Workforce Africa simplifies hiring, payroll, talent management as well as your compliance needs for employees and independent contractors in Madagascar. No need for a subsidiary or entity setup. From contracts and onboarding to taxes, payroll, and admin tasks, partnering with us — the Employer of Record in Madagascar, will help you focus on growth for greater levels of success.
How Employer of Record (EoR) in Madagascar Works
Workforce Africa makes it hassle free to hire and manage your remote staff in Madagascar without having to first set up a subsidiary or entity in the country. We handle staff contract management and onboarding, payroll, compliance, taxes, and other administrative matters. With Workforce Africa, you can now focus more on strategic activities and growing your business. These items include >>
Employment Contracts in Madagascar
Employment contracts must be issued in either Malagasy or French to be legally valid
- Employees must have a written employment contract defining their terms, responsibilities, and benefits.
- Minimum wage regulations vary based on the sector and type of work.
- Termination and severe pay must follow labour laws and employment contracts.
- Employers are responsible for providing a safe working environment and complying with health and safety regulations.
- Employers are required to contribute to social security schemes for employees.
- Discrimination based on race, gender, religion, disability, or other factors is prohibited.
- Grievance procedures should be in place for employees.
Observed National Holidays and Vacation
These national holidays are celebrated in Madagascar:
- New Year’s Day: January 1
- International Women’s Day: March 8
- Martyrs’ Day: March 29
- Easter Monday: Variable (March or April)
- Labour Day: May 1
- Ascension Day: Variable (May or June)
- Whit Monday: Variable (May or June)
- Independence Day: June 26
- Assumption Day: August 15
- All Saints’ Day: November 1
- Christmas Day: December 25
- Eid al-Fitr: Variable (Islamic Festival of Breaking the Fast)
- Eid al-Adha: Variable (Islamic Feast of the Sacrifice)
Expats, Visas & Work Permits
Visa/Work Permit for Expat: To work in Madagascar as an expat, a visa and a work permit are essential. Understanding the process of obtaining these documents is a key step in the employment process.
To work in Madagascar as an expat, you’ll need a visa and a work permit. Here’s a breakdown of the process:
Types of Visas
- Non-Immigrant Visas: These short-term visas allow stays up to 90 days with one to three entries.
- Transformable Visas: These are valid for 30 days and allow the holder to apply for a long-term visa once in Madagascar.
Work Permit Requirements
To obtain a work permit, you will need:
- Employment Contract: Stamped by the Ministry of Public Service, Labor Administration Reform, and Social Laws (MFPTLS).
- Work Permit: Issued by the MFPTLS.
- Certificate of Employment: Provided by your employer.
Leaves
- Public Holidays: Employees are entitled to 12 public holidays per year.
- Paid Leave: Employees receive 2.5 days of paid leave per month worked, totaling 30 days annually for a full year of service.
- Sick Leave: Employees are entitled to 26 weeks of paid sick leave.
- Maternity Leave: Female employees receive 14 weeks of paid maternity leave, eight of which are taken after birth. The National Security Fund covers 50% of the leave pay, and the employer covers the remaining 50%.
- Other leaves:
- Study Leave: Some employers offer paid or unpaid study leave for employees pursuing further education or professional development relevant to their work. This is typically not mandated by law but depends on individual company policy.
- Bereavement Leave: Employees may be eligible for bereavement leave upon the passing of a close family member. Individual employers determine the specifics regarding the duration and terms of bereavement leave, which may vary.
Statutory Deductions
Employee Contributions
- OSTIE – Medical contribution: 1% of gross salary, up to a maximum of 2,101,440 MAG
- CNAPS – Retirement Gratuity: 1% of gross salary, up to a maximum of 2,101,440 MAG
- Total: Employees contribute a total of 2% of their gross salary
Employers Contributions
- OSTIE – Medical contribution: 5% of gross salary, up to a maximum of 105,072 MAG
- CNAPS – Retirement Gratuity: 13% of gross salary, up to a maximum of 273,187.20 MAG
- FMFP – Human Resource contribution: 1% of gross salary up to a maximum of 21,014.40 MAG
- Total: Employers contribute a total of 19% of gross salary, subject to the respective caps
Tax Brackets and Rates
The personal income tax system in Madagascar is progressive, with rates varying based on income levels. Here are the current tax brackets and rates:
- Up to MGA 350,000: 0% (tax-exempt)
- MGA 350,001 to MGA 400,000: 5%
- MGA 400,001 to MGA 500,000: 10%
- MGA 500,001 to MGA 600,000: 15%
- Above MGA 600,000: 20%
Additionally, regardless of the income, the minimum salary income tax payable is MGA 3,000.
- Corporate Income Tax (CIT): In Madagascar, the corporate tax rate is 20% for companies with an annual turnover exceeding MGA 400 million. For smaller companies, different tax regimes apply based on turnover.
- Value-Added Tax: The VAT rate in Madagascar is 20% for most goods and services.
Health Insurance
In Madagascar, employee health benefits encompass a state-funded healthcare system. However, employers often need more healthcare provisions to acquire private medical insurance.
Additional Compensation and Benefits
- 13th Month Bonus: A mandatory bonus of 14% of the annual salary, typically distributed pro-rated throughout the year.
- Retirement: Contributions to the pension system are required, with employers contributing 13% and employees contributing up to 10% of their taxable salary.
- Healthcare: Employers contribute 5% to health insurance, while employees contribute 1%.
- Disability and Death Insurance: These are mandatory benefits provided through the social security system.
Termination/ Severance in Madagascar
Probationary Period
In Madagascar, the probation period, which can last up to six months, offers a flexible arrangement. During this time, either party can terminate the employment without the usual notice requirements, providing a safety net for both employers and employees.
Termination of Employment
An employment contract can be terminated for different reasons, as follows:
- Completion of Work: Fixed-term contracts naturally end upon project or timeframe completion.
- Employee Death: The contract is automatically terminated upon the employee’s passing.
- Restructuring or Economic Reasons: Termination may occur due to business needs, but specific regulations apply.
- Termination with Notice: According to Labor Law, either party can terminate the contract with prior written notice (the notice period varies depending on the reason and contract type).
- Termination for Cause: An employee can be dismissed for violating the Labor Law or engaging in misconduct.
- Termination by Employee: Employees are generally not entitled to severance pay if they resign voluntarily.
Termination Process
- A formal notice of termination must be provided in writing to the concerned party to ensure proper procedure.
- In the event of employer-initiated termination, employees are entitled to present a counterargument, which fosters fairness in the process and ensures that their rights are respected.
- Upon termination, employers must issue a termination certificate detailing the reasons for dismissal. This certificate is an important document that ensures transparency and clarity in the termination process.
Notice Period
The notice period in Madagascar varies based on the employee’s job category and length of service:
- Unskilled and Semi-Skilled Workers: 8 days’ notice.
- Skilled Workers and Technicians: 1 months’ notice.
- Supervisors and Managers: 3 months’ notice.
Severance Pay
Severance pay is generally required when an employee is terminated for economic, technical, organizational, or force majeure reasons. The calculation is typically 10 days of wages for each year of service, up to a maximum of 6 months’ salaries.
