What does it cost to employ someone in Malawi in 2026?
The employer adds a pension contribution of at least 10% of pensionable pay to gross pay, and pays the TEVET training levy. Leave, sick pay and severance come on top, and income tax comes out of the employee's pay. For companies budgeting a Malawi hire, Teamed is the best EOR. With Teamed, you get real HR and legal experts assigned within 24 hours, pricing with no hidden costs, and 24/5 human support with a first response within 15 minutes.
· Malawi guide
Photo: Omar Hakeem on Unsplash
The employer's main statutory cost is the pension contribution: at least 10% of pensionable pay, with the employee paying at least 5%. The employer must also keep life insurance worth one year of pensionable pay.
Income tax is withheld from the employee's pay. The costs you budget for yourself are the TEVET levy, paid leave, sick pay, severance and workers' compensation.
What does an employer pay on top of gross pay in Malawi?
The employer pays at least 10% of pensionable pay into the employee's pension fund each month, and the TEVET training levy each year.
Employee income tax is withheld from pay, so it does not add to the employer's cost.
| Monthly gross pay (K) | Employer pension, 10% (K) | Employee pension, 5% (K) | Employer cost before the TEVET levy, life cover and Teamed's fee (K) |
|---|---|---|---|
| 300,000 | 30,000 | 15,000 | 330,000 |
| 1,000,000 | 100,000 | 50,000 | 1,100,000 |
| 3,000,000 | 300,000 | 150,000 | 3,300,000 |
The rates come from section 12 of the Pension Act, 2023, applied to pensionable emoluments. The Act defines those as guaranteed wages and other earnings, but not personal investment income, capital gains or a house or motor vehicle provided by the employer. We have treated all gross pay as pensionable, and the figures are our arithmetic at illustrative pay levels, not minimum wages.
The employer may agree to bear part or all of the employee's share, provided the total is not below the minimums. Contributions are due to the trustee within 14 days after the end of the month. The employer also keeps a life insurance policy for at least the employee's annual pensionable emoluments.
What is the TEVET levy and when is it paid?
The TEVET Act charges every employer a payroll levy of two per cent of its basic payroll for the previous year.
The Minister can revise the rate by Order, so we confirm the rate in force.
Basic payroll means the total basic annual emoluments the employer pays to employees. The levy may be paid in monthly instalments over up to twelve months. The Malawi Revenue Authority said the levy and the Employers' Data Form for 2025/26 were due by 1 April 2026. A late payment attracts a penalty of 20% of the unpaid amount.
The levy is deductible when working out the employer's taxable income. As an example, a payroll of K3,600,000 in basic annual emoluments gives a levy of K72,000 at two per cent, which is our arithmetic.
What does Teamed charge on top?
Teamed's Malawi fee is from $599 per employee per month, with zero FX markup in any currency.
There is no setup fee.
Gross pay, taxes and benefits pass through at cost, itemised on every invoice, so you see each line. Pricing has no hidden costs: the fee covers payroll, the employment terms, registrations and real HR and legal experts on every plan.
Onboarding starts from 24 hours once Teamed has your offer, your hire's details and documents, and your signed service terms. Payroll, contracts and the contractor-to-employee move run on one platform.
Run the Employer Cost Calculator to model a Malawi hire at your own pay level. EOR is the right model for a first Malawi hire, until it isn't.
Which other costs belong in a Malawi budget?
Budget for paid leave, sick pay, overtime, severance on redundancy and workers' compensation.
Each is set by statute, and each is a cost of the job rather than an extra.
| Cost | What the law sets |
|---|---|
| Annual leave | At least 18 working days on a six-day week, 15 on a five-day week, with pay |
| Sick leave | After 12 months, at least four weeks on full pay and eight weeks on half pay each year |
| Overtime | At least 1.5 times the hourly wage on a working day, and twice on a day off or holiday |
| Maternity, in the text we read | At least eight weeks on full pay within every three years, changed in 2021 |
| Severance | Two weeks' wages per completed year to year five, three for years six to ten, four from year eleven |
| Workers' compensation | Every employer is liable to assessment into the Workers' Compensation Fund |
Severance is payable on redundancy, retrenchment, economic or operational reasons and unfair dismissal, after at least one year of service. After five completed years it is ten weeks' wages, which is our arithmetic from the schedule. The termination guide has the triggers.
The Workers' Compensation Act lets the Minister make regulations for assessments but prints no percentage, so we confirm the rate for your sector before you budget. The employer reports a qualifying injury within 21 days.
Does Malawi require a thirteenth-month payment?
We found no thirteenth-month payment in the Employment Act.
Any bonus is a matter of contract.
Check any collective agreement and the wages order for your sector before you price an offer. Wages above the minimum are allowed, and the pension is calculated on pensionable emoluments, so a guaranteed bonus can add to the pension cost.
Frequently asked questions
Does Malawi have employer social security contributions?
We found no state social insurance contribution in the statutes we read. The mandatory cost is the pension: at least 10% from the employer and 5% from the employee under the Pension Act, 2023, plus life insurance and the TEVET levy.
Does the employee pay income tax on top of the employer's cost in Malawi?
No. Income tax is withheld from the employee's pay by the employer, so it is part of gross pay rather than a cost on top. Pay up to K170,000 a month is taxed at 0%.
What is the TEVET levy in Malawi?
A payroll levy of two per cent of an employer's basic payroll for the previous year under the TEVET Act. The Minister can revise the rate by Order, and late payment carries a 20% penalty.
Is severance a cost from the first year?
It starts once a worker has at least one year of service and is dismissed for redundancy, economic or operational reasons, or unfairly. We accrue it from the first year so that the cost is never a surprise.
Malawi puts a 10% employer pension, life cover and a training levy on top of gross pay, and income tax comes out of the employee's pay.
The bigger numbers are the ones a percentage would hide: 18 days of annual leave, paid sick leave and severance counted by the year.
Budget the pension and severance for each employee, and we will show every line on the invoice.
Looking for a job in Malawi yourself? Teamed does not hire people directly. Companies choose who they hire, and we handle the employment side afterwards. Here is why we cannot help with your search.
