In Malawi, employee pension contributions are deducted after tax (post‑tax). This means PAYE is always calculated on the full taxable gross salary, not on a reduced amount after pension.
1. PAYE Calculation
PAYE base: Full taxable gross pay (salary + taxable allowances/benefits as applicable)
Pension timing: Employee pension contributions are taken after PAYE has been calculated
As a result, the pension deduction does not reduce the PAYE calculation base.
Please always refer to the latest guidance from the Malawi Revenue Authority (MRA) for official rules on PAYE and allowable deductions: https://www.mra.mw/
2. Workpay Payslip Layout – Important Note
On Workpay payslips, the visual order of items (e.g. gross, pension, PAYE) can sometimes appear confusing or suggest that pension is taken before tax.
Despite the display order, the system still calculates PAYE correctly on the full gross amount, and then applies the pension deduction afterwards.
If the payslip layout creates confusion for an employee or client, clarify that:
The calculation logic follows Malawi rules (PAYE on full gross).
Pension is a post‑tax deduction, even if it appears above or close to the tax line on the slip.