for the economy. Tourism is a major industry, making up about 13% of GDP. In the larger economy, textiles, agro-industry, and mining are the most important industrial sectors, and construction and tech are also important. Outsourced services make up a large sector, mainly in Antananarivo and primarily for French-speaking clients.

Hiring is straightforward, and as soon as an offer is accepted and paperwork is complete, employment can start quickly. Hiring foreign nationals is also possible, but there’s a longer timeline and work permits are needed. There is also a quota on foreign staff, with a 20% cap on foreign nationals in a company.

Employers are flexible with benefits, offering several allowances, and packages can be tailored to specific positions. Where the workplace isn’t served by public transport, employers must arrange this or pay a flat allowance. A meal allowance is also common.

Country-specific problem that employers must know about

Dismissals can be complicated in Madagascar, and having clear documentation is very important right from the start of the employment relationship. The employer must be able to prove the reason for dismissal was legitimate.

Terminations related to poor performance are much easier when you can demonstrate that you clearly communicated the expectations and recorded your concerns. It’s important to establish clear objectives, carry out performance reviews, and keep careful records. If you provide support or training to help the employee improve in their role, it’s a good idea to keep evidence.

The problems occur when you try to terminate an employee due to poor performance, but you don’t have a clear, documented history of the problems. Disputes are more likely in these cases. The employee could argue they were unaware of the problem or were not given an opportunity to improve, and the court decides on the damages where dismissal is ruled abusive.

Procedure matters. Make sure you tell the employee the reasons in writing, and invite them to a prior hearing at least three working days before. They can also ask to see the file of facts and present a defense. A dismissal letter also has to be written that states the reasons, and you must send it by a method that proves receipt.

Compliance risks employers in Madagascar must know about

Payroll

Payroll compliance is one of the most important obligations. You need to calculate and remit employee income tax, called IRSA, which is withheld monthly and paid by the 15th of the next month. All employees owe something, even those earning under the tax-free threshold, who still pay MGA 3,000 per month.

Work permits

When hiring foreign nationals, it’s important to get the work permit before they can start employment. There are various immigration procedures, including getting visas, and the process takes longer. Two approvals are required, and the employment contract must be endorsed by a labor inspector. The labor ministry then issues the work permit, and applications must be made through the national investment agency (EDBM).

Fixed-term contracts

Both fixed-term and indefinite contracts can be used in Madagascar, but be careful with fixed-term contracts. The law only allows these for work outside the normal, permanent company activities, a specific project, a surge in activity, or urgent safety work. Two years per contract is the maximum, and two renewals are allowed, up to a total of six years. After this, the contract automatically becomes indefinite. If you end one early and without a valid cause, you must pay the salary until the end date.

Social security

You must register employees for social security and occupational health, and make the contributions. Failure to do so can lead to penalties, compliance disputes, and back payments. All employers must join an occupational health service and enroll workers. Failure to enroll an employee in the national social security fund (CNaPS) also means the employer will need to pay for maternity costs plus the full salary for 14 weeks of maternity leave.

How Rivermate can help you stay compliant when hiring in Madagascar

Our experts know exactly how to apply the labor laws in Madagascar and will deal with all aspects of the employment relationship on your behalf so you can focus instead on running your business.

Learn more about EOR services

Benefits of hiring employees through an EOR in Madagascar

When you use the services of an EOR like Rivermate, you can hire in Madagascar without needing a local legal entity. This can be a good option if you want to enter the market quickly, test a new region, or hire a small number of employees with a low administrative burden.

Speed is a big advantage. Setting up a local entity can take a lot of time, while an EOR has the legal infrastructure and local compliance processes all in place already. This means you can onboard much faster without the need to wait for company formation.

An EOR simplifies payroll management and compliance, and you won’t need to worry about making mistakes. There are various statutory obligations in Madagascar, and an EOR manages them for you, so you can stay compliant with all the local regulations without the risk of calculation errors and missed deadlines.

The EOR prepares contracts, manages onboarding, deals with all the documentation, and ensures everything aligns with the labor laws. It can also help with hiring foreign nationals, dealing with the paperwork and the process, and avoiding unexpected delays.

In addition, the local experts can suggest compensation packages. Using their local insight, they understand the labor market, and they can recommend benefits and bonuses that can help you attract the best talent and retain employees.

Want to hire in Madagascar?

Rivermate makes the entire process of hiring in Madagascar easy for foreign companies, dealing with everything from payroll to taxes, and ensuring full compliance.

Talk to a Madagascar Hiring Expert

Sources:

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