Employer of record in Zambia

PAID TIME OFF

• Annual Leave: Employees are entitled to 24 working days of paid annual leave each year.
• Sick Leave: After 12 months of service, employees qualify for up to 6 months of paid sick leave—100% pay for the first 3 months, and 50% pay for the remaining 3.
• Maternity Leave: Female employees are entitled to 14 weeks of maternity leave. This can be extended by 4 weeks for multiple births, or reduced to 6 weeks in case of miscarriage during the third trimester.
• Paternity Leave: Male employees with at least one year of service are entitled to a minimum of 5 consecutive working days of paternity leave.
• Family Responsibility Leave: Employees with at least 6 months of service are eligible for up to 7 days of paid leave to care for an ill dependent.
• Public Holidays: Zambia observes 14 paid national holidays annually.

STATUTORY EMPLOYEE BENEFITS

• Unemployment: There are no formal unemployment benefits, but severance pay is provided in cases of unlawful dismissal or termination due to certified medical conditions. Severance is at least two months’ basic pay per completed year of service.
• Workers’ Compensation: The Workers’ Compensation Fund Control Board (WCFCB) offers coverage for occupational injuries and illnesses under the Workers’ Compensation Act.
• Social Security: Both employers and employees contribute 5% of monthly gross earnings, capped at ZMW 21,476. Voluntary contributions stand at 10%.
• Retirement: Employees may retire at age 55 (or 60 if enrolled after August 14, 2015), provided they’ve contributed for at least 180 months.
• Healthcare: Zambia offers free public healthcare services, although many citizens prefer private facilities due to limited resources and staff in public hospitals.

PRIVATE EMPLOYEE BENEFITS

• Healthcare: Many employers offer private medical coverage due to the challenges of the public system.
• Retirement Plans: Some employers provide private pension schemes in addition to statutory contributions.
• Insurance: Private life and health insurance are available through various providers.

PERSONAL INCOME TAX

• Tax Year: January 1 to December 31.
• Tax Rates:

Tax System: Zambia operates a source-based tax regime. Residents are taxed on local and some foreign income (such as dividends and interest), while non-residents are taxed on Zambian-source income.

• Tax Credits: No significant personal tax credits or rebates.
• Double Taxation: Zambia maintains several double taxation agreements.
• Residency: A person is considered a tax resident if present in Zambia for 183 days or more within a tax year.

PAYROLL COMPONENTS

• Remuneration: Includes wages, bonuses, overtime, allowances, and taxable non-cash benefits.
• Bonuses: Employers may offer 13th-month salary or performance bonuses.
• Benefits in Kind: Includes housing, transport, meals, and other non-cash benefits regulated under the Employment Act.
• Capital Gains: Not subject to tax in Zambia.
• Allowances: Not explicitly defined in legislation.
• Investment Income: Interest and dividends are taxable.
• Allowable Deductions: Deductions are allowed for costs incurred exclusively for generating income, but personal employee expenses rarely qualify.

PAYROLL TAXES & EMPLOYER CONTRIBUTIONS

• PAYE (Pay-As-You-Earn): Employers are responsible for withholding and remitting employees’ income tax.
• Skills Development Levy (SDL): Employers contribute 0.5% of gross employee earnings monthly.
• Social Security (NAPSA): 5% employee + 5% employer contributions; capped at ZMW 21,476 monthly.
• Workers’ Compensation: Mandatory contributions made under the WCFCB for workplace-related injuries or illnesses.
• National Health Insurance: Contributions required from both employers and employees.

ADMINISTRATIVE REQUIREMENTS

• Payroll Cycle: Salaries are generally paid at month-end.
• Gratuity: Upon contract completion, a gratuity payment may be required depending on the employment agreement.
• Reporting: Employers must maintain accurate records and submit monthly and annual payroll tax returns.