Establish your presence globally with Neeyamo – Global Payroll services and EOR services as we help you go beyond borders to manage your international global payroll and hire new talent in Lesotho.
Overview
A country within a country? Or more like a country surrounded entirely by another country? Only three exist in this world – San Marino, Vatican City and Lesotho. Lesotho is surrounded entirely by the country of South Africa, and these countries are known as enclaves. Though Lesotho is landlocked by South Africa, it is separated by the Lesotho mountains.
Do your organization’s expansion plans require you to hire employees in Lesotho? Do you lack a physical entity in the country – a key requisite to hire local talent? Neeyamo – one of the top Global payroll providers, assists organizations worldwide with onboarding and managing employees in Lesotho - processing payroll, managing local compliance requirements, benefits, and more.
Facts And Stats
Capital
Maseru
Currency
Maloti (LSL)
Official Language
English & Sesotho
Fiscal Year
1 April - 31 March
Date Format
YYYY-MM-DD for Sesotho
DD-MM-YYYY for English
Country Calling Code
+266
Time Zone
South African Standard Time, UTC +02:00
Global Payroll
Overview
What is Global Payroll?
Handling payroll for a widespread workforce can pose a significant challenge for any organization, and the added complication of compliance can make things worse. If companies spend more time processing payroll, it directly impacts day-to-day operations and their overall productivity. The solution to this is global payroll outsourcing.
What is a global payroll system?
Over the years, Neeyamo – Global Payroll Services has observed these complexities and strived to provide global payroll solutions through a single technology platform – Neeyamo Payroll. Neeyamos global payroll services ease the process for companies looking to outsource their global payroll requirements and aid them in maneuvering the tricky payroll system in Lesotho. Neeyamos payroll software provides the perfect solution for all your global payroll needs – for employees working in primary geographies, the long-tail region, remote or internationally located.
How is payroll calculated?
Neeyamo acts as your personalized Payroll Calculator. Ensuring adherence to local regulatory requirements using multi-level controls. Providing timely and accurate payroll, courtesy of our experts worldwide and using a tech-based integrated smart helpdesk solution with seamless support experience manned by payroll experts - Neeyamo has all your payroll needs covered.
Payroll Taxes
Payroll tax is the percentage amount retained from an employee's salary and paid to the government to invest in the general population's welfare. These are statutory in nature and are levied from both the employer and employee. Additional statutory contributions are made by employers towards aiding both short-term and long-term benefits for their employees.
Employee Taxes
In Lesotho, residents are required to pay taxes on their worldwide income, while non-residents are only taxed on income that is sourced from Lesotho. Taxable income is calculated by subtracting any allowable deductions from gross income, excluding exempt income. Employment income does not include benefits that are subject to the fringe benefits tax, and pension income is taxed in the same manner as other forms of income. Individual income tax is generally levied at progressive rates of 20% or 30%, with a flat rate of 40% applied to trustees, non-exempt fringe benefits that are not taxed at the employer level, and non-residents who elect to be taxed by assessment on income that would otherwise be subject to withholding tax.
With effect from April 1, 2023, the tax credit increased for resident individuals from M 10,560 to M 10,824 per annum, which will reduce their tax liability.
Taxable Income (LSL)
0 to 69,120 - 20%
Over 69,120 - 30%
Employer Taxes
There are no mandatory social security contributions for employers in Lesotho.
Payroll Cycle
Overview
Undoubtedly, payroll is a critical process for any organization. The pay cycle in Lesotho refers to the period for which an organization pays its employees, and this can vary depending on the pay frequency that the organization chooses to adopt.
Frequency
The frequency cycle in Lesotho is Monthly.
13th Month Cycle
There is no statutory requirement to pay the 13th or the 14th month's salary in Lesotho.
Global Work
Overview
What is Employer of Record?
An Employer of Record services / EOR services provider helps you eliminate the hassle of handling complexities while onboarding a new employee in an international location. They help bridge the gap that otherwise mandates organizations to have a local registered entity and a local bank account prior to making a job offer to an international hire.
An Employer of Record services / EOR services provider acts as a legal employer, facilitates salary payments, and manages other statutory requirements such as health insurance, payroll taxes, and employee benefits, ensuring compliance with local tax laws and regulations.
This allows organizations to focus on collaborating with the employee in Lesotho for operational tasks, with the knowledge that they have a cost-effective solution to support their global payroll management & HR requirements as they continue their global expansion.
HR Mandates and Practices
Minimum Wage
The minimum wage has been revised in Lesotho from 01 May 2022. The general monthly minimum wage has increased to LSL1,1881.00 for workers with less than one year of service. For those with more than one year of service, the general monthly minimum wage is LSL2,053.00. Minimum wages for other sectors are also increased.
Overtime
Overtime compensation for workers is at least 25% higher than regular pay. In general, the weekly maximum for overtime is 11 hours.
Hiring and Onboarding Requirements
Hiring
Education and qualifications: Employers often prioritize candidates with relevant educational qualifications and certifications.
Work experience: Prior work experience in a similar role or industry is highly valued
Skills and competencies: Candidates possessing specific skills and competencies required for the job are preferred.
Cultural fit: Employers may also consider how well a candidate aligns with the organization's values and culture.
Local knowledge: For certain roles, local knowledge and understanding of Lesotho's culture, customs, and languages may be advantageous.
Onboarding
Employment contract: A written contract outlining the terms and conditions of employment is usually provided to new employees.
Offer letter: An offer letter is given to the selected candidate, specifying the position, compensation, benefits, and start date.
Identification documents: Employees are often required to provide identification documents such as a passport, national ID, or driver's license.
Tax forms: Employees need to complete tax-related forms, such as the Lesotho Revenue Authority (LRA) tax registration form.
Bank account details: Employers may require employees to provide their bank account details for salary payments.
Medical examination: Some organizations may ask new employees to undergo a medical examination to ensure their fitness for work.
Probation
The maximum probationary time allowed by the Labour Code in Lesotho is four months. The employment immediately converts to permanent employment for an indefinite duration after the successful completion of the probationary period. Only with the labor commissioner's written permission may the trial or probation term be extended.
Leave
Public Holidays
There are 11 public holidays in Lesotho:
- January 1: New Year
- March 11: Moshoeshoe's Birthday
- April 2: Good Friday
- April 5: Easter Monday
- May 1: May Day
- May 13: Ascension Day
- May 25: Africa/Heroes Day
- July 17: King's Birthday
- October 4: Independence Day
- December 25: Christmas Day
- December 26: Boxing Day
Sick Leave
Sick leave during the first six months of continuous employment with the same employer is unpaid.
If the employment length exceeds six months, the employee is entitled to sick leave with full pay for up to 12 days and to sick leave on half pay for up to 24 days in each period of 12 months of continuous employment.
Maternity Leave
The general duration of maternity leave is twelve weeks and comprises six weeks before and after confinement.
If the pregnant woman contracts any illness or has any complications while pregnant, they can be allowed to take leave for up to eight weeks.
Paternity Leave
There is no statutory paternity leave.
Termination
Notice Period
A statutory written notice period is provided under the Labor Code, which states that unless otherwise stipulated in the collective agreement, the notice period will be as follows:
- Seven days’ notice for less than six months of service
- 14 days’ notice for less than one year of service
- One month's notice for more than one year of service
- Three-month notice for more than ten years of service
Severance Pay
The Labor Code has made provisions for severance pay that is directly linked to the length of service of the employee.
For any employee who has completed more than one year of continuous service with the same employer, a severance payment equivalent to two weeks’ wages is paid for each completed year of service.
The amount of severance pay is capped at a certain level, and the amount is updated regularly by the Minister in consultation with the Wages Advisory Board.
Severance pay is not paid to employees who have been dismissed by the employer for misconduct.
Visa
Overview
Lesotho offers several visa categories that provide a number of reasons for foreign nationals to enter the country.
Visa Requirements
In order to obtain a visa for traveling to Lesotho, applicants will need to provide the following documents:
- A completed visa application
- A valid passport with a blank page for the entry stamp
- A recent passport photograph
- Proof of vaccination against yellow fever
- Proof that the applicant has travel health insurance
- Employees should bring the following documents with them to apply for a work and residence permit in Lesotho
- A letter of invitation from the employer in Lesotho
- A valid passport
- A passport photo
- A completed application
- Proof of accommodations in Lesotho
Employee Background Checks
Legal and Background Checks
In Lesotho, an employer can do the following legal and background checks on an employee:
- Criminal Background Check
- Civil Record search
- Highest Degree Verification
- Identity/Passport Validation
Last updated on August 8, 2023
If you have any queries or suggestions, reach out to us at irene.jones@neeyamo.com
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