In Madagascar, companies have a legal and social responsibility to contribute to the well-being of their employees through various obligations, including social protection, health coverage, and professional development. 

Some of the contributions are deducted from the gross salary up to a capped amount, determined based on the minimum wage in Madagascar.

Understanding these obligations is essential for employers to remain compliant with labor laws while ensuring a productive and secure work environment.

Social Protection for Employees (CNAPS)

Madagascar’s labor laws require all employees to be affiliated with a social protection organization, which is the Caisse Nationale de Prévoyance Sociale (CNaPS).

Contributions are shared between the employer and the employee, with the worker contributing 1% of their gross salary and the employer covering 13%.

This system is designed to provide financial and social security for employees and their families.

For expats working on a local contract in Madagascar, a contribution to CNAPS is also required. They are therefore entitled to receive family allowances, work accident compensation and retirement allowances from CNAPS. 

However, it’s important to note that for expats, allowances received through CNAPS might not be substantial.

Family Benefits

Employees with dependent children or specific family circumstances may benefit from various financial supports under the “prestations familiales” system:

• Reimbursement of childbirth expenses: Covers costs related to childbirth.
• Prenatal allowance: Up to 100,000 Ar, provided during pregnancy to support expectant mothers.
• Maternity allowance: Paid in two installments of 42,000 Ar to support new mothers.
• Family allowance: 7,000 Ar per child per month, payable through a mobile money account or bank transfer upon request.
• Half-salary indemnity: In cases of maternity leave, employees can receive an indemnity equal to half their daily salary, paid in two installments during the leave period.

These benefits ensure that employees and their families are supported financially during critical life events, enhancing both stability and well-being.

Workplace Accidents and Occupational Diseases

The CNaPS also covers compensation for workplace accidents and illnesses resulting from professional exposure. 

The indemnity provided is equivalent to two-thirds of the employee’s daily salary, capped at 1/540th of the annual minimum hiring salary.

A workplace accident is defined as any accident occurring:

• While performing work-related tasks, regardless of the cause.
• During the commute between home and the workplace.
• During business trips or assignments outside the usual work location.

An occupational disease refers to any illness caused directly by exposure to a risk associated with the employee’s work environment. 

These risks can be physical, chemical, or biological, or they may result from the conditions under which the employee performs their duties.

Retirement Benefits

The old-age pension is available to employees who have contributed to the system for at least 28 quarters during the ten years preceding the age of 60. 

Additionally, a supplementary retirement pension is available for employees who have made additional contributions to this fund during their professional careers.

These contributions are paid quarterly, following the procedures and templates provided by the CNaPS.

Health Coverage Through Inter-Company Health Organizations (OSTIE)

Health coverage for employees is managed by inter-company health organizations, such as OSTIE, ESIA, and FUNHECE.

These organizations provide essential healthcare services to employees, which generally include both general and occupational medicine. 

General medical services cover consultations, dental care, pharmacy access, and basic stomatology. 

Occupational medicine, on the other hand, involves mandatory medical check-ups for employees, which may occur during pre-employment, periodically, or systematically, depending on company policies.

Some inter-company health organizations also offer specialized consultations in areas such as cardiology or ophthalmology. 

Companies are encouraged to select a provider that best meets the specific healthcare needs of their employees. 

The financing of these health services is shared between employees and employers. Employees contribute 1% of their gross salary, while employers contribute 5%.

In practice, some companies are located in areas where inter-company health organizations do not operate. In such cases, employers may enter into health agreements with hospitals or private doctors to provide their employees with similar healthcare services. 

These agreements allow employees to receive medical coverage that is comparable to what the OSIE offers.

Furthermore, companies with more than 500 employees may qualify to establish OSIE branches on their premises. 

The Malagasy Professional Training Fund (FMFP)

The Fond Malagasy de Formation Professionnelle (FMFP) plays a key role in addressing youth unemployment and supporting workforce development in Madagascar.

This fund aims to improve access to employment for young people through pre-employment training programs. It also helps employers strengthen the skills and capabilities of their employees by offering continuous training opportunities.

The FMFP is financed by a mandatory contribution from employers, equivalent to 1% of their employees’ gross salaries.

Companies contributing to the FMFP can request specific training programs either individually or in collaboration with other participating companies. 

In addition to these tailored programs, the fund organizes general training sessions designed to meet the evolving demands of the labor market. 

Concretely, each year, the FMFP issues a call for projects, inviting training institutions and companies to submit proposals for new training programs. 

This system not only benefits employers by building a more capable workforce but also helps align employee skills with market needs.

To sum up, these obligations might be unfamiliar to you when setting up your company in Madagascar. Navigating the administrative and legal requirements can be complex, but ensuring compliance is essential for safeguarding your employees’ well-being.

At Madagascar Invest, while setting up your company, we can assist you with the tedious bureaucratic processes. This will help you fulfill your company’s social obligations while focusing on growing your business.