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Zimbabwe Payroll and Employer of Record: Employment Contracts
To visit Zimbabwe, most foreign nationals will require a visa. In terms of admission criteria, the country categorizes foreign nationals into three groups:
- Category A covers nationals of countries that do not require a visa to enter Zimbabwe.
- Category B: This category applies to foreign citizens from a variety of countries, including the United States, the United Kingdom, and numerous European Union member states (EU). Category B nationalities can get a visa on arrival in Zimbabwe at the airport.
- Category C: Nationals of India, Pakistan, and numerous EU member states, as well as a number of other nations. Unlike those in Category B, these individuals will need to get a visa before coming to Zimbabwe.
PAID TIME OFF
Annual Vacation
Employees are entitled for vacation after one year of service and accumulate one month of paid annual leave (30 calendar days, including 22 working days) for each year of service up to 90 days. In contrast to many other nations, Saturdays, Sundays, and holidays that fall within an employee’s vacation are considered as vacation days. Employees who have not collected enough leave days may be permitted to take unpaid time off.
Sick
Employees are permitted to take up to 180 days of sick leave each year. Following the submission of a medical certificate, the employee will be awarded up to 90 days of sick leave at full pay. After 90 days, the sick leave may be extended for another 90 days at half-pay.
Maternity
Female employees who have been with their business for at least a year are eligible for 98 days of paid maternity leave. Maternity leave of up to 45 days can be taken before the delivery. A woman is only allowed to take paid maternity leave once every 24 months and no more than three times while working for the same employer. Any maternity leave taken in excess of these restrictions is unpaid.
Paternity
The father of a newborn infant may be eligible to take up to 12 days of unpaid leave.
Family
N/A
National Holidays
Zimbabwe has a total of 12 public holidays which are paid.
Other Paid Time Off
Employees are entitled to up to 12 days of paid absence to attend court as a witness in Zimbabwe.Employees are entitled to up to 12 days of paid leave if a spouse, parent, child, or legal dependent dies, or for any other justified humanitarian reason.
STATUTORY EMPLOYEE BENEFITS
Unemployment
No statutory unemployment benefits are provided in Zimbabwe.
Workers Compensation
Employees do not contribute to the scheme because it is sponsored entirely by the company. Contribution rates vary according to the inherent occupational risk. Currently, all employers, with the exception of the government, employers of domestic workers, and companies in the informal sector, are required by law to contribute to the Scheme.
Social Security
The National Social Security Authority (NSSA) is the statutory corporate agency in Zimbabwe mandated by the government to provide social security.
Currently, both the employer and employee contribute 4.5 percent of the basic wage every month capped at ZWL 5,000. These contributions cover pension & other benefits.
Retirement
Covered by social security.
Health
Zimbabwe does not have public health-care insurance available. Medical Aid is a private option and is based on an employee voluntary basis to sign up or for the employer to offer it.
Life insurance is a private option and is based on an employee voluntary basis to sign up or for the employer to offer it.
PRIVATE EMPLOYEE BENEFITS
Workers Compensation
Private workman’s compensation is available in Zimbabwe.
Retirement
Private retirement schemes available in Zimbabwe.
Health
Private healthcare is available in Zimbabwe.
Insurance
Private life insurance is available in Zimbabwe.
PERSONAL INCOME TAX
Tax Year
Tax year runs from January 1st to December 31st.
Tax Tables
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Taxation Method
Zimbabwe has a PAYE (Pay As You Earn) income tax system and a progressive tax system.
Double Taxation
Zimbabwe has multiple double taxation agreements.
Residence Requirements
- The Zimbabwean tax system is now based on source rather than residence. Income received, or considered to be earned, from Zimbabwean sources is taxed.
- The place where revenue originates or is earned, not the place where it is paid, is referred to as the source. If products are sold under a contract made in Zimbabwe, the source of revenue is presumed to be in Zimbabwe, regardless of the site of delivery or transfer of title.
Payroll Calendars
Wages are normally paid on the final working day of the month, according to the payroll cycle.
Rebates & Tax Credits
Credits of ZWL 117,000 (USD 900) per year are available to the elderly, blind, and mentally or physically impaired.
A 50% credit is also provided for medical aid contributions/medical expense shortfalls.
Health Insurance
Zimbabwe does not have public health-care insurance available. Medical Aid is a private option and is based on an employee voluntary basis to sign up or for the employer to offer it.
Unemployment
No statutory unemployment benefits are provided in Zimbabwe.
Social Security
The National Social Security Authority (NSSA) is the statutory corporate agency in Zimbabwe mandated by the government to provide social security.
Currently, both the employer and employee contribute 4.5 percent of the basic wage every month capped at ZWL 5,000. These contributions cover pension & other benefits.
PAYROLL ELEMENTS
Income
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 may be eligible for a 13th month’s compensation, as well as performance and production-based incentives upon employer discretion.
Allowances
No mandatory allowances
Benefits in Kind
The benefits in kind are appraised at their true worth, which is the employer’s actual expense. Transportation benefits are free from WHT for enterprises formed in regional development zones.
Any amount of money received or receivable to any person, whether in cash or otherwise, in exchange for services done is referred to as a fringe benefit. The taxable benefit is determined by the employee’s occupation or usage of quarters, house, or furnishings.
For example :
- When a company pays school fees for an employee’s children, the cost of the fees becomes taxable in the employee’s hands. However, if the employee is a member of the school’s teaching or non-teaching staff, only half of the school fees benefit will be included in his gross income, and this will apply to only three of the employee’s children.
Investment Income
Capital gains tax applies to selling property or shares in private or public companies. The rate is 20% of the net gain and 5% of the proceeds for specific assets bought before February 22, 2019, and sold after that date. Other income, like business profits and rents, is taxed at the corporate rate, currently 24%.
Retirement Funding
Covered by social security.
Health Insurance
Zimbabwe does not have public health-care insurance available. Medical Aid is a private option and is based on an employee voluntary basis to sign up or for the employer to offer it.
Risk Insurance
N/A
Taxable Income
- The Zimbabwean tax system is now based on source rather than residence. Income received, or considered to be earned, from Zimbabwean sources is taxed.
- The place where revenue originates or is earned, not the place where it is paid, is referred to as the source. If products are sold under a contract made in Zimbabwe, the source of revenue is presumed to be in Zimbabwe, regardless of the site of delivery or transfer of title.
Allowable Deductions
- An employee may deduct payments of up to ZWL 390,000 (USD 3,000) each year to a Zimbabwe-registered pension, retirement annuity, and NSSS fund.
- Travel, entertainment, and motor vehicle costs may be deducted, but the employee must demonstrate that they were expended in the generating of taxable revenue. Where the employer provides allowances, this onus is more easily satisfied.
- Personal and household costs are normally not deductible.
PAYROLL TAXES AND EMPLOYER CONTRIBUTIONS
Payroll Taxes
In addition to the NSSA contributions, employers must contribute to the following funds on a monthly basis :
- Manpower training levy
Employers are required to pay 1% of the monthly gross wage bill towards the Zimbabwe Manpower Development Authority. These contributions are subject to some exceptions.
- Standards Development Fund
Except for a few exceptions, employers are required to pay 0.5% of their quarterly gross wage bill to the Standards Development Fund. This contribution covers all payments made on behalf of employees, including those for medical aid and pension contributions.
Unemployment
The Labour Act of 1985 does not allow for unemployment compensation. To give financial aid to jobless persons, a means-tested and non-contributory public assistance program is provided.
Social Security
The National Social Security Authority (NSSA) is the statutory corporate agency in Zimbabwe mandated by the government to provide social security.
Currently, both the employer and employee contribute 4.5% of the basic wage every month capped at ZWL 5,000. These contributions cover pension & other benefits.
If an employee’s base income exceeds their normal allowances and benefits, the NSSA contribution is determined only on the basic salary. However, if an employee’s regular allowances or perks exceed more than double their basic pay, NSSA contributions should be calculated using the total of basic salary, allowances, and benefits, up to a maximum of the TCPL number for that month. For the purposes of computing the contribution rates, income generated in US dollars should be translated to ZWL dollars at the interbank rate in effect at the time the income is paid. However, everyone in Zimbabwe who receives a salary in foreign currency must now make their NSSA payment in foreign money.
Workers Compensation
Employees do not contribute to the scheme because it is sponsored entirely by the company. Contribution rates vary according to the inherent occupational risk. Currently, all employers, with the exception of the government, employers of domestic workers, and companies in the informal sector, are required by law to contribute to the Scheme.
ADMINISTRATION
Income
Zimbabwe has a pay-as-you-earn (PAYE) system known as the ‘Final Deduction System’ (FDS). This is based on the assumption that all employers (including domestic and foreign-based) must register for PAYE and are responsible for calculating, collecting, and paying the right amount of PAYE to ZIMRA each month. Tax audits are performed on a regular basis (every year or two) to examine the payroll systems.
Because the employer bears the whole cost of collecting the right tax, there is no necessity for employees to file yearly tax returns for employment income.
Payroll Taxes
In addition to the NSSA contributions, employers must contribute to the following funds on a monthly basis :
- Manpower training levy
- Standards Development Fund
Unemployment
No statutory unemployment benefits are provided in Zimbabwe.
Social Security
The National Social Security Scheme (NSSS) in Zimbabwe provides pensions and other benefits for members and their dependents in case of retirement, invalidity, or death.
Contributors are eligible for retirement benefits at age 60 for normal retirement or 65 for late retirement if they are no longer employed. Those aged 55 who are no longer employed and have at least 7 years of arduous work in the last 10 years before turning 55 also qualify. If contributions are between 12 and 120 months, the benefit is paid as a grant. For contributions of 120 months or more, the benefit is paid as a monthly pension until death.
Employers remit a total of 9% of the employees salary to the NSSA office by the 1st of each month. Contributions are based on the basic salary unless regular allowances exceed twice the basic pay, in which case all income is considered.
Employees paid in foreign currency must contribute in the same currency. The scheme includes all employees aged 16 to 65, Zimbabwean citizens working in or outside Zimbabwe, and civil servants. Membership is mandatory except for non-resident non-citizens, non-Zimbabwean diplomatic staff, and domestic workers.
Workers Compensation
Currently, all employers, with the exception of the government, employers of domestic workers, and companies in the informal sector, are required by law to contribute to the Scheme.
The scheme provides financial assistance to employees and their families when an employee is injured on the job, suffers from a work-related sickness, or dies as a result of it.
It also provides rehabilitation services to impaired employees in order to minimize their disability and restore them to their previous employment, or to prepare them for a valuable and meaningful role in society.
Employers are responsible for informing NSSA of any changes or developments in their company. This will help NSSA to retain correct records and alter their insurance rates and records as needed when changes occur.
Statutory Benefits
Zimbabwe has social security, retirement and workers compensation.
Employee Benefits
Certain benefits are mandatory to offer employees in Zimbabwe. These are: 12 public holidays, 22 days of paid leave and 98 days of paid maternity leave.
LEGISLATION
- Constitution of Zimbabwe (Amendment) Act, 2013
- Labour Act 1985, last amended in 2015
- Factories and Works (General) Regulations, 1976 Statutory Instrument 263 of 1976
- Accident Prevention and Workers’ Compensation Scheme, 1990
- Tripartite Negotiating Forum Act, 2019 (No. 3 of 2019)
STATUTORY BODIES
Zimbabwe Revenue Authority
National Social Security Authority (NSSA)
USEFUL LINKS
https://www.zimra.co.zw/
https://www.nssa.org.zw/
