Employer of Record in Eswatini

Expanding your business into Eswatini offers significant opportunities, but navigating international employment regulations can be complex. When considering hiring employees in Eswatini, understanding the local labor laws, payroll processes, and tax obligations is crucial for compliant and efficient operations. This often involves a deep dive into local compliance to ensure your team is onboarded legally and effectively.

Companies looking to engage talent in Eswatini generally have a few distinct options for employment. Each path comes with its own set of legal requirements, administrative burdens, and strategic implications. Carefully evaluating these options will help determine the most suitable approach for your business objectives.

• Establishing a local entity: This involves incorporating a company in Eswatini, a process that can be time-consuming and costly, requiring significant upfront investment in legal, administrative, and financial infrastructure.
• Hiring through an Employer of Record (EOR): Partnering with a global EOR like Rivermate allows your company to onboard employees in Eswatini without needing to establish your own local legal entity. The EOR acts as the legal employer, handling all local compliance while your company retains full control over day-to-day management.
• Hiring independent contractors: This option offers flexibility but carries the risk of misclassification if the working relationship resembles employment. Misclassification can lead to significant penalties and legal challenges under Eswatini labor law.

How an EOR Works in Eswatini

An Employer of Record simplifies global expansion by taking on the legal responsibilities of employment in Eswatini. This means Rivermate manages crucial administrative and compliance tasks on your behalf, allowing you to focus on your core business goals and manage your team directly.

• Payroll processing: Ensuring timely and accurate payment of salaries, bonuses, and expenses in compliance with Eswatini's labor laws.
• Tax compliance: Handling all local employment taxes, social security contributions, and other statutory deductions required by Eswatini authorities.
• Employment contracts: Drafting and managing compliant employment contracts in line with Eswatini's legal framework.
• Benefits administration: Facilitating and managing statutory and supplementary benefits packages for your Eswatini employees.
• HR compliance: Maintaining adherence to Eswatini's labor laws, including working hours, leave entitlements, and workplace safety regulations.
• Termination procedures: Guiding and executing compliant termination processes should they become necessary, mitigating legal risks.

Benefits of Using an EOR in Eswatini

Utilizing an Employer of Record service offers distinct advantages for companies aiming to expand into Eswatini without the complexities of establishing a local entity.

• Accelerated market entry: Onboard employees in Eswatini rapidly, often in a matter of days, without the typical delays associated with entity setup.
• Reduced compliance risk: Ensure full adherence to Eswatini's intricate labor laws, tax regulations, and payroll requirements, significantly lowering the risk of fines or legal disputes.
• Cost-effectiveness: Avoid the substantial costs and resource drain of setting up and maintaining a local legal entity in Eswatini.
• Access to talent: Secure top talent in Eswatini without the geographical or administrative barriers of needing a local presence.
• Expert local support: Benefit from on-the-ground knowledge and expertise in Eswatini's employment landscape, ensuring best practices and smooth operations.

Rivermate's transparent pricing model eliminates complexity with a single, competitive monthly fee per employee. Unlike traditional PEO providers, our pricing in Eswatini includes comprehensive HR support, benefits administration, compliance management, and access to our proprietary dashboard for real-time workforce analytics. No hidden costs, no setup fees—just straightforward pricing that scales with your business needs while ensuring full legal compliance in Eswatini.

Employers in Eswatini must contribute 5% of each employee's monthly earnings to the Eswatini National Provident Fund (ENPF), with a maximum of E175 per party, totaling up to 10% or E350 per employee (see table below). They are also responsible for withholding Pay-As-You-Earn (PAYE) income tax based on progressive rates: 0% up to E48,000, 25% for E48,001–E120,000, 30% for E120,001–E280,000, and 33% above E280,001. Employees can reduce taxable income through deductions such as pension contributions (up to E40,000 annually) and medical aid contributions (up to E3,000 annually).

Employers must submit monthly PAYE returns (Form P10) by the 7th of the following month and an annual reconciliation (Form P12) by June 30th. Non-compliance can lead to penalties. Foreign workers' tax obligations depend on residency status, with residents taxed on worldwide income and non-residents on Eswatini-sourced income. Withholding taxes on payments to non-residents include 15% on dividends, 10% on interest, and 15% on royalties and management fees. Employers and foreign entities should seek professional advice to ensure compliance with all tax laws and applicable DTAs.

Salaries in Eswatini vary by industry, role, experience, and location, with higher pay in sectors like finance, technology, and mining, and in urban areas such as Mbabane and Manzini. For example, annual salaries range from E60,000–90,000 for entry-level administrators to E300,000–600,000 for operations managers. Key salary data includes:

Minimum wages are sector-specific, with rates such as E2,000/month for security services and E1,500 for domestic workers. Employers must comply with these regulations, which are periodically reviewed. Compensation packages often include bonuses like performance incentives, 13th-month salaries, and allowances for housing, transportation, and medical expenses.

Payroll is typically processed monthly via bank transfers, with statutory deductions for income tax (PAYE), the National Provident Fund, and workers' compensation contributions. Salary trends are influenced by economic growth, inflation, skills shortages, government policies, and foreign investment, all of which could lead to increased wages for skilled professionals in the future.

Employees in Eswatini are entitled to a minimum of 15 working days of annual vacation leave per year, accrued on a pro-rata basis, with the right to payment for unused leave upon termination. Public holidays, such as New Year's Day, King's Birthday, Labour Day, and Christmas, are paid days off, with work on these days typically compensated with overtime or a day off in lieu. Sick leave allows employees to take paid time off due to illness, usually requiring a medical certificate, but unused sick days do not carry over or get paid out upon termination.

Parental leave includes approximately 12 weeks of maternity leave for women, with pay often partially covered, and around 3-5 days of paternity leave for men. Adoption leave policies are flexible and may be negotiated. Additional leave types include bereavement, study, sabbatical, and family responsibility leave, each with varying durations and conditions based on employer policies.

Employers in Eswatini must provide mandatory employee benefits as per labor laws, including paid annual leave, sick leave, maternity leave, paid public holidays, workers' compensation insurance, severance pay, and notice periods. These benefits establish a minimum level of employee protection and are essential for legal compliance.

Key mandatory benefits include:

While these legal requirements set the baseline, offering competitive and supplementary benefits can enhance talent attraction and retention, requiring careful consideration of costs, compliance, and market practices.

Employment agreements in Eswatini are governed by the Employment Act of 1980 and other labor laws, ensuring minimum standards for working hours, wages, and termination procedures. Properly drafted contracts help prevent disputes and clarify rights and obligations for both parties.

There are two main types of employment agreements:

Employers should ensure compliance with legal standards to maintain lawful and positive employment relations.

Eswatini is increasingly adopting remote work, driven by benefits such as talent attraction, productivity, and cost savings. Although there is no specific remote work legislation, existing laws like the Employment Act of 1980 govern arrangements, emphasizing clear employment contracts, health and safety responsibilities, and employer support in providing necessary resources. Employees can negotiate work-from-home rights, and employers must ensure ergonomic setups and effective communication.

Flexible work options are expanding, including arrangements like telecommuting, flexible hours, and part-time work, supported by policies on equipment provision, expense reimbursement, and data security. Key data points include:

Data protection is prioritized through encryption, secure networks, access controls, and employee training. Clear policies on equipment and expense reimbursement help manage costs and compliance, with processes for submitting requests and understanding tax implications. A robust technological infrastructure, including reliable internet, collaboration tools, cloud services, and cybersecurity measures, is essential for effective remote work in Eswatini.

Employers in Eswatini must comply with the Employment Act and related laws when terminating employees to avoid legal disputes. Key requirements include adhering to minimum notice periods based on employee category and length of service, and providing severance pay for dismissals not due to misconduct. Notice periods range from 1 week for less than 1 year of service to 1 month for employees with over 3 years or monthly-paid employees, with longer periods possible if stipulated in contracts.

Severance pay is mandated for dismissals due to retrenchment, redundancy, or business closure, calculated as:

Termination grounds include misconduct (with cause) such as theft or gross insubordination, and operational reasons (without cause). Employers must follow procedural steps: investigation, notice, hearing, decision, written notification, and documentation. Employees are protected against wrongful dismissal based on discrimination, retaliation, or procedural violations, with remedies including reinstatement or compensation.

Eswatini is witnessing a growing trend towards freelancing and independent contracting, offering flexibility for both businesses and professionals. This shift allows companies to tap into specialized skills without long-term employment commitments. However, businesses must navigate local regulations carefully to avoid misclassification risks, which can lead to legal and financial penalties. Proper classification hinges on factors like control, integration, financial dependence, and the provision of tools. Contracts should clearly define the scope of work, payment terms, and the nature of the relationship to mitigate disputes.

Independent contractors in Eswatini manage their own tax obligations, including income and potential VAT registration, while businesses are generally not responsible for withholding taxes. Contractors must also handle their own insurance needs. Common industries employing freelancers include IT, creative services, consulting, construction, education, and healthcare, where project-based expertise is crucial. Proper legal agreements, especially regarding intellectual property rights, are essential to ensure clear ownership and avoid future disputes.

Foreign nationals can work legally in Eswatini by obtaining appropriate visas and work permits, with common options including the Temporary Residence Permit (TRP), Special Permit, and Business Visa. The TRP is valid for 1-2 years and suitable for temporary employment, requiring a job offer, qualifications, and police clearance. The Special Permit is for individuals with specialized skills, while the Business Visa allows short-term business activities without long-term employment authorization.

The application process involves submitting necessary documents such as a completed form, passport, qualifications, employment contract, police clearance, medical report, and employer sponsorship to the Ministry of Home Affairs. Processing typically takes 4-8 weeks, with fees varying by permit type. Employers must ensure all foreign employees hold valid permits, comply with labor laws, and maintain accurate records, while employees must adhere to permit conditions and renew visas timely to avoid penalties.

Permanent residency is possible after five years of legal residence, requiring proof of good character, financial stability, and contribution to Eswatini. Dependents can be sponsored if the primary permit holder maintains valid status and demonstrates financial capacity. The following table summarizes key permit types: