Payroll and Benefits Guide - Malawi

Malawi
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Currency

Malawian Kwacha (MWK)

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Capital

Lilongwe
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Employer Taxes

10.00%
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Date Format

dd/mm/yyyy
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Fiscal Year

1 July – 30 June

Fun Facts

Malawi is often called the “Warm Heart of Africa” due to the friendliness and hospitality of its people.

The Malawian kwacha (MWK) features colorful banknotes depicting various aspects of the country’s culture, wildlife, and landmarks.

Lake Malawi is the ninth largest lake in the world and is known for its crystal-clear waters, diverse marine life, and beautiful sandy beaches.

Malawi is known for its efforts in conservation and sustainable tourism.

Malawi is known for its tea production.

Malawi has a strong tradition of dance and music.

Malawi

Contributions

Employee Payroll Tax

Contribution TypeRate
National Pension Scheme5.00%

Employer Payroll Tax

Contribution TypeRate
National Pension Scheme10.00%

Payroll

Payroll Cycle

According to the Employment Act, an employer must pay an employee’s salary in the following ways:

In the event of an employee whose pay is fixed by the hour, day, or week, or determined based on a project basis, no less than once a week, or every two weeks.

In the event of an employee whose pay are fixed on a monthly or annual basis, no less than once a month.

13th Salary

The law makes no mention of thirteenth salary.

Work Hours and Week

The employment contract for each employee has certain working hours. In Malawi, a typical full-time workweek is no longer than 48 hours.

On a public holiday, ordinary working hours are compensated at double the regular wage rate.

Overtime

On rest days, extra hours are paid at a rate of 200.00% of the regular salary, and on public holidays, overtime hours are paid at a rate of 400.00% of the regular salary.

Instead of being paid, extra time worked throughout the working week or workdays is compensated with a day off.

Malawi

Leave

Paid Time Off

If an employee works a 5-day workweek, they are entitled to a minimum of 15 days, and if they work a 6-day workweek, they are entitled to a minimum of 18 days.

Public Holidays

There are twelve federal holidays. Weekend public holidays are changed to a weekday as an alternative day off.

Sick Days

Employees are entitled to at least four weeks of paid sick time after one year of employment and eight weeks of paid sick time annually.

Maternity Leave

Every three years, expectant workers are entitled to 8 weeks of paid maternity leave.

Paternity Leave

In Malawi, paternity leave is not mandated by law.

Parental Leave

In Malawi, parental leave is not mandated by law.

Termination

Termination Process

A fixed-term contract may be terminated by the employer for any of the following reasons: business, personal, or employee misbehavior. It necessitates notification and a justification for the termination in writing. When misbehavior is the cause, a warning must be provided and the employee is given the opportunity to defend their actions.

Notice Period

Contracts of employment and collective agreements may include clauses defining notice periods. Both the employer and the employee adhere to the notice periods specified in the collective agreement if they differ from the statutory notice periods.

The length of notice depends on how frequently the employee is scheduled to receive compensation.

  • The obligation is 30 days’ notice if the employee is paid on a monthly basis.
  • The notice period is 15 days for employees with less than five years of service and 30 days for those with more than five years of service if the employee is paid every two weeks.
  • The notice period is one week if the person has been paid monthly for less than two years, two weeks if they have worked for between two and five years, and one month if they have been there for more than five years.
  • If the employee is paid hourly or daily, the notice period is one day for those who have less than six months of service, one week for those who have between two and six years, 15 days for those who have between five and more years of service, and one month for those who have more than five years.

Severance Pay

Only those workers who have worked for their employer for at least a year and whose contract has been terminated unfairly or for economic reasons (such as layoffs) are entitled for severance compensation.

The amount of the severance payout is directly proportional to the total number of years of service:

  • 2 weeks of salary for every year of employment, from one to five years of service
  • 3 weeks of salary for each year of employment, between 6 and 10.
  • 4 weeks of salary for each year of service after 11 years

Probation Period

Probation Period

The probationary term in Malawi can run up to 12 months depending on the contract, however it usually lasts between 3 and 6 months.

Immigration

If you are a foreigner with a work offer in Malawi, you need a Temporary work Permit. The application for the permission must be made by the employer on the employee’s behalf.

The Policy Statement on the Employment of Expatriates contains a description of the application procedure. After paying the processing costs, the necessary TEP application form and accompanying papers are presented at the Immigration Headquarters or Regional Immigration Offices for processing. The TEP Approval Committee will then review the application before the Minister makes a judgment.

The applicant will be formally informed of the acceptance or rejection after a decision has been made. The necessary payments will be asked for payment within 30 days after the confirmation date, if accepted.

VAT

The commonly used standard rate of VAT in Malawi is 16.50%.