Employer of Record in Madagascar

An Employer of Record (EOR) in Madagascar is a company that legally hires employees on your behalf. This means you can build a team in Madagascar without setting up a local entity. The EOR takes care of all the legal and HR work, like payroll, taxes, benefits, and contracts, making sure you follow local labor laws. It's a straightforward way to hire talent in a new country while you focus on running your business. For EOR services, you can consider providers like Rivermate.

How an Employer of Record (EOR) Works in Madagascar

Using an EOR in Madagascar simplifies the hiring process. Here is how it generally works:

1. You Find the Talent. You identify the candidate you want to hire in Madagascar.
2. The EOR Hires Them. The EOR legally employs the person on your behalf under a compliant local contract.
3. Onboarding is Handled. The EOR manages the onboarding process, including all necessary paperwork.
4. You Manage Daily Work. You manage your employee's day-to-day tasks and responsibilities.
5. The EOR Handles HR. The EOR takes care of payroll, taxes, benefits, and ensures compliance with Malagasy labor laws.

Benefits of Using an EOR for Hiring in Madagascar

Using an EOR to hire in Madagascar offers several advantages. It allows you to enter the market and hire talent quickly without the time and expense of establishing a legal entity in the country. This approach helps you avoid legal risks and ensures you are compliant with local employment regulations from the start.

Here are some key benefits:

• Faster Market Entry. Hire employees and start operations in Madagascar much faster than setting up a local company.
• Reduced Costs. Avoid the significant expenses associated with establishing and maintaining a legal entity.
• Compliance Assurance. The EOR handles all aspects of local labor laws, taxes, and social security, minimizing your legal risks.
• Focus on Your Business. You can concentrate on your core business activities while the EOR manages HR and administrative tasks.

Rivermate's transparent pricing model eliminates complexity with a single, competitive monthly fee per employee. Unlike traditional PEO providers, our pricing in Madagascar 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 Madagascar.

Hiring in Madagascar can seem complex, but it doesn't have to be. The key is understanding the local labor laws to ensure a smooth process for both you and your new hires. Madagascar's workforce is growing, with young people continuously learning new skills and seeking fresh opportunities. This makes it an attractive place to find talent. To hire employees, you can either set up a local legal entity or partner with an Employer of Record (EOR). An EOR allows you to legally employ workers in Madagascar without the need to establish a local presence, handling everything from payroll to compliance.

Employment contracts & must-have clauses

You must provide a written employment contract to every employee in Madagascar. The contract should be in French or Malagasy and use the local currency, the Malagasy ariary, for all salary information.

Make sure each contract includes:

• Compensation: Clearly state the salary and any other benefits.
• Working hours: Define the expected work schedule.
• Termination requirements: Outline the process for ending the employment relationship.
• Job description: Detail the employee's role and responsibilities.
• Start date: Specify the first day of employment.
• Paid leave: Reference the employee's right to paid time off according to the labor code.

You can use two main types of contracts:

• Indefinite-term contracts: These are for permanent positions with no set end date.
• Fixed-term contracts: These are for a specific duration, a particular project, or to temporarily replace an employee. They have a minimum term of six months and cannot exceed two years.

Probation periods

You can include a probation period in an employment contract to see if a new hire is a good fit. While not mandatory, if you choose to have one, the maximum duration is six months and it can only be renewed once. Any agreement for a probationary period must be in writing.

The length of the probation period often depends on the employee's role:

Working hours & overtime

The standard workweek in Madagascar is 40 hours, typically broken down into five, eight-hour days. Any time worked beyond these standard hours is considered overtime.

Overtime pay is calculated at a higher rate:

• First 8 hours of overtime: 30% above the normal rate.
• Any additional overtime: 50% above the normal rate.

Public & regional holidays

Employees in Madagascar are entitled to paid time off for public holidays. The country celebrates a mix of national and religious holidays throughout the year.

Here are the public holidays for 2025:

Hiring contractors in Madagascar

Working with independent contractors can be a flexible way to get work done. However, it's important to classify them correctly. If a contractor is treated like an employee, with set working hours and a high degree of control over their work, you risk misclassification. This can lead to penalties, including back pay for benefits and social security contributions.

An EOR can help you avoid these risks. We can help you correctly classify your workers from the start. If you want to hire someone as a full-time employee, we can handle all the legal and HR tasks that come with it. This lets you focus on managing your team and growing your business, without worrying about compliance.

Managing payroll in Madagascar means navigating specific local rules. To pay employees legally, you need a registered local entity. You must provide a formal employment contract for every employee. All payments must be in the local currency, the Malagasy ariary.

Payroll cycles & wage structure

In Madagascar, the payroll cycle is typically monthly. You should pay your employees by the last working day of the month. A 13th-month salary is a mandatory bonus. This bonus is equal to 14% of the annual salary and is often paid out over the year, with a final payment in December.

Overtime & minimums

The standard workweek is 40 hours, spread over five days. For the first eight hours of overtime, you must pay 130% of the regular rate. Any overtime beyond that is paid at 150%.

Minimum wage varies by sector and employee tenure:

• Non-Agricultural Sector:
  • Less than 3 years of tenure: MGA 262,680 per month.
  • 3 or more years of tenure: MGA 264,200 per month.
• Agricultural Sector:
  • Less than 3 years of tenure: MGA 266,500 per month.
  • 3 or more years of tenure: MGA 268,700 per month.

Employer taxes and contributions

As an employer, you contribute to several social funds. These contributions are a percentage of the employee's gross salary.

Employee taxes and deductions

Employees also contribute to social funds from their salary. You withhold these amounts during payroll.

Income tax, known as IRSA, is also deducted from an employee's pay. It follows a progressive rate structure.

In Madagascar, your employee benefits package is a mix of required leave and optional perks. The law sets the minimum, but many companies offer more to attract and keep good people. Think of it as a starting point. You must provide the basics, but going beyond can make a real difference in your team's satisfaction and loyalty.

Statutory leave

Here are the leave benefits you must provide by law:

• Annual Leave: Your employees get 2.5 days of paid leave for each month they work. This adds up to 30 days a year for a full-time employee. They can carry over this leave for up to three years.
• Sick Leave: Employees are entitled to up to six months of paid sick leave. A medical certificate is often required. The first few days may be unpaid, with social security covering a portion of the pay for the remainder of the leave.
• Maternity Leave: Female employees receive 14 weeks of paid maternity leave. Typically, they take some weeks before the birth and eight weeks after. Pay during this time is a shared cost between you and the National Security Fund.
• Paternity Leave: Fathers are entitled to a short period of paid leave when their child is born.

Public holidays & regional holidays

Your employees in Madagascar get paid time off for national holidays. Here are the public holidays for 2025:

Some holidays are based on religious or lunar calendars, so their dates can change each year. Also, some holidays may only be observed by specific groups of people.

Typical supplemental benefits

To stay competitive, you may want to offer more than the legal minimum. Here's a look at both required and extra benefits:

How an EOR can help with setting up benefits

Setting up employee benefits in a new country can be complex. An Employer of Record (EOR) simplifies this process for you.

An EOR already has a legal entity in Madagascar. This means they understand the local laws and can make sure your benefits package is compliant. They handle the administrative work of managing payroll, leave, and social security contributions.

Using an EOR saves you time and reduces risk. You can be confident that you are meeting all your legal obligations as an employer. This lets you focus on growing your business and supporting your team.

When an employment relationship ends in Madagascar, you need to follow a specific process. The country's Labor Code sets the rules for termination and offboarding. You cannot terminate an employee at will; there must be a just cause, such as misconduct or economic reasons. The process requires clear communication and adherence to legal requirements to ensure a compliant and respectful exit for the employee.

Notice periods

When terminating an employment contract in Madagascar, you must provide the employee with a written notice. The length of the notice period depends on the employee's tenure and job type. These periods can range from a single day to several months. It's a key part of the termination process and is legally required after the probationary period.

For other employee categories, the notice period can be more complex and is determined by the specific terms of the employment contract and the Labor Code.

Severance pay

Employees in Madagascar are entitled to severance pay under certain conditions, particularly in cases of termination for economic reasons. The standard severance is calculated as 10 days of salary for each year of service. However, employees are generally not eligible for severance pay if the termination is for a justified cause, unless the employer chooses to provide it voluntarily.

How Rivermate handles compliant exits

Navigating the details of termination and offboarding in a different country can be complex. We handle the entire process to ensure you remain compliant with Malagasy labor law.

Here’s how we manage employee exits:

• Legal Compliance: We ensure every step of the termination process follows the regulations set out in the Labor Code.
• Documentation: We prepare and handle all necessary documentation, including the formal termination letter that clearly states the reasons for termination and the effective date.
• Calculations: We accurately calculate any final payments, including notice period pay and severance entitlements.
• Clear Communication: We manage communication with the departing employee, ensuring they understand the process and their final entitlements.

Navigating the visa and work permit process in Madagascar is a multi-step journey. You will find that for any long-term employment, a foreign national needs to secure both a visa to enter the country and a separate work permit to legally begin their job. The process involves coordination with Malagasy embassies or consulates in your employee's home country and various government ministries in Madagascar.

Employment visas & sponsorship realities

For long-term work in Madagascar, your employee will typically start by getting a "transformable" visa. This visa allows them to enter the country for 30 days and then apply for a long-term residence and work permit once they have arrived.

An Employer of Record (EOR) can sponsor the necessary work permits for your employees. This is often the most practical route if you do not have your own legal entity in Madagascar. The EOR acts as the legal employer and handles the sponsorship process, ensuring compliance with local labor laws.

Here are the practical steps for employment:

• Secure a Job Offer: The process begins with a formal employment contract from a Malagasy employer or an EOR.
• Obtain a Transformable Visa: Your employee will need to apply for this long-stay visa at a Malagasy embassy or consulate before traveling.
• Apply for a Work Permit: Upon arrival in Madagascar, the EOR will help your employee apply for a work permit from the Ministry of Labor.
• Get a Residence Permit: At the same time, your employee will need to apply for a residence permit from the Ministry of Interior.

Keep in mind that there can be limitations due to visa quotas, so it is important to start the process early.

Business travel compliance

For short-term business trips, such as attending meetings or conferences, a business visa is the correct option. You can often get a visa on arrival at the airport, or apply for an e-Visa online before you travel. These visas are typically for stays of up to 90 days.

Here is what you need to know for short-term visits:

• Permitted Activities: Business visas are for activities that do not count as employment. This includes meetings, negotiations, and attending conferences.
• Required Documents: You will generally need to provide the following:
  • A valid passport with at least six months of validity remaining.
  • A round-trip flight itinerary.
  • Proof of sufficient funds for your stay.
  • An invitation letter from a company in Madagascar, if applicable.
• Visa on Arrival: For many nationalities, a visa for up to 60 days can be obtained upon arrival at the airport.