Zambia

Employer of Record in Zambia

Understanding the Government’s financial policies and labor laws is the first and most crucial step while expanding business in a foreign country. It is critical to understand regulations on business entities set up, employment contracts, recruitment, payroll, working hours, leaves, and termination. Even a tiny mistake can cause significant risk and threat to the business prospects; however, an effective and trusted EOR solution could make the global business expansion hassle-free. Skuad’s EOR services take care of hiring employees, managing their payroll and taxes while complying with the local employment laws. Learn more about how Skuad’s Global HR platform can help to expand your business in Zambia.

Zambia at a Glance

Official Name: Republic of Zambia

Location: Southern Africa

Population: 17.86 Million (2019)

Currency: Zambian kwacha (ZMW)

Capital city: Lusaka

Languages: English (Official), local languages include Bemba, Lozi, Kaonde, Lunda, Luvale, Tonga, and Nyanja.

GDP: 23.31 Billion USD (2019)

 Employment in Zambia

What You Must Know Before Employing in Zambia

In 2019, Zambia enacted some key changes in the Employment Code Act to enhance employee rights protection. Two legislation governs employment relationships in Zambia, the Employment Code Act, and the Industrial and Labour relations Act. The Industrial Relations Court, a fast-track court, hears and resolves industrial relations disputes promptly.

To set up a local entity in Zambia, a company must be aware of all aspects of Zambia’s employment regulations. To minimize and mitigate the challenges that may arise for companies looking to set up a local office, it is advisable to partner with a local payroll provider like Skuad, who is well aware of Zambia’s labor laws for both local and foreign employees.

Let us understand the essential aspects of Zambia’s employment laws.

Employment Contracts

The employment contract for six months or more must be in writing. Agreements for less than six months can be oral; agreed verbally by both parties.

Written contracts need to be signed by both parties and attested by the labor officer.

The minimum age for employment is 15.

An employer may make changes to the terms of an employment agreement by obtaining consent from the employee.

Any adverse alteration to the contract entitles the employee to a severance payout.

Working Hours

A regular working day is eight hours, a maximum of 48 hours per week.

With the employee’s consent, the employer may exceed the hours of work in a day without additional pay, provided the hours do not exceed 48 hours a week.

Employees become entitled to extra pay if the work hours exceed 48 hours in a week.

Employees are entitled to:

• One rest day of 24 hours per week.
• One-hour lunch break per day; and
• Twenty minutes health break per day.

Minimum Wage

There is no national minimum wage applicable in Zambia.

Overtime Rules

• Overtime is calculated at 150% times the employee’s hourly rate of pay.
• Overtime for working on a public holiday or weekly rest day is calculated at 200% of the employee’s hourly pay rate.
• There are no exemptions from overtime.

Paid Public Holidays

Following Public holidays are observed in Zambia.

• New Year’s Day
• Women’s Day
• Youth Day
• Good Friday
• Holy Saturday
• Easter Monday
• Labor Day
• African Unity Day
• Hero’s Day
• Unity Day
• Farmer’s Day
• National Prayer Day
• Independence Day
• Christmas.

Paid Annual Holiday

After 12 months of continuous work, Employees are entitled to a holiday calculated at the rate of two days per month.

Paid Annual Holiday

After 12 months of continuous work, Employees are entitled to a holiday calculated at the rate of two days per month.

Family and Medical Leave

• Employees get ten days of paid family care leave in a year.
• The below table shows the entitlement of Paid Sick leaves based on the tenure of contracts.

Long Term Contract

Three month’s sick leave plus full pay for the first three months and after that, at 50% pay for the next three months.

Short Term Contract

26 Sick leave plus full pay for 26 days and, after that, at 50% pay for the next 26 days.

Maternity Leave

A female employee with at least two years of continuous service is entitled to maternity leave of twelve weeks with full pay.

Health Care Benefits

Employers must provide medical cover for an employee to enable the employee to get medical attention and medicines and, where necessary, transport to a medical institution during the employee’s illness.

To know more about Skuad, book a demo today.

Contractors Vs. Full-Time Employees

 The decision to keep contractors versus hiring full-time employees is of utmost importance while expanding globally. As per Zambia’s labor law, both short-term and long-term employment contracts are applicable. Due to the enhanced protection of employee rights in Zambia, it is difficult for employers to sustain contracts of employment for full-time employees. Most employers prefer to execute short-term contracts or part-time work to cut back on the costs. 

Learn more from Skuad experts about the nitty-gritty involved in hiring short-term contractors or full-time employees.

 Hiring in Zambia

Companies looking to hire talent in Zambia must be familiar with Zambia’s Labor Law and dispute jurisdictions. Sourcing talent includes various steps like posting open positions on digital job search websites, tapping into your local network, or outsourcing recruitment services. Before beginning the staffing process, ensure you understand your legal obligations as an employer. People have a right to decent employment, and they should not be discriminated against on grounds including color, nationality, and health. The employment contract must be clearly defined and understood by employees to avoid future issues.

Companies looking to hire knowledge workers tend to hire contractors and often use the Job Search portals. The two most popular job portals in Zambia are:

• Jobweb Zambia
• GoZambiaJobs

The job search portals can undoubtedly help in finding talent available in Zambia. However, you still need to manage the overall hiring, onboarding, and employee life cycle process. Hiring in Zambia can be complex, especially when you don’t have an existing presence. Skuad as an Employer or Record in Zambia can help hire in Zambia without setting up a legal entity, eliminating most legal and financial risks.

Probation & Termination of Service

 Zambia’s Employment Code Act of 2019 prescribes a probationary period for a maximum term of 3 months to determine a worker’s suitability for appointment. The probationary period can be extended for three months, making the total duration six months. Both employee and employer may terminate the employment contract after serving 24-hour notice.

 A worker who is re-hired by the same employer for the same job within two years from the contract termination date is not required to go through probation again, provided that the termination was not performance-related.

Notice Period – The notice to terminate a long-term contract of employment must be given in writing. The minimum duration of notice specified as per Zambia’s Employment Act are as follows: 

• Twenty-four hours for a contract of employment for less than 30 days.
• Fourteen days notice for a contract of employment ranging between one to three months.
• Thirty days notice for a contract of employment of more than three months.

Severance Pay – The employee is entitled to severance pay in the following cases –

• Termination of the employment contract of a fixed duration - at least 25% of the employee’s basic pay.
• Termination of employment due to redundancy - 2 months’ basic pay for each completed year of service.
• Employee’s death - 2 months’ basic pay for each completed year of service.
• Termination on medical grounds: at least three months’ basic pay for each completed year of service.

To learn more about the probation period and termination of employment in Uruguay - Connect with Skuad Experts.

EOR Solution In Zambia

Establishing a successful business in a different country requires much expertise, and it is tough to know the various compliance policies of that country. Skuad is the leading Employer of Record (EOR) solutions provider in Zambia. Skuad partners with organizations that want to expand their global operations. Skuad experts hire, onboard, and manage globally distributed teams while ensuring compliance with local regulations in over 150 countries worldwide. 

Zambia Employer of Record (Zambia EOR) solution makes it easier and faster for businesses to expand into Zambia. EOR ensures smooth and compliant payroll processing and other employment responsibilities, including contracts, work permits, and taxation in Zambia, without setting up a local entity. Talk to us and build a global team of efficient workers now.

Types of Visas in Zambia

When you decide to expand into Zambia, you also need to determine the path you want to take if you wish to build an in-house team or accept an EOR to manage payroll and employee lifecycle. It can be intimidating to keep track of all compliance risks when you’re doing business in Zambia. One critical task is making sure all of your employees have the necessary Zambian work visas and permits.

Zambia Single Entry Visa

• It allows the traveler to enter Zambia only once during the validity of the visa.
• The fee is USD 50.
• It is valid for 90 days.

Zambia Double Entry Visa

• It allows the traveler to enter Zambia twice during the validity of the visa.
• The fee is USD 80.
• It is valid for 90 days.

Zambia Multiple Entry Visa

• This visa allows the traveler to enter Zambia multiple times during the validity of the visa.
• The fee is USD 150.
• Headquarters shall only issue multiple Entry Visas through the e-visa facility.
• Valid for ninety (90), except for nationals from the United States of America for whom a multi-entry visit visa is valid for up to three years.

Zambia’s Transit Visa

• The Transit visa is issued to a foreign national who require access to enter Zambia and is transiting through overland
• Valid for a maximum period of seven days

Zambia Work Visa

• A Work Permit is issued to a foreigner who enters the country to take up employment for more than six months.
• A Zambian work permit can be extended for periods up to a maximum of 10 years.

The following types of the foreigner are eligible for work visa:

• A person employed by the Zambian Government or a statutory body.
• A person employed by the private sector, Non-Governmental Organisations
• The spouse and children may be issued with Employment Permits to be engaged in a family business.

Temporary Work Visa ( Business Visa)

A Temporary Work Permit is issued to any business visitor who intends to remain in Zambia for more than 30 days.

The validity of the business visa should not exceed six months within one year.

Work Permits in Zambia

To live and work in Zambia, foreigners must obtain a work permit, which is issued based on valid employment. Zambia offers varied types of work permits depending on the employment contract duration. An applicant can apply for a business visa at the Zambian embassy in their home country and then apply for a work permit in Zambia. For long-term work permits, the applicant needs first to get the work permit approved and then apply for a visa to collect the permit. The Chief Immigration Officer in Zambia issues the work permit and also decides the length of its validity. Learn more about types of visas and work permits in Zambia with Skuad’s global HR solutions.

Zambian work permits

Requirement for Zambian Work Permit

Foreign nationals need to provide the following documents to apply for a Zambian work permit.

• A duly filled application form.
• A valid passport.
• Two recent passport photographs
• Certified copies of the applicant’s academic and professional certificates must be submitted along with the application form.
• Employment offer from a company based in Zambia.
• Police background checks from the applicant’s home country.
• A cover letter from the prospective employer
• The prescribed fee of USD 800/ZMW 18,090

Requirement for Business Visa (Temporary Work Permit)

Foreign nationals need to provide the following documents to apply for a Zambian temporary work permit:

• Duly completed application form.
• Cover letter from the institution doing business with the applicant.
• Certified copy of valid passport
• One recent passport-size photograph.
• The prescribed fee of USD 600/ZMW 13,567.50

Other Considerations

• All applicants must remain outside Zambia until the permit has been approved.
• Only an Employer, Lawyer, or Immigration Consultant can apply for Employment Permits on behalf of a prospective expatriate.
• Once the work permit is approved, the applicant requires a visa to enter Zambia to collect the permit.
• A Zambian work permit allows the holder and their spouse and dependents to stay in the country.

Payroll and Taxes in Zambia

To set up payroll and manage taxation in Zambia, you need to be aware of the rules, which vary from one category to another. The first and the foremost thing you must consider is whether you want to employ foreign professionals or locals. As a foreign company, you must be aware and adhere to the local tax laws like income tax, business tax, withholding tax, employee compensation insurance, and social security costs.

There are three ways of doing it –

• Set up an in-house team to manage the payroll in Zambia - Setting up an in-house team can involve hiring many HR and Payroll staff that can be very costly.
• Take services of a local payroll company in Zambia; the employer still needs to comply with employment laws.
• Payroll Outsourcing Zambia – Skuad can help make payroll management simpler and ensure complete compliance with Zambian employment laws.
  

Taxes Applicable In Zambia 

Zambia has a progressive income tax rate. The employee’s income tax rate depends on how much money they earn. Corporate income tax rates in Zambia vary depending on the industry.  Let us take a look at various taxes applicable in Zambia.

Personal Income Tax

• Employees in indefinite contracts pay taxes using a Pay As You Earn (PAYE) system.
• The highest applicable tax rate is 37.5 %

Corporate Tax

The corporate tax rate is 35%.

• The agricultural sector and non-traditional exports are taxed at 15%,
• Companies listed on the Lusaka Stock exchanges are taxed at the rate of 33%.
• Banks are levied corporate tax at the rate of 40%.

Social Security Rate

Both Employer and Employee need to make Social Security contributions to the National Pension Scheme Authority ( NPSA).

• The current Social Security Tax rate is 10%
• Social Security Rate For Companies is 5%
• Social Security Rate For Employees is 5%

National Health Insurance Contribution

Both Employer and Employees need to make contributions to National Health Insurance. The rate is 1% of the employee’s basic salary, a total of 2% contribution by both employer and employee.

Sales Tax / VAT

16%

Custom Duties

There are three categories for import duties

• 25% mainly for finished products
• 15% intermediate goods
• 0 – 5% raw materials and capital goods

Financial Tax Year

The financial tax year, also known as the charge year, runs from 1st April to 31st March.

Incorporation: How to Set Up a Subsidiary in Zambia?

Two key factors to keep in mind while setting up a subsidiary in Zambia are the location and business goals. Zambia has various subsidiary laws depending on the location of the entity. The main types of companies that can be incorporated under the Companies Act are public companies and private companies. Private companies can be any of the following:

• Unlimited liability companies.
• Limited liability companies.
• Companies limited by guarantee.

Private limited companies are common in Zambia’s business sector, mainly because the members’ liability is limited to the amount unpaid on their shares. In addition, tax is charged on the company’s income (unlike partners and sole traders who are subject to personal taxes). Public companies have the advantage of offering shares to the public and, therefore, can raise capital more quickly than private companies.

Steps Involved in Setting up Subsidiary in Zambia:

• Appointment of directors of the foreign company
• Appointment of at least one documentary agent
• Obtain the Certificate of Incorporation
• Submissions of the charter, statutes, regulations, memorandum, and articles
• Pay registration fees and establish an in-country bank account
• Obtain the Certificate of Registration

Setting up a Subsidiary in Zambia can be a complex process for a foreign company Skuad as an Employer of Record, has a team of lawyers, accountants, and consultants who can help handle the process with ease.

Professional Employer Organization (PEO)

A PEO (professional employer organization) is an organization that enters into a joint-employment relationship with an employer by leasing employees to the employer. It allows the PEO to share and manage employee-related responsibilities and liabilities. If the organization collaborates with a PEO, a company must establish a legal presence across every state or country of its existence. The best alternative for a PEO is having an Employer or Record. EOR can act as a partial workforce.

Skuad’s integrated platform acts as an EOR as well as a PEO. Skuad enables companies looking to expand in Zambia without the hassle of setting up a Legal Entity. Skuad helps manage workers’ compensation, payroll, unemployment claims and handles local laws and taxations.

Conclusion

We understand that expanding business across geographies is not an easy task. Skuad can help by providing a well-established global HR platform to hire, pay and manage employees without setting up a legal entity in Zambia. Talk To Skuad experts now to learn about essential aspects of global business expansion.

FAQs

1) What is an Employer of Record in Zambia?

An Employer of Record (EOR) in Zambia helps companies hire employees legally without setting up a local entity. The EOR handles compliance with local labor laws, payroll, and taxes, allowing the client company to focus on managing employee work.

2) Who is the Employer of Record in Zambia?

Skuad is the Employer of Record in Zambia that legally hires your employees without a local entity. They manage payroll, benefits, and contracts, and ensure compliance with Zambian labor laws.

3) What is an Employer of Record?

An Employer of Record (EOR) is a third-party organization that legally hires employees on behalf of companies looking to operate in foreign countries. The EOR manages employment contracts, and payroll, and ensures the company complies with local labor laws.

4) What is the difference between Employer of Record and Co-employment?

An Employer of Record (EOR) is the legal employer of a worker, while co-employment refers to a shared responsibility for employees between two companies, typically involving a PEO. The EOR is responsible for legal compliance, while the client manages daily tasks.

5) What is the Employer of Record in Africa?

An Employer of Record in Africa allows companies to hire employees in African countries without setting up a local entity. The EOR manages legal and administrative employment tasks like payroll, taxes, and compliance across various African nations.

6) How much does an EOR cost?

The cost of an EOR varies based on country and the number of employees being managed. It typically ranges from $100 to $1000 or even more per employee per month, depending on the services provided and the complexity of local regulations.

7) What are the benefits of EOR?

The benefits of an EOR include ensuring compliance with local labor laws, avoiding the need for a local entity, managing payroll and taxes, and reducing the risks associated with international hiring.