Zambia EOR & PEO

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Zambia is a landlocked country in South-Central Africa. The capital of Zambia is Lusaka, in southern Zambia. Eight other African countries border Zambia, making it an important passageway for goods traveling through Africa.

Zambia is in UTC+2 time zone, meaning it shares a time zone with parts of Eastern Europe during Daylight Savings; still, the time zone of Zambia is reasonably close to Europe, which is convenient for European-based companies looking to hire in Zambia.

The main drivers of the Zambian export economy have continuously been mined metals and minerals, especially copper and cobalt. Key industries for economy growth include mining & mining processing, chemicals, fertilizer, textiles, and construction. Copper mining remains the central focus of the Zambian economy, with more than 3/4 of Zambia’s total export earnings coming from copper export.

The main regional trading partners of Zambia are South Africa, Malawi, Zimbabwe, and the DRC. Internationally, the USA, Japan, the UK, the Netherlands, and Germany are major trading partners for Zambia.

Zambia is a part of these international agreements and organizations, including:

Common Market for Eastern and Southern Africa (COMESA) – Free Trade Agreement
South African Development Community (SADC) – Free Trade Agreement
African Continental Free Trade Area (AfCFTA) – Free Trade Agreement
United Nations (UN) – International Organization
African Union (AU) – International Organization
World Trade Organization (WTO) – International Organization

For more information on Zambia’s trade agreements, see the US Department of Commerce web page on the topic here.

Zambia is a good place to hire staff. With a young workforce, a key location in central Africa, a time zone congruent with Europe, relatively low employee wages, major participation in regional and global trade organizations, and a relatively positive economic outlook as put forward by The World Bank, there are many international companies interested in hiring in Zambia.

For those who want to hire in Zambia, a Zambia EOR is the best way to hire in Zambia. With a Zambia EOR, companies are not only able to get operations started in 48 hours (versus the weeks/months it would take opening their own entities), they are oftentimes able to save money on their hiring as well. Read more below to learn what exactly a Zambia EOR is and what the benefits are for companies who choose to engage a Zambia EOR for global hiring.

Facts & Stats

What is a Zambia EOR?

A Zambia EOR, or Zambia Employer of Record, refers to an HR outsourcing company that helps other companies hire compliantly in Zambia without the need to set up their own local entity.

To hire in Zambia, you would normally need to go through the relatively expensive and time-consuming process of opening a subsidiary or local company of your own. With a Zambia EOR, you can hire your employee with the Zambia EOR as the legal employer of that employee.

There are many benefits to engaging a Zambia EOR. Not only is it faster and oftentimes more cost effective to hire Zambia employees using a Zambia EOR, it usually offers more protection in terms of compliance, due to both the HR expertise of the Zambia EOR, and the fact that the “client company” (presumably your company) has no legal employment relationship with the employee. Read more below for a full list of the benefits of using a Zambia EOR.

stay compliant with Zambia labor laws

What are the benefits of a Zambia EOR?

There are many reasons why a company would benefit from using a Zambia EOR versus opening their own Zambia entity. By engaging a Zambia EOR to hire in Zambia, your company can:

Expand faster — with Horizons Zambia EOR, expand to Zambia in 24 hours.
Save more — save up to 85% versus the cost of entity establishment
Improve compliance — trust Horizons local employment law and tax experts to ensure full compliance is met in Zambia
Increase flexibility — whether you want to hire 1 employee, or 100, you can achieve your hiring goals with Horizons Zambia EOR without specialized knowledge.
Reduce administrative burden — focus on your business while Horizons Zambia EOR takes care of all the back-office administrative HR paperwork.
Mitigate your risks —with Horizons as the Employer of Record (EOR) for your Zambia employee, and with no legal entity in Zambia, the risk your business is reduced.
Continue expanding — Horizons is a global EOR, which means expanding outside of Zambia later is just as easy.

Zambia itself offers a great amount to prospective companies. By hiring in Zambia, your company can access:

Skilled workforces with proficiency in English
Favorable business environment and stable political situation
Excellent location with many neighboring countries
Plentiful natural resources, particularly for rare earth metals and gemstones
Lower labor costs (versus Europe or North America) with comparable skill levels
Growing demographics, which often leads to increased domestic consumer spending and business innovation.

It is worth noting that the specific benefits of a Zambia EOR will depend on the services they offer and the needs of the business.

Benefits administration in Zambia

Maternity and Paternity leave

Mothers in Zambia are entitled to 14 weeks of paid maternity leave. In order to qualify, the employee must have worked continuously for 2 years with the same employer. Expectant mothers must provide a medical document signed by a licensed medical doctor. In cases where an employee is sick as a result of pregnancy, the employee is entitled to sick leave. Employees may not be terminated for any reason related to pregnancy.

Fathers in Zambia are entitled to 5 days of consecutive unpaid paternity leave. In order to qualify, the employee must have worked continuously for 12 months with the same employer.

Healthcare

The healthcare system in Zambia includes two parts:

Publicly funded universal healthcare
Private healthcare

The publicly-funded universal healthcare in Zambia suffers from several problems. The first problem is that the system itself is chronically underfunded; as a result, many doctors in Zambia with either leave the country for better opportunities, or work exclusively in the private healthcare system in Zambia. While these problems decrease the quality of healthcare available to Zambia citizens, Zambia’s universal healthcare has no cost for patients, who are often earning low wages. For the majority of Zambia citizens, universal healthcare is their only option. The government of Zambia is working on solutions to increase the quality of healthcare offered, often in conjunction with international partners (e.g., the Japan International Cooperation Agency, or JICA).

The public health system is divided into three categories:

Level 1 Hospitals (‘Primary’, at the district level): in charge of provision of services, diagnoses, etc.
Level 2 (‘Secondary’, at the provincial level) & 3 (‘Tertiary’, at the central level) Hospitals: ‘Specialist hospitals’, meant to provide specialist treatment.

The private healthcare system is mostly used by expatriates or wealthy Zambians. Most of the private healthcare facilities are found in major cities, like the capital Lusaka. Private healthcare accounts for more than 50 percent of formal health services. While the speed and quality of care at private hospitals is better, in cases of emergency, especially those that are life-threatening, those who are able would opt to be evacuated to South Africa, where the quality of healthcare is significantly better.

With a Zambia EOR, companies have access to affordable private health insurance plans to give their employees access to the private healthcare system of Zambia; and some EORs, like Horizons, can provide international health insurance plans so if the employee’s situation becomes serious, the healthcare systems of neighboring countries like South Africa can be utilized.

With quality benefits like international health insurance, attracting and retaining talent in Zambia becomes much easier.

Pensions

There are several types of pensions available for workers in Zambia. Zambia has a minimum number of months an employee must contribute to the formal system in order to draw pensions. Contributions are paid by both employees and employers with each monthly salary. Both employees and employer contribute 5% of the total monthly salary each, for a total of 10%. The minimum monthly earnings used to calculate pension payments is 15 ZMW, and the maximum is 21,476 KMW.

Find below the different types of pensions and settlements offered in Zambia, and the requirements to draw them.

Zambia’s old-age pension can be drawn from age 55, or 60 for those who started payments after 14 August 2015. To qualify, employees must have made 180 months of contributions (required contribution reduced by 12 months for each year the employee was aged 39+ on 1 February 2000, when the pension scheme went live). When the employee draws the old-age pension, employment must end. Employees who meet the Zambia old-age pension requirements by age 50 are entitled to draw an early pension, and employees may defer pension payments until age 65. Zambia’s old-age pension may be drawn from abroad.

Zambia’s old-age settlement acts as a lump sum retirement payment for those who are ineligible to draw the Zambia old-age pension. It may be received if the applicant is abroad.

Zambia’s disability pension is for employees who have been determined as invalid by Zambian medical authorities, with a permanent incapacity to work. To receive the Zambia disability pension, employees must have made at least 60 months of contributions, which includes the previous 12/36 months prior to the disability. The disability pension may be paid to an employee abroad.

Zambia’s disability settlement acts as a lump sum disability payment to those who are ineligible to draw the Zambia disability pension (i.e., for those who have not reached the minimum number of monthly contributions). Once assessed by government medical authorities as disabled, the employee is eligible to receive the one-time payment in the amount calculated by the Zambian government.

Zambia’s survivor pension is for the immediate family of a deceased pensioner, or a deceased employee who was eligible to receive the pension with at least 60 months of contributions made at the time of death. Eligible survivors include widows, widowers, or orphans under the age of 18 (or 25 if a student). The widow and widower pension ends when the survivor is remarried, unless taking care of one or more of the deceased’s children. The survivor pension may be paid to survivors living abroad.

Zambia’s survivor settlement acts as a lump sum payment made to survivors when the deceased has not made enough contributions to be eligible for the survivor’s pension (i.e., for those employees who were only eligible for the old-age settlement). Eligible survivors include: the widow, widower, child, or elected beneficiary of the deceased.

Zambia also offers a funeral grant covered by this system. This is paid to survivors if the deceased was eligible for a Zambia old-age or disability pension, or if the deceased had made 12/36 contributions in the months leading up to death.

Payroll and employer taxes

Payroll tax

Payroll tax refers to taxes paid toward social contributions. Payroll taxes are represented as a percentage of the employees’ salary and are paid in addition to the employees’ salaries.

The payroll tax rate in Zambia is 10%, with 5% being paid by the employee and 5% by the employer.

Income tax

Income tax refers to taxes paid by employees on the income they receive from employment. Income tax is represented as a percentage of the employees’ salary. Zambia institutes a ‘pay as you earn’ (PAYE) system, which means income tax is withheld directly by the company and paid to the Zambian government by the company (on behalf of the employee). Zambia has a progressive income tax system, which means high-earning employees pay a higher percentage of income taxes after certain thresholds.

The employee income tax rate in Zambia can be found below:

Monthly income (ZMW	Tax Rate (%)
0-4,800	0
4,801-6,800	20
6,801-8,900	30
8,901+	37.5

Hiring in Zambia with a Global EOR

Zambia is an excellent choice for hiring in Africa. With active participation in a variety of trade organizations, good trading relationships with the US, the EU, and China, a young population of workers facing underemployment, and a location at the crossroads of south-central Africa, it is a good place to hire. For companies looking for a stable place to grow Africa operations, Zambia might represent an opportunity. To reduce risks and costs, and to gain additional flexibility, a Zambia EOR is the best option for hiring in Zambia.

With a Zambia EOR, a company looking to expand to Zambia can do so confidently, compliantly, and quickly. Contact us if you have any question about the process to hire in Zambia.

Zambia Employer Of Record Peo

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What is a Zambia EOR?

What are the benefits of a Zambia EOR?

Benefits administration in Zambia

Payroll and employer taxes

Hiring in Zambia with a Global EOR

Frequently asked questions

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Frequently asked questions

What is the difference between a Zambia PEO and a Zambia EOR

Generally speaking, the terms “Zambia PEO” and “Zambia EOR” are used interchangeably.

Should I hire a Zambia EOR?

A Zambia EOR is an excellent choice for international businesses seeking to hire and pay employees in Zambia in full compliance with tax and labor laws. It saves up to 85 percent of the cost of setting up a local subsidiary — the key alternative option.