Do I Need a Local Entity to Hire in Malawi?

In Malawi, a "local entity" typically refers to a legally recognized presence such as a subsidiary or branch office that allows you to act as an employer. This setup is essential for managing payroll and fulfilling employment obligations in the country.

Without a local entity, you may find it challenging to register as an employer, manage payroll, and comply with local labor laws. An alternative is to use an Employer of Record (EOR), which can handle these responsibilities on your behalf.

What is Required to Employ Someone in Malawi?

• Local employing entity required to directly employ? Yes (required for direct employment and payroll registration)
• Payroll registration required? Yes (mandatory with the Malawi Revenue Authority)
• Withholding/tax remittance required? Yes (employers must withhold income tax for employees)
• Social contributions required? Yes (contributions to the National Social Security Fund are mandatory)
• Local employment agreement required? Yes (written contracts are standard practice)
• Mandatory benefits to budget? Yes (includes sick leave, maternity leave, and pension contributions)
• Works council/collective agreements considerations? Usually (depending on industry and employee count)

Best Options If You're Hiring in Malawi

Can I Hire Contractors Instead of Setting Up an Entity?

Yes, but you should be cautious about misclassification risks.

While hiring contractors in Malawi doesn’t require a local entity, it’s essential to ensure that the contractor operates independently. Misclassification can lead to legal complications if the contractor is deemed an employee.

• Ensure the contractor has multiple clients.
• Limit control over their work hours and methods.
• Keep the relationship clearly defined in a contract.

How Long Does Entity Setup Take And What Does It Cost?

Typical entity setup timeline: It often takes 4–8 weeks to set up an entity in Malawi, depending on the required registrations.

Ongoing cost categories (entity route):

• Accounting, bookkeeping, and statutory filings: Estimated MWK 150,000–300,000 per month ($180–$360)
• Payroll provider: Estimated MWK 10,000–25,000 per employee per month ($12–$30)
• Employer registrations and recurring compliance: Varies by complexity
• Corporate tax filings and annual reporting: Estimated MWK 200,000–500,000 per year ($240–$600)

EOR cost components (no-entity route):

• A per-employee EOR service fee (from $399 p/month with Playroll)
• Pass-through statutory costs (e.g., employer social security contributions)
• Any optional benefits you choose to provide beyond statutory minimums

How an Employer of Record Can Help You Hire in Malawi

Hiring in Malawi can be complex, but it doesn’t have to require setting up a local entity or taking on long-term overhead. With an Employer of Record like Playroll, you get a simple, predictable way to hire compliantly while keeping costs transparent and under control. We help you:

• Hire employees in Malawi quickly without establishing a local entity, eliminating incorporation costs, ongoing administration, and exit complexity.
• Stay fully compliant with local payroll, tax, and employment regulations with Playroll’s payroll services.
• Control your total employment costs, with a clear monthly EOR service fee (from $399 per employee).
• Focus on growing your business, while we manage contracts, payroll, compliance, and labor law obligations end to end.
• Scale up or exit the market easily, without the financial or legal burden of closing a local entity.