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Global PEO and payroll in Malawi

Malawi presents a low-cost, strategically located labour market for companies operating in agriculture, manufacturing, NGO programme delivery, and field-based services. It’s a jurisdiction where on-the-ground execution matters, and where international employers often require fast access to local or cross-border talent without building a permanent footprint.

But hiring in Malawi is not informal or risk-free. Employment is governed by a legal code and enforced through the Employment Act (as amended), the Income Tax Act, and pension contribution regulations. Employers are required to issue written contracts, deduct PAYE and pension contributions at source, register employees with relevant authorities, and follow correct procedures for termination, leave, and severance.

For companies that need to hire one or several people quickly, without overcommitting to local incorporation or navigating tax and labour compliance directly, a Global PEO/EOR offers a compliant, lower-risk alternative.

Through an Employer of Record (EOR) model, the PEO becomes the legal employer in Malawi while you retain operational control. It’s a structure designed to simplify hiring, protect against legal exposure, and maintain flexibility as project or delivery needs evolve.

What Is a Global PEO?

A Global Professional Employer Organisation (PEO) allows you to employ local or international staff in Malawi without registering a local entity. The PEO becomes the legal employer on paper, handling contracts, payroll, statutory filings, and compliance, while your business directs the work and oversees performance.

This is not a co-employment model. Under Malawian law, employment responsibilities cannot be split. The Employer of Record (EOR) assumes full liability for legal compliance, while you remain in control of daily operations and deliverables.

The model is used by companies needing to:

  • Hire quickly for short- or long-term assignments.
  • Deploy field or programme staff without setting up infrastructure.
  • Convert independent contractors into compliant employees.
  • Reduce the legal risk of direct employment in unfamiliar jurisdictions.
  • Exit the market cleanly when operations wind down.

The PEO handles everything on the back end:

  • Drafting and issuing locally compliant employment contracts.
  • Calculating payroll and making PAYE, pension, and other statutory deductions.
  • Registering employees with tax and social protection authorities.
  • Managing onboarding, probation, leave, and termination.
  • Ensuring ongoing compliance with Malawian labour law.

You get the benefits of compliant employment without the overhead of incorporation, registration, or ongoing entity maintenance.

How a Global PEO Works in Malawi

In Malawi, a Global PEO functions as a full Employer of Record (EOR). This is not a shared responsibility model — under local law, the legal employer is solely responsible for contractual terms, payroll reporting, tax deductions, and statutory compliance. As the client, you retain control of the employee’s duties, outputs, and day-to-day supervision, but none of the legal liabilities.

The process typically works as follows:

  • Employment setup
    The PEO prepares a contract based on your operational brief, aligned with the Employment Act and all statutory entitlements. This includes specifying contract type (permanent or fixed-term), probation, hours, notice, and benefits.
  • Onboarding and registration
    Once signed, the employee is registered with the Malawi Revenue Authority for PAYE and with the relevant pension scheme. Bank details, ID, and other onboarding formalities are handled locally.
  • Payroll and deductions
    Salaries are processed monthly in Malawi Kwacha. The PEO calculates and remits all mandatory deductions, including PAYE, pension (minimum 10% combined), and any applicable levies.
  • Leave, entitlements, and changes
    The PEO tracks statutory leave, handles salary adjustments or contract updates, and ensures compliance with maternity, sick leave, and working time obligations under law.
  • Offboarding and termination
    If the engagement ends, the PEO manages the required notice, calculates severance (if due), and issues final payments, following proper legal process to avoid disputes.

At every stage, your role is to set direction, manage the work, and stay focused on outcomes. The PEO shields your organisation from the complexities of Malawian employment compliance and gives you a clean legal structure for workforce management.

Malawi Employment Essentials

Employers in Malawi must comply with national labour legislation, including the Employment Act (revised 2021), the Pension Act, and relevant tax regulations administered by the Malawi Revenue Authority (MRA). While the system is straightforward in structure, non-compliance, particularly in dismissals and deductions, can result in fines, legal claims, or operational disruption.

Key requirements include:

  • Employment Contracts
    All employees must receive a written contract at the start of employment. It must specify job title, salary, hours of work, leave entitlements, termination provisions, and notice period. Fixed-term contracts are permitted, but renewals beyond 12 months may trigger reclassification as permanent unless handled correctly.
  • Working Hours
    The statutory maximum is 48 hours per week, typically spread over six days. Overtime is allowed by agreement and must be compensated at 150% of normal wages, or 200% on public holidays.
  • Minimum Wage
    As of 2024, the national minimum wage is MWK 100,000 per month (approximately USD 60), though higher wages are expected in urban and skilled sectors. Wages must be paid in Malawi Kwacha, at least monthly.
  • Income Tax (PAYE)
    The PAYE system is progressive, with rates ranging from 0% to 30%. Employers are responsible for monthly withholding and remittance. Failure to file or remit on time can result in financial penalties.
  • Social Protection and Pension
    Employers must enrol eligible employees in a licensed pension scheme. The statutory minimum contribution is 10% of monthly earnings (5% employer + 5% employee), but higher rates are common in formal employment. Registration with the pension administrator is mandatory.
  • Leave Entitlements
    • Annual Leave: Minimum of 18 working days per year after 12 months of service.
    • Sick Leave: Up to 3 months per year, with 4 weeks fully paid. A medical certificate is required.
    • Maternity Leave: 8 weeks paid leave, available every 3 years. No paternity leave is mandated by law.
    • Public Holidays: 14 recognised national holidays. Work on these days must be compensated.
  • Termination and Severance
    Notice periods vary by tenure but must be stated in the contract. Employees with over one year of service are entitled to statutory severance unless dismissed for misconduct. Redundancy requires proper documentation and justification. Unfair dismissal claims can be brought to the Industrial Relations Court.

Malawi’s employment regime does not support informal workarounds. Employers must meet the same standards regardless of scale, whether hiring a local country manager, a field coordinator, or temporary project staff.

Key Advantages of Using a Global PEO in Malawi

Hiring directly in Malawi means registering a local entity, opening a bank account, appointing directors, engaging local counsel, and taking on full liability for employment compliance. For most international employers, especially those with limited headcount, short-term operations, or donor oversight, that’s not a sensible starting point.

A Global PEO gives you a legally sound alternative: hire employees under a local Employer of Record (EOR) structure, stay fully compliant with Malawian law, and avoid the time, cost, and liability of setting up a company.

This model is especially valuable if you:

  • Need to hire quickly for a grant, pilot, or field-based project.
  • Are running operations in parallel markets and want a centralised employment framework.
  • Must convert contractors into employees to meet funding, tax, or risk requirements.
  • Want to avoid entanglement with local payroll registration, tax filings, or legal disputes.
  • Require exit flexibility — the ability to wind down operations without residual exposure.

With a Global PEO in Malawi, you gain:

  • A fully compliant local employment setup without incorporation.
  • Clean separation between delivery and liability — you manage the work, we handle the employment and compliance.
  • On-the-ground HR and payroll execution in local currency and language.
  • Protection against misclassification, unlawful termination, and statutory errors.
  • The ability to scale, reduce, or shift your workforce based on programme or business needs.

For many organisations, it’s the only way to hire in Malawi with confidence and control without overcommitting.

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