Severance Pay, Notice and Unfair Dismissal in Malawi (2026): What You Are Owed When a Job Ends

Losing a job in Malawi is hard enough without guessing what you are owed. The rules are not company policy or goodwill: they are minimums set by the Employment Act (Chapter 55:01). This guide covers the four payments that can arise when a job ends — notice, leave pay, severance allowance and, if the dismissal was unfair, compensation — and the deadline that quietly ends most claims.

First, work out why the job ended

Almost everything depends on this, because the Act treats different endings very differently.

• Redundancy, retrenchment or "operational reasons" — the employer no longer needs the role, is cutting costs, restructuring, or is in economic difficulty. This is the main situation in which severance allowance is payable.
• Unfair dismissal — you were dismissed without a valid reason, or without a fair hearing. Severance is payable here too, and you can claim compensation.
• Fair dismissal for conduct — for example, dismissal after a proper hearing for serious misconduct. No severance.
• Resignation — you chose to leave. No severance, and you owe your employer notice.
• A fixed-term contract simply running out, or a specific task being finished — no notice is needed and no severance is payable (sections 28 and 35(5)).

One trap in the fixed-term rule protects you: under section 28(3), a "fixed-term" contract that is really filling a permanent, ongoing post is treated as a contract for an unspecified period. Being kept on rolling short contracts for years in a normal, permanent job does not strip you of your rights.

Notice: how much you are entitled to

For a contract with no end date, section 29(1) sets the minimum written notice either side must give:

Your contract can give you more than this, never less. For a contract for a specified period, section 29(3) sets the minimum notice at fourteen calendar days.

Payment in lieu of notice. Your employer may end the job immediately instead of letting you work the notice — but under section 30(2) it must then pay you the remuneration you would have earned, and give you all your other benefits, up to the end of the notice period. The rule cuts both ways: if you walk out without giving the notice you owe, section 30(3) lets your employer claim the equivalent sum from you, although you still keep the pay and benefits that had already built up.

Leave pay and final wages

Two payments are due whatever the reason for leaving:

• Untaken annual leave. Section 45(2) requires your employer to pay you for any leave you had earned but not taken, at a rate of at least the wage you were earning when your employment ended.
• Your final wages. Section 53 requires wages and other remuneration due on termination to be paid within seven days of the contract ending.

On request you are also entitled to a certificate of termination (section 31) showing your length of service, your job, your final pay and, if you ask, the reason the job ended. Request it: it is the cleanest proof of your service length if a dispute follows.

Severance allowance: who gets it

Section 35(1) is unusually blunt. Severance is payable on termination "as a result of redundancy or retrenchment, or due to economic difficulties, or technical, structural or operational requirements of the employer, or on the unfair dismissal of an employee… and not in any other circumstance." It is payable at the time of termination, not months later. Termination because the employer became insolvent or died also counts (section 35(5)).

Even in those situations, section 35(7) removes the entitlement if you:

• were still on probation;
• were fairly dismissed for a reason related to your conduct;
• unreasonably refused an offer of re-employment by the same employer, at the same place of work, on terms no less favourable than before.

That last point matters in restructurings. Turning down a genuinely equivalent job offer can cost you your severance, so if you are offered one, read the terms carefully before you say no.

Severance allowance: how much

The scale is in Part I of the First Schedule to the Act, and it is based on completed years of service at your current wage:

The rates step up, so each band only applies to the years inside it. Someone with 12 completed years is owed: 5 years × 2 weeks, plus 5 years × 3 weeks, plus 2 years × 4 weeks = 33 weeks' wages. Someone with 4 completed years is owed 8 weeks'.

What counts as "wage" for severance is wider than basic salary. Section 35(2) includes housing allowance or housing provided as a benefit, a car allowance or car (unless provided purely to do the job), transport allowance to and from work, and other cash payments and payments in kind. Unless your contract or a collective agreement says otherwise, it excludes tool and relocation allowances, tips, share schemes, discretionary profit-sharing, entertainment and education allowances, and the employer's medical aid, pension and funeral contributions.

Ask your employer to show the working, including how your monthly pay was converted into a weekly figure — and confirm the scale with a labour officer, because section 35(3) lets the Minister amend it by notice in the Gazette.

Severance does not replace your other entitlements. Section 35(6) states that it does not affect your pay in lieu of notice or any compensation for unfair dismissal.

If you were unfairly dismissed

Under section 57, your employer needs a valid reason connected with your capacity, your conduct or the operational requirements of the business — and before dismissing you for capacity or conduct, it must give you an opportunity to defend yourself, unless it genuinely could not be expected to. Some reasons are never valid, including your sex, religion, political opinion, disability, marital status or family responsibilities, temporary absence through sickness or injury, lawful union activity, or having filed a complaint against the employer.

Crucially, the burden sits with the employer. Under section 61, it must prove the reason for the dismissal and show that it acted "with justice and equity"; if it cannot give a reason at all, the dismissal is conclusively presumed unfair.

If you were forced out rather than dismissed — your employer's conduct made it unreasonable to stay — that is constructive dismissal under section 60, and it is treated as a dismissal.

If the Industrial Relations Court finds the dismissal unfair, section 63 lets it order reinstatement, re-engagement in comparable work, or compensation. Compensation is what the Court considers just and equitable, but it cannot be less than:

Unlike the severance scale, these apply to every year of service at the rate for your band: 12 years' service means at least 36 weeks' pay. More can be awarded where the dismissal was for a prohibited reason. And if the employer ignores an order to reinstate or re-engage you, section 63(6) adds a special award of twelve weeks' wages on top.

The three-month deadline

This is where most claims fail. Under section 62, you have three months from the date of dismissal to complain to the District Labour Officer that you were unfairly dismissed. A complaint that severance has not been paid must likewise be made to the District Labour Officer within three months of it falling due (section 35(8)).

The labour officer first tries to settle the matter. If that has not happened within one month, it can be referred to the Industrial Relations Court. A trade union or employers' organisation may represent you (section 64(4)). The Ministry of Labour's headquarters is at Capital Hill, Private Bag 344, Lilongwe 3 (labour@labour.gov.mw); your nearest District Labour Office handles complaints.

Do not wait to see if the employer "comes round". Lodge first, negotiate afterwards.

Your pension when a job ends

Severance and pension are separate. Under the Pension Act 2023:

• Your pension contributions vest immediately (section 89) — none of it is forfeited for leaving early.
• If you have not found another job for at least three months, you can apply for an early payment (section 88), but it is limited to your own contributions and the investment income on them. Your employer's contributions stay invested for retirement. There is an exception for small balances below a threshold set by the regulator's directives, which can be paid out in full (section 91(2)(b)).
• If you do nothing, your balance moves to a default fund no later than thirty days after six months have passed since your last day of employment (section 62). Applying to move it to a fund you choose is faster and keeps you in control.
• If you were employed before 1 June 2011, section 136 treats the severance you had built up to 31 May 2011 as pension dues, payable into a pension fund of your choice — and immediately payable to that fund when your employment ends. Unpaid amounts count as an outstanding employer contribution carrying penalty interest. Ask your fund whether the transfer was made.

See our guide to pensions and retirement in Malawi for how withdrawals, transfers and the default fund work in full.

Tax on what you are paid

Your final pay is not all taxed the same way. Ordinary wages and notice pay go through PAYE like any other pay; see how PAYE works in Malawi and understanding your payslip. The Taxation Act separately lists, as exempt income, a fixed kwacha amount of a payment made to an employee declared redundant — and it expressly excludes notice pay and payment for untaken leave from that exemption. Because that amount is set in the Act, ask your employer to show how PAYE was calculated on the final payment, and confirm the current exempt amount with the Malawi Revenue Authority.

A practical checklist

1. Get the reason in writing, and request your certificate of termination.
2. Check your final pay within seven days: wages, notice (or pay in lieu), untaken leave and, where it applies, severance.
3. Count your completed years and run the severance scale yourself.
4. Diarise three months from your last day. Complain to the District Labour Officer before then if anything is disputed.
5. Contact your pension fund about transferring your balance, or about an early payment after three months without work.
6. Stretch the money deliberately. Work out how many months of essentials it covers with the emergency fund calculator, tackle expensive debt with the debt payoff calculator, and rework your budget with our guide to managing your money in Malawi.

Frequently asked questions

I was on probation. Am I owed anything? No severance (section 35(7)(a)). You are still owed your wages to the last day, and any leave you had earned.

My fixed-term contract was not renewed. Is that a redundancy? Normally not: a fixed-term contract that ends on its date is excluded from severance by section 35(5). But if the "fixed term" was really a permanent post, section 28(3) treats it as an open-ended contract.

My employer went bankrupt. Will I be paid? Under section 34(3), employees' claims — including severance pay and unfair dismissal compensation — rank ahead of all other creditors, including the State, for the amounts the section lists.

Sources

• Employment Act, Chapter 55:01 (No. 6 of 2000, as amended by Act 27 of 2010), Laws.Africa consolidation as at 31 December 2014, via MalawiLII — sections 3, 28–31, 34, 35, 45, 53, 57, 59–64 and the First Schedule.
• Employment (Amendment) Act, No. 17 of 2021, published 14 October 2021 — checked in full; it does not amend the provisions above.
• Pension Act, No. 6 of 2023, published 10 February 2023, Ministry of Labour copy — sections 62, 88, 89, 91 and 136.
• Ministry of Labour, Malawi, labour.gov.mw — headquarters contact details. Accessed 11 September 2026.

Last reviewed: September 2026. General information, not legal advice. For a dispute, speak to your District Labour Officer, your trade union or a lawyer, and act within the three-month deadline.