Navigating the complex labour laws governing employment practices is essential when running Zambia payroll. However, building an in-house compliance team may not be the most efficient way to manage your remote team’s payroll in Zambia.

Regardless of size, global companies need help to secure in-country expertise for localised payroll service. This is where a partner like Workforce Africa provides significant value in supporting global firms to maintain compliance when handling payroll in Zambia, addressing every intricate detail, including;

• Salary computation requirements,
• Taxation legislation specifics (social security, employee income tax, corporate tax, VAT and other employee deductions.
• Benefits administration, and more (health insurance, pension, paid leaves, holiday compensation.

Workforce Africa simplifies hiring and payroll compliance for offshore talent management in Zambia. No need for a subsidiary or entity setup. From contracts and onboarding to taxes, payroll, and admin tasks, partnering with us – a payroll firm in Zambia will help you focus on growth for greater levels of success.

Employment Contract Termination

In accordance with the laws of Zambia, employment contracts can be terminated by either party, provided proper notice is given as stipulated in the employment contract or as per the Employment Code Act No. 3 of 2019. Termination can occur due to various reasons, including redundancy, misconduct, or mutual agreement. It’s essential to follow the proper procedures to avoid legal disputes or penalties.

Zambia Country Overview

The Republic of Zambia is a landlocked country in Southern Africa. It is predominantly an English-speaking country. Two critical cities in Zambia are Lusaka, the capital and the economic hub, and Ndola. These urban centres act as transit points to ecotourism destinations and beach resorts. With a population exceeding 19 million people, Zambia boasts a significant demographic presence and is one of Africa’s most urbanised countries.

In recent years, key industries experiencing growth include mining (primarily copper) and agriculture. Zambia boasts a market-based, diversified economy comprising tourism, renewable energy and services. Considerations such as the low labour cost and abundant natural resources make Zambia attractive for businesses seeking expansion opportunities.

Although Zambia possesses a highly skilled workforce, hiring and establishing a team can be time-consuming and challenging. However, partnering with an Employer of Record (EOR) or Professional Employer Organisation (PEO) in Zambia facilitates swift market entry. It manages all legal complexities associated with operations in the country.

Payroll Processing in Zambia

Local labour laws in Zambia govern payroll processing, with each employee’s salary potentially calculated differently. Due to compliance concerns, processing payroll at scale can become complex, cumbersome, and risky. Here are the phases of payroll processes global businesses should understand-:

• Pre-payroll Phase: Your organisation’s unique approach to payroll compliance shapes its policies and processes, including payroll preparation. Global firms must prioritise essential business elements in the pre-payroll phase, such as accurate business profile documentation and tailored work location policies, which is crucial. Customise leave and work policies to align with local standards in Zambia to ensure compliance and transparency while collaborating closely with compliance teams or partners to help adhere to statutory requirements throughout the payroll management process for your remote team. In this phase also, standardising compensation packages to conform with local payment norms, such as payment cycles, which enhance compliance and meet employee expectations, is necessary.
• Payroll Calculation Phase: Streamlining input collection and validation processes ensures accurate wage calculations in this phase of payroll processing. This phase involves the actual calculation of wages, with a primary focus on this task. Utilising software automation and digital document submission tools makes payroll calculations efficient and reduces the risk of human error in this process.
• Post-payroll Phase: The post-payroll phase in Zambia refers to the period after payroll processing, where employers review and settle any outstanding issues related to employee compensation, benefits, and taxes. This phase typically includes: salary payment, compliance reporting, benefit administration, audit and reconciliation. The post-payroll phase is crucial in Zambia as it ensures that employers comply with regulatory requirements, maintain a good employer-employee relationship, and reduce the risk of penalties or fines associated with non-compliance.

Payroll Components in Zambia

Here are some aspects comprehensively needed to navigate Zambia’s payroll compliance:

• Salary/Wages
• Overtime benefits
• Social security contribution
• Paid leaves
• Paid holidays
• Payroll taxes
• Other laws

Zambia’s employment regulations are primarily outlined in the Employment Code Act No. 3 of 2019, which covers critical aspects of payroll processing and compliance:

Salary/Minimum Wage

Varies by industry and role.

Working Hours

The standard workweek consists of 48 hours.

Social Security Contribution

Employer and employee contribute 5% each to NAPSA.

Health Insurance

Employers must provide medical care and transport for employees. Employers and employees are required to make monthly contributions to the national health insurance scheme. Each party contributes 1% of the employee’s basic salary, resulting in a total combined contribution of 2%.

Paid Leaves

Employees are entitled to annual leave, sick leave, and maternity/paternity leave.

Corporate Tax Rate: 30%

VAT Rate: 16%

Personal Income Tax

• 0 – 5,100 ZMW: 0%
• 5,101- 7,100 ZMW:20%
• 7,101- 9,200 ZMW: 30%
• 9,201ZMW Above: 37%

Paid Leaves

• Annual Leave: After six months of continuous service, an employee is entitled to fully paid leave, accrued at a rate of two days per month of service. The timing of the vacation is determined through mutual agreement between the employer and the employee.
• Sick Leave: Employees who have completed at least 12 months of service are eligible for paid sick leave of up to six months. They receive full pay for the first three months, followed by 50% pay for the next three months. Those on shorter contracts are entitled to 52 days of sick leave, with full pay for the first 26 days and 50% pay for the remaining 26 days.
• Maternity Leave: A female employee who has continuously worked for at least two years with the same employer, either from the start of her employment or since her last maternity leave, is entitled to 14 weeks of fully paid maternity leave. To qualify, she must provide a medical certificate confirming her pregnancy, signed by a registered medical practitioner.
• Paternal Leave: Fathers receive full pay for the first week of paternity leave. Employees who have completed at least 12 months of service are also entitled to five consecutive working days of unpaid paternity leave.
• Family Responsibility Leave: Employees who have completed at least six months of service are entitled to seven working days of paid leave to care for a sick child, spouse, or dependent.
• Bereavement Leave: Employees are entitled to 12 days of compassionate leave in the event of the death of a spouse, child, or dependent.
• Paid Public Holidays: In Zambia, the paid holidays are as follows:
  • New Year’s Day (January 1)
  • International Women’s Day (March 8)
  • Youth Day (March 12)
  • Good Friday and Easter Monday (dates vary)
  • Kenneth Kaunda Birthday (April 28)
  • Labour Day (May 1)
  • Africa Freedom Day (May 25)
  • Heroes Day (first Monday of July)
  • Unity Day (first Tuesday of July)
  • Farmers’ Day (first Monday of August)
  • National Prayer Day (October 18)
  • Independence Day (October 24)
  • Christmas Day (December 25)

Payroll Outsourcing in Zambia

Payroll in Zambia also encompasses termination and probationary periods law. Employees are not generally eligible for severance pay, except the termination is unjustified, or the employer voluntarily decides to make severance payment.

Collaborate with an Africa employer of record and payroll solutions provider such as Workforce Africa to strategically outsource your payroll operations while ensuring compliance with local labour regulations. Additionally, leverage our flexible service offerings to expand your international teams as needed.