Malawi

Overview

With a 5-year compound annual growth of 4.1%, Malawi has witnessed sustainable growth and continues its stride toward economic consolidation. Agriculture contributes nearly 30% while services contribute 54% to the country’s GDP. Major exports include sugar, tobacco, tea, groundnuts, pulses, ceramics, gemstones, beans, and enamelware. Malawi’s GDP is projected to grow by 5% in 2018, largely bolstered by agriculture and the services industry.

Currency: Malawian Kwacha

Principal language: English, Chichewa, Chinyanja

Government: Presidential Republic

Capital City: Lilongwe

Major Cities: Blantyre, Mzuzu, Zomba, Kasungu

Employment Contracts

The following types of employment contracts are prevalent in Malawi:

  • For an unspecified period
  • For a specified period
  • For a specific task

Probationary Period
The parties can agree on the duration of a probationary period which should not exceed 12 months. During the probation period, the employment contract can be terminated by either party without giving any notice.

Work/Time Regulations

Regular working hours are mentioned in employment contracts, but employers cannot ask employees to work for more than 48 hours (excluding overtime) or 6 consecutive days in a week. Employees are entitled to a minimum rest period of 24 hours that can be taken on a regular rest day or a day agreed by both the parties.

Overtime
Work done beyond 48 hours in a week is treated as overtime. There are 3 broad categories of overtime:

  • Ordinary Overtime: Work done beyond regular working hours is considered ordinary overtime and is paid at 1.5 times the regular pay.
  • Day off Overtime: Work done on off days is considered day off overtime and is paid twice the regular pay.
  • Holiday Overtime: Work done on holidays is considered holiday overtime and is paid twice the regular pay.

Leave

Holidays

  • New Year
  • John Chilembwe Day
  • Martyrs’ Day
  • Good Friday
  • Easter Monday
  • May Day
  • Kamuzu Day
  • Freedom Day
  • Eid al-Fitr
  • Independence Day
  • Christmas Day

Annual Leave
Employees who work 6 days a week are entitled to 18 days’ annual leave while those who work 5 days a week are entitled to 15 days’ annual leave. The annual leave can be deferred and accrued based on mutual agreement.

Sick Leave
Employees are entitled to a minimum 4 weeks’ sick leave (on full pay) and minimum 8 weeks’ sick leave (on half pay) annually. Employers can ask employees to produce a medical certificate issued by a registered medical practitioner which states employees’ sickness or incapacity.

Maternity Leave
Women employees are entitled to a minimum 8 weeks’ maternity leave. During the maternity leave, employees’ benefits, entitlements, contractual rights, seniority, employment period continue uninterrupted.

Benefits

Pension and Social Security

National Pension System
Under the Pension Act 2010, all the employees are required to register with the National Pension Scheme unless exempted by the Minister of Finance.

Key Details
Under the new pension system:

  • Employers must enroll employees with salaries more than MWK10,000 per month within 12 months of employment.
  • Employers are required to make contributions equal to 10% of employees’ salary while employees make contribution equal to 5% of their salary.
  • Employees are entitled to life insurance benefit equal to their annual salary.
  • Employees qualify for retirement benefits after 20 years of contributions or after attaining the age 50, whichever is earlier.

Currently, contributions can be made to one of the following privately managed funds:

  • Restricted Funds: Pension funds which are restricted to an employer or a group of employers
  • Unrestricted Funds: Funds which are open to public
  • Umbrella Funds: Funds that are restricted to particular funds’ trustees and are mainly used to pool investments

The Pension Act 2010 contains details such as pension rights, qualifying conditions, and contribution rates but the information available is limited. The legal retirement age varies from 50 to 70 years.

Dependents' / Survivors' Benefit
Employees can nominate family members for survivor benefits after their death.

How GPS can Help

With our Global PEO/Employer of Record services, companies can expand into Malawi and hire their employees without having to establish a branch office or subsidiary in Malawi.

  • Your candidate is hired via our Malawi PEO. If needed, we can also help you find the right talent in any country with our comprehensive global staffing services.
  • Your new employee begins work quickly as we take care of employment contracts, statutory and non-statutory benefits, and running their payroll - all in full compliance with Malawi laws.
  • Global PEO Services experts manage all day-to-day operational issues such as employee expenses, and severance/termination if required.
  • With no contractor risks, pass on the compliance burden to Global PEO Services.

Spin Off/M&A Support

  • Ensure continuity of payroll, benefits and HR support when acquiring or spinning off a business with employees overseas.

24/7 Support in 100+ Countries

  • Empower your teams with 24/7 support and a single point-of-contact model in which experienced client services directors are in continuous communication with information and advice.
  • We are backed by a mix of 300+ multidisciplinary experts from HR, Payroll, Finance, Tax, and Legal domains who are ready to respond to the expected and unexpected needs of your business on the shortest notice.

Easy Visibility into Your Employee Time & Attendance and Benefits Data
With our Global PEO, you get access to Mihi, our proprietary SaaS solution for time and attendance, vacation, leave management and benefits enrollment and management. Mihi enables clients to have easy access to employee data in real time. It is designed specifically for companies with a global workforce, especially when working in multiple countries with low headcount.

Ready for Growth When You Are
When ready, we can seamlessly transition you from the PEO/EOR model to your own legal entity and provide ongoing international HR, finance, legal, compliance and staffing support. Learn more about our end-to-end international expansion services.