Payroll & Employment Guide Madagascar

Employment contracts in Madagascar are governed by the Labour Code and must follow strict legal requirements, particularly regarding termination, notice periods, and employee protections. Employers must ensure that contracts clearly define the terms of employment and comply with local labour laws.

Notice periods: Mandatory for indefinite contracts and vary depending on the employee’s role and length of service. They can range from a few days to several months. If not respected, compensation in lieu must be paid.

Termination of employment: Employees may challenge a dismissal if it is considered abusive or not based on a valid reason. In such cases, courts may award damages. Severance pay is required in specific cases, particularly for economic dismissals, and is generally calculated based on years of service, capped at six months of salary.

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Employers in Madagascar must provide mandatory benefits in line with the Labour Code (Law No. 2024-014) and the national social security system (CNAPS). These benefits ensure employee protection, while additional perks may be offered to remain competitive in the job market.

Mandatory benefits:

• Social security (CNAPS): Covers retirement pensions, family allowances, and occupational accident insurance. Employers must register employees, withhold contributions, and submit monthly declarations
• Retirement (pension): Funded through mandatory employer and employee contributions based on gross salary (subject to a statutory ceiling)
• Workers’ compensation: Fully employer-funded under CNAPS, covering workplace injuries, medical expenses, disability, and death benefits
• Disability coverage: Includes invalidity pensions (non-occupational) and compensation for work-related disability
• Occupational health services: Employers must ensure access to workplace medical services (e.g. OSTIE in certain regions), including mandatory health checks and monitoring
• Common perks: This includes private health insurance or medical reimbursement plans (not mandatory), housing, transport, meal allowances, performance bonuses, hardship allowances, and education and relocation support, particularly for expatriates.

Leave policies:

• Paid annual leave: 2.5 days per month of service (~30 days per year), with entitlement after 12 months of service
• Sick leave: Up to 6 consecutive months with job protection; employer pays a capped indemnity, after which social security may provide support
• Maternity leave: 14 weeks (at least 8 weeks post-birth), with salary split 50% employer / 50% CNAPS
• Paternity leave: 3 paid days
• Family-related leave: Includes up to 10 days per year for family events, plus additional leave for child or spouse hospitalisation

Madagascar has a comprehensive tax system that applies to both employees and employers. Employers are responsible for withholding income tax and social contributions, while additional rules apply depending on residency and income type.

Individuals are considered tax residents if they stay more than 183 days in Madagascar or have their main economic interests there. Residents are taxed on worldwide income, while non-residents are taxed only on Malagasy-source income

Personal income tax: Madagascar has progressive tax rates ranging from 0% to 25%. The minimum tax payable is MGA 3,000 per month. Here are the monthly tax brackets:

• 0 – MGA 350,000: 0%
• MGA 350,001 – 400,000: 5%
• MGA 400,001 – 500,000: 10%
• MGA 500,001 – 600,000: 15%
• MGA 600,001 – 4,000,000: 20%
• Above MGA 4,000,000: 25%

Withholding taxes:

• Interest: 20% withholding tax
• Dividends: Effective 10% (20% applied on 50% taxable base)
• Capital gains: Generally taxed at 20%
• Withholding taxes are typically final for non-residents

VAT: 20%

Tax allowances and deductions:

• Family allowance: Approx. MGA 2,000 per dependent per month
• Social contributions: Employee (~1% pension + 1% health), Employer (~13% pension + 5% health + 1% training)
• Benefits in kind are taxable, generally capped at 20% of gross salary, with specific valuation rules

Double taxation relief: Available through treaties with France, Mauritius, Canada, and Morocco

Employers in Madagascar must manage payroll in compliance with local tax and social security regulations, including salary payments, tax withholdings, and CNAPS contributions. Payroll reporting is primarily handled on a monthly basis.

Salary payment deadline: Salaries must typically be paid at the end of the month or within the first few days of the following month (commonly by the 5th–10th)

Taxes and contributions payment deadline:

• Income tax (IRSA): Paid monthly, typically by mid-month of the following month
• Social security (CNAPS): Paid monthly, generally aligned with declaration deadlines

Payroll declarations deadline:

• Monthly declarations required for Income tax (IRSA), and Social security (CNAPS)
• Submitted in the month following payroll (typically by mid-month)
• No standard quarterly payroll reporting requirements

Payroll currency: Malagasy Ariary (MGA)

Madagascar’s labour law is defined by the country’s Labour Code, which outlines key aspects of employment, including contract types, working conditions, minimum wages, probation practices, and termination rules. Employers must comply with these regulations, as well as payroll, tax, and social security obligations.

Total employment cost:

• Employer’s social security contributions: 19%
• Employees’ social security contributions: 2%

Minimum wage: 262,680 MGA/month

Contribution ceiling: 2,101,440 MGA/month (8 × minimum wage)

Probation period: Maximum duration depends on role:

• Up to 3 months: workers and non-managerial employees
• Up to 4 months: supervisors and managers
• Up to 6 months: senior executives

EOR services in Madagascar enable you to legally employ individuals in the country without opening legal entities. Your EOR will take over all the legal responsibilities as an official employer, including:

• Legal employment and contracts
• Payroll processing
• Tax withholding
• Benefits administration
• Onboarding/offboarding employees

PEO services in Madagascar provide HR and administrative support, while you remain the legal employer for your team. They are ideal for employers who already have legal entities in Madagascar but need support to manage their workforce operations, including:

• HR support and workforce administration
• Payroll and benefits management
• Compliance and local labour law guidance
• Employment contracts assistance

Native Teams’ payroll calculators are adjusted to 95+ countries’ local labour laws, including Madagascar. Using our calculator, you can easily estimate net and gross salaries, employer/employee contributions, and other mandatory deductions in the country.