Payroll Guide in Rwanda 2025

As an HR specialist with a decade of experience in Rwanda, I recognize the pivotal role that effective payroll management plays in ensuring compliance with local regulations and fostering a positive workplace. This guide is tailored specifically for HR professionals and businesses in Rwanda’s private sector, providing a detailed overview of the payroll system as of May 2025. It incorporates the latest labour laws, including Law No. 66/2018 of 30/08/2018, as amended by Law No. 027/2023 of 18/05/2023, and Ministerial Order No. 01/MIFOTRA/23 of 13/06/2023, which regulates working hours and employment contracts. Optimized with trending keywords like “Rwanda payroll guide 2025,” “labour law Rwanda 2025,” “working hours Rwanda 2023,” and “payroll taxes Rwanda,” this article empowers private sector businesses to navigate Rwanda’s dynamic payroll landscape effectively.

1. Overview of Payroll in Rwanda

Rwanda’s payroll system for the private sector is governed by the Labour Law (Law No. 66/2018, as amended in 2023), the Income Tax Law, and the Social Security Law. The Rwanda Social Security Board (RSSB) manages contributions for pensions, medical insurance, and maternity benefits. A significant pension contribution increase to 12% in January 2025 has likely reshaped payroll budgets, requiring private sector businesses to adapt their processes to remain compliant. This guide focuses on payroll administration, taxes, working hours, leave policies, hiring, and termination procedures, emphasizing private sector requirements.

2. Payroll Taxes and Contributions

Payroll in Rwanda’s private sector involves mandatory contributions to social security, pensions, and health insurance. The table below outlines key contributions as of May 2025:

Category

Employee Contribution

Employer Contribution

Pension Scheme

6% of gross salary (including transport allowance)

6% of gross salary (including transport allowance)

Medical Insurance (RSSB)

7.5% (optional if private insurance is provided)

7.5%

Maternity Leave Benefits

0.3% of gross salary (excluding transport allowance)

0.3% of gross salary (excluding transport allowance)

Occupational Hazards

-

2% of gross salary (excluding transport allowance)

Community-Based Health Insurance

0.5% of net salary

-

Key Changes in 2025

• Pension Contribution Increase: Effective January 2025, the total pension contribution rate likely doubled from 6% to 12%, split equally between employees and employers (6% each) (NETPIPO). The contribution base includes transport allowances, aligning with taxable income.
• Future Increases: Contributions are planned to rise by 2% annually from 2027 to 2030, reaching 20% by 2030 (Visions Africa).
• Impact on Employees: For a gross salary of RWF 400,000, the employee’s pension deduction likely increased from RWF 12,000 to RWF 24,000, reducing net salary by approximately RWF 13,134.
• Impact on Employers: Employer contributions increased by RWF 13,200 per employee due to higher pension and occupational hazard contributions.
• SME Support: A RWF 30 billion fund was reportedly launched in 2025 to assist small and medium enterprises with compliance costs.

Private sector employers may choose to cover the employee’s share of the pension increase to maintain take-home pay, depending on company policies.

3. Payroll Administration

Payroll administration in the private sector is governed by specific regulations under Law No. 66/2018 to ensure fair and timely salary payments. Key provisions include:

Regulation

Details

Right to Salary (Article 66)

Employees are entitled to a salary for work performed, unless specified otherwise by contract or law. No salary is payable if no work is performed.

Means of Salary Payment (Article 67)

Salaries must be paid in Rwandan francs (RWF) and deposited into an employee-designated bank or financial institution account.

Minimum Wage (Article 68)

Determined by a ministerial order, currently set at 100 RWF daily, though actual wages are often higher due to collective agreements.

Determination of Salary (Article 69)

Salaries, including commissions, are calculated based on all service or income-based elements.

Intervals in Payment (Article 70)

Payment frequency depends on the contract: daily for hourly/daily hires, weekly for weekly hires, fortnightly for fortnightly hires, monthly for monthly hires.

Payroll Document (Article 71)

Employers must provide a payroll document upon request, detailing basic salary, allowances, bonuses, deductions, and net salary.

Insolvency (Article 72)

Employees are entitled to salaries even if the employer becomes insolvent, per relevant laws.

Seizure and Assignment (Article 73)

Salary deductions are limited to half the salary for specific cases like court judgments or voluntary transfers.

Illegal Deductions (Article 74)

Employees are entitled to interest on illegally deducted amounts.

Temporary Transfer Allowances (Article 75)

Employees transferred temporarily are entitled to transport, meal, and accommodation allowances, per enterprise rules.

Prescription Period (Article 76)

Unpaid salaries cannot be claimed after two years, unless interrupted by actions like labour inspectorate intervention.

These regulations ensure transparency and compliance, requiring private sector employers to maintain accurate payroll records and provide clear documentation.

4. Payroll Cycle and HR Practices

Payroll in the private sector is typically processed monthly, on the last working day of the month. There is no statutory requirement for a 13th-month salary or mandatory bonuses, though discretionary bonuses may be offered based on company policies (Papaya Global).

HR Practices

• Minimum Wage: Set at 100 RWF daily, though collective agreements often result in higher wages, reflecting market standards.
• Overtime: Regulated for hours exceeding the standard 40-hour workweek, with compensation rates set by collective agreements.
• Data Retention: Payroll and employment records must be retained for two years to comply with auditing requirements.
• Probation Period: Maximum of three months, extendable by another three months based on performance evaluations.
• Working Hours: As per Ministerial Order No. 01/MIFOTRA/23, weekly working hours are set at 40 hours. Employers determine daily timetables, with flexible hours if work starts before 9:00 am. Employees are entitled to a one-hour daily break and a weekly rest of at least 24 hours, not counted as working hours.

Overtime and Compensation

• Overtime Conditions: Overtime is permitted for urgent, exceptional, seasonal, productivity preservation, or special nature work, as requested by the employer.
• Compensation: Overtime hours are compensated with time off equal to the overtime hours within 30 days. If not taken, overtime is paid in the next month’s salary and reflected on the pay slip.
• Non-Worked Hours: If work is interrupted (e.g., due to accidents, power shortages), salaries are not deducted, and non-worked hours can be compensated by working extra hours within 30 days.
• Hourly Salary Calculation: The average hourly salary is calculated based on the gross salary divided by standard working hours. If agreed hours are less than 40, the agreed hours prevail.

These practices ensure fair compensation while aligning with Rwanda’s labour regulations.

5. Hiring and Onboarding Processes

Hiring in the private sector requires a written employment contract in Kinyarwanda, English, or French specifying the salary in Rwandan francs. The onboarding process includes:

• Reviewing the contract and job responsibilities.
• Explaining the company’s code of conduct.
• Collecting necessary documents, such as identification and tax registration.

Employment contracts are governed by Law No. 66/2018, with flexibility for employers to set terms within legal boundaries. Collective agreements may include provisions for salaries, overtime, and benefits, ensuring favorable conditions for employees (Global People Strategist).

6. Leave Policies

Rwanda’s leave policies, governed by Law No. 66/2018 and amended by Law No. 027/2023, support employee well-being in the private sector:

• Public Holidays: 14 days annually, including New Year’s Day, National Heroes Day, and Independence Day. Holidays on weekends are typically moved to the next working day (Papaya Global).
• Sick Leave:
• Short-term: Up to 15 days, fully paid, with a doctor’s certificate.
• Long-term: Up to six months, with the first three months paid and the last three unpaid, requiring a medical certificate after two days.
• Maternity Leave: 12 weeks, fully paid, with at least 14 days before the due date, requiring a medical certificate. Additional leave for complications is determined by ministerial order (Article 56, 2023 Amendment).
• Paternity Leave: 4 working days, paid, with additional leave for complications per ministerial order.
• Annual Leave: Minimum of 18 days (24 days for employees under 18), increasing with service length.
• Other Leave:
• Bereavement: Varies by relationship (e.g., 6 days for a spouse, 3 days for a parent).
• Jury Duty/Voting: 1 day, not deducted from annual leave.
• Additional Paternity Leave: 20 days if the mother dies during childbirth.

Law No. 027/2023 (Article 24 bis) protects pregnant employees from termination due to pregnancy, ensuring continued salary payments during this period (Payroll).

7. Termination and Severance

Termination procedures in the private sector are structured to protect both parties, as outlined in Law No. 66/2018:

• Notice Period:
• 15 days for less than one year of service.
• 30 days for one year or more.
• Severance Pay (Article 31):

Years of Service

Severance Pay

Less than 5 years

1 month’s salary

5-10 years

2 months’ salary

10-15 years

3 months’ salary

15-20 years

4 months’ salary

20-25 years

5 months’ salary

25 years and above

6 months’ salary

• Protection for Pregnant Employees (Article 24 bis, 2023 Amendment): Employers cannot terminate a pregnant employee’s contract due to pregnancy, ensuring continued salary payments.

8. Recent Payroll and Labour Law Updates

• Pension Contribution Increase: Effective January 2025, the total pension contribution rate likely doubles from 6% to 12%, split equally between employees and employers (6% each) (NETPIPO). This strengthens retirement security but increases payroll costs.
• Labour Law Amendments (2023): Law No. 027/2023 introduced protections for pregnant employees, updated working hours, and revised leave policies, effective from May 2023 (working hours from January 2023).
• Ministerial Order No. 01/MIFOTRA/23 (2023): Effective from January 2023, this order regulates private sector working hours, setting a 40-hour workweek, flexible hours, and overtime compensation rules. It also provides a framework for employment contracts, emphasizing compliance with labour laws.
• Potential 2025 Labour Law: A new labour law was announced in February 2025 by MIFOTRA, but specific details are unavailable as of May 2025.

9. Practical Tips for HR Professionals

• Use Payroll Software: Tools like NETPIPO automate calculations and ensure compliance with RSSB rates (RSSB).
• Communicate Changes: Clearly explain pension reforms, working hour regulations, and leave entitlements to employees, highlighting long-term benefits like enhanced retirement security.
• Budget for Increases: Incorporate higher pension contributions and potential overtime costs into 2025 budgets to avoid financial strain.
• Monitor Updates: Regularly check MIFOTRA and RSSB for new regulations to stay compliant.
• Conduct Regular Audits: Ensure payroll processes align with labour laws, particularly regarding overtime, leave payments, and deductions, to avoid fines.

10. Conclusion

Navigating Rwanda’s payroll system in the private sector requires a deep understanding of taxes, contributions, working hours, leave policies, employment contracts, and termination procedures. The 2025 pension contribution increase to 12% and the 2023 labour law amendments, including Ministerial Order No. 01/MIFOTRA/23, highlight the importance of proactive compliance. This guide, optimized for payroll professionals and consultants in the private sector to streamline payroll processes and foster employee satisfaction. By leveraging payroll software and staying informed via official sources, HR professionals can contribute to Rwanda’s growing economy while ensuring compliance.