In Zambia, gratuity is a mandatory lump-sum payment made by an employer to an employee at the conclusion of a long-term or fixed-term contract. It serves as recognition for continuous service and forms a critical part of financial planning for contract workers across the country.

Under Section 73 of the Employment Code Act No. 3 of 2019, every employer is legally required to pay gratuity at a rate of not less than 25% of the employee’s total basic pay earned throughout the contract period. This applies to employees on fixed-term contracts — whether in government, NGOs, mining, telecoms, or the private sector.

Our free calculator applies this formula directly, giving you a fast, accurate estimate so you can verify what you’re owed before your contract ends.

Tax treatment: Gratuity in Zambia is treated as regular income and is fully subject to PAYE (Pay As You Earn) tax using the standard tax bands. Unlike redundancy pay, there is no tax exemption threshold for gratuity. Your employer is required to deduct PAYE before disbursing the net amount.

Payment timing: Under Section 66 of the Employment Code Act, all terminal benefits — including gratuity — must be paid on your last working day. Late payment is a statutory violation and you have the right to pursue legal action.