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A Madagascar Employer of Record (EOR) is a company that legally employs staff on behalf of a business. It fulfills all employer responsibilities (contracts, payroll, taxes, and full legal compliance with Malagasy labor law), while the business owners handle the employees’ daily activities and performance.
The Employer of Record differs from a Professional Employer Organization (PEO) in that the client doesn’t need a local entity. As the EOR is the legal employer, foreign businesses can hire locally through them, rather than needing to establish their own company in Madagascar.
The EOR is also regulated in Madagascar. Article 77 of the country’s 2024 Labour Code precisely defines its legal framework, setting out the conditions of its regulation. This clarity establishes a regulated framework for foreign companies to use this type of hiring to employ staff.
An EOR in Madagascar handles all necessary compliance with Law No. 2024-014, including contract specifications, worker rights, and workplace safety. Its core services include providing employment contracts in French or Malagasy, processing payroll payments in Malagasy Ariary (MGA), handling pension (CNaPS) and health (OSTIE) contributions, as well as managing statutory benefits and the formal process for employee termination.
Remote People is a global EOR provider whose mission is to make hiring workers in foreign countries easy, compliant and affordable. The company’s Madagascar solution is tailored to foreign businesses, international agencies, and NGOs looking to hire local talent. From onboarding to termination, Remote People manages the entire employment lifecycle, in full compliance with the 2024 Labour Code, without the client needing to establish a local legal entity.
Read our Remote People review for more information.
| Pros | Cons |
|---|---|
| Starting at $199 per month, this EOR is an inexpensive, time-saving solution that guarantees 100% legal compliance in both official languages of Madagascar. Additionally, businesses can save time and money by not having to register an entity. | On the other hand, clients have less control over HR-related decisions. As the EOR’s local expertise is the source of compliance, choosing the right provider is essential. |
Deel is a leading, technology-first EOR platform that empowers companies to hire, pay, and manage teams across over 150 countries. Their EOR solution for Madagascar focuses on speed and automation of onboarding so employers can onboard talent quickly through a single, unified dashboard. With Deel, employers can simplify the complexity of local laws and tax systems and international payroll, making it a good choice for their company to manage a distributed global team.
To learn more, see our Deel review.
| Pros | Cons |
|---|---|
| This provider offers rapid and smooth onboarding. This all-in-one HR platform helps employers manage a global workforce and be transparent about employer costs with access to optional health benefits. | However, the starting price is $599/month, which is high. Some other providers in this category offer lower starting prices. The final price is not provided and must be confirmed by contacting the sales team directly. |
G-P is one of the first companies in the EOR field, operating with a unique compliance-first approach across more than 180 countries. Backed by G-P’s own existing global network of legal entities and one of the largest in-house teams of HR and legal professionals in the industry, G-P Madagascar provides employers with the assurance of managing the entire employment lifecycle reliably and under expert legal review.
To find out more, see our Global Partners (G-P) review.
| Pros | Cons |
|---|---|
| This provider prioritizes compliance, has a large in-house HR/legal team with deep local knowledge of regulations and also owns its own global legal entities for reliability and less risk with third-party providers. | However, it is generally a premium-priced option that is not as optimal for smaller businesses with tighter budgets. |
Safeguard Global is an EOR and global payroll services provider that places significant importance on dedicated in-country specialists. The Safeguard Global EOR solution in Madagascar aims to assist businesses in dealing with the local regulations, but more importantly, in budgeting for the total social costs involved. This provider is well-suited for companies that prefer specialist support and assistance with financial planning.
Check out our Safeguard Global review for more in-depth details.
| Pros | Cons |
|---|---|
| Safeguard Global offers local HR professionals who provide personalized guidance to help employers navigate the complexities of Madagascar’s employment regulations. Also provides transparency into total social costs to help business owners plan their financials accordingly, and its services are scalable to accommodate business growth. | On the other hand, it tends to be more service-first, which may not be suitable for self-service or technology-driven preferences. |
Papaya Global provides an enterprise-grade solution for global EOR, payroll and payments in over 160 countries, including Madagascar. Built on a single platform, Papaya’s technology is integrated with its network of vetted, local, top-tier legal and accounting partners. The platform is architected to scale with enterprise volume while meeting stringent global localization needs and compliance requirements.
Learn more from our review of Papaya Global.
| Pros | Cons |
|---|---|
| Enterprise-focused, this provider’s platform easily accommodates high-volume onboarding and multi-country payroll. A single system for EOR, payroll and payments globally simplifies financial operations, and an employee self-service portal helps provide a better worker experience and fewer admin tasks. | One downside is that it is connected with a network of third-party partners to source in-country expertise, which offers less direct control than with providers that own in-country entities. |
Pebl (previously known as Velocity Global) is an EOR provider with operations in over 185 countries, including Madagascar. The company offers a blend of self-service technology and specialized human assistance. They are well-known for their data security certifications and integrations with clients’ existing HR software stack.
For more details, see our Pebl review.
| Pros | Cons |
|---|---|
| This provider is highly integrated with existing HR systems, ensuring a smooth data transition and management experience. It also has the highest level of security certifications, including ISO 27001 and SOC 2, which may appeal to businesses in data-sensitive industries. The service has a wide global reach and an established reputation in the EOR space. | On the downside, this provider operates through a combination of owned and partner entities, which may introduce some additional complexity in certain regions. Some users have experienced delayed responses from customer support. |
Speed to market is the primary benefit when partnering with an EOR provider. An EOR provides a way to hire employees in days, rather than months, while skipping entirely the complex, costly, and risky legal process of setting up a local legal entity (business registration, opening a local bank account, and registering with all tax authorities).
Absolute compliance and risk mitigation are the key benefits. The EOR takes on 100% legal liability for the employment relationship. This gives complete legal and financial protection to the client company. This is especially important in the case of Madagascar, where new legislation such as the 2024 Labour Code (Law 2024-014), enacted in late 2023, includes significant new requirements (enhanced termination protections, new health and safety obligations, and a more complex dispute resolution process). EOR’s local experts manage the entire burden of these often nuanced rules, freeing the client from risks of onerous legal and financial penalties.
Cost efficiency is a strong selling point for an EOR service. Although they have a monthly price, they are significantly more cost-efficient than the alternatives. They free the client from the large upfront capital investment needed to set up an entity (which can be a major barrier for many companies). They also save a significant amount of money on the high ongoing overhead required to build and maintain an in-house Malagasy HR team, a payroll team and local legal counsel to manage the contribution to CNaPS and OSTIE for each employee.
An EOR finally allows a business to focus on what it does best. Outsourcing the full administrative and legal burden of employment allows the client company’s management team to focus its time and resources on its primary goals and mission.
On August 12th, 2024, Madagascar’s new Labour Code (no. 2024-014) was published. The new code repeals the previous one, which was from 2003. The new code was implemented to modernize work and employment conditions in Madagascar. It also updates the labour code to be more in line with international standards and norms while also adding protections for employees around health, safety and termination.
In Madagascar, all employment contracts must be in writing, per Malagasy law. Verbal agreements are not considered legally sufficient. The contract must be drawn up in an official language (French or Malagasy). An EOR can help ensure that all contracts comply with the code.
The code also specifies the types of contracts that can be drawn up. There are two: the Fixed-Term Contract (CDD) and the Indefinite-Term Contract (CDI).
In Madagascar, the legal workweek is 40 hours or 173.33 hours per month. A legal workday is 8 hours, five days per week. Hours worked in excess of 40 per week are considered overtime hours under the law and must be paid at a premium rate.
Overtime must be paid at the following premium rates:
Madagascar does not have a flat minimum wage. The government sets a Salaire Minimum d’Embauche (SME) or minimum hiring wage, with rates varying by sector and professional category. The rates were set by decree as of March 2024.
The current SME in the non-agricultural sector (applicable to the base category M1-1A) is MGA 262,680 per month. The agricultural industry has a slightly higher SME of MGA 266,500 per month. This MGA 262,680 is simply the legal bottom line. The labor code also sets minimum salaries for other professional categories, with higher minimums for more skilled/experienced categories.
The Malagasy Labor Code stipulates employee benefits. Employees are entitled by law to 2.5 days of paid annual leave for every month worked. This provides up to 30 days of paid annual leave per year. Employees also receive time off for 14 paid public holidays in Madagascar.
Female employees are eligible for 14 consecutive weeks of paid maternity leave, of which at least eight weeks must be taken after delivery. Fifty percent of the salary is paid by the employer, and fifty percent is paid by the National Security Fund (CNaPS). Employees are eligible for paid sick leave of up to six months with a medical certificate. The pay during this leave is covered by social security and the employer.
Payroll contributions are one of the most administratively challenging aspects of being an employer in Madagascar. Employers, along with employees, are required to pay into 3 separate compulsory funds. The employer cost for these contributions is around 19% on top of the employee’s gross salary.
The 3 contributions are as follows :
All these contributions are not calculated on an employee’s entire salary. They are applied only up to a “ceiling” which is set at 8 times the national minimum wage. At current rates, MGA 262,680 SME, this contribution ceiling is MGA 2,101,440 per month.
For an executive with a salary of MGA 3,000,000 per month, the 19% employer contribution is calculated only on the first MGA 2,101,440 of that salary. This represents a substantial reduction in the effective tax rate for top earners.
The termination of employment contracts in Madagascar is strictly regulated and is one of the most important aspects of the new 2024 Labour Code, which further enhances the protection of employees against unjustified dismissal. A written termination notice must be provided for any dismissal.
The statutory notice period is determined by law and varies depending on the professional category of the employee, rather than just the duration of their service.
Severance pay is not automatically given to all employees in the case of dismissal. Severance pay is, however, compulsory by law in case of dismissal for operational reasons, i.e., layoff or redundancy. The normal calculation basis is 10 days’ salary for every full year of service, with a ceiling of six months’ total salary.
Employers may hire non-nationals to work in Madagascar. However, immigration is employer-sponsored, and the law states that companies should only hire non-nationals if there is no Malagasy national available with the same skills and qualifications.
The process must be initiated before traveling (not on a tourist visa). It is a two-step procedure.
First, the employee must apply for a “Transformable Visa” from the Malagasy embassy or consulate in their home country. This is a short-term visa, valid for 30 days.
Once arrived, the employer (or EOR) then takes up sponsorship of the employee to apply for a long-term permit. The EOR must submit 2 applications, one for a Work Permit (Permis de Travail) from the Ministry of Labor and one for a Residence Permit (Carte de Résident) from the Ministry of Interior.
Choosing the right Employer of Record (EOR) provider is a strategic decision that will have a significant impact on compliance, operational efficiency and total cost for any company that is looking to hire in Madagascar. Navigating the intricacies of the new 2024 Labour Code, the unique contributions rules for CNaPS and OSTIE, and the multi-step and document-heavy process for work permit sponsorship requires specialist knowledge.
RemotePad’s team of independent global hiring and HR experts can help you understand your options and compare different EOR providers to find the best solution for your goals in Madagascar. Contact RemotePad’s global hiring experts today to make the best decision.
An EOR serves as the legal employer of workers, while establishing a legal entity in Madagascar involves registration with the Economic Development Board, tax identification, business license procurement, and publication of formation.
The establishment process takes 30-45 days and incurs significant costs, including registration fees, legal fees, notary services, and ongoing compliance expenses. An EOR removes this requirement, allowing companies to hire within days and bypass the administrative burden of maintaining a local entity.
