Navigating the complex labour laws governing employment practices is essential when running Senegal payroll. However, building an in-house compliance team may not be the most efficient way to manage your remote team’s payroll in Senegal.
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 Senegal, 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 Senegal. 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 Senegal will help you focus on growth for greater levels of success.
Employment Contract Termination
Under Senegalese law, employment contracts may be terminated by either party with prior notice, in accordance with the contract terms. The required notice periods are as follows: one month for manual and clerical workers, two months for supervisors and equivalent roles, and three months for managers or similar positions. An employer may also terminate a contract without notice in cases of just cause, such as gross misconduct or breach of contract. Similarly, employees may resign by submitting written notice, which must be formally acknowledged by the employer.
Senegal Country Overview
The Republic of Senegal is located in West Africa and is predominantly French-speaking. Key cities include Dakar, the capital and economic center, and Pikine. These urban areas serve as gateways to ecotourism destinations and coastal resorts. With a population of over 18.5 million, Senegal represents a significant demographic presence in the region.
In recent years, Senegal has seen notable growth in key sectors such as renewable energy and agriculture. The country has invested heavily in solar and wind power, with projects like the Taiba N’Diaye Wind Farm positioning Senegal as a regional leader in clean energy. Its low labor costs, rich natural resources, and stable business environment make it an attractive destination for investment and business expansion.
Although Senegal 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 Senegal facilitates swift market entry. It manages all legal complexities associated with operations in the country.
Payroll Processing in Senegal
Local labour laws in Senegal 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 Senegal 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 Senegal 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 Senegal 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 Senegal
Here are some aspects comprehensively needed to navigate Senegal’s payroll compliance:
- Salary/Wages
- Overtime benefits
- Social security contribution
- Paid leaves
- Paid holidays
- Payroll taxes
- Other laws
Navigating Senegal Payroll Compliance
Senegal’s employment regulation primarily revolves around Labour Act 97-17 of December 1997, along with pertinent sections of other laws and acts. The Labor Law outlines critical aspects of payroll processing and compliance with crucial employment practices-:
Salary/ Minimum Wage
The national minimum wage in Senegal is set at 209.10 XOF per hour, which amounts to 106,811 XOF per month. A minimum transportation allowance of 26,000 XOF is mandated by law. Additionally, the 13th-month salary is compulsory and must be paid on a pro-rata basis, corresponding to the number of months the employee has worked during the year.
Working Hours
The standard workweek in Senegal is 40 hours.
Social Security Contribution
Employers and employees each contribute 1.5% of salaries, up to a cap of 60,000 CFA francs, to the IPM Health Fund. Employers also pay 7% of salaries to social security, subject to a salary limit. Contributions to the Industrial Accident Fund range from 1% to 5%, depending on the job’s risk level, and are also capped.
Health Insurance Scheme:
In Senegal, employers are legally required to provide health insurance coverage for employees and their dependents. Employees are enrolled in a statutory health fund through their employers, which typically covers 40% to 80% of medical, pharmaceutical, and hospital expenses. Employers must also pay a hospital allowance and cover hospital bills upfront, which are later reimbursed. In addition to the public system, private health insurance options are also available.
Pension Contributions
Contributions to the National Retirement System are split 60% by the employer and 40% by the employee. Executives and their employers each contribute an additional 6% to the executive pension fund, also subject to a salary ceiling.
PAYE
Gross Annual Income (Tax Rate (%))
- Up to F.CFA 630,000: 0%
- Up to F.CFA 1,500,000: 20%
- Up to F.CFA 4,000,000: 30%
- Up to F.CFA 8,000,000: 35%
- Up to F.CFA 13,500,000: 37%
- Up to F.CFA 50,000,000: 40%
- Above CFA 50,000,000: 43%
- Corporate Income Tax: 30%
- VAT Rate: 15%
Payroll Taxes
| Taxes | Stakeholders |
|---|---|
| Social Insurance Covers old age, disability and death benefits. | Employer: 7% Employee: 0% |
| Health Insurance Provides medical care and health services. | Employer: 1.5% Employee: 1.5% |
| Industrial Accident Fund Covers emergency workplace accidents. | Employer: 1 – 5% Employee: 0% |
| Income Tax (PAYE) Employee pays income tax based on their earnings, with rates ranging from 0% – 43%. | Employer: 0% Employee: Variable |
Paid Leaves
- Annual Leave: Employees are generally entitled to 24 working days of annual leave per year, accrued at a rate of two days for each month of service. Annual leave becomes available after completing one year of employment.
- Sick Leave: Sick leave is paid and may not exceed six (6) months. It must be supported by a medical certificate provided by the employee.
- Maternity Leave: Maternity leave lasts for fourteen consecutive weeks, including eight weeks following childbirth. It may be extended by up to three weeks if a certified medical condition arises due to pregnancy or delivery.
- Other Leave: In Senegal, employees may be granted compassionate/ special leaves on some family events. Such leave shall be paid within the limits and deadlines specified. Public holidays are not fixed days and they can be changed according to the government decision.
- Paid Public Holidays: In Senegal, the paid holidays are as follows:
- New Year’s Day: January 1
- Prophet Mohammed’s Birthday: Date Varies
- Independence Day: April 4
- Easter Monday: Date Varies
- Labour Day: May 1
- Ascension:
- Whit Monday
- Assumption Day
- Korité: Date Varies
- All Saints’ Day
- Tabaski: Date Varies
Payroll Outsourcing in Senegal
Payroll in Senegal 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.
