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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.
- Nationals of India, Pakistan, and numerous EU member states, as well as a number of other nations, are included in Category C. Unlike those in Category B, these persons will need to get a visa before coming to Zimbabwe.
Probation Periods
A casual or seasonal worker has a one-day probation term under Zimbabwean labour rules. However, for other types of full-time work in Zimbabwe, the normal probation term is three months.
Notice Periods
Any party may terminate the employment contract by giving the following notice:
- Three months in the case of a contract with no time limit or a contract for two years or more.
- Two months if the contract is for one year or more but less than two years.
- One month in the case of a contract lasting six months or more but less than a year.
- Two weeks if the contract is for three months or more but less than six months.
- One day if the contract is for a duration of less than three months or if the employment is casual/seasonal.
Minimum Wage
There is no statutory minimum rate of compensation for workers in Zimbabwe because the country does not have a minimum wage. Pay rates must be negotiated directly with the employer via collective bargaining or other mechanisms of obtaining a reasonable living wage.
Working Hours
Working hours are typically 8.5 hours per day and 44 hours per week. According to the Labour Act, the Minister of Labour has the authority to make regulations governing overtime, shift work, and night work. Overtime pay may be governed by a collective bargaining agreement. There was no such rule to be found.
Overtime
Overtime is not required unless specified in the CBA or rules, or unless an emergency scenario exists. An employee may be asked to work no more than 10 hours each day. The employer should pay the employee not less than one and a half times his/her regular rate for breakdown, continuous work, emergency, and for every hour or portion thereof performed by an employee in excess of his/her customary hours of work.
The employer shall pay an employee not less than twice their customary rate for each hour or portion thereof worked by an employee between midnight on Saturday and midnight on Sunday, or between midnight on the day before their day off.
Non Compete
Non-compete clauses may enter the contract between the employer and employee. The time-line for the non-compete clause is negotiated between both parties.
Severance
- Severance compensation is only provided for collective dismissals for economic reasons, i.e., retrenchment, according to the Labour Act. Employers may be compelled by a collective agreement to pay severance to employees who are laid off due to redundancy. Severance pay is typically one month’s compensation for every two years of employment with the company.
Termination
Both the employer and the employee have the right to cancel an employment contract by giving notice. Depending on the employee’s length of service, the notice period ranges from one day to three months. There are special rules in place for collective or redundancy dismissal.
Collective Bargaining
They have the authority to negotiate collective bargaining agreements on any work circumstances that are of mutual interest to the parties. In the Labour Act, however, collective bargaining is not reserved only for trade unions. Workers’ committees may also bargain on behalf of the corporation.
Enforcement
- Constitutional Court.
- Supreme Court.
- Harare High Court.
- Bulawayo High Court.
- Masvingo High Court.
- Mutare High Court.
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 will be extended for another 90 days provided a doctor delivers a written opinion that the employee will most likely be able to return to work after this extra term of sick leave.
Maternity
Female employees who have been with their business for at least a year are eligible to 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
In Zimbabwe, there is no paternity leave. The father of a new-born infant, on the other hand, 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 dependant dies, or for any other justified humanitarian reason.
STATUTORY EMPLOYEE BENEFITS
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.
Workers Compensation
- Employees do not contribute to the scheme because it is sponsored entirely by the company. 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.
- Providing financial assistance to employees and their families when an employee is hurt or murdered on the job, suffers from a work-related sickness, or dies as a result of it.
- Raising awareness of, and encouraging, health and safety in all workplaces.
- Through factory and machinery inspection, we may encourage the application of health and safety regulations.
- Providing 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.
Social Security
- The National Social Security Authority (NSSA) is the statutory corporate agency in Zimbabwe mandated by the government to provide social security.
- The provision of social security can be defined as the implementation of public policy measures designed to protect an individual in life situations or conditions that threaten his or her livelihood and well-being, such as those caused by illness, workplace injuries, unemployment, invalidity, old age, retirement, and death.
- Pension & Other Benefits Scheme (POBS): Currently, the company contributes 3.5 percent and the employee contributes another 3.5 percent, for a total contribution of 7 percent of basic wage (threshold $700.00) every month. The company deducts the required contribution from each employee’s compensation and also provides an equal amount every month to each employee.
- APWC (Accident Prevention & Workers Compensation): Businesses are categorized by industry, and each industry is assigned an industrial code (IC). Based on risk assessments, each industrial classification is assigned an insurance rate. The plan applies to all employees in the formal sector. It now excludes public servants, domestic workers, and those in the informal economy.
Retirement
A worker must be at least 60 years old (the same for males and women) and have contributed for at least 120 months (10 years) to be eligible for a full pension. In the event of strenuous labour, the necessary age is 55. There is also the option of deferred pension, which allows the pension to be deferred until the age of 65. The old-age pension is calculated as 1.33 percent of monthly earnings in the month preceding retirement multiplied by the number of years of contributions up to 30 years + 1 percent of monthly covered earnings multiplied by the number of years of contributions above 30 years. The monthly minimum pension is US$60.
Health
Medical Aid 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
N / A
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
Taxable Income | Rates of Taxes |
0 – 300 000 | 0% |
300 000 – 720 000 | 0 + 20% for each ZWL above 300,000 |
720 000 – 1 440 000 | 84,000 + 25% for each ZWL above 720,000 |
1 440 000 – 2 880 000 | 264,000 + 30% for each ZWL above 1,440,000 |
2 880 000 – 6 000 000 | 696,000 + 35% for each ZWL above 2,880,000 |
6 000 000 + | 1,788,000 + 40% for each ZWL above 6,000,000 |
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. Zimbabwe is working toward a residence-based taxation system, although specifics have yet to be released. 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 credit is also provided for 50% of medical assistance donations and medical expenditure shortages.
Health Insurance
Zimbabwe does not have public health-care insurance available.
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.
- The provision of social security can be defined as the implementation of public policy measures designed to protect an individual in life situations or conditions that threaten his or her livelihood and well-being, such as those caused by illness, workplace injuries, unemployment, invalidity, old age, retirement, and death.
- Pension & Other Benefits Scheme (POBS): Currently, the company contributes 3.5 percent and the employee contributes another 3.5 percent, for a total contribution of 7 percent of basic wage (threshold $700.00) every month. The company deducts the required contribution from each employee’s compensation and also provides an equal amount every month to each employee.
- APWC (Accident Prevention & Workers Compensation): Businesses are categorized by industry, and each industry is assigned an industrial code (IC). Based on risk assessments, each industrial classification is assigned an insurance rate. The plan applies to all employees in the formal sector. It now excludes public servants, domestic workers, and those in the informal economy.
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 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
When the employer provides allowances, this onus is more easily satisfied; nonetheless, the deduction cannot generally exceed the allowance.
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. These are benefits that employers provide to their employees in addition to monetary remuneration. These are perks or bonuses provided to employees as a means of incentivizing them to stay with the company.
- The taxable benefit is determined by the employee’s occupation or usage of quarters, house, or furnishings.
- A loan in excess of $100 US dollars. There is an advantage if the interest rate due is less than the LIBOR rate + 5%. If the loan amount exceeds ZWL8,000.00 and the interest rate is less than 15%, the Zimbabwean dollar will profit.
Automobiles
- 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.
- The benefit reimburses the employer for travel expenses incurred by the employee, spouse, or children that are not related to the company’s business. This covers the expense of starting a new job or terminating a job when such charges were previously given to the employee.
The taxable benefit is determined by the cost to the employer.
Investment Income
It should be mentioned that in Zimbabwe, capital gains tax is due on the sale of immovable property or shares held in listed (on the Zimbabwean Stock Exchange) or unlisted corporations at the following rates:
- Purchased before to February 22nd, 2019.
- Listed securities: 1.5% of proceeds if listed for at least six months and 2% if listed for less than six months.
- Property: 5% of the revenues.
- Unlisted securities: 5% of total proceeds.
- Purchased after February 22nd, 2019.
- Listed securities: 1.5% of proceeds if listed for at least six months and 2% if listed for less than six months.
- Property gains are taxed at a rate of 20%.
- Capital gains on unlisted securities are taxed at a rate of 20%.
Retirement Funding
A worker must be at least 60 years old (the same for males and women) and have contributed for at least 120 months (10 years) to be eligible for a full pension. In the event of strenuous labour, the necessary age is 55. There is also the option of deferred pension, which allows the pension to be deferred until the age of 65. The old-age pension is calculated as 1.33 percent of monthly earnings in the month preceding retirement multiplied by the number of years of contributions up to 30 years + 1 percent of monthly covered earnings multiplied by the number of years of contributions above 30 years. The monthly minimum pension is US$60.
Health Insurance
Zimbabwe does not have public health-care available.
Risk Insurance
N/A
Taxable Income
- Currently, the Zimbabwean tax system is based on source rather than residency. Income received or considered to be sourced from Zimbabwean sources is taxed. During the current tax reform process, Zimbabwe has stated that it is contemplating transitioning to a residence-based system.
- 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. The location where services are provided is referred to as the source of services.
- Certain sorts of money earned outside of Zimbabwe may be judged to have been earned in Zimbabwe and taxed as such in the hands of a Zimbabwean tax resident. Interest, dividends, and some copyright royalties occurring outside of Zimbabwe are examples.
- WHT may apply to non-residents who do not have a place of business in Zimbabwe.
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, although the deduction cannot generally exceed the amount.
- Personal and household costs are normally not deductible.
PAYROLL TAXES AND EMPLOYER CONTRIBUTIONS
Payroll Taxes
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. Contributions to the National Social Security Scheme (NSSS) are due at the same rate of 4.5 percent of basic salary by both the employer and the employee, with a salary ceiling of ZWL 5,000 per month.
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
Zimbabwe’s social security system is inadequate. Contributions to the National Social Security Scheme (NSSS) are due at the same rate of 4.5 percent of basic salary by both the employer and the employee, with a salary ceiling of ZWL 5,000 per month.
With effect from June 12, 2021, Statutory Instrument 169 of 2021 increased the maximum monthly insurable earnings from ZWL$ 5,000 to 75 percent of the previous month’s Total Consumption Poverty Line (TCPL) for an average of five people per household, as published by the Zimbabwe National Statistics Agency. If the TCPL figure is not available or has not been published, the most recently released figure applies. NSSA will post the monthly insurable earnings relevant for each month on the NSSA website by the 1st of each month.
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. 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. Providing financial assistance to employees and their families when an employee is hurt or murdered on the job, suffers from a work-related sickness, or dies as a result of it.
Raising awareness of, and encouraging, health and safety in all workplaces. Through factory and machinery inspection, we may encourage the application of health and safety regulations. Providing 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.
ADMINISTRATION
Income
- Currently, the Zimbabwean tax system is based on source rather than residency. Income received or considered to be sourced from Zimbabwean sources is taxed. During the current tax reform process, Zimbabwe has stated that it is contemplating transitioning to a residence-based system.
- 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. The location where services are provided is referred to as the source of services.
- Certain sorts of money earned outside of Zimbabwe may be judged to have been earned in Zimbabwe and taxed as such in the hands of a Zimbabwean tax resident. Interest, dividends, and some copyright royalties occurring outside of Zimbabwe are examples.
- WHT may apply to non-residents who do not have a place of business in Zimbabwe.
Payroll Taxes
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.
Contributions to the National Social Security Scheme (NSSS) are due at the same rate of 4.5 percent of basic salary by both the employer and the employee, with a salary ceiling of ZWL 5,000 per month.
Unemployment
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
Social Security
- Zimbabwe’s social security system is inadequate. Contributions to the National Social Security Scheme (NSSS) are due at the same rate of 4.5 percent of basic salary by both the employer and the employee, with a salary ceiling of ZWL 5,000 per month.
- With effect from June 12, 2021, Statutory Instrument 169 of 2021 increased the maximum monthly insurable earnings from ZWL$ 5,000 to 75 percent of the previous month’s Total Consumption Poverty Line (TCPL) for an average of five people per household, as published by the Zimbabwe National Statistics Agency. If the TCPL figure is not available or has not been published, the most recently released figure applies. NSSA will post the monthly insurable earnings relevant for each month on the NSSA website by the 1st of each month.
- 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. 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. Providing financial assistance to employees and their families when an employee is hurt or murdered on the job, suffers from a work-related sickness, or dies as a result of it. Raising awareness of, and encouraging, health and safety in all workplaces. Through factory and machinery inspection, we may encourage the application of health and safety regulations. Providing 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
