Hire in Ethiopia

EOR in Ethiopia

If a lack of speed or local expertise are among your top concerns when expanding to or employing workers in Ethiopia, an employer of record may be the best option for achieving your global growth objectives.

An employer of record, sometimes known as an international PEO, enables you to quickly hire and onboard workers in Ethiopia ―often in as little as two weeks―without having to take on the cost and risk of establishing a local entity.

Learn about the hiring, employment, payroll and benefits requirements for workers in Ethiopia and how our employer of record service, EOR, and local HR experts can help you manage your international employment needs.

Hiring in Ethiopia

Employers must uphold the labor laws of Ethiopia, which the Ministry of Labor and Social Affairs regulates. These laws provide regulations regarding minimum wage rates, overtime, work hours, holidays, leave, wage payment, termination pay, workers’ compensation, and recordkeeping.

Ethiopia's overriding body of labor law is Labor Proclamation No. 1156/2019.

Employment contracts in Ethiopia

As you look to hire employees in Ethiopia, here are some standard regulations you’ll need to know to create a compliant contract, as well as how an employer of record and PEO can provide support for your unique HR needs.

Working hours

Normal working hours may not exceed eight hours a day or 48 hours a week. Employers must provide all workers with a 24-hour uninterrupted rest period every week, which typically should fall on Sunday and be granted simultaneously to all workers.

Normal work hours for employees under 18 are limited to seven hours a day.

Employees under 18 also are prohibited from:

• Work from 10 p.m. to 6 a.m.
• Overtime work
• Work on weekly resting days
• Work on public holidays

Work done over normal working hours is considered overtime. Overtime work may not exceed two hours a day, 20 hours a month, or 100 hours a year.

Compensation

As you consider the appropriate salary to offer new employees, keep in mind:

• Ethiopia does not have a national minimum wage.
• Overtime work must be compensated as below:

As your employer of record in Ethiopia, we can provide you with resources and insights about employee compensation, so you are better equipped to make a competitive employment offer.

Bonuses

Ethiopia does not mandate employers to provide bonus payments to employees.

Probationary period

The maximum probationary (trial) period in Ethiopia is 45 days.

Termination and severance

Employers or workers wishing to terminate an employment relationship generally must provide notice in writing based on the length of service as follows:

• Employed up to one year: one month of notice
• Employed more than one year but less than nine years: two months of notice
• Employed more than nine years: three months of notice.

Employees terminated due to redundancy are entitled to two months of notice.

Employers generally must provide severance payments to terminated employees within seven days of termination.

Employees with up to one year of service are entitled to 30 times the average daily wage of the employees’ last week of service. Those who have worked more than one year are entitled to an annual increase of a third of the sum every year after the first year.

If employees are dismissed because the employer goes bankrupt or reduces the workforce by at least 10%, they are entitled to a sum equal to 60 times their average wage over their last week of service.

Employee benefits and paid leave in Ethiopia

When negotiating terms of an employment contract with a candidate in Ethiopia, here are some of the statutory benefits and paid leave requirements to keep in mind, as well as how an employer of record can support your company’s benefits strategy.

Maternity leave

Pregnant employees are provided 30 consecutive days’ paid leave before the due date of childbirth and 90 consecutive days after.

Vacation

Employers must grant employees 16 days of annual leave on their first year of service.

Employers must provide this to all employees who have accrued 26 days of service in the first year of employment.

This amount must increase by one day of leave for every additional two years of service.

Holidays

Ethiopia mandates the following paid public holidays:

• ‘Gena’ - Ethiopian Christmas
• ‘Timkat’ - Ethiopian Epiphany
• Victory of Adwa Commemoration Day
• International Labor Day
• Ethiopian Patriots Victory Day
• Overthrow of the Derg Regime
• ‘Enkutatash’ - Ethiopian New Year
• ‘Meskel’ - Finding of the True Cross
• Ethiopian Good Friday
• Ethiopian Easter
• Id Al Adha
• ‘Mawlid’ - The Birth of the Prophet Mohammed
• Id Al Fater-End of Ramedan

Holidays without dates have different calendar dates every year.

Sick leave

Employers must provide paid sick leave to all employees who have completed their probationary period. The leave may not exceed 6 months in 12 months.

Sick leave is paid at

• Normal wages for the 1st month of leave
• 50% of regular wages for the second month of leave
• Unpaid leave thereafter.

Health coverage

Employers and employees in Ethiopia are assessed taxes to fund employee pensions and occupational injury insurance benefits. The Private Organization Employees’ Social Security Agency oversees private- sector employee pensions and administers assessment of these taxes. The taxes are contributed to the Private Organizations Pension Fund.

Additional benefits

In addition to healthcare benefits, employees in Ethiopia are entitled to pension, which is funded by government tax revenues, as well as workers compensation, which is covered through mandated employer insurance.

Employer social costs will cover a large portion of employee benefits in Ethiopia, but we can consult with you about supplemental coverage options, such as additional pension contributions or life insurance if needed.

Updated: April 05, 2024

Employee onboarding with an employer of record in Ethiopia

We write and validate all local employment contracts, streamlining the onboarding process for you and your Ethiopian employees—all you have to do is provide relevant information and review and approve the employment agreement. As your employer of record in Ethiopia, we will:

• Schedule a welcome call to discuss HR and employment information for Ethiopia, as well as answer any questions
• Prepare a customized employment contract in English or other local language
• Share the employment contract and benefits information with the new employee for signature and review
• Gather tax and banking information from the employee to set up payroll
• Provide a local point of contact to the employee to answer any questions regarding their employment, local HR or payroll

The entire onboarding process for the employee is often completed in as little as two weeks.

Partner with Safeguard Global as your Ethiopia employer of record and PEO

With over a decade of service, we are the longest-serving employer of record and PEO provider in the international market. Organizations around the world rely on EOR, our employer of record solution, to expand and hire in 170+ countries around the world, quickly and compliantly.

We’ve seen just about every global employment circumstance imaginable—and with our extensive knowledge of local law and culture, we know what it takes to get employment right in Ethiopia. We provide written contracts in the local language, salaries in the local currency and HR support in your employees’ time zone.

Additionally, as a global payroll provider we support payroll administration—including payments, filings and other calculations— all around the world and can accommodate the payroll outsourcing needs of any size organization.

Whether you’re looking to hire as part of a strategic expansion or to meet specific talent needs, our global solutions advisors can walk you through your international hiring options so you can make the right choice for your organization. Contact us today.

Disclaimer

The information provided on or through this website is for informational purposes only and does not constitute legal advice. Safeguard Global expressly disclaims any liability with respect to warranty or representation concerning the information contained herein, including the lost essence, interpretation, accuracy and/or completeness of the information in transit and language translation.