Employer of Record in Malawi
Skuad's Malawi Employer of Record (EOR) solution helps your business expand into Malawi without the need for an entity setup. Our unified and automated global HR platform enables you to expedite the onboarding of your remote team, manage their payroll, benefits, etc. compliantly. We help you streamline the global expansion process with the able assistance of our international network.
Malawi at a Glance
Population: 19,634,469 people
Currency: Malawi kwacha (MWK)
Capital city: Lilongwe
Languages spoken: English, Chichewa
Gross Domestic Product (GDP): USD 7.66 billion (2019)
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Employment in Malawi
MALAWI EMPLOYMENT ACT 2000 applies to both citizens and foreign nationals. To establish a local entity in Malawi, a company must be aware of Malawi labor laws, work permits, and HR functions such as payroll and work visas.
To minimize the complications that may arise for companies planning to establish a subsidiary in Malawi, it is advisable to partner with a credible Malawi EOR service with expertise in the nuances of local labor laws, employment laws, and other regulations for citizens and foreign workers.
Malawi Employment Laws
|Statutory working hours
||The statutory working hours are 48 hours per week.
Overtime hours are disbursed at the rate of 150% of the normal pay. Besides this, an employee is entitled to receive compensatory rest for an equal amount of overtime worked.
For work over public holidays or weekends, the overtime pay rate amounts to 200% of the normal pay.
|Paid public holidays
||The public holidays in Malawi are as follows.
- New Year Day (January 1)
- John Chilembwe Day (January 15)
- Martyrs’ Day (March 3)
- Good Friday (Friday before Easter)
- Holy Saturday (Saturday before Easter)
- Easter Monday (the day after Easter Sunday)
- Labor Day (May 1)
- Eid al-Fitr (changes every year)
- Kamuzu Day (May 12)
- Independence Day (July 6)
- Mother’s Day (October 15)
- Christmas (December 25)
- Boxing Day (December 26)
An employee is entitled to receive annual leave after the completion of 12 months of employment. Eighteen paid annual leaves (exclusive of public holidays and weekends) can be accessed if an employee works for a six-day workweek, and 15 days annual holiday leaves (exclusive of public holidays and weekends) can be accessed if an employee works for a five-day workweek.
In case an employee has worked for less than 12 months, they will still be able to access leaves but that will be in proportion to the service length during that specific year.
|Annual leave accrual
Annual paid leave may be accumulated and deferred by mutual agreement. Collective bargaining agreements may enhance the annual leave up to 30 days a year.
After the new year has started, the employer needs to determine the amount and terms and conditions related to the annual paid leave in advance. All accrued unutilized annual leaves must be paid to the employee on termination.
An employee is entitled to holiday pay if they are,
The employee is entitled to either another day off or a day’s salary if a public holiday coincides with a non-working day.
- On authorized leave such as medical leave or annual leave on the day immediately before or after a public holiday,
- In attendance on the working day immediately before or after a holiday, or
- Not on approved unpaid leave on the day of the holiday.
||Employees are entitled to receive 12 weeks a year of medical leave after the completion of 12 months of service. However, the leave will only be granted after an employee submits a medical certificate. During the first four weeks, the employee is eligible to receive their full salary. For the remaining eight weeks, an employee is entitled to receive half their due pay.
||Female employees are entitled to receive fully paid eight weeks of maternity leave for every three-year period for which they have been employed. Maternity leave is subject to extension in case of pregnancy-related illnesses.
Skuad’s Malawi EOR solution will simplify your business expansion efforts without hassles and delay. To learn more, get in touch with Skuad experts today
Contractors vs. Full-time Employees
Full-time Employees are those employees that are hired by your firm and work for
specified hours. They receive a fixed salary and a company requires paying social and other benefits to the employees while managing their activities daily. A termination notice is a prerequisite in case an employer aims to end the working relationship with a full-time employee.
Contractors are freelancers who work on a freelance basis. They are paid project-basis and work as per the requirement of the project. The company does not require paying any benefit. Work can be terminated either at any time or by providing a short notice period.
The advantages of Contractors
Engaging a talent through hiring a global PEO is 30% cheaper in comparison to opting for an in-house option. It saves 50% of the cost in comparison to engaging and paying a talent via your own company. There are many benefits to opt for a contractor including flexibility to plan resources based on the changing requirements, leveraging the experience of contractors while entering a new market, enjoying financial flexibility, and beyond.
The advantages of hiring a full-time employee
Hiring full-time employees results in enhanced employee loyalty and the knowledge of a full-time employee stay within the company. Also, by hiring a full-time employee, a company ends up minimizing compliance issues while eliminating the penalties risk.
Nevertheless, whichever option you decide to choose, leverage the expertise of global EOR. Talk To Skuad Experts if you would like to know more about Malawi EOR solutions.
Hiring in Malawi
The economy of Malawi mainly relies on income from agriculture, tobacco, cotton, foodstuffs, and more. It trades closely with the European and regional partners and has been witnessing growth for some time. The hiring process in Malawi begins with identifying employee requirements, assessing the application, selecting the right candidate to interview, selecting a candidate, and then getting the employment contract done. Here are a few popular Malawi job search portals through which an employee can hire employees on either a full-time or contractual basis.
However, hiring by relying on job portals does come with its own sets of pros and cons. Job portals offer quick recruitment solutions but checking the credibility of shortlisted candidates can be a challenging process. This is where the role of a POE comes into the picture. By partnering with a professional POE, a company can fast-track the entire hiring process in Malawi. Learn more about the hiring process in Malawi by visiting https://www.skuad.io/
Probation & Termination
Probation in Malawi is regulated under the Employment Act. Parties may agree to integrate a clause related to the probation period in the employment contract in the case of a skilled worker provided that the duration of probation does not exceed more than 12 months. Moreover, during the probation period, an employment contract can be terminated at any time either by an employer or an employee without notice.
Termination of employment Malawi
A notice of termination should be submitted in the written form to the other party.
The employee must be offered an opportunity to present a counter-argument against termination if it is initiated by the employer.
The employer is obliged to hand over a termination certificate to the employee specifying the dismissal reason.
|Notice for termination of employment
The notice period depends on the frequency of the employee’s payment.
- Bi-weekly payment: Thirty days if an employee has been employed for more than five years and 15 days in the case where an employee has been employed for less than five years.
- Monthly payment: One month if an employee has completed five years of service, two weeks if the employee has been employed for between two and five years, and one week in case the employee has been employed for fewer than two years.
- Daily or hourly payments: One month in the case of completion of five or more years of employment, one week upon the completion of six months to two years of employment, 15 days in the case of completion of two to five years of employment, and one day in the case of fewer than six months of employment.
To ensure your expansion endeavors adhere to the laws regarding probation and termination in Malawi, talk to Skuad experts and book a demo.
EOR Solution in Malawi
Malawi Employer of Record (Malawi EOR) solution makes it faster and hassle-free for businesses to expand into Malawi. Leveraging the EOR route ensures effortless and compliant processing of all employment responsibilities including payroll that too without establishing any entity. Skuad can help you manage employment contracts, monthly payroll, taxation, work permits, etc. in Malawi for your employees. Learn More about the EOR Solution in Malawi in detail.
Types of Visas in Malawi
|Type of Visa
||Tourist Visa is strictly issued to those people who intend to enter Malawi for visits.
||Official Visa is issued to a person holding either a service passport or an official passport on an official purpose/business visit to Malawi.
||Transit Visa is strictly issued to those people who intend to transit via Malawi within 7 days.
||A diplomatic Visa is issued to such a person who holds a diplomatic passport for an official mission or visit to Malawi.
Documents Required for Visa
- Valid passport (Not less than six months of validity)
- Visa Application form duly filled and signed.
- Passport photos (2)
- Covering letter
- Air Itinerary/ticket
- Three months latest bank statements
- Confirmed Hotel booking
- Yellow Fever Certificate
|Work Permit Category
|Temporary Employment Permit (TEP)
A TEP is granted for temporary work, voluntary work, and working visits.
Anyone who intends to obtain a work permit in Malawi can apply for a TEP. The cost is USD 500, and additionally, USD 100 as the processing fee.
|Employment Permit (EP): Working under contract
An EP must be applied for by the employer organization before an employee arrives in Malawi. The purpose of an EP is to demonstrate that a specific job cannot be performed by a citizen or local in Malawi. The validity of EP is two years, and it allows unlimited travel within and outside of the country. An EP is extendable.
The EP application cost is USD 2,000; it costs USD 1,000 if an employee intends to work for an NGO. Additionally, a processing fee of USD 100 is required.
|Business Residence Permit (BRP)
||A BRP is meant for those who want to start their own business and live in Malawi. It requires investing a minimum of USD 50,000. A BRP is valid for five years and comes without any travel restriction. The cost to apply for a BRP is USD 7,500, plus a processing fee of USD 100.
|Permanent Residence Permit (PRP)
||Those who have lived on BRPs or TEPs in Malawi for a minimum of seven consecutive years are eligible for a PRP. However, once you receive a PRP, you cannot reside outside Malawi for more than one consecutive year. PRP grants all the rights to its holder that can be enjoyed by someone with a Malawian passport except for the right to vote. The cost to apply for a PRP is USD 10,000, plus a processing fee of USD 100.
Validity and Renewal
Work permit Malawi is valid for two years when it is first issued. The minimum validity is for six months. However, employees can opt for TEP renewal twice by submitting a renewal application along with supporting documents. These all documents together must be sent to the Regional Immigration Office three months before the expiry of your work permit.
Malawi Work Permit for Foreigners
Malawi demands all foreign nationals possess a passport valid for a minimum of six months past their proposed departure when entering the country. However, not all passport-holders require to possess a visa; the visa is exempted for the citizens of specific countries such as the US and Japan.
Document Requirements to Acquire a Work Permit in Malawi
The following documents are required to obtain a work permit in Malawi
- Valid passport
- Detailed cover letter
- Employment contract
- Curriculum vitae (CV)
- Advertisement for the job vacancy
- Academic qualifications
- Two passport-size photos
- Airplane itinerary/tickets
- Confirmed hotel booking
- Bank statements from the last three months
- Yellow fever vaccine proof if entering from a high-risk country
To expedite your expansion in Malawi, book a demo with Skuad experts today
Payroll & Taxes in Malawi
Payroll in Malawi
To set up payroll and manage taxation in Malawi, you need to gain familiarity with the rules that vary from one category to the other. The first thing you need to take a call on is whether you want to employ locals or foreign professionals.
As a foreign company, you require clarity on countless legal stipulations. For instance, local taxation laws in Malawi include business tax, income tax, withholding tax, social security costs, and compensation insurance. There are three ways of incorporating in Malawi.
- By establishing an in-house team to manage the payroll.
- Through the services of a reputed local payroll organization that will not make the management simpler but also ensure foolproof compliance with the Malawi employment laws.
- By outsourcing payroll to a global hiring service such as Skuad.
Payroll Outsourcing in Malawi
Employment laws in Malawi require pursuing utmost attention to detail regarding interpreting local best employment practices. If you aim to leverage the best of the Malawi business opportunities without experiencing the burden of establishing a subsidiary or a foreign branch office, you should rely on a global EOR firm such as Skuad. Skuad’s integrated, tech-enabled global HR platform is your one-stop solution for hiring, payroll, and compliance.
Taxes in Malawi
In Malawi, taxation-related legislation falls under the Taxation Act.
As per Section 11 (Taxation Act) income is defined as “the total amount in cash or otherwise, including any capital gain, received by or accrued to a person in any year or period of assessment from a source within or deemed to be within Malawi. The taxpayer’s assessable income excludes any amount exempt from tax under this Act.”
Section 27 of the Malawi Taxation Act limits income in Malawi to the following
- Remuneration for work performed or services rendered in Malawi.
- Remuneration for work performed or services rendered either outside of or in Malawi where the remuneration amount may be declared as expenditure that is tax-deductible by a permanent establishment (PE) in Malawi.
- Amounts claimed, claimable, or incurred in connection with a PE in Malawi.
- Realized exchange losses and gains in connection with a PE in Malawi or foreign exchange liabilities and assets held in Malawi.
- Capital losses and gains realized regarding a tangible property situated in Malawi and interests in firms incorporated in Malawi.
- Interest that is not levied on a loan by a lender to another person is also deemed to be income accrued to the lender. The attributed interest on a home country loan is charged at the current bank interest plus 5%. On the other hand, the foreign debt is levied at the current London Interbank Offered Rate (LIBOR) plus 5%.
Summary of Tax Rates
||Income Tax Rate (%)
|Locally incorporated companies
|Branches of companies that are not incorporated in Malawi
|Companies in Export Processing Zones (EPZs)
|Companies in priority industries for a period not exceeding 10 years
|In all other cases for companies incorporated in Malawi
|In all other cases for Malawi branches of external companies
- In the context of a mining company, mineral royalty is levied as a separate tax as mentioned in the regulations and is considered a tax-deductible expense.
- Power generation and agricultural produce processing are recognized as priority industries.
To find out more about how Skuad can assist you to set up payroll and manage taxation in Malawi, talk to Skuad experts and book a demo.
Incorporation: How to Set Up a Subsidiary in Malawi
Incorporating a holding company in Malawi is crucial to accessing business opportunities. Getting a subsidiary registered in Malawi makes the entire process of hiring employees, establishing payroll, and accessing compensation and benefits hassle-free. However, without the help of a proficient EOR organization, the procedure and formalities involved in registering a subsidiary might delay your expansion plans in Malawi.
Incorporating a Holding Company in Malawi
Establishing a subsidiary is the first step to expand in Malawi. An organization requires considering various aspects that can impact the subsidiary establishment process. They include laws and regulations as per the different countries and the types of subsidiaries.
A limited liability company (LLC) is one of the most popular subsidiary options in Malawi that enables foreign companies to operate like native companies. For incorporating a holding company in Malawi, you must complete the following steps.
- Register offline or online.
- Select a unique organization name.
- Submit an application related to the certificate of incorporation.
- Registering for income, Pay As You Earn (PAYE), and fringe benefits taxes.
- Get a company seal.
- Acquire a license from the city assembly.
- Register your workplace with the Welfare Department, Occupational Health and Safety.
- Obtain a certificate post the workplace inspection conducted by officials.
Subsidiary Laws in Malawi
Subsidiary laws in Malawi differ based on the type of subsidiary format. For instance, for an LLC, a minimum of two people are required to associate. The required documents include the following.
- Name and contact of company owners involved in the LLC
- Nationality of company owner(s)
- The physical address of LLC
- Number of employees
- Share capital
It is important to keep these documents safe at the LLC office. Also, before getting a subsidiary registered, it is crucial to consider possible expenditures, including lawyer fees, fees to the government, and the company’s articles of association.
Benefits of Establishing a Subsidiary
Many companies do not opt for establishing a subsidiary as they fail to realize the array of benefits that come with it. From obtaining a loan to hiring employees and gaining access to resources and technology, establishing a subsidiary imparts ease of doing business within Malawi by enhanced operational efficiency.
Trying to establish a subsidiary on your own is an extremely time-consuming process. With the help of a resourceful EOR service such as Skuad’s Malawi EOR solution, you can establish a subsidiary without experiencing troubles and delays related to compliance. To avail yourself of Skuad’s bespoke EOR solution for Malawi, get in touch with us and learn more.
Professional Employer Organization (PEO)
A professional employer organization (PEO) collaborates with medium-and small-sized organizations to provide HR services. A PEO handles various HR services such as recruitment, payroll, training, and other HR tasks. An EOR also provides similar HR services; however, the difference lies in the arrangement or association between the outsourcing company and the business.
A PEO acts as your co-employer, whereas an EOR service acts as the legal employer of your employees. The latter assumes all the responsibilities and liabilities of your remote team. You can outsource a specific HR function or end-to-end activities.
Further, an EOR service allows you to expand your workforce without setting up a business entity. It handles payroll funding, worker’s compensation, and unemployment claims and reports. It files taxes under its file ID number.
Skuad helps organizations expand with its EOR solution. Its unified employment platform handles all HR-related services with efficiency and dedication. We strive to understand your needs and end-goal to help grow and expand your business. Our bespoke services will save you precious time and money. Book a demo with Skuad experts to know more about our EOR solution.
Conclusion: What Gives Skuad’s Malawi Solutions an Edge?
When you plan to expand in Malawi, teaming up with a resourceful global EOR service offers a multitude of benefits. Skuad is one of the foremost EOR service providers in the world, catering to more than 150 countries.
Outsourcing with Skuad helps you provide a positive hiring experience to your employees right from the beginning, saving you time, labor, and resources. As a seasoned EOR solution provider for Malawi, we make sure to handle all employment compliances with utmost professionalism. We can handle recruitment, hiring, onboarding, payroll, taxation, visas, work permits, probation, termination, and all other HR tasks for you.
Partner with Skaud experts today to expedite your expansion endeavors in Malawi. Book a demo with us to know more.