Using an Employer of Record in Malawi

Located in southeastern Africa, Malawi is bordered by Tanzania, Mozambique, and Zambia. As a country with a majority youth population and a growing service sector, Malawi presents an opportunity to access the emerging talent pool. 

To access the talent pool while adhering to the country’s legal environment, organizations can use an Employer of Record in Malawi. 

EOR solutions support payroll, tax compliance, benefits, and employment administration, helping businesses reduce operational complexity and administrative overhead.

Continue reading to discover more about the use of EORs in Malawi, or explore the solutions offered by Payoneer Workforce Management.

How to hire employees in Malawi

Companies looking to engage talent in Malawi typically have three primary options:

1. Set up a local entity: You can incorporate a local entity through the Registrar General’s office and the Malawi Investment and Trade Centre (MITC). This allows direct hiring of employees. However, it also requires managing registration processes, meeting tax obligations, complying with local employment laws, and handling ongoing administrative tasks.
2. Hire independent freelancers or contractors: Hiring contractors can offer flexibility and cost savings, but it also carries the risks of misclassification, which may result in legal and financial consequences.
3. Employer of Record: Malawian talent can be legally engaged on your behalf through an EOR in Malawi, and you can get support for managing employment contracts, onboarding, benefits, payroll, and more. 
   Payoneer Workforce Management allows businesses to onboard and engage talent in 160+ countries compliantly, without the need to establish a local legal entity. We help you set up localized benefits as per local laws and requirements.

How to onboard employees in Malawi

The employee onboarding process typically involves:

• Payroll processing and statutory benefits setup: This involves enrolling the new employees in the local payroll system and ensuring that all statutory benefits are taken care of according to the guidelines provided by the Malawian government.
• Equipment distribution and workspace setup: This involves ensuring that the local talent is provided with the necessary equipment to get to work right away.
• First week onboarding briefing: This involves providing a general overview to the employee during their first week to familiarize them with the policies and processes that may be unique to their role.
• Team and organizational introductions: This involves setting up meetings between the newly onboarded employee and their team, as well as the entire organization.

Payoneer Workforce Management helps companies to engage talent across borders through its technology platform compliantly.

Pay employees in Malawi

Employers must pay employees in Malawi in Malawian Kwacha (MWK). The standard pay date is the last working day of the month.

Income tax and social security obligations

To run a compliant Malawi payroll, employers must manage income tax and social security obligations.

Income tax is applied on a progressive scale and ranges from 0% to 30%.

Malawi’s social security system centers around a mandatory National Pension Scheme (NPS) for most formal sector employees. Employers must contribute a minimum of 10% of the employee’s pensionable earnings, while employees contribute at least 5%. 

Ultimately, the employer cost is approximately 14.6% on an annual salary of USD 60,000. The actual cost can vary depending on the employee’s salary and other local factors.

For an employment cost breakdown, you can use our employee cost calculator.

Using an Employer of Record offers a streamlined way to pay employees in Malawi. 

Payoneer Workforce Management’s unified, all-in-one platform gives you a single dashboard to manage a global workforce.

Employment laws in Malawi

Engaging employees in Malawi means adhering to a well-defined set of labor laws. Using an Employer of Record in Malawi makes these simpler to navigate.

A typical full-time employee works a maximum of 48 hours per week or 8 hours per day. 

Employees cannot work more than 6 consecutive days without at least 24 hours of rest.

Overtime

Probation

There is no legally set probation period in Malawi. The most common practice is 1 to 3 months, depending on the employee’s role. During probation, either party may terminate the contract without notice.

Minimum wage in Malawi

The minimum wage requirement is not applicable per local legislation. However, employers should regularly check official government announcements for updates regarding the minimum wage in Malawi. 

Employment contracts in Malawi

It is highly recommended to have written employment contracts to clearly define the terms and avoid any potential conflict.

Employment contracts generally have the following terms and conditions:

• Employee name and personal details
• Type of contract: Fixed-Term/Indefinite
• Date of employment
• Job description and responsibilities
• Employee compensation package
• Working hours and legal leave
• Probation period
• Terms and conditions for termination

With the help of an Employer of Record in Malawi, you can get expert assistance with drafting the employment contract. Solutions like Payoneer Workforce Management help you to navigate and configure employee benefits according to the local regulations and requirements.

Leave policy in Malawi

In Malawi, employers must offer leave, including vacation time, public holidays, sick leave, and more.

Annual leave

Employees are entitled to 15 paid working days per year on a 5-day workweek, or 18 paid working days on a 6-day workweek. 

Leave should be taken within a few months of becoming due. You can refer to the Employment Act for more information.

If not used, it may be deferred and accumulated by mutual agreement. Carry-forward is at the employer’s discretion.

Sick leave

Permanent employees are entitled to a maximum of 90 days of sick leave with half pay.

Public holidays

Malawi observes 16 public holidays per year. Employees who work on a public holiday receive compensation at twice the regular salary rate.

Maternity and paternity leave

Female employees are entitled to 2 months (8 weeks) of fully paid maternity leave, available once every 3 years.

However, the industry practices 12 weeks of maternity leave, once every 3 years.

Fathers get at least 2 weeks (10 working days) of paternity leave on full pay, once every 3 years.

Other leave

Malawi’s labor laws do not mandate childcare, compassionate, or wedding leave. Employers may offer these at their discretion.

Work permit in Malawi

All foreign nationals are required to hold a valid work permit to be employed legally in Malawi. A Temporary Employment Permit (TEP) is issued by the Ministry of Labor for foreign workers.

For more information, both employers and employees should consult official government resources to understand specific details and comply with local regulations.

Background check in Malawi

Some employers carry out background checks in Malawi before engaging an employee, but these are subject to local regulations and require consent from the party being checked.

These checks can include criminal records, employment history, education verification, and other lawful screenings.

Employment termination in Malawi

The Employment Act and its amendments govern termination of employment in Malawi.  Employers can terminate employees based on valid grounds, but doing so without valid justification may be considered unfair dismissal and can lead to legal consequences.

Common situations that may lead to termination include:

• Employee resignation: Voluntary termination initiated by the employee.
• Mutual agreement: Termination agreed upon by both employer and employee.
• Termination during probation: Employment can be ended during the probation period without notice.
• Termination by employer: On grounds of misconduct, incapacity, poor performance, or redundancy.
• Fixed-term contract expiry: The contract ends automatically upon expiry unless renewed or extended.

Notice periods

Notice periods can range from 1 month to the duration agreed upon in the contract. During probation, either party may terminate without notice.

Severance pay

Severance is payable in cases of redundancy, incapacity, or lawful termination without cause. No severance is payable for lawful dismissal due to gross misconduct.

Company registration in Malawi

Business registration runs through the Department of the Registrar General, using the MBRS online portal. Expect the process to take a few working days when done online or in person.

Typically, the steps include:

1. Picking the structure: sole proprietorship, partnership, or corporate body. 
2. Reserving a business name via MBRS. 
3. File your Memorandum and Articles of Association. 
4. Foreign companies also need a notarized Certificate of Incorporation from the home country, a Power of Attorney, and a shareholder resolution. 
5. After that, register for a TIN with the MRA through Msonkho Online or at any MRA office.

All of that feels like a lot? Learn why companies choose EOR over entity setup.

For many companies, using an Employer of Record in Malawi is a faster and simpler option. Payoneer Workforce Management enables businesses to compliantly onboard and engage talent in 160+ countries without the need to set up a local legal entity.

PEO in Malawi

A PEO (Professional Employer Organization) shares employer duties with your company, such as payroll, benefits, and HR compliance. However, a PEO still needs you to have a legal entity in the country.

If you don’t have one and don’t want to set one up, an employer of record in Malawi can help you.

EOR vs. PEO, the short version:

Feature	EOR	PEO
Local Entity Needed?	No	Yes
Legal Employer	EOR Provider acts as the legal employer	Your Company (co-employment)
Compliance Support	EOR Provider offers assistance	Shared (Limited)
Best For	Market entry, no local entity	Companies with an existing entity

However, if you are considering engaging contractors, you may consider an Agent of Record (AOR). For a deeper breakdown, read AOR vs EOR: How Are They Different?

Payoneer Workforce Management’s Employer of Record services in Malawi

Expanding into Malawi doesn’t have to mean months of paperwork or legal dead ends. Payoneer Workforce Management helps businesses build, manage, and pay global teams across 160+ countries.

You can get assistance with:

• Localized contracts and payroll for Malawi, set up without a local entity.
• Compliance support aligned with Malawi’s labor laws.
• Contractor payments across 70+ currencies.
• A single dashboard to manage an international workforce.
• Integrations with 70+ HR and payroll tools.

Ready to engage talent in Malawi? Talk to our experts and get started with Payoneer Workforce Management today. 

Book a demo today.

FAQs

1. How much does it cost to hire in Malawi?

Employer costs start from approximately 14.6% on an annual salary of USD 60,000. Actual employment costs may vary depending on salary levels and the benefits provided. Businesses can use the employee cost calculator to get a detailed estimate of total employment expenses.

2. Why hire through an EOR in Malawi?

Working with an Employer of Record in Malawi allows businesses to engage local talent while streamlining the employment process quickly. Payoneer Workforce Management helps businesses onboard and pay employees across the globe with support for 70+ currencies and a transparent pricing model.

3. What are the mandatory employer contributions in Malawi?

Employers must contribute a minimum of 10% of an employee’s pensionable earnings toward a pension fund. They must also deduct and remit PAYE income tax to the Malawi Revenue Authority.

4. Does Malawi mandate 13th-month pay?

No. A 13th or 14th-month salary is not mandatory in Malawi. It is complimentary and at the employer’s discretion.