Employer of Record in Zambia
Understanding the Government’s financial policies and labor laws is the first and most crucial step while expanding business in a foreign country. It is critical to understand regulations on business entities set up, employment contracts, recruitment, payroll, working hours, leaves, and termination. Even a tiny mistake can cause significant risk and threat to the business prospects; however, an effective and trusted EOR solution could make the global business expansion hassle-free. Skuad’s EOR services take care of hiring employees, managing their payroll and taxes while complying with the local employment laws. Learn more about how Skuad’s Global HR platform can help to expand your business in Zambia.
Zambia at a Glance
Official Name: Republic of Zambia
Location: Southern Africa
Population: 17.86 Million (2019)
Currency: Zambian kwacha (ZMW)
Capital city: Lusaka
Languages: English (Official), local languages include Bemba, Lozi, Kaonde, Lunda, Luvale, Tonga, and Nyanja.
GDP: 23.31 Billion USD (2019)
Employment in Zambia
What You Must Know Before Employing in Zambia
In 2019, Zambia enacted some key changes in the Employment Code Act to enhance employee rights protection. Two legislation governs employment relationships in Zambia, the Employment Code Act, and the Industrial and Labour relations Act. The Industrial Relations Court, a fast-track court, hears and resolves industrial relations disputes promptly.
To set up a local entity in Zambia, a company must be aware of all aspects of Zambia’s employment regulations. To minimize and mitigate the challenges that may arise for companies looking to set up a local office, it is advisable to partner with a local payroll provider like Skuad, who is well aware of Zambia’s labor laws for both local and foreign employees.
Let us understand the essential aspects of Zambia’s employment laws.
Contractors Vs. Full-Time Employees
The decision to keep contractors versus hiring full-time employees is of utmost importance while expanding globally. As per Zambia’s labor law, both short-term and long-term employment contracts are applicable. Due to the enhanced protection of employee rights in Zambia, it is difficult for employers to sustain contracts of employment for full-time employees. Most employers prefer to execute short-term contracts or part-time work to cut back on the costs.
Learn more from Skuad experts about the nitty-gritty involved in hiring short-term contractors or full-time employees.
Hiring in Zambia
Companies looking to hire talent in Zambia must be familiar with Zambia’s Labor Law and dispute jurisdictions. Sourcing talent includes various steps like posting open positions on digital job search websites, tapping into your local network, or outsourcing recruitment services. Before beginning the staffing process, ensure you understand your legal obligations as an employer. People have a right to decent employment, and they should not be discriminated against on grounds including color, nationality, and health. The employment contract must be clearly defined and understood by employees to avoid future issues.
Companies looking to hire knowledge workers tend to hire contractors and often use the Job Search portals. The two most popular job portals in Zambia are:
- Jobweb Zambia
The job search portals can undoubtedly help in finding talent available in Zambia. However, you still need to manage the overall hiring, onboarding, and employee life cycle process. Hiring in Zambia can be complex, especially when you don’t have an existing presence. Skuad as an Employer or Record in Zambia can help hire in Zambia without setting up a legal entity, eliminating most legal and financial risks.
Probation & Termination of Service
Zambia’s Employment Code Act of 2019 prescribes a probationary period for a maximum term of 3 months to determine a worker’s suitability for appointment. The probationary period can be extended for three months, making the total duration six months. Both employee and employer may terminate the employment contract after serving 24-hour notice.
A worker who is re-hired by the same employer for the same job within two years from the contract termination date is not required to go through probation again, provided that the termination was not performance-related.
Notice Period – The notice to terminate a long-term contract of employment must be given in writing. The minimum duration of notice specified as per Zambia’s Employment Act are as follows:
- Twenty-four hours for a contract of employment for less than 30 days.
- Fourteen days notice for a contract of employment ranging between one to three months.
- Thirty days notice for a contract of employment of more than three months.
Severance Pay – The employee is entitled to severance pay in the following cases –
- Termination of the employment contract of a fixed duration - at least 25% of the employee’s basic pay.
- Termination of employment due to redundancy - 2 months’ basic pay for each completed year of service.
- Employee’s death - 2 months’ basic pay for each completed year of service.
- Termination on medical grounds: at least three months’ basic pay for each completed year of service.
To learn more about the probation period and termination of employment in Uruguay - Connect with Skuad Experts.
EOR Solution In Zambia
Establishing a successful business in a different country requires much expertise, and it is tough to know the various compliance policies of that country. Skuad is the leading Employer of Record (EOR) solutions provider in Zambia. Skuad partners with organizations that want to expand their global operations. Skuad experts hire, onboard, and manage globally distributed teams while ensuring compliance with local regulations in over 150 countries worldwide.
Zambia Employer of Record (Zambia EOR) solution makes it easier and faster for businesses to expand into Zambia. EOR ensures smooth and compliant payroll processing and other employment responsibilities, including contracts, work permits, and taxation in Zambia, without setting up a local entity. Talk to us and build a global team of efficient workers now.
Types of Visas in Zambia
When you decide to expand into Zambia, you also need to determine the path you want to take if you wish to build an in-house team or accept an EOR to manage payroll and employee lifecycle. It can be intimidating to keep track of all compliance risks when you’re doing business in Zambia. One critical task is making sure all of your employees have the necessary Zambian work visas and permits.
Work Permits in Zambia
To live and work in Zambia, foreigners must obtain a work permit, which is issued based on valid employment. Zambia offers varied types of work permits depending on the employment contract duration. An applicant can apply for a business visa at the Zambian embassy in their home country and then apply for a work permit in Zambia. For long-term work permits, the applicant needs first to get the work permit approved and then apply for a visa to collect the permit. The Chief Immigration Officer in Zambia issues the work permit and also decides the length of its validity. Learn more about types of visas and work permits in Zambia with Skuad’s global HR solutions.
Payroll and Taxes in Zambia
To set up payroll and manage taxation in Zambia, you need to be aware of the rules, which vary from one category to another. The first and the foremost thing you must consider is whether you want to employ foreign professionals or locals. As a foreign company, you must be aware and adhere to the local tax laws like income tax, business tax, withholding tax, employee compensation insurance, and social security costs.
There are three ways of doing it –
- Set up an in-house team to manage the payroll in Zambia - Setting up an in-house team can involve hiring many HR and Payroll staff that can be very costly.
- Take services of a local payroll company in Zambia; the employer still needs to comply with employment laws.
- Payroll Outsourcing Zambia – Skuad can help make payroll management simpler and ensure complete compliance with Zambian employment laws.
Taxes Applicable In Zambia
Zambia has a progressive income tax rate. The employee’s income tax rate depends on how much money they earn. Corporate income tax rates in Zambia vary depending on the industry. Let us take a look at various taxes applicable in Zambia.
Incorporation: How to Set Up a Subsidiary in Zambia?
Two key factors to keep in mind while setting up a subsidiary in Zambia are the location and business goals. Zambia has various subsidiary laws depending on the location of the entity. The main types of companies that can be incorporated under the Companies Act are public companies and private companies. Private companies can be any of the following:
- Unlimited liability companies.
- Limited liability companies.
- Companies limited by guarantee.
Private limited companies are common in Zambia’s business sector, mainly because the members’ liability is limited to the amount unpaid on their shares. In addition, tax is charged on the company’s income (unlike partners and sole traders who are subject to personal taxes). Public companies have the advantage of offering shares to the public and, therefore, can raise capital more quickly than private companies.
Steps Involved in Setting up Subsidiary in Zambia:
- Appointment of directors of the foreign company
- Appointment of at least one documentary agent
- Obtain the Certificate of Incorporation
- Submissions of the charter, statutes, regulations, memorandum, and articles
- Pay registration fees and establish an in-country bank account
- Obtain the Certificate of Registration
Setting up a Subsidiary in Zambia can be a complex process for a foreign company Skuad as an Employer of Record, has a team of lawyers, accountants, and consultants who can help handle the process with ease.
Professional Employer Organization (PEO)
A PEO (professional employer organization) is an organization that enters into a joint-employment relationship with an employer by leasing employees to the employer. It allows the PEO to share and manage employee-related responsibilities and liabilities. If the organization collaborates with a PEO, a company must establish a legal presence across every state or country of its existence. The best alternative for a PEO is having an Employer or Record. EOR can act as a partial workforce.
Skuad’s integrated platform acts as an EOR as well as a PEO. Skuad enables companies looking to expand in Zambia without the hassle of setting up a Legal Entity. Skuad helps manage workers’ compensation, payroll, unemployment claims and handles local laws and taxations.
We understand that expanding business across geographies is not an easy task. Skuad can help by providing a well-established global HR platform to hire, pay and manage employees without setting up a legal entity in Zambia. Talk To Skuad experts now to learn about essential aspects of global business expansion.