Employer of Record in Malawi

An Employer of Record (EOR) in Malawi is a company that helps you hire employees there without setting up your own local entity. It acts as the legal employer for your team. This means it handles tasks like payroll, taxes, benefits, and employment contracts. Using an EOR ensures you follow all of Malawi's local labor laws. Companies like Rivermate allow you to build a team in Malawi quickly and efficiently.

How an Employer of Record (EOR) Works in Malawi

Using an EOR simplifies hiring in Malawi. Here is how it works:

• You find the talent. You recruit and select the person you want to hire in Malawi.
• The EOR hires them legally. The EOR service provider has a legal entity in Malawi and officially hires the employee on your behalf.
• They manage the paperwork. The EOR handles the employment contract to make sure it meets all local labor laws, like the Employment Act of 2000.
• Onboarding is taken care of. They manage the process of bringing your new employee on board.
• Payroll and benefits are handled. The EOR manages payroll, taxes, and benefits according to Malawian law.
• Your employee works for you. Although the EOR is the legal employer, your new hire works for your company just like any other team member.

Why use an Employer of Record in Malawi

Using an EOR in Malawi helps you hire and manage talent quickly while ensuring you follow local labor and tax regulations. It is a flexible, low-risk solution for businesses looking to test new markets or grow teams across borders.

Here are some key benefits:

• Hire without a local entity. You can hire employees in Malawi without the cost and time of setting up a legal entity there.
• Stay compliant. An EOR ensures that all employment practices follow Malawian labor laws and tax regulations. They handle employment contracts, payroll, and tax compliance for you.
• Simplify HR. The EOR takes care of HR administration, including payroll processing and managing statutory benefits.
• Reduce risks. Misclassifying an employee as a contractor can lead to legal and financial penalties. An EOR helps you classify workers correctly according to Malawian labor laws.

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

Hiring in Malawi requires you to understand its unique employment landscape. The primary law governing employment is the Employment Act of 2000. This act outlines the rights and responsibilities of both employers and employees. To hire employees in Malawi, you can either establish a local legal entity or partner with an Employer of Record (EOR). An EOR can manage employment contracts, payroll, and tax compliance on your behalf.

Employment contracts & must-have clauses

While oral contracts can exist, a written contract is highly recommended to clarify terms and protect both you and your employee. You should provide a written statement of employment particulars to your employee.

Here are some essential clauses to include in an employment contract:

• Job description: Clearly outline the employee's role and responsibilities.
• Working hours: Specify the standard workweek and any overtime arrangements.
• Wages: Detail the amount and frequency of payments.
• Leave entitlements: Include annual leave, sick leave, and maternity or paternity leave.
• Termination procedures: Explain how the contract can be ended and under what conditions.

Probation periods

You can include a probationary period in an employment contract to assess a new employee's suitability. The length of the probationary period is typically agreed upon by both parties and specified in the contract. While there is no legally mandated maximum length, a common practice is a period of one to three months. During probation, the notice period for termination is often shorter.

Working hours & overtime

The standard workweek in Malawi is 48 hours, typically spread over six days. Any hours worked beyond the standard 48-hour workweek are considered overtime. Employees are entitled to overtime pay for these extra hours. The overtime rate is generally 1.5 times the regular hourly wage.

Public & regional holidays

Your employees in Malawi are entitled to paid public holidays. Here is a list of public holidays in Malawi for 2024:

Hiring contractors in Malawi

You can hire independent contractors for project-based or temporary work. This offers flexibility and access to specialized skills. However, you must correctly classify workers to avoid misclassification risks.

An independent contractor is self-employed, controls their own work, and often has multiple clients. An employee, on the other hand, works under your supervision and control. Misclassifying an employee as a contractor can lead to legal and financial penalties, including back taxes and fines.

An Employer of Record (EOR) can help you mitigate these risks. An EOR ensures that your workers are classified correctly according to Malawian labor laws. They handle the legal and administrative responsibilities, allowing you to focus on your business operations.

Understanding compensation and payroll in Malawi is straightforward. You need to know the rules for paying your team correctly and on time. This includes understanding the local laws on wages, taxes, and contributions. Getting these details right keeps your business compliant and your employees happy.

Payroll cycles & wage structure

You can pay your employees on a cycle that works for your business. The most common payroll cycles in Malawi are weekly, bi-weekly, or monthly. For employees whose pay is calculated hourly, daily, or weekly, you must pay them at least once every two weeks. If your employee's salary is fixed on a monthly or annual basis, you should pay them at least once a month.

Overtime & minimums

The minimum wage for general workers in Malawi is MWK 126,000 per month.

Malawi has specific rules for overtime pay. You can categorize overtime into three types:

• Ordinary overtime is for extra hours an employee works on a normal workday.
• Day off overtime applies when an employee works on a day they would typically have off.
• Holiday overtime is for any time worked on a public holiday.

For ordinary overtime, you should pay one and a half times the employee's normal wage for each hour worked. For work on a day off or a public holiday, the pay should be twice the employee's regular wage. Another source suggests that overtime on a public holiday is paid at 400% of the normal salary rate.

Employer taxes and contributions

As an employer in Malawi, you are responsible for contributing to the national pension scheme for your employees.

Employee taxes and deductions

Your employees also have deductions taken from their pay. This includes their contribution to the pension fund and income tax.

Income tax is progressive, meaning the rate increases with the employee's income. Here are the annual income tax brackets:

In Malawi, providing the right benefits and leave is key to attracting and keeping great talent. It’s not just about following the law. It’s about building a supportive workplace. Understanding the local rules for time off and other benefits is your first step. This shows your commitment to your team's well-being and helps you stand out as a top employer.

Statutory Leave

Malawi's laws set minimum leave requirements for all employees.

• Annual Leave: You must give employees paid annual leave. Those working a five-day week get at least 15 days. If they work a six-day week, they get 18 days.
• Sick Leave: After one year of service, an employee is entitled to at least four weeks of sick leave at full pay and eight weeks at half pay each year. A medical certificate may be required.
• Maternity Leave: Female employees get a minimum of eight weeks of maternity leave with full pay. This does not interrupt their employment or affect their benefits.
• Paternity Leave: There is no statutory requirement for paternity leave in Malawi.

Public Holidays & Regional Holidays

Employees are entitled to paid time off for public holidays. If they work on a public holiday, they should be paid double their normal wage rate.

Typical Supplemental Benefits

To attract the best people, many companies offer more than the legal minimum.

How an EOR Can Help with Setting Up Benefits

Setting up a benefits plan in a new country can be complex. An Employer of Record (EOR) makes it simple. We handle the details to make sure you are compliant and competitive.

An EOR helps you:

• Stay Compliant: We understand local labor laws. We ensure your benefits packages meet all legal requirements.
• Save Time: You can avoid the long process of setting up a legal entity in Malawi. This means you can hire and onboard talent much faster.
• Offer Competitive Benefits: We know the local market. We can help you create a benefits plan that attracts top candidates.
• Manage Administration: We take care of payroll, benefits administration, and other HR tasks. This frees you up to focus on growing your business.

When an employment contract ends in Malawi, you need to follow a specific process. This ensures you treat your employees fairly and stay on the right side of the law. The process is guided by Malawi's Employment Act, which sets out the rules for both employers and employees. It covers everything from giving notice to final payments. Following these rules helps you avoid disputes and potential legal issues.

Notice Periods

Giving the correct notice is a critical first step. In Malawi, the length of the notice period depends on how long the employee has worked for you. You can also choose to pay the employee for the notice period instead of having them work.

Here are the minimum notice periods required by law:

Severance Pay

Severance pay is a final payment you make to an employee when their contract is terminated. In Malawi, an employee is entitled to severance pay if they have been with your company for at least one year. However, this does not apply if the employee is dismissed for serious misconduct.

It's also important to know that if your employee is part of a pension scheme, they are not entitled to severance pay. This is to avoid a double payment.

The amount of severance pay is based on the employee's length of service:

How Rivermate Handles Compliant Exits

When you partner with an Employer of Record like Rivermate, we manage the entire offboarding process for you. We make sure every termination is handled correctly and in full compliance with Malawian law.

Here’s how we help:

• Fair Procedure: We ensure a fair and documented reason for termination is established, whether it's related to performance, conduct, or operational changes.
• Correct Calculations: We calculate all final payments, including outstanding wages, accrued leave, and any severance pay the employee is entitled to.
• Clear Communication: We handle the formal written notice to the employee, clearly stating the reason for termination and the effective date.
• Final Documentation: We provide the employee with a certificate of service, as required.

By managing these steps, we help you navigate complex labor laws with confidence. This minimizes risks and ensures a smooth and respectful exit process for your employees.

Navigating visas and work permits in Malawi is straightforward once you understand the system. It's a two-part process. First, you need a visa to enter the country. Second, you need a permit to work. The main work permit is called a Temporary Employment Permit, or TEP. Your employer must apply for your TEP before you start your job.

Employment visas & sponsorship realities

The main way to work in Malawi as a foreign national is with a Temporary Employment Permit (TEP). This permit allows you to live and work in the country for a specific employer. The TEP is typically issued for up to two years and can be renewed. Your employer, or an Employer of Record (EOR), must sponsor your TEP application.

An EOR can sponsor a TEP, but they must be a legally registered entity in Malawi. The application process requires the employer to prove that a foreign national is necessary for the role.

Here is what your employer needs to do:

• Demonstrate that no qualified Malawian is available for the job.
• Provide a valid employment contract.
• Show that the company is registered and compliant with local tax laws.

You will need to provide documents like your passport, CV, and academic qualifications. The entire process usually takes a few weeks, and you must wait for approval before you travel to Malawi to start working.

Business travel compliance

For short-term trips that involve business meetings or exploring opportunities, you can use a Business Visa or a Visitor's Permit. These are not work permits and do not allow you to be employed in Malawi.

Keep these points in mind for short-term visits:

• You cannot perform work that a Malawian could be hired for.
• Your activities should be limited to things like meetings, negotiations, or attending conferences.
• Engaging in employment on a tourist or business visa can lead to fines, arrest, or deportation.

Always check the latest regulations with the Malawi Department of Immigration and Citizenship Services before you travel.