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.
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:
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.
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:
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 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:
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.
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.
A full workweek in Malawi is 48 hours.
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%.
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.
PTO is calculated by the:
There are 12 public holidays.
The duration of sick leave entitlement provided to workers is dependent on how long they have been employed by their employer:
Women are entitled to 8 weeks of maternity leave every 3 years and receive their full salary.
There is no statutory paternity leave in Malawi.
There is no statutory parental 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.
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.
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.
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.
Depending on the contract, the probation period can last up to 12 months.