Payroll and Benefits Guide Malawi
Last updated: Jul 06, 2025
Contribution
| Employer Payroll Contributions | |
| 10.00% | National Pension Scheme |
| 10.00% | Total Employment Cost |
| Employee Payroll Contributions | |
| 5.00% | National Pension Scheme |
| 5.00% | Total Employee Cost |
| Employee Income Tax | Annual |
| 0.00% | 0-1,800,000 MWK |
| 25.00% | 1,800,001 – 6,000,000MWK |
| 30.00% | 6,000,001 – 30,600,000 MWK |
| 35.00% | Income exceeding 30,600,000 MWK |
| 15.00% | Flat rate income tax applies to expats |
Employer taxes
Employee taxes
Minimum Wage
General
Under the provision of the Employment Act, employees are entitled to a minimum wage of 90,000 MWK per month or 3,461.54 MWK per day for both urban and rural areas.
MINIMUM WAGE (PER MONTH)
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
| Aspect | Regulation Details |
| Maximum Ordinary Hours | 48 hours per week (excluding overtime). Any work beyond this is classified as overtime. |
| Daily Hour Limit (Contractual) | The limit is 8 hours for employees working six days a week, or 12 hours for employees working five days a week. |
| Overtime Threshold | Overtime is triggered by any time worked in excess of the hours normally worked by the employee on a working day or by time worked on a day off or public holiday. |
| Compensatory Rest | A worker must be compensated for each hour of overtime with compensatory rest (of at least equivalent hours) and premium pay for overtime hours (Source 2.8). |
| Exemptions | Certain exempted employees (such as security guards and managerial staff) may not be subject to these working hour limits. |
Mandatory Overtime Pay Rates
Malawi’s Employment Act recognizes three distinct classes of overtime, each with a statutory minimum premium rate.
| Day/Condition | Classification | Minimum Compensation Rate (Statutory) | Total Pay Rate | Notes |
| Ordinary Overtime | Extra hours worked on a regular working day beyond normal hours. | 1.5 times the regular hourly wage. | 150% | This premium is often compensated with daytime off rather than financially for the working week. |
| Day Off Overtime | Hours worked on a scheduled day off (weekly rest day). | 2 times the regular hourly wage (Double Time). | 200% | This high premium is mandatory for work on a scheduled rest day. |
| Holiday Overtime | Hours worked on a Public Holiday. | 2 times the regular hourly wage (Double Time). | 200% | Note: Some sources indicate rates as high as 400% (four times the normal rate) for Public Holiday overtime, making contractual clarification essential. The widely cited minimum statutory rate is 200%. |
Compensation Method:
-
For ordinary overtime on working days, the preferred statutory compensation method is often compensatory rest (time off in lieu) in addition to premium pay.
-
For Day Off and Holiday overtime, monetary payment at the $200\%$ rate is the minimum standard, often required in addition to a compensatory day off.
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.
PTO carryover
Note:
- For Zapeo, annual leave that is not taken within six months of the annual leave cycle ends is forfeited.
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 | Notes |
|---|---|---|---|
| 1 January 2026 | Thursday | New Year’s Day | Standard holiday |
| 15 January 2026 | Thursday | John Chilembwe Day | Standard holiday |
| 3 March 2026 | Tuesday | Martyrs’ Day | Standard holiday |
| 20 March 2026 | Friday | Eid al-Fitr | |
| 3 April 2026 | Friday | Good Friday | Standard holiday |
| 4 April 2026 | Saturday | Easter Saturday | Standard holiday |
| 6 April 2026 | Monday | Easter Monday | Standard holiday |
| 1 May 2026 | Friday | Labour Day | Standard holiday |
| 14 May 2026 | Thursday | Kamuzu Day | Standard holiday |
| 27 May 2026 | Wednesday | Eid al-Adha | |
| 6 July 2026 | Monday | Independence Day | Standard holiday |
| 15 October 2026 | Thursday | Mother’s Day | Standard holiday |
| 25 December 2026 | Friday | Christmas Day | Standard holiday |
| 26 December 2026 | Saturday | Boxing Day | Standard holiday |
| 28 December 2026 | Monday | Boxing Day Holiday |
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.
PAID MATERNITY LEAVE (DAYS)
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 their actions.
| Salary payment interval / date | Final payment on termination | Bank account payment requirement |
|---|---|---|
| Wages must be paid at least once a week or fortnight if the employee’s wages are fixed by the hour, day, week or piece-work; and at least once a month if wages are fixed on a monthly or annual basis. | Wages and other remuneration due on termination or completion of the contract must be paid within seven days after the termination or completion of employment. | Wages shall be paid to the employee or a person specified in writing, in legal tender; with the employee’s consent, payment may be made by another method (e.g., deposit). |
Notice Period
Notice of termination of contract of employment to be given by either party shall be:
- 3 months notice in the case of contract without limit of time/a contract of two years or more
- 2 months in the case of a contact of 1 year/more but less than 2 years
- 1 month in the case of contract of 6 months/more but less than a year
- 2 weeks in the case of a contract less than 3 months/more but less than 6 months
- 1 day in the case of a contract of less than 3 months/ in the case of casual/seasonal
Notice period for termination is an option and therefore subject to the agreement with the employee, and, if there was no mention the above prevail.
Severance Pay
Severance pay is only required for employees who have been with the company for at least one year and whose contract is terminated for economic reasons (retrenchment, layoffs) or if the termination is unfair and the employee is not on pension. Pension replaced severance compensation, thus if the employee is on pension, no severance payment will be provided; to avoid double payment.
The amount of payment depends on how long the employee has worked at the company:
- 1-5 years = 2 weeks of wages for each year of employment
- 6-10 years = 3 weeks of wages for each year of employment
- 11+ years = 4 weeks of wages for each year of employment
Gratuity
In accordance with the Employment Act, where an employee is not on pension due to exemptions extended to them, then upon retirement, termination of employment or death the employer must pay out Gratuity to the worker equal to 5% of the monthly salary for each completed month of service. To be eligible for Gratuity, the worker must have been employed by that employer for a minimum continuous period of three months in any given year.
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.
Immigration
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
Questions & Answers
See how Papaya can help you automate your global payroll or EoR whilst staying 100% compliant with local labor laws
Payroll and Benefits Guide
in Malawi
What’s covered in this guide:
- Employer/employee contributions
- Minimum wage
- Working hours
- Visa requirements
And more...
Public Holidays Calendar
| Date | Day | Holiday | Notes |
|---|---|---|---|
| 1 January 2026 | Thursday | New Year’s Day | Standard holiday |
| 15 January 2026 | Thursday | John Chilembwe Day | Standard holiday |
| 3 March 2026 | Tuesday | Martyrs’ Day | Standard holiday |
| 20 March 2026 | Friday | Eid al-Fitr | |
| 3 April 2026 | Friday | Good Friday | Standard holiday |
| 4 April 2026 | Saturday | Easter Saturday | Standard holiday |
| 6 April 2026 | Monday | Easter Monday | Standard holiday |
| 1 May 2026 | Friday | Labour Day | Standard holiday |
| 14 May 2026 | Thursday | Kamuzu Day | Standard holiday |
| 27 May 2026 | Wednesday | Eid al-Adha | |
| 6 July 2026 | Monday | Independence Day | Standard holiday |
| 15 October 2026 | Thursday | Mother’s Day | Standard holiday |
| 25 December 2026 | Friday | Christmas Day | Standard holiday |
| 26 December 2026 | Saturday | Boxing Day | Standard holiday |
| 28 December 2026 | Monday | Boxing Day Holiday |
what is leave rules and salary rules for expats in malawi?
Hi Hitendra, thank you for your question. There is no difference in leave or salary rules for expats.
I just want to know the specific section within the employment Act that talks about minimum wage
Hi Charles, section 54 and 55 of the Malawi Employment Act discuss minimum wage.
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?
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
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?
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.
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?
An employee who has worked between one to five years is entitled to 2 weeks’ severance pay for every year of employment.
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?
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.
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
What calculation are you referring to?
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?
The worker should check their rights with a local employment expert for their unique setup.
how is PAYE calculated on gratuity is there a fixed rate?
Typically, this will be the applied rates (though rate can change and should be verified at the time of payout): Up to K100,000: 0% tax (exempt or tax-free portion)
K100,001 to K200,000: 15% tax
K200,001 to K400,000: 30% tax
Above K400,000: 35% tax
These bands are applied on the portion of the gratuity payment that exceeds the exempted amount.
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
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.
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.
How is tax on severance pay calculated in Malawi in 2023?
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.
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?
Severance is calculated based on the current salary of the worker.
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?
Unfortunately, this is not something we can advise on; We recommend seeking advice from a local lawyer.
how do we calculate terminal benefits in malawi?
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.
what are fields of a payslip in malawi or what does the payroll contain
This Countrypedia page can be used to reference the items that must be paid in Malawi.
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?
Probation period is common for 3-6 months. I would suggest seeking a local legal advisor.
What if they have worked for 8 years how do you calculate the surveillance allowance
Is this referring to severance pay? You can find all the information here.
how do you calculate severance pay or graduity for a employee that resigned months in advance
There is no severance pay in case of resignation.
wanted to ask about the tax on severence pay how do we calculate
It is treated the same as payroll taxes.
After serving notice for termination of contract, is the company expected to pay the base pay or net pay to the employee that’s leaving? Does the Labour law provide for this?
Until the worker terminates, they are entitled to all of their regular salary and contributions.
For someone who was exempted from pension, has worked from July 2023 through July, 2024 and his current leaving salary was K162,600.75 how can we come up with his Gratuity?
A gratuity is equal to 5% of the monthly salary for each completed month of service.
What’s the maximum period an employee can stay without being paid after the payment cycle has fallen due?
“Hi! Here’s what we can share based on common practices in Malawi (note: this does not constitute advice and is not legally binding):
In Malawi, the Employment Act requires employers to pay wages no later than the last working day of the month or within 7 days after the end of the pay period, depending on the agreed cycle (monthly, bi-weekly, etc.).
If payment is delayed beyond that period, it may be considered a breach of contract or unlawful withholding of wages. Employees can report such issues to the Labor Office or seek legal redress.
For a definitive answer in your case, we recommend speaking with Malawi’s Ministry of Labor or a legal professional.”