Malawi has shown promising growth in the tourism, manufacturing, and logistics sectors, along with the development of a skilled and educated workforce. With advancements in infrastructure and economic diversification, more businesses look at Malawi as a favorable hiring destination. 

The southeastern African country offers a low cost of living and an affordable labor force, but following the local labor laws can be complex, particularly for foreign businesses. When expanding in Malawi and hiring employees, employers must follow the Employment Act. This includes regulations covering payroll, employee rights, and onboarding. To avoid issues of non-compliance or complications when hiring a workforce, more foreign businesses partner with an Employer of Record, or EOR. 

A Malawian EOR handles various HR and payroll processes, simplifying the employment process. Furthermore, an EOR is an affordable choice for business and workforce expansion, with services provided by Remote People starting from $199 per month. 

In this guide, discover the importance of working with an EOR service when hiring employees in Malawi. Learn just how foreign companies are benefiting from partnerships with EORs and how the service provider upholds compliance for the protection and growth of your business. 

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How to Hire Employees in Malawi

There are three methods of hiring employees in Malawi:

Setting Up a Local Entity

Setting up a local entity allows greater control over the employment process and improves your business’s credibility. To register an entity in Malawi, employers must sign up with the Registrar of Companies, choose a business structure, and apply for a certificate of incorporation. It is important to note that Malawi’s registration and licensing procedures can be time-consuming and complex without legal aid. 

Working with an Employer of Record (EOR)

Quick market entry, simplified payroll, and hiring skilled employees are the benefits of working with a Malawian EOR. The Employer of Record handles tax reporting, employee benefits administration, and compliance practices, alleviating a business’s administrative burden. An EOR in Malawi is knowledgeable about local labor laws, keeping employers updated on reforms and changes to employment regulations. 

Hiring Independent Contractors

Businesses looking for flexible workforce solutions can hire independent contractors in Malawi. The employment arrangement involving contract workers differs from that of permanent or full-time employees. This must be carefully considered to avoid employee misclassification and the penalties incurred. 

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Malawi EOR vs Legal Entity in Malawi

The decision as to whether a Malawian EOR or a legal entity is suitable for your business depends on the legal process, costs, and support services to help you achieve your goals.

When you choose a Malawian EOR, your company is protected against the risk of non-compliance. An EOR acts as a legal employer of the workforce, eliminating the need to register an entity to operate in Malawi. An Employer of Record handles tax reporting, deductions, and paying salaries, allowing you to focus on business growth. 

If you are searching for a more permanent business presence in Malawi with full control over your liabilities and workforce, then a legal entity is a good choice. However, Malawi’s business registration procedures can be complicated. Apart from bureaucratic hurdles, employers must be mindful of cultural practices and language barriers. Despite English being the national language, the local language of Chichewa is widely spoken. 

The costs for company registration in Malawi involve business name registration, processing legal paperwork, and obtaining business licenses. For example, preparing the Memorandum of Association and the Articles of Association can cost up to $287.94. The business registration fee is around $57, and entities requiring an investment license pay up to $800. 

On top of the registration fees, businesses must pay for rent, general utilities, wages, and maintenance expenses when establishing an entity. 

Many business owners prefer to work with a legal practitioner to guide them through a smooth, compliant, and efficient business setup. 

Depending on the entity structure and the complexity of the registration process, it can take several weeks to months to establish a business in Malawi. 

In comparison to the costs of setting up a legal entity, EORs charge a set monthly fee that is usually more affordable than the ongoing costs of infrastructure and licensing when registering a business. 

Using an Employer of Record in Malawi

The Malawian EOR becomes the legal employer of the workforce, allowing them to assume liabilities and act on your behalf. The EOR firm doesn’t manage your employees but focuses on registering the workforce for taxes, paying timely wages, and processing employee benefits as per the Malawian Labor Code.

As the client company, you continue to oversee the performance and training of your employees while entrusting compliance and payroll matters to the Employer of Record. 

Malawi Employer Of Record

A professional EOR agency in Malawi can help you hire skilled employees and facilitate the onboarding process so you can get your business operational. 

  • Employment Contracts: Written employment contracts are recommended, as they allow employers to outline the terms of the employment arrangement. Oral contracts are permitted in Malawi; however, there is a higher risk of confusion and disputes without written agreements. The employment contract must stipulate annual leave, salaries, deductions, and benefits. 
  • Payroll: In Malawi, the payroll cycle is weekly, fortnightly, or monthly. Employees with hourly, daily, or weekly wages must be paid weekly or every other week as per the Labor Act. The EOR will process employee salaries, wages, benefits, and taxes following the terms outlined in the employment contract. 
  • Tax and social contributions: EORs will help employers comply with social security contributions and payroll tax requirements. This includes withholding PAYE from employee salaries and making contributions to the National Social Security Fund (NSSF). 
  • Compliance with labor regulations: A Malawian EOR is knowledgeable in the local labor laws. They will calculate the employee benefits, register your workforce with the relevant payroll authorities, and ensure employee rights are upheld. This includes an employee’s right to trade union membership under the Labor Relations Act. 
  • Benefits administration: Mandatory benefits consist of overtime pay, annual leave, sick leave, and pension contributions. EORs monitor employee attendance to calculate the correct benefits and maintain compliance.

How Much Does a Malawi EOR Cost?

EORs in Malawi have different pricing models depending on the service package and the size of the workforce. Most providers issue a one-time fee to add new employees to the system. The general Malawian EOR service costs range from $199 to $499 per employee per month. The Employer of Record must provide full transparency detailing each cost. Other service providers charge a percentage of payroll or employee salaries of 5% to 15%. 

Services known as add-ons are available at an extra fee. These include employee work permit applications and renewals, ending an employment contract, and connecting clients to competitive benefits providers. 

Businesses interested in efficient and compliant workforce expansion in Malawi are encouraged to rely on an Employer of Record. The EOR firm assists with risk mitigation and can prove more affordable than setting up a legal entity.

Employment and Labor Laws in Malawi

To remain compliant in Malawi, businesses must closely follow the local labor laws, from presenting employment contracts and tax withholding to overseeing employee rights. Learn how an EOR protects you from non-compliance while improving employee retention. 

Key Contract Requirements

Employment contracts in Malawi must adhere to the regulatory requirements below: 

  • Job offer and acceptance: Once the employee accepts the formal job offer, they must receive an employment contract detailing the job role, duties, salary, and benefits. 
  • Written employment contract: In Malawi, written employment contracts are not mandatory, but they are highly recommended for clarity and the protection of the employer and employee. The contract elements include working hours, remuneration, provisions for termination, and the start date of employment. 
  • Registration with Revenue: Employees must be registered with the Malawi Revenue Authority (MRA) for tax purposes, such as PAYE. Employers and employees must register with the NSSF for social security contributions. 
  • Right to work verification: Non-citizens seeking employment in Malawi must have a work permit. Employment permits and temporary employment permits are issued to non-residents. It is the employer’s responsibility to apply for employment permits on behalf of the foreign worker. 
  • Notification of employment rights: Employees are informed of their rights in the employment contract and through labor inspectors who visit the workplace. Malawian employees have the right to minimum wage, equal treatment, non-discriminatory practices, and a safe working environment. 
  • Health and safety compliance: Every employee has the right to workplace safety. Employers must provide a healthy and productive workspace and train employees on basic safety practices and standards. 
  • Equality in employment: Malawian employers will be in contravention of the Labor Relations Act if employees are discriminated against. Workers cannot be treated differently based on age, race, gender, beliefs, or background. 
  • Onboarding: Foreign employees must obtain the relevant employment permits. Employee information, such as names, physical addresses, and banking information, is collected to integrate them into the company.

Working Hours

The standard workweek for Malawians is 48 hours, usually performed over five days. Employees must receive 30-minute breaks if they work continuously for six hours. 

Overtime

Malawi permits overtime; however, the rates differ based on the type of work and overtime. Basic overtime is calculated at 1.5 times the employee’s standard hourly rate. Overtime performed on a public holiday or a day off is compensated at double the standard hourly rate. 

Probation Periods

The typical probation period for Malawian employees is three to six months and can be extended up to 12 months. 

Payroll and Employment Taxes in Malawi

Payroll consists of employee salaries, wages, benefits calculations, and tax obligations. Malawian businesses must follow local payroll regulations to prevent non-compliance risks while guaranteeing employees are paid on time. The following payroll regulations must be adhered to: 

Payroll Cycle

The Malawian payroll cycle can be weekly, bi-weekly, bi-monthly, or monthly, depending on when employees are paid and the contract terms.

Minimum Wage

As of June 2025, the minimum wage for urban and rural Malawian employees is MK 126,000, which is equivalent to $72.63. Different minimum wage rates apply to specific jobs, such as truck drivers and domestic workers. 

Learn more about minimum wage in Malawi

Bonus Payments

Bonuses are not mandatory in Malawi; however, many employers prefer to offer bonus payments as incentives to improve employee satisfaction and retention.

Employer Tax Contributions

Employers must contribute to PAYE if they pay their staff salaries of more than MK 150,000 per month. Businesses established in Malawi must pay a corporate income tax of 30%. As per labor law, employers must register employees with the NSSF and contribute 10% of an employee’s wage. Lastly, employers pay a compulsory TEVET levy of 1%. 

Employee Payroll Contributions

Malawian employees pay income tax through the PAYE system. The PAYE percentage deducted from their salaries depends on their income bracket and ranges from 0% to 40%. In addition to PAYE, workers contribute 5% of their earnings to the National Pension Scheme (NPS).

Income Tax

The PAYE income tax rates are as follows:

Income Bracket (MK)Tax Rate
First 150,0000%
Next 350,00025%
Next 2,050,00030%
Over 2,550,00035%

Pension System

Malawi has a national pension system known as the National Pension Scheme. It is meant to provide social security, including a pension and retirement benefits. 

Tax Compliance and Payroll Reporting

To remain tax compliant, employers are responsible for registering their employees with the relevant authorities for PAYE and social security. PAYE must be remitted to the Malawi Revenue Authority before the 14th day of the month following the payroll month. An employer must file yearly PAYE returns by the 31st of March. Employers must keep payroll slips covering information, such as gross wages and deductions. 

In Malawi, businesses are penalized for violating payroll regulations, including fines and the possibility of imprisonment. 

Work Permits and Visas in Malawi

Foreign nationals can only be employed in Malawi if they have a work permit.

Critical Skills Employment Permit

Malawi does not offer a critical skills employment permit.

General Employment Permit

The country provides foreigners with a temporary employment permit (TEP) for specific and short-term work projects. An employment permit is granted to individuals who have already secured full-time jobs. 

Intra-Company Transfer Permit

Malawi does not have an intra-company transfer permit.

All foreign nationals who are employed in Malawi must possess an employment permit as per the Labor Relations Act. 

Time Off and Leave in Malawi

Mandatory Leave Entitlements

Employees offered permanent and fixed contracts are entitled to mandatory leave. This includes paid annual leave, maternity leave, and sick leave, which are explored in more detail.

Public Holidays

There are 12 public holidays that employees are entitled to:

  • New Year’s Day (January 1)
  • John Chilembwe Day (January 15)
  • Martyr’s Day (March 3)
  • Good Friday (April 10)
  • Easter Monday (April 13)
  • Labor Day (May 1)
  • Kamuzu Day (May 14)
  • Independence Day (July 6)
  • Mother’s Day (October 15)
  • Eid Ul Fitr (date varies based on moon sighting)
  • Christmas Day (December 25)
  • Boxing Day (December 26)

Sick Leave

Malawian employees receive four weeks of fully paid sick leave. An extra eight weeks of sick leave is granted, but only at half pay. Employees must have completed one year of service to receive sick leave benefits. 

Maternity Leave

Female workers receive eight weeks of fully paid maternity leave. However, paid maternity leave is only provided once every three years. 

Paternity Leave

There is no mandated paternity leave in Malawi.

Parental Leave

Maternity leave is the only form of parental leave as per the Malawian labor law. However, non-statutory parental leave can be negotiated through collective agreements. 

Bereavement and Jury Duty

Bereavement leave is not mandatory, but companies usually offer 10 days of paid leave for the passing of a family member. Malawian employees are entitled to court leave and cannot be dismissed or receive pay reductions when fulfilling their civic duties. 

Employee Benefits in Malawi

The mandatory benefits include annual leave, maternity leave, and sick leave; however, employers can attract and retain talented employees with non-mandatory or supplementary benefits. 

The following mandatory benefits are issued in Malawi:

  • Paid maternity leave
  • Paid sick leave
  • Paid annual leave
  • Contributions to the National Pension Scheme 

Non-statutory benefits consist of: 

  • Flexible work hours
  • Employee assistance programs 
  • Training and development 
  • Wellness programs 
  • Extended leave
  • Childcare assistance 

Employers in Malawi who offer fringe benefits will pay a fringe benefits tax rate of 30%.

Terminations and Severance in Malawi

Ending an Employment Contract

Employers can end an employment contract for reasons including redundancy, the expiration of a fixed-term contract, and misconduct, among others. Employees must receive notice before terminating an employment contract. 

Employment contracts can be terminated based on the following: 

  • Breach of contract
  • Redundancy
  • Misconduct
  • Mutual agreement 

Notice Periods

The type of employment contract determines the notice period. 

Fixed-term employment contracts: Fixed-term contracts do not typically have notice periods and expire on the agreed-upon date. 

Permanent employment contracts: Employees with monthly salaries receive a 30-day notice. Bi-weekly wage payments are entitled to 15-day notice periods, whereas weekly wages receive one week’s notice. 

Severance Pay

Employees who are dismissed for financial reasons are entitled to severance pay. Circumstances such as redundancy, unfair dismissal, and retrenchment constitute severance payments, provided the individual has worked for the same employer for one year. 

Length of EmploymentSeverance Pay Entitlement
Up to 5 years2 weeks’ wages per year of service
More than 5 years up to 10 years3 weeks’ wages per year of service

Expand into Malawi Easily with Remote People’s Employer of Record (EOR) Solution

Malawi has captured the attention of foreign businesses for its investment potential, low-cost labor force, and skilled employees. When it’s time to hire workers in Malawi, employers must follow the Labor Relations Act, which governs the employment relationship. Malawi labor law requires adherence to payroll regulations, granting mandatory employee benefits, and satisfying annual tax obligations, such as PAYE and pension fund contributions. 

To comply with Malawi’s legal framework, consider the services of a professional EOR firm. An Employer of Record supports workforce expansion because you won’t need to establish a legal entity. The Malawian EOR manages payroll, tax reporting, HR, onboarding, and compliance, protecting your business from processing delays and penalties. 

You can reach out to the EOR experts at Remote People for specialized payroll and compliance solutions. They offer remote employee management, efficient onboarding, and transparent pricing to help you with successful expansion in Malawi.