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Payroll and Benefits Guide Malawi

Last updated: May 10, 2023

Currency
Malawian Kwacha (MWK)
Employer Taxes
10.00%
Payroll Frequency
Weekly/ Bi Weekly/ Monthly
Employee Costs
5%
Capital
Lilongwe
Date Format
dd/mm/yyyy
Fiscal Year
1 July - 30 June
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Contribution

Employer  Employer Payroll Contributions
10.00% National Pension Scheme
10.00% Total Employment Cost
Employee Employee Payroll Contributions
5.00% National Pension Scheme
5.00%  Total Employee Cost
Employee Income Tax
0.00% 0-1,200,000 MWK
25.00% 1,200,000 – 12,000,000MWK
30.00% 12,000,000 – 36,000,000 MWK
35.00%  36,000,000 – 72,000,000 MWK
40.00% 72,000,000 MWK and above
15.00%  Flat rate income tax applies to expats

Employer taxes

Highest
Lowest

Employee taxes

Highest
Lowest

Minimum Wage

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.

MINIMUM WAGE (PER MONTH)

Highest
Lowest

Payroll

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.

Working Hours

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.

Leave

Annual Leave (vacation)

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.

Date Day Holiday Note
1 Jan 2024 Monday New Years Day
15 Jan 2024 Monday John Chilembwe Day
3 Mar 2024 Sunday Martyrs’ Day
4 Mar 2024 Monday Martyrs’ Day Holiday Day Off in Lieu
11 Mar 2024 Monday Ramadan Start Tentative
29 Mar 2024 Friday Good Friday
30 Mar 2024 Saturday Easter Saturday
1 Apr 2024 Monday Easter Monday
10 Apr 2024 Wednesday Eid al-Fitr Tentative
1 May 2024 Wednesday May Day
14 May 2024 Tuesday Kamuzu Day
6 Jul 2024 Saturday Independence Day
8 Jul 2024 Monday Independence Day Holiday Day Off in Lieu
15 Oct 2024 Tuesday Mother’s Day
25 Dec 2024 Wednesday Christmas Day
26 Dec 2024 Thursday Boxing Day

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.

Vacation Days
Public Holidays
Highest
Lowest

PAID MATERNITY LEAVE (DAYS)

Highest
Lowest

Termination

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

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.

VAT

General

The Standard rate of VAT in Malawi is 16.50%.

Stay up to date on payroll & employment law changes

Version History

May 24, 2022
Payroll contributions and personal income tax rates have been updated.
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Questions & Answers

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HITENDRA C KANOJIYA
HITENDRA C KANOJIYA
2 years ago

what is leave rules and salary rules for expats in malawi?

Emily Kuhnert
Emily Kuhnert
2 years ago

Hi Hitendra, thank you for your question. There is no difference in leave or salary rules for expats.

charles katunga
charles katunga
2 years ago

I just want to know the specific section within the employment Act that talks about minimum wage

Erez Greenberg
Erez Greenberg
2 years ago

Hi Charles, section 54 and 55 of the Malawi Employment Act discuss minimum wage.

GCM
GCM
1 year ago

Hi.

Is it correct that severance is calculated as 10% of the current salary multiplied by the number of months worked? Which one should be used?

Erez Greenberg
Erez Greenberg
1 year ago
Reply to  GCM

The amount of the severance payment is directly linked to the number of years of 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

Richard
Richard
1 year ago
Reply to  Erez Greenberg

Assuming you are getting a k100 000 per month and have worked for 4years does this mean you will get 50 000 ×4 yrs or 50 000 per month for 4 years?

Erez Greenberg
Erez Greenberg
1 year ago
Reply to  Richard

Severance pay for 4 years of service is calculated at 2 weeks’ pay for every year of employment. Assuming you are getting a k100,000 per month, you’d receive K50,000 x 4 = K200,000.

Kondwani Bottoman
Kondwani Bottoman
1 year ago
Reply to  Erez Greenberg

I have worked for 4 years without going on annual leave, and without a public holiday with a certain company and my contract was terminated.my net pay was K148,000. How much should I expect from this company?

Erez Greenberg
Erez Greenberg
1 year ago

An employee who has worked between one to five years is entitled to 2 weeks’ severance pay for every year of employment.

Beni
Beni
1 year ago

Is it legally permissible to claim that an employee upon termination of employment by the employer is not entitled to severance pay because they are on pension scheme?

Erez Greenberg
Erez Greenberg
1 year ago
Reply to  Beni

As a general rule, employers no longer have the double financial burden, that prevailed between 2000 and 2011, to pay both pension benefits and a severance allowance.

Andy
Andy
1 year ago

If someone has worked for 5 years, it means the salary kept changing. Say if I was getting K100,000 five years ago and I’m now getting K500,000, will the calculation be done according to each year’s pay? I’m asking this because K100,000 of five years ago will not be of the same value today

Erez Greenberg
Erez Greenberg
1 year ago
Reply to  Andy

What calculation are you referring to?

Leigh
Leigh
1 year ago

Hi. Are expats (residing and paying tax outside Malawi), contracted by a company that is registered and operating in Malawi eligible for severance and gratuity upon termination of contract?

Erez Greenberg
Erez Greenberg
1 year ago
Reply to  Leigh

The worker should check their rights with a local employment expert for their unique setup.

James Malema
James Malema
1 year ago

IF the company is paying your rent, is this taxable as fringe benefit tax or as part of gross pay and taxed under PAYE.
Does it matter if the money is given in cash versus paid directly to landlord or if the house is employee identified vs identified by company

Polly
Polly
1 year ago

I have worked at this other company since October 2021. They confirmed me from 1 January 2023 . While on probation I was paid MK97,500(basic salary 90K and the other for overtime ) now after getting confirmed I got MK93,000. Is this normal? What should I do? Also I don’t have pension scheme or medical aid. It’s a very big company and my workmates get better.

Enny Shmurin
Admin
Enny Shmurin
2 months ago
Reply to  Polly

Unfortunately, this is not something we can advise on; We recommend reaching out to HR or whoever your manager reports to. If these channels are not an option you should reach out to a local lawyer to understand your rights.

Thomas Jalasi
Thomas Jalasi
1 year ago

How is tax on severance pay calculated in Malawi in 2023?

Erez Greenberg
Erez Greenberg
1 year ago
Reply to  Thomas Jalasi

In general, severance pay is considered taxable income and is subject to income tax. The amount of tax owed will depend on the employee’s total taxable income, including the severance pay, and the tax bracket they fall into.

Bob Phiri
Bob Phiri
1 year ago
Reply to  Erez Greenberg

If someone has worked for a total of 30 years let’s say for example from 1993 to 2023 and the salary kept on changing. For instance he started with MK10, 000.00 monthly pay in 1993 and now he is retiring in 2023 at a monthly pay of MK200,000.00.
How will severance pay be calculated based on?

Enny Shmurin
Admin
Enny Shmurin
1 month ago
Reply to  Bob Phiri

Severance is calculated based on the current salary of the worker.

Philip
Philip
1 year ago

Hi,
One of my employees had an abortion before her metarnity period cessation. Is there any specific rule for employee compensation regarding a situation like this?

Enny Shmurin
Admin
Enny Shmurin
2 months ago
Reply to  Philip

Unfortunately, this is not something we can advise on; We recommend seeking advice from a local lawyer.

khumbo
khumbo
1 year ago

how do we calculate terminal benefits in malawi?

Erez Greenberg
Erez Greenberg
1 year ago
Reply to  khumbo

In Malawi, employee termination benefits are calculated based on the number of years an employee has worked with a company, as well as their salary and any other compensation they may have received. The exact method of calculation may vary depending on the company and its internal policies, as well as any relevant labor laws in the country. It is recommended to check with the relevant authorities or a labor lawyer to get a clear understanding of how termination benefits are calculated in Malawi.

preciall
preciall
1 year ago

what are fields of a payslip in malawi or what does the payroll contain

Enny Shmurin
Admin
Enny Shmurin
1 month ago
Reply to  preciall

This Countrypedia page can be used to reference the items that must be paid in Malawi.

Ritchies
Ritchies
10 months ago

On probationary period, let’s say you agreed of 3 months but after three months the employer adds a month without your consent and after that month they terminate you. What happens?

Enny Shmurin
Admin
Enny Shmurin
9 months ago
Reply to  Ritchies

Probation period is common for 3-6 months. I would suggest seeking a local legal advisor.

Sphiwe
Sphiwe
5 months ago

What if they have worked for 8 years how do you calculate the surveillance allowance

Enny Shmurin
Admin
Enny Shmurin
7 days ago
Reply to  Sphiwe

Is this referring to severance pay? You can find all the information here.

dalilani
dalilani
3 months ago

how do you calculate severance pay or graduity for a employee that resigned months in advance

Enny Shmurin
Admin
Enny Shmurin
3 months ago
Reply to  dalilani

There is no severance pay in case of resignation.

Violet
Violet
3 months ago

wanted to ask about the tax on severence pay how do we calculate

Enny Shmurin
Admin
Enny Shmurin
7 days ago
Reply to  Violet

It is treated the same as payroll taxes.

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Payroll and Benefits Guide in Malawi

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Payroll and Benefits Guide
in Malawi

What’s covered in this guide:

  • Employer/employee contributions
  • Minimum wage
  • Working hours
  • Visa requirements

And more...

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All questions are answered by our in-house compliance department working in conjunction with our local in-country partner for this specific country

Public Holidays Calendar

Malawi
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ICS
Date Day Holiday Note
1 Jan 2024 Monday New Years Day
15 Jan 2024 Monday John Chilembwe Day
3 Mar 2024 Sunday Martyrs’ Day
4 Mar 2024 Monday Martyrs’ Day Holiday Day Off in Lieu
11 Mar 2024 Monday Ramadan Start Tentative
29 Mar 2024 Friday Good Friday
30 Mar 2024 Saturday Easter Saturday
1 Apr 2024 Monday Easter Monday
10 Apr 2024 Wednesday Eid al-Fitr Tentative
1 May 2024 Wednesday May Day
14 May 2024 Tuesday Kamuzu Day
6 Jul 2024 Saturday Independence Day
8 Jul 2024 Monday Independence Day Holiday Day Off in Lieu
15 Oct 2024 Tuesday Mother’s Day
25 Dec 2024 Wednesday Christmas Day
26 Dec 2024 Thursday Boxing Day