Do I Need a Local Entity to Hire in Lesotho?

In Lesotho, a "local entity" typically refers to a recognized business presence that can act as an employer, such as a subsidiary or branch office. This setup allows you to be acknowledged locally as an employer and fulfill the country's payroll and employment obligations.

Without a local entity, you generally cannot register as an employer, manage mandatory social security processes, or run compliant payroll. However, using an Employer of Record (EOR) can simplify the hiring process without the need for a local entity.

What is Required to Employ Someone in Lesotho?

• Local employing entity required to directly employ? Usually yes (unless using an EOR)
• Payroll registration required? Yes (employer registration with the Lesotho Revenue Authority)
• Withholding/tax remittance required? Yes (mandatory payroll tax remittance applies)
• Social contributions required? Yes (employer must contribute to the Social Security Fund)
• Local employment agreement required? Yes (written contracts are standard practice)
• Mandatory benefits to budget? Yes (statutory leave, social security coverage, and other entitlements)
• Works council/collective agreements considerations? Often (certain sectors may have collective agreements)

Best Options If You're Hiring in Lesotho

Can I Hire Contractors Instead of Setting Up an Entity?

Yes, but it’s essential to ensure that the contractor relationship is genuinely independent.

In Lesotho, while hiring contractors can be a flexible option, misclassification risks exist if the contractor is treated like an employee. Authorities may scrutinize the relationship to determine if it resembles employment.

• Ensure the contractor has multiple clients.
• Limit your control over how the work is done.
• Keep the contractor's work scope project-based and not integral to your business.

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 Lesotho, depending on the registrations required.

Ongoing cost categories (entity route):

• Accounting, bookkeeping, and statutory filings: Estimated 3,000–7,000 LSL per month ($160–$370)
• Payroll provider: Estimated 500–1,500 LSL per employee per month ($27–$80)
• Employer registrations and recurring compliance: Varies by complexity
• Corporate tax filings and annual reporting: Estimated 15,000–30,000 LSL per year ($800–$1,600)

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 Lesotho

Hiring in Lesotho 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 Lesotho quickly without establishing a local entity, eliminating incorporation costs and ongoing administration.
• 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.