Payroll and Benefits Guide Malawi

Employer

Employer Payroll Contributions

Employee

Employee Payroll Contributions

Employee

Employee Income Tax

General

Under the provision of the Employment Act, employees are entitled to a minimum wage of 50,000 MWK per month or 2,380 MWK per day for both urban and rural areas.

Payroll Cycle

The Employment Act stipulates that an employer will pay wages to an employee in the following manner:
No less than once a week or two weeks in the case of an employee whose wages are fixed by the hour, day, or week or calculated on a project basis
No less than once a month in the case of an employee whose wages are fixed on a monthly or yearly basis

13th Salary

There are no provisions in the law regarding 13th salaries.

General

All employees working hours are stipulated within the employees’ contract. A standard full-time working week in Malawi is no more than 48 hours.
Normal working hours on a public holiday are paid at twice the regular salary rate.

Overtime

Overtime hours worked during rest days are paid at 200.00% of the normal salary rate of pay, overtime hours on a public holiday are paid at 400.00% of the normal salary rate of pay.
Overtime during the working week/workdays is compensated as a daytime off rather than financially.

Working Week

Monday-Friday

Paid Time Off

Employees are entitled to a minimum of 15 days for an employee who works a 5-day week and 18 days for an employee who works a 6-day week.

Public Holidays

There are 12 public holidays. Public holidays that fall on the weekend are moved to a weekday as a day off in lieu.

Sick Days

After completing one year of service, employees are entitled to at least four weeks of sick leave on full pay and eight weeks of sick leave on half pay each year.

Maternity Leave

Pregnant employees are entitled to 8 weeks of maternity leave on full pay every three years.

Paternity Leave

There is no statutory paternity leave in Malawi.

Parental Leave

There is no statutory parental leave.

Other Leave

According to an amendment to Labour law No. 17 of late 2021, employees in Malawi will only be paid for three days while on strike, any employee who continues to strike after three days should be paid by their union.

Termination Process

Employers can terminate a fixed term contract for the following reasons – business, personal, or workers misconduct. It requires notice and a written explanation for the termination. If the reason is misconduct, a warning needs to be given, and the employee gets a chance to explain actions.

Notice Period

Employment contracts/collective agreements may contain provisions on periods of notice. If the notice periods in the collective agreement differ from the statutory notice periods, the employer and employee observe the notice periods in the collective agreement.
The amount of notice is dependent on how often the employee is contracted to be paid.

• If the employee is paid monthly, the requirement is 30 days’ notice.
• If the employee is paid every two weeks, the notice period requirement is 15 days for an employee with less than five years’ service and 30 days for more than five years’ service.
• If the employee has been employed for less than 2 years and paid monthly, the notice period required is one week; two weeks if the employee has been employed between two and five years; one month if the employee has been employed for more than five years.
• If the employee is paid on an hourly or daily basis, the notice period requirement is one day for an employee with less than six months of service, one week for an employee with six months to two years’ service, 15 days for employees with more than two years to five years of service, and one month for employees with more than five years of service.

Severance Pay

Employees are only eligible for severance pay if they have completed at least one year of service and an employer has terminated their contract due to economic reasons (i.e. lay-offs) or if they have been terminated unfairly.
The severance payment due is linked directly to the number of years’ service completed:

• 1-5 years of service: 2 weeks’ pay for every year of employment
• 6-10 years: 3 weeks’ pay for every year of employment
• 11+ years: 4 weeks’ pay for every year of service

Probation Period

Depending on the contract, the probation period in Malawi can last up to 12 months, but common practice is 3 to 6 months.

VISA

You need a Temporary Employment Permit if you are a foreigner with an offer of employment in Malawi. The employer is responsible for applying for the permit on behalf of the employee.

The application process is outlined in The Policy Statement on The Employment of Expatriates. The required TEP application form and supporting documents are submitted at the Immigration Headquarters or Regional Immigration Offices for processing upon payment of the processing fees.
The application will then be submitted to the TEP Approval Committee for consideration, then the Minister for decision.

Once a decision is made, the applicant will be formally notified of the approval or rejection. If approved, the required fees will be requested for payment within 30 days from the date of confirmation.

General

The Standard rate of VAT in Malawi is 16.50%.