Madagascar PEO & Employer of Record

WeHG provides an International PEO and global Employer of Record service in Madagascar to companies willing to enter the Madagascar market or hire local/expat employees in this country.

Common approach requires establishing a subsidiary in Madagascar.  Meanwhile, our solution affords you to start the operations in Madagascar within days hence save time and money.  WeHG would hire job-seekers for your company while you keep maintaining full operational control of their work. So legally they would be our employees, on our local payroll, 100% compliant but will work on your behalf.

Madagascar fast facts

Population, million: 26
Land area: 587,041 km²
Capital: Antananarivo
Local currency: Malagasy ariary (MGA)

GDP per capita:$ 1,697
GDP in currency:$ 45.948 billion

Madagascar, island country lying off the southeastern coast of Africa. Madagascar is the fourth largest island in the world, after Greenland, New Guinea, and Borneo.

Although located some 250 miles (400 km) from the African continent, Madagascar’s population is primarily related not to African peoples but rather to those of Indonesia, more than 3,000 miles (4,800 km) to the east. The Malagasy peoples, moreover, do not consider themselves to be Africans, but, because of the continuing bond with France that resulted from former colonial rule, the island developed political, economic, and cultural links with the French-speaking countries of western Africa. The animal life and vegetation of the island are equally anomalous, differing greatly from that of nearby Africa and being in many respects unique. Although the coastlands have been known to Europeans for more than 400 years and to Arabs for much longer, recent historical development has been more intense and concentrated in the central plateau, which contains the capital city of Antananarivo (formerly Tananarive).

Hiring, Negotiating and Doing Business in Madagascar

Necessity of written employment contract

It is legally required to put a written employment contract in place in Madagascar, in the local language, which spells out the terms of the employee’s compensation, benefits, and termination requirements. An offer letter and employment contract in Madagascar should always state the salary and any compensation amounts in Malagasy ariary rather than a foreign currency.

In the absence of a written contract, the existence of the employment contract can be proved by all means. The employment contract is free of any stamp duty and registration. The employment contract can be concluded for an indefinite duration or a duration determined.

Different forms of engagement: employment, contracting, work with private entrepreneur

The law in Madagascar allows public and private sector workers to establish and join labour unions of their choice, without prior authorization or particular requirements (nevertheless, essential workers, including police, military, and firefighters, may not form unions; and civil servants have a different labour code). Formally, unions operate independently from government and political parties.

Workers in the private sector have the right to bargain collectively. However, more than 80% of workers are engaged in agriculture, fishing, and forestry at a subsistence level, and therefore have no access to unions.

In general, collective bargaining rights are more readily exercised and respected in larger international firms, whereas in smaller local companies employees tend to be more reluctant to make demands for fear of reprisals.

Madagascar Employment Contract

Types of employment agreements

A fixed-term contract is a contract of employment characterized, at the time of its conclusion, by the existence of a term fixed by the parties or linked to an event whose future occurrence is certain even if it does not depend on the will of the parties. The fixed-term contract can not exceed two years.

The following may be the subject of a fixed-term contract:

• do not last more than two  years;
• do not enter the normal activities of the establishment;
• relate to a specific work whose realization is the end of the contract.

The fixed-term employment contract of a minimum duration of six months is transformed automatically on an open-ended employment contract after two renewals.

Re-employment in the same position of a worker bound by a fixed-term contract after a interruption not exceeding one month is considered a renewal of the contract.

Madagascar working hours

The typical business hours in Madagascar are from 8:30am to 5pm. Monday to Friday, with a lunch break between noon and 1pm. Most offices work from 9am to noon on Saturdays. In general the work week is 40 hours, with five, eight-hour days.

Overtime

If a worker works beyond the stipulated working hours, he/she is entitled to an overtime pay according to the following schedule:

• 130% of normal hourly rate for the first eight overtime hours;
• 150% of normal hourly rate beyond the 8th hour.

Vacation leave in Madagascar

In general, employees are entitled to 2.5 days of paid leave per month.

Madagascar Maternity Leave

Female employees are generally entitled to 14 weeks of paid maternity leave, at least 8 of which should be taken after the child’s birth. Leave is paid at 50% for employees covered by the labor code and at 100% for public servants. Men are generally entitled to up to 10 days each year for family events.

Madagascar Severance Laws

Probationary periods of up to 6 months are allowed with a one-time renewal. The time allowed depends on the position.

Fixed term contracts, including renewals, may not exceed 24 months.

Employees may be terminated for cause with written notice. The notice period is determined by the type of employment and length of service, and ranges from 8 days to 6 months.

Employees are not generally eligible for severance pay, except if they are terminated for economic reasons, in which case they are entitled to 10 days’ wages for each year of service, up to 6 months’ of wages.

Madagascar Tax

Social Security Contributions Paid By Employers: 13% (capped at eight times the legal minimum salary per employee)

Social Security Contributions Paid By Employees: Employers contribute up to 13% of remuneration, up to 13% of eight times the legal minimum salary per employee for social security (“Caisse Nationale de Prévoyance Sociale”), plus 5% for health contributions.

Employees contribute to the National Pensions Fund at 1% (capped at a monthly maximum 1% of eight times the legal minimum salary), plus 1% of monthly remuneration to the statutory health organisation (also limited to a monthly maximum of 1% of eight times the legal minimum salary).

Health Insurance Benefits in Madagascar

Madagascar has a public/private healthcare system.

Employees are entitled to at least 5 paid sick days per year.

Additional Benefits in Madagascar

Common employer provided benefits include:

• Supplementary health insurance
• Car allowance
• Dependent education
• Fitness allowance
• Meal allowance

Annual, 13th month, and performance-based bonuses are all common in Madagascar.

General market practice benefits/additional allowances

The regulatory reforms and public investments in infrastructure since 2002 in the have led to the improvement of the country’s business environment.

• Significant public and private investments in infrastructure, such as road, ports, airports, telecommunication, and energy reduce the costs of doing business.
• No restrictions on capital flow in and out of the country, either for debt service or dividend payment
• No requirement that nationals own shares of foreign companies
• Rules of law are enforced without discrimination.
• Intellectual property protection is granted by laws.
• No Government-imposed conditions on permission to invest, including the location in a specific geographical area, specific percentage of local content, substitution for imports, export requirements or targets, employment of host country nationals, or technology transfer
• Property rights are protected by laws (guarantee against nationalization, expropriation).
• Quick and easy procedure for company creation

Madagascar Holidays

The law does not provide for a compensation day in case a holiday falls on a non-working day.

If a person has to work during a holiday, he/she is generally entitled to 150% of the normal pay (140% in case of weekly day off). There’re 12 public holidays in Madagascar:

• New Year’s Day
• International Women’s Day
• Easter Monday
• Martyrs’ Day
• Labor Day
• Ascension Day
• Whit Monday
• Independence Day
• Assumption of Mary
• All Saints’ Day
• Republic Day
• Christmas Day         

Why Choose WeHireGlobally

WeHG takes care of all the onboarding hurdles, payroll, compensation and benefits, tax filing, and termination of employment. Our Employer of Record solution allows you to manage your overseas teams efficiently while minimizing cost and risk.