Introduction to Payroll in Zambia
The Republic of Zambia may be an attractive outsourcing destination, but it presents significant compliance challenges to growing businesses. Running payroll in Zambia requires strict adherence to the country’s local labor laws, and noncompliance not only hurts your relationship with your employees, but also puts you at risk of costly legal fees and harsh penalties. What you need is in-depth local legal expertise and a software platform that can quickly, compliantly get you running payroll without slowing down your growth.
Skuad extends the in-country legal expertise to successfully comply with the country’s local labor laws as well as the platform to help you execute payroll seamlessly, from calculating employee wages to following tax legislation to properly executing benefits and deductions:
- Income, regional, or corporate taxes
- Social and health insurance, unemployment benefits, and pension
- Different types of leaves and holiday compensation
- Other employee deductions
Payroll Process in Zambia
Zambia’s local labor laws are comprehensive and cover nearly every crucial aspect of employment practices, including payroll.
The pre-payroll phase is essentially the due diligence stage where inputs are collected and validated, and processes and policies are standardized and prepared for implementation.
Setting up the organization
Different companies will have distinct standards, values, and approaches to every aspect of HR, including payroll. You’ll need to standardize and prep policies for these crucial areas of business, among others:
Consisting of registered business numbers and other forms of identification, your business profile will be used for compliance with regard to submission of required documents to the appropriate government bodies.
Ideally, every work location should have its own unique policies, even if they’re all within the same country.
The types of leave and pay rates they require will naturally impact wage calculation, so it’s crucial to standardize leave policy in the pre-payroll phase.
Attendance policy is the bedrock of salary computation and needs to take into consideration partial or increased rates (e.g., for reduced hours or overtime). It also needs to integrate any tools used for attendance tracking, such as digital time sheets. Depending on other internal policies, performance reviews and trackers may impact rates through real-time bonuses, so those may also need to be incorporated.
Zambia’s local employment legislation includes statutory components not only for general HR functions, but also payroll processing. You need to make sure all these mandatory requirements are satisfied while also implementing internal standardization of processes and policies.
The components that comprise a compensation package include:
- Local statutory guidelines
- Internal company policy
- Industry standards and market rates
- Supplementary additions and structure
Employees in Zambia are often paid monthly. It’s best to try to incorporate local employment practices when formulating internal policies for aspects like pay schedule.
Much of the data and validations required in the pre-payroll phase concern employee information. You’ll need to standardize a process for collecting the input you require for payroll for seamless processing. This may include:
- Approvals from direct-line supervisors
- Supporting documentation for sick leave
Payroll Calculation Phase
Once all processes and policies are standardized in the pre-payroll phase and all necessary inputs are collected and validated, you move on to the second stage, which is dedicated to wage calculation. Software can automate this stage to a great degree if it’s properly calibrated to the due diligence performed in pre-payroll.
Salary payments go out once you send an advice to your bank or payment processor after calculating your employees’ wages. Software features like integrated direct deposit can make this part of post-payroll more cost effective.
Internal payroll accounting occurs after payout to ensure all significant business expenses are tracked.
Payroll reporting and compliance
External reporting goes out after every pay period to meet reporting requirements by local governance.
Book a demo with Skuad so you can see for yourself how you can make payroll in Zambia work.
Payroll Processing in Zambia
Outsourcing payroll in Zambia is a highly recommended strategy for companies looking to quickly start operations in the country. For many companies, the focus shifts from trying to mount in-house resources to satisfy local labor regulations to finding a payroll processing partner that can do so.
Payroll Processing Company in Zambia
Running payroll in Zambia requires a deep and genuine understanding of its local labor laws to guarantee compliance, and for many businesses trying to scale internationally, this presents a critical challenge in outsourcing remote employees in the country. This is where a global HR and payroll platform like Skuad can help with in-country expertise that guarantees compliance and the software infrastructure to launch payroll operations nearly instantaneously.
Payroll Management in Zambia
Skuad also offers payroll management under the same package for Zambia. Payroll management is the records keeping and back office support functions related to payroll, which requires significant documentation.
Payroll Compliance in Zambia
Aside from Zambia’s constitution and common law, a few other key Acts and Laws form the basis of labor law in the country. These include:
- The Employment Code Act No. 3 of 2019
- The Employment Act, 1965
- Special Provisions to the Employment Act, 1966
- The Minimum Wages and Conditions of Employment Act (with amendments), 1982
Furthermore, Zambia has been an International Labor Organization (ILO) member state since 1964, though the nation has yet to ratify many of ILO’s conventions. Skuad ensures that your processes comply with every relevant regulation in Zambia so you can run payroll stress free.
Payroll Components in Zambia
You need to develop a good grasp of the components of payroll in Zambia to successfully maintain compliance with the regulations that guide them. Payroll can generally be broken down into the base pay, any bonuses and benefits, and deductions and contributions. Zambia’s exchange rate currently stands at $1 for every ZMK 17.03.
Zambia’s minimum wages are categorized based on type of employment, ranging from 1,698.60 Zambian kwacha or ZMK ($99.74) per month to ZMK 3,151.35 ($185.05) per month for employees in the higher earning categories. These minimums include the base pay and allowances.
Zambia’s working hours are governed by the Employment Code Act of 2019, which caps the work week at 48 hours spread between eight-hour workdays.
Overtime work rendered is often paid at 150% the base rate, and never below 125%. In Zambia, overtime is tricky due to the country not clearly defining relevant regulations, which could lead to abuse. To date, Zambia has not ratified ILO conventions pertaining to overtime.
Social security contributions in Zambia currently stand at 10% of an employees salary, split evenly between employer and employee.
Sick leave credits are earned based on contract length, and employees are entitled to between 52 days to six months of paid sick leave. During sick leave, employers pay the first 26 days to three months of leave in full, depending on THE contract, and then provide partial payments afterward.
New mothers are entitled to 14 weeks of paid maternity leave, granted that they’ve been employed for two years, or two years have passed since their last maternity leave. New fathers who have been employed for over a year are entitled to five days of paternity leave that they need to take seven days after childbirth.
Employees who have been in service for six months are entitled to two days of paid holiday leave for every month of tenure. The public holidays in Zambia are below:
- 1 Jan - New Year's Day
- 8 Mar - International Women's Day
- 12 Mar - Youth Day
- 15 Apr - Good Friday
- 16 Apr - Easter Saturday
- 18 Apr - Easter Monday
- 28 Apr - Kenneth Kaunda Birthday
- 1 May - Labor Day
- 2 May - Labor Day Holiday
- 25 May - Africa Day
- 4 Jul - Heroes' Day
- 5 Jul - Unity Day
- 1 Aug - Farmers' Day
- 18 Oct - Prayer Day
- 24 Oct - Independence Day
- 25 Dec - Christmas Day
- 26 Dec - Christmas Holiday
Zambia’s tax system levies tax on personal income using progressive brackets based on earnings:
- Below ZMK 54,000: 0%
- From ZMK 54,001 to 57,600: 25%
- From ZMK 57,601 to 82,800: 30%
- Over ZMK 82,801: 37.5%
You also need to be familiar with additional legislation that can impact payroll, such as probation periods and termination. Probation periods may not exceed three months in Zambia. In terms of termination, employers may terminate employees given due notice based on contract duration, or choose to offer pay in lieu of a notice:
- 24 hour notice for employment of less than a week
- 14 days’ notice for daily contracts where wages are payable once a month
- 30 days’ notice for contracts of more than a week
Need a comprehensive understanding of payroll in Zambia? Book a demo with Skuad’s in-country experts and discuss what you need.
Outsourcing Zambia Payroll Processing
A company looking to scale aggressively can’t be slowed down by compliance concerns every time it needs to hire or pay remote workers in a new location. Skuad is a leading global HR and payroll platform that can help companies maintain their rates of growth by guaranteeing compliance to local labor laws in their places of business.
Skuad’s in-country expertise can help you run payroll in Zambia compliantly and seamlessly so you can focus on other important areas of business. Better yet, Skuad can extend its HR management capabilities in Zambia and other parts of the world to help you build globally distributed teams.
Ready to run payroll in Zambia? Request a demo from Skuad and plot your path to international growth today.