Hire Employees in Malawi: Laws, Payroll & Permits

Introduction

Foreign companies looking to hire in Malawi must comply with the Employment Act (2000), withhold income tax under Pay As You Earn (PAYE), and enrol every employee in a registered pension fund under the Pension Act 2023. Engagement is possible through a registered local entity, an Employer of Record (EOR), or an Agent of Record (AOR) for contractors. Foreign nationals require a Temporary Employment Permit (TEP) before starting work.

What distinguishes Malawi from most markets is that several compliance failures carry criminal liability. Pension non-enrollment can result in fines up to K150,000,000 and ten years' imprisonment. Employing a foreign national without a valid TEP is a criminal offence under the Immigration Act. Termination during maternity leave carries a five-year prison term.

This guide covers hiring routes, work permit requirements, employment contract obligations, payroll and tax rules, leave entitlements, compliance risks, and the cost of hiring in Malawi.

How to hire in Malawi?

Foreign companies have three main ways to engage workers in Malawi: Set up a local entity, partner with an Employer of Record (EOR), or use an Agent of Record (AOR) for independent contractors. The right route depends on the nature of the engagement and whether you plan a long-term presence in the country.

How to hire by setting up a local entity?

A local entity gives you direct control of employment and is the appropriate structure for companies building a long-term presence in Malawi. Once registered, you hire employees directly, manage payroll, and comply with the Employment Act. The process requires proper management resources and is more time-intensive than other routes.

How to hire employees via EOR?

An EOR lets you hire employees in Malawi without registering a local entity. The EOR acts as the legal employer on record, supporting employment contracts, payroll, statutory contributions, and local compliance. You retain day-to-day management of the employee's work. This is the faster route for market-entry hires or smaller distributed teams.

How to hire contractors via AOR?

An AOR is the appropriate route when engaging independent contractors rather than employees. The AOR helps contractors with onboarding, payments, classification, and compliance with local labour law. This works well for project-based or specialist engagements where full employment is not required.

What does the employment contract need to include?

Under the Employment Act, contracts in Malawi take one of three forms: Indefinite, Fixed-term, and Task-based.

Regardless of the type, every employer with five or more employees must provide each new hire with a written statement of employment particulars within one month of the employee reporting for work.

The written statement must cover:

• Names of the employee and the employer
• Date of commencement of the contract
• Rate of remuneration and the method of calculating remuneration
• Intervals at which remuneration is paid
• Nature of the work to be performed
• Normal hours of work
• Any provisions for termination of the contract
• Any disciplinary rules applicable to the employee

For skilled workers, a probationary period of up to twelve months may be agreed. Either party can terminate during probation without notice.

How do work permits work for foreign hires?

Any foreign national requires a Temporary Employment Permit (TEP) before starting work in Malawi. Working without one is a criminal offence under the Immigration Act. The employer applies for the TEP on behalf of the prospective employee through the Department of Immigration and Citizenship Services.

Key requirements and conditions:

• The post must be advertised locally first, and the employer must show that no suitably qualified Malawian is available
• The employer must identify a qualified Malawian understudy who will eventually take over the role
• The TEP applicant must remain outside Malawi until the application is approved
• A TEP is valid for not less than six months or more than two years and can be renewed twice

Hiring in Malawi means deciding upfront whether you need full-time employees or independent contractors, since the route shapes which compliance obligations apply. Full-time hires require a written employment statement within one month and, for foreign nationals, a Temporary Employment Permit (TEP) before work begins. Setting up a local entity to manage this adds time to the hiring timeline before your first employee starts.

Skuad supports both hiring models from a single platform:

EOR for full-time employees

• Acts as the legal employer across 160+ countries, so your company can hire in Malawi without registering a local entity
• Supports employment contract generation aligned with local labor laws and statutory requirements across supported markets
• Facilitates statutory contribution workflows covering applicable social insurance and pension obligations
• Supports payroll processing in 70+ currencies with accurate tax withholding and statutory deductions
• Helps administer statutory leave entitlements and benefits in line with local requirements
• Assists with termination and offboarding, including notice periods and severance calculations as required locally

Contractor management (AOR)

• Helps onboard contractors with locally compliant agreements that reduce misclassification exposure
• Supports invoice generation, approval workflows, and payment processing
• Helps flag classification risk before it becomes a compliance issue with built-in worker classification checks
• Facilitates multi-currency payouts across 70+ currencies
• Helps manage contractor records, contracts, and payment history from a single dashboard alongside full-time employees

What are the employment laws in Malawi?

Malawi's employment framework is anchored in the Employment Act (2000), alongside the Labour Relations Act (1996), the Occupational Safety, Health and Welfare Act (1997), and the Workers Compensation Act (2000). The Employment Act sets the baseline for hours, overtime, leave, termination, and severance. The Ministry of Labour oversees compliance.

Standard working hours

No employer shall require or permit any employee to work for more than forty-eight hours during any week, excluding overtime. Employees are also entitled to at least twenty-four consecutive hours of rest after no more than six consecutive working days.

How is overtime compensated?

The Employment Act defines three classes of overtime, each with a statutory minimum rate:

How does termination work in Malawi?

Under the Employment Act, no employer may terminate an employee unless there is a valid reason connected with the employee's capacity, conduct, or the operational requirements of the business.

For reasons related to conduct or capacity, the employee must be allowed to defend themselves before termination. Immediate summary dismissal without notice is permitted for serious misconduct, habitual neglect, wilful disobedience, and unauthorised absence.

Notice periods depend on how frequently the employee is paid and their length of service:

If the employer does not give the required notice, wages must be paid instead of the notice period.

Severance is owed on redundancy, retrenchment, economic difficulties, and unfair dismissal and not in other circumstances. The employee must have completed at least one year of service:

What anti-discrimination protections apply?

No person shall discriminate against any employee or prospective employee in recruitment, training, promotion, terms and conditions, or termination on the grounds of:

• Race, colour, sex, language, religion, or political opinion
• Nationality, ethnic or social origin, disability, or property
• Birth, marital or other status, or family responsibilities

Where a violation is alleged, the burden of proof falls on the employer to show no discrimination occurred.

What are the payroll and tax rules in Malawi?

As an employer in Malawi, three obligations sit on top of every salary: Income tax withheld under Pay As You Earn (PAYE), mandatory pension contributions, and a life insurance requirement for each employee.

PAYE income tax rates

Malawi operates a progressive PAYE system. Employers deduct income tax from each employee's monthly salary and remit it to the Malawi Revenue Authority (MRA). The following rates apply, effective 30 December 2025:

These rates were introduced through the Taxation (Amendment) Act, enacted under the 2025/26 Mid-Year Budget Review. The 25% band was removed, and the top rate of 40% was reintroduced. Employers must register with the MRA as a PAYE withholding agent and remit deductions on the prescribed monthly schedule.

Mandatory pension contributions

As per the Pension Act 2023, every employer must enrol all employees in a registered pension fund and contribute at the following minimum rates on pensionable emoluments:

• Employer contributes 10% of pensionable emoluments
• Employee contributes 5% of pensionable emoluments

Contributions must be paid to the pension fund trustee no later than fourteen days after the end of the month in which the liability arose. Late remittance attracts penalty interest.

In addition to pension contributions, Section 14 requires every employer to maintain a life insurance policy for each employee, with a minimum cover equivalent to the employee's annual pensionable emoluments.

When is payroll paid in Malawi?

Under the Employment Act, wages must be paid at least once a month for monthly-paid employees, and at least once a week or fortnight for employees paid on an hourly, daily, or weekly basis. Monthly payroll is the standard for salaried employees. PAYE and pension deductions are remitted to the relevant authorities on the prescribed monthly schedules.

Running payroll in Malawi means withholding PAYE and remitting to the Malawi Revenue Authority on a monthly schedule, contributing 10% of pensionable emoluments to a registered pension fund within 14 days of month-end, and maintaining a life insurance policy for each employee. Each obligation runs to a separate authority on its own deadline.

Skuad's Global Payroll platform helps process payroll from a single system, supporting statutory contribution workflows, payroll processing in 70+ currencies, and tax withholding across supported markets, so your team isn't tracking separate authority deadlines manually.

For benchmarking salaries across roles before making an offer, the Skuad Salary Insights tool helps in understanding compensation data by role and seniority level across supported markets.

Explore salary benchmarks.

What are the leave benefits in Malawi?

All leave entitlements for private sector employees in Malawi are set by the Employment Act. There is no separate leave legislation, and all obligations below flow from the same statute.

Points worth noting for payroll and HR setup:

• Annual leave must be taken within six months of the entitlement date. Leave that accrues but is not taken before termination must be paid out in cash.
• Sick leave requires a certificate from a registered medical practitioner. The employer is not obliged to grant sick leave without one.
• Maternity leave does not interrupt seniority, contractual rights, or benefit accrual. The employee's period of employment continues uninterrupted during the eight weeks.

How many public holidays are there in Malawi?

Malawi observes 13 public holiday days in 2026 across 12 named holidays. All are paid days off. Where a holiday falls on a Sunday, the following Monday is observed.

What are the compliance risks of hiring in Malawi?

Malawi's labor framework is enforced by the Ministry of Labour, the Industrial Relations Court, and the Malawi Revenue Authority (MRA). The risks below carry criminal liability, court-ordered reinstatement, or significant financial penalties, all of which apply equally to foreign employers operating in Malawi.

Key compliance risks and their consequences:

Of all the risks below, pension non-compliance carries by far the most severe consequences.

Malawi's compliance framework carries serious consequences across all its primary risk areas. Employing a foreign national without a valid TEP is a criminal offence under the Immigration Act. Terminating an employee during maternity leave carries a fine and five years' imprisonment. These are not warning-based systems, and the penalties apply from the point of the violation.

Skuad's Shield helps distributed teams stay aligned with statutory obligations across supported markets, supporting compliance monitoring and documentation tracking from a single platform, helping teams stay ahead of permit and enrollment deadlines that carry no grace period.

How much does it cost to hire in Malawi?

The total cost of hiring in Malawi is the employee's salary plus the mandatory employer pension contribution and life insurance obligation covered in the payroll section above. Use the minimum wage figures below as your floor when building a hiring budget.

Minimum wage in Malawi

Malawi reviews minimum wages annually via the government gazette. The following rates apply under the Employment (Minimum Wages) (Amendment) Order, 2025, effective June 1, 2025:

The actual hire cost depends on the role, compensation level, and applicable pension contribution rates at that salary. Skuad's hiring cost calculator helps you model the full employer cost before you make an offer.

Estimate the hire cost

Customer story: How RemoteLock hired 26 Tech professionals across six countries with Skuad?

RemoteLock, an access control software company, needed to hire full-time and contract tech professionals across six countries without registering local entities in each market. Using Skuad's EOR platform and contractor management tools, the company onboarded 26 professionals, covering compliant employment agreements, payroll processing in 70+ currencies, and misclassification protection across supported markets.

Partnering with Skuad has transformed our international hiring and onboarding processes. Their streamlined approach has enabled our tech team to scale effortlessly and efficiently.

- Jon Santavy, Managing Partner, RemoteLock

Read the full case study

Planning to build a team in Malawi?

With a clear picture of Malawi's hiring framework, the focus now shifts to picking the right structure. The route you choose, local entity, AOR for contractors, or EOR for full-time employees, shapes how much compliance responsibility your team carries and how fast you can get someone onboarded. Entity setup gives you direct control but adds months of lead time before the first contract is signed.

Regardless of the route, certain obligations are fixed. PAYE withholding goes to the MRA on a monthly schedule, pension contributions under the Pension Act must reach the fund trustee within 14 days of the month-end, and any foreign national needs a valid TEP before starting work. None of these has a grace period.

For teams looking to bring all of this under one system, Skuad supports hiring and workforce management across 160+ countries without requiring a local entity in each market.

Book a demo to see how Skuad supports your first Malawi hire without entity setup.

FAQs

1. Can a foreign company hire in Malawi without setting up a local entity?

A foreign company can hire in Malawi without a local entity by using an Employer of Record (EOR). The EOR acts as the legal employer, processes payroll, withholds Pay As You Earn (PAYE) tax, enrols employees in a registered pension fund, and helps in local compliance, while you manage the employee's work.

2. Do foreign nationals need a work permit to work in Malawi?

Every foreign national needs a Temporary Employment Permit (TEP) before starting work in Malawi, and working without one is a criminal offence under the Immigration Act. The employer applies through the Department of Immigration and Citizenship Services, and the applicant must remain outside Malawi until the permit is approved.

3. What are the mandatory employer costs of hiring in Malawi?

On top of gross salary, the employer contributes a minimum of 10% of pensionable emoluments to a registered pension fund, matched by a 5% employee deduction. The employer must also maintain a life insurance policy for each employee, with cover at least equal to the employee's annual pensionable emoluments.

4. What happens if a contractor is misclassified in Malawi?

Malawi enforces worker classification under the Employment Act. If an employer uses a fixed-term contract for a role tied to the permanent activity of the business, the contract is deemed a contract for an unspecified period by operation of law, bringing full employee entitlements such as notice and severance.

5. What are the most serious compliance risks when hiring in Malawi?

Several failures carry criminal liability beyond fines. Failing to enrol employees in a pension fund or remit contributions can bring fines and imprisonment under the Pension Act. Employing a foreign national without a Temporary Employment Permit is a criminal offence, and dismissing an employee on maternity leave carries imprisonment.

6. How long does it take to onboard a hire in Malawi?

Onboarding time depends on the hiring route and the worker. Setting up a local entity adds months before the first contract. Through an Employer of Record that holds the registrations, a local hire can start in days, while a foreign national still waits for Temporary Employment Permit approval.