Zambia Payroll Outsourcing, Payroll Software and Employer Of Record (EOR) services.
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ZAMBIA
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Zambia Payroll and Employer of Record: Employment Contracts
Foreign nationals can apply for a variety of visas from the Zambian government. In addition to these visas, the government issues work permits to foreign nationals who work for Zambian companies. Foreigners can obtain two types of Zambian work permits:
- Short-term work permit: A short-term work permit allows a foreign employee to work in Zambia for up to three months at a time. This permit can only be renewed once, allowing the holder to stay in Zambia for a maximum of six months.
- Long-term work permit: Also known as an employment permit. An employment permit allows the holder to stay in Zambia and work for up to two years.
PAID TIME OFF
Annual Vacation
24 days of leave per year.
Sick
Employees with at least 12 months of service are eligible for up to six months of employer-paid sick leave, with the first three months paid at 100% and the last three at 50%.
Maternity
The Employment Code Act, in Section 41, provides for 14 weeks of maternity leave. Maternity leave will be extended for four weeks if there are multiple births, and reduced to six weeks if there is a miscarriage in the third trimester.
Paternity
Paternity leave is available to employees who have been in continuous employment with the same employer for at least 12 months, and it must last at least five consecutive working days.
Family
Employees with at least six months of service have the right to seven days of paid leave to care for a sick child, spouse, or dependent.
National Holidays
Zambia has a total of 14 public holidays which are paid.
Other Paid Time Off
N/A
STATUTORY EMPLOYEE BENEFITS
Unemployment
The Minimum Wages and Conditions of Employment Act of 2011 requires employers to provide severance pay for unlawful dismissal of employees, as well as lump-sum payments for termination of employment due to medical reasons certified by a registered medical doctor. In either case, at least two months’ basic pay is paid for each year of service completed. Otherwise, severance pay is only provided when there is an express agreement between the employer and the employee.
Workers Compensation
The WCFCB is a social security scheme responsible for compensating workers for accidents and diseases contracted while on the job in accordance with the provisions of Zambia’s Workers’ Compensation Act No. 10 of 2000.
Social Security
Employee: 5% of gross monthly covered earnings; voluntarily insured: 10%. The monthly earnings threshold for calculating contributions is 15 kwacha. The maximum monthly earnings for contribution purposes are 21,476 kwacha. Employer: 5% of monthly gross covered payroll. The monthly earnings threshold for calculating contributions is 15 kwacha. The maximum monthly earnings for contribution purposes are 21,476 kwacha.
Retirement
Age 55 (or 60 if your insurance period began after August 14, 2015) and have contributed for at least 180 months.
Health
Zambia provides free healthcare to all of its citizens. This healthcare is very basic by Western standards, and Zambia’s public healthcare system is chronically underfunded. Many Zambian doctors leave the country or work exclusively in the private sector, implying that public health is suffering from a skills drain.
PRIVATE EMPLOYEE BENEFITS
Workers Compensation
Private workers compensation is available in Zambia.
Retirement
Private retirement schemes available in Zambia.
Health
Private healthcare is available in Zambia.
Insurance
Private life insurance is available in Zambia.
PERSONAL INCOME TAX
Tax Year
Zambia Personal Income Tax
Tax year runs from January 1st to December 31st.
Tax Tables
Taxable Income | Rates of Taxes |
0 – 54 000 | 0% |
54 000 – 57 600 | 25% |
57 600 – 82 800 | 30% |
82 800 + | 37.5% |
Taxation Method
Zambia has a source-based income taxation system under the Income Tax Act. Income deemed to be derived from Zambia is generally subject to Zambian income tax. Zambian residents are also taxed on interest and dividends received from sources outside Zambia.
Double Taxation
Zambia has multiple double taxation agreements.
Residence Requirements
Individuals will be treated as Zambian residents unless they are present in Zambia for a temporary purpose only and do not intend to establish residence in Zambia. Any person who is present in Zambia for 183 days or more during a charge year is considered a Zambian resident for that year.
Payroll Calendars
Wages are normally paid on the final working day of the month, according to the payroll cycle.
Rebates & Tax Credits
In Zambia, there are no other significant tax credits or incentives for individuals.
Health Insurance
Zambia provides free healthcare to all of its citizens. This healthcare is very basic by Western standards, and Zambia’s public healthcare system is chronically underfunded. Many Zambian doctors leave the country or work exclusively in the private sector, implying that public health is suffering from a skills drain.
Unemployment
The Minimum Wages and Conditions of Employment Act of 2011 requires employers to provide severance pay for unlawful dismissal of employees, as well as lump-sum payments for termination of employment due to medical reasons certified by a registered medical doctor. In either case, at least two months’ basic pay is paid for each year of service completed. Otherwise, severance pay is only provided when there is an express agreement between the employer and the employee.
Social Security
Employee: 5% of gross monthly covered earnings; voluntarily insured: 10%. The monthly earnings threshold for calculating contributions is 15 kwacha. The maximum monthly earnings for contribution purposes are 21,476 kwacha. Employer: 5% of monthly gross covered payroll. The monthly earnings threshold for calculating contributions is 15 kwacha. The maximum monthly earnings for contribution purposes are 21,476 kwacha.
PAYROLL ELEMENTS
Income
Zambia Payroll Elements
Salary, earnings, bonuses, overtime pay, taxable benefits, allowances, and certain lump sum perks are examples of remuneration (revenue from employment). Profits or losses made by a company or trade. Income or profits derived from an individual’s status as a trust beneficiary.
Bonuses
Employees are frequently compensated with bonuses as part of their overall remuneration package. Employees may be eligible for a 13th month’s compensation, as well as performance and production-based incentives.
Allowances
N/A
Benefits in Kind
The 2019 Employment Act No. 3 regulates benefits in kind in Zambia. Benefits in kind are defined by the Act as non-cash benefits that a company offers to a worker in addition to a pay. Benefits in kind include things like lodging, transportation, health care, and food.
Investment Income
Capital gains are not taxed in Zambia because the country lacks a capital gains tax regime.
Retirement Funding
Age 55 (or 60 if your insurance period began after August 14, 2015) and have contributed for at least 180 months.
Health Insurance
Zambia provides free healthcare to all of its citizens. This healthcare is very basic by Western standards, and Zambia’s public healthcare system is chronically underfunded. Many Zambian doctors leave the country or work exclusively in the private sector, implying that public health is suffering from a skills drain.
Risk Insurance
N/A
Taxable Income
- Zambia has a source-based income taxation system under the Income Tax Act. Income deemed to be derived from Zambia is generally subject to Zambian income tax. Zambian residents are also taxed on interest and dividends received from sources outside Zambia. In general, both Zambian and non-Zambian residents pay the same rates. In practice, the only way for non-Zambian residents’ income to be taxed at these rates would be on Zambian-source emoluments from employment or office under pay-as-you-earn (PAYE). Non-Zambian residents’ other Zambian-sourced income may be subject to withholding tax (WHT).
Allowable Deductions
If an expense is incurred wholly and exclusively for the purpose of that source of income and is not capital in nature, it is deductible against taxable earnings. In practice, where an employee incurs an expense, this test is difficult to meet. In some cases, capital allowances may be available. Business expenses are generally deductible as long as they are not capital and are incurred solely for the purposes of the business.
PAYROLL TAXES AND EMPLOYER CONTRIBUTIONS
Payroll Taxes
Zambia Payroll Taxes and Employer Contributions
The ‘Pay-As-You-Earn’ (PAYE) Regulations require employers to deduct and remit income tax on behalf of their employees.
Levy for skill development (SDL)
Employers must pay a monthly levy equal to 0.5% of the gross emoluments paid to their employees.
Unemployment
The Minimum Wages and Conditions of Employment Act of 2011 requires employers to provide severance pay for unlawful dismissal of employees, as well as lump-sum payments for termination of employment due to medical reasons certified by a registered medical doctor. In either case, at least two months’ basic pay is paid for each year of service completed. Otherwise, severance pay is only provided when there is an express agreement between the employer and the employee.
Social Security
Employee: 5% of gross monthly covered earnings; voluntarily insured: 10%. The monthly earnings threshold for calculating contributions is 15 kwacha. The maximum monthly earnings for contribution purposes are 21,476 kwacha. Employer: 5% of monthly gross covered payroll. The monthly earnings threshold for calculating contributions is 15 kwacha. The maximum monthly earnings for contribution purposes are 21,476 kwacha.
Workers Compensation
The WCFCB is a social security scheme responsible for compensating workers for accidents and diseases contracted while on the job in accordance with the provisions of Zambia’s Workers’ Compensation Act No. 10 of 2000.
ADMINISTRATION
Income
- Zambia has a source-based income taxation system under the Income Tax Act. Income deemed to be derived from Zambia is generally subject to Zambian income tax. Zambian residents are also taxed on interest and dividends received from sources outside Zambia.
- In general, both Zambian and non-Zambian residents pay the same rates. In practice, the only way for non-Zambian residents’ income to be taxed at these rates would be on Zambian-source emoluments from employment or office under pay-as-you-earn (PAYE). Non-Zambian residents’ other Zambian-sourced income may be subject to withholding tax (WHT).
Payroll Taxes
Contributions to the National Pension Scheme Authority are required of both employers and employees (NAPSA). Employees and employers are both required to contribute to the National Health Insurance Scheme.
Unemployment
Zambia does not provide unemployment benefits.
Social Security
Employee: 5% of gross monthly covered earnings; voluntarily insured: 10%. The monthly earnings threshold for calculating contributions is 15 kwacha. The maximum monthly earnings for contribution purposes are 21,476 kwacha. Employer: 5% of monthly gross covered payroll. The monthly earnings threshold for calculating contributions is 15 kwacha. The maximum monthly earnings for contribution purposes are 21,476 kwacha.
Workers Compensation
Employed individuals, including certain casual workers, household workers, and apprentices; self-employed individuals; and public-sector employees who are not covered by a special system Special system for certain government employees, as well as military and police personnel. A work injury or occupational disease must be evaluated. Occupational diseases are legally defined. A medical certificate is required.
Statutory Benefits
Employers are required by labour laws to provide the following:
- Contributions to social security
- Contributions to the National Health Fund
- Public holidays that are paid
- Annual and compassionate leave are both paid.
- Paid sick time
- Worker’s compensation insurance
- Gratuity at the conclusion of a contract
Employee Benefits
Employee’s are entitled to paid time off, paid public holidays and maternity leave.
LEGISLATION
The Employment Act
STATUTORY BODIES
- Parliament of Zambia.
- Ministry of Finance.
- Ministry of Labour and Social Security.
