How to Hire Remote Employees In 

Malawi

The Basics

Currency
Malawian Kwacha (MWK)
Employer Taxes
10.0%
Payroll Frequency
Monthly
Official Language
English

Employment in 

Malawi

Hire Independent Contractors

Independent contractors or freelancers are self-employed individuals who provide services to companies as a non-employee. This is one of the most common ways companies tend to hire non-local designers, engineers, support reps, etc.

For legal and tax purposes, independent contractors are not classified as employees. They may work for multiple clients, set their own work hours, negotiate their pay rate, and decide how a job gets done.

For example, the IRS says that if an independent contractor or freelancer does work that can be controlled (what will be done and how it will be done) by an employer then they are, in fact, classified as an employee.

As you can imagine, hiring someone as an independent contractor versus an employee is a fine line to tread.

While there are benefits when you choose the contractor route, there are quite a few drawbacks to consider and you’ll need to weigh them carefully to determine the best fit for your company.

Benefits of Hiring Independent Contractors
Reduced overhead: Lower cost in expenses, payroll, benefits, and more.
Greater flexibility: Contractors can be brought on as-needed. If not a good fit, you simply don’t have to move forward with the contract.
Reduced legal risk: Contractors aren’t usually protected by employment anti-discrimination and workplace safety laws.
Disadvantages of Hiring Independent Contractors
Risk of Misclassification: Not only does this deny workers their proper protections, it can also result in steep penalties and damage to your company. If the IRS determines that employee misclassification has occurred, you will be liable for a percentage of the employees wages, FICA contributions, penalty fines, unpaid taxes, up to a year in prison, and more.
Lack of Control: Contractors are drawn to being independent because it gives them greater control over the work they perform and who they work with. Because they’re not employees, you can’t tell them what to work on and how it should be done.
Lack of Loyalty: Contractors come and go as-needed. Many companies hire contractors for short-term work, which makes it difficult to cultivate loyalty.
Increased Scrutiny: Using Independent Contractors typically leads to an increased risk of being audited.

Set up a subsidiary in 

Malawi

A foreign subsidiary is a company that operates overseas as part of a larger company who’s HQ is in another country.

Establishing a foreign entity is great for having an international presence and accessing new markets. Though, setting up a subsidiary in Malawi can be expensive, stressful, and time-consuming. It's not for the faint of heart.

To set up a subsidiary in Malawi, you have to:

  1. Register your business name and file articles of incorporation
  2. File for local bank accounts
  3. Learn and keep track of the local employment laws
  4. Set up local payroll
  5. Hire local accounting, legal, and HR people

If you're lucky, this process can take months. If you're not so lucky, it can take up to a year. And on average, it costs about $50k-$80k, all-in-all, to get setup. And that's just for Malawi.

Use an Employer-of-Record (EOR)

An employer-of-record (EOR) is a company that hires and pays an employee on behalf of another company.

An EOR is typically used to overcome the financial and regulatory hurdles that often come with employing remote workers.

Each country has its own payroll, employment, and work permit requirements for non-resident companies doing business in their jurisdiction. Meeting those demands can be a huge obstacle when it comes to hiring remotely.

At Panther, we help companies employ and pay people in over 160 countries, without having to set up a foreign subsidiary. Payroll, benefits, taxes, compliance, and more are all handled by us, at a fraction of the cost.

Outside of saving you months and tens of thousands of dollars, other advantages of using Panther are:

  • Ability to attract talented and motivated employees from all over the world.
  • Full legal compliance: There is no risk of violating local employment laws.
  • Transparency: Employees are still your employees. All the work, processes, operations and day-to-day business belong to you, the company, just like with any other employee. Panther just takes on all of the responsibilities, obligations and admin work related to your team's employment.
  • No risk of misclassification

Because you no longer have to set up your own subsidiary, you’ll save a ton of time and tens of thousands of dollars using Panther.

Paying Remote Employees

Paying employees in Malawi is not the same as paying workers in your own country. Employees have to be paid using Malawi’s employment and payroll standards.

This means that you have to know, understand, and keep up with 1) fluctuating currency changes, and 2) local payroll and tax laws in the countries you’re looking to hire in.

Outside of the laws and regulations around payroll, there may be different conditions surrounding leave, overtime, termination, and more. As you can imagine, maintaining this kind of regulatory knowledge can be challenging. But it is crucial and necessary to follow local legislation.

After, you’ll have to determine the best way to pay your international employees. This can be done in a number of ways, including but not limited to:

Pay through a local entity

One of the most challenging (and expensive) parts of paying international employees is setting up the infrastructure to do so.

Before you start to run payroll, you have to register your company as the local employer in the country the worker resides in. As you can see in the “Set up a subsidiary” section, this is a multi-step process that can take up to a year and put you on your way to bankruptcy.

Work with an EOR

Outside of EORs acting as the full admin employer, many also provide remote payroll.

For example, at Panther, in just 1-click, you’re able to pay your entire global team, anywhere in the world. We send you an invoice each month, charge you in US Dollars, and pay your employees the same amount in their local currency.

We factor in currency fluctuations and use the mid-market rate plus any applicable fee passed on by our provider at cost at the time of billing.

Malawi

 Specific Information

Working Hours

A full workweek in Malawi is 48 hours.

Overtime

Overtime hours during the regular workday are paid at a rate of 150% of the normal pay.  In addition, the employee is entitled to receive the hours of overtime back in compensatory rest for at least the equivalent amount overtime worked.

For work over a weekend or public holiday, the overtime pay rate is 200%.

Payroll Tax

Employer

Employer

  • National Pension Scheme

Minimum Wage

Malawi minimum wage policy is 1, 346 MWK per day.

Payroll

Pay Cycle

Salaries are paid on a weekly basis. If an employee works on an hourly basis, then the salary is paid every 2 weeks.

It is also possible to pay employees on a monthly basis, so long as it is agreed upon by both the employee and employer.

13th Salary

Not Required.

Leave

Paid Time Off (PTO)

PTO is calculated by the:

  • Minimum annual leave is 15 days for an employee who works a 5- day work week and 18 days for an employee who works a 6-day workweek.

Public Holidays

There are 12 public holidays.

Sick Days

The duration of sick leave entitlement provided to workers is dependent on how long they have been employed by their employer:

  • If the employee has completed for 12 months of employment, they are entitled to 4 weeks of sick leave at 100% pay and an additional 8 weeks at 50% pay.     

Maternity Leave

Women are entitled to 8 weeks of maternity leave every 3 years and receive their full salary. 

Paternity Leave

There is no statutory paternity leave in Malawi.

Parental Leave

There is no statutory parental leave.

Other Leave

Work-related injury leave: For temporary disability, the employee is entitled to a percentage of their regular salary.

For employees who are deemed to be permanently disabled, a lump sum of 54 months is paid out to the employee.

For employees who are partially disabled, a percentage of the 54 months will be paid out to the employee, depending on the degree to which they are assessed to be disabled.

In addition to this, it is the responsibility of the employer to pay for all medical expenses associated with the injury.

If the injury results in death, a sum totaling 42 months excluding any disability benefit paid before the passing of the employee is paid out to the family.

Marriage Leave

None.

Bereavement Leave

None.

Termination

Termination Process

Termination needs to be submitted in writing to the other party. 

The employee must be given the opportunity to present their counterargument.    

The employer is obligated to provide a termination certificate to the employee stating the reason for termination.  

Notice Period

The notice period depends on the frequency the employee is paid:

If the employee is paid monthly: 30 days’ notice

If the employee is paid every 2 weeks: 15 days if they have been employed for less than 5 years and 30 days if they have been employed for more than 5 years

If the employee is paid monthly: One week if the employee has been employed for less than 2 years; 2 weeks if the employee has been employed between 2-5 years; one month if the employee has been employed for more than 5 years.

If the employee is paid on an hourly or daily basis: 1 day for less than 6 months of employment, 1 week for 6 months-2 years of employment; 15 days for 2-5 years of employment, 1 month for 5+ years of employment.

Severance Pay

An employee is only eligible for severance pay if they are let go due to economic reasons (i.e. redundancy ore retrenchment) or if they are terminated unfairly.  In addition, the employee must have completed one year of employment.

  • 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 can last up to 12 months.