A complete, cutting-edge HR platform is provided by Marzuna Employer of Record Solutions to help companies expand in Ethiopia. The platform functions as a centralized UI for remote team management and onboarding across over 150 countries.
Employer of Record Ethiopia solutions from Marzuna will ensure complete compliance with local labor and employment laws, whether it’s in hiring local talent or setting up the payroll to manage benefits and payments for employees. Please contact us to find out more about our specific EOR solutions.
Ethiopia, a nation nestled in the Horn of Africa, shares its borders with Eritrea, Sudan, South Sudan, Kenya, Somalia, and Djibouti. It stands as the second most densely populated country on the African continent, following Nigeria. Ethiopia’s promising commercial potential has attracted the attention of multinational corporations, driving their efforts to expand their presence within the nation.
The realm of labor and employment in Ethiopia is meticulously governed by the Labor Proclamation. For foreign nationals seeking to live and work in Ethiopia, compliance with the country’s immigration regulations is essential, necessitating valid work and residency permits. Navigating these requirements within the framework of local laws can be a formidable task, often overwhelming businesses seeking to establish themselves in Ethiopia.
In such circumstances, the engagement of a localized Employer of Record can prove highly advantageous for enterprises embarking on expansion endeavors in Ethiopia. By doing so, businesses can mitigate the risks associated with non-compliance and ensure a streamlined and efficient process for hiring and onboarding personnel. The services offered by Marzuna Employer of Record Ethiopia are tailored to meet these critical needs, helping businesses navigate the intricate landscape of Ethiopian employment.
| Entitlements | Explanation | ||||||
|---|---|---|---|---|---|---|---|
| Standard Working Hours | 48 hours per week | ||||||
| Overtime Eligibility | Employees may work overtime under certain conditions with mutual consent between the employer and the employee as follows:
The following is how employers pay their workers for overtime: Unless it falls between 10 pm and 6 am, when it is paid at 150% of the base pay, overtime is paid at a rate of 125%. Weekend overtime is compensated at two times the usual rate and at 250% on public holidays. holiday. |
||||||
| Paid Public Holidays | The public holidays in Ethiopia are as followed:
|
||||||
| Holiday Pay | Employees are eligible for all paid public holidays, including memorial days and holidays observed by Muslims and Christians. | ||||||
| Medical Leave | The following employees are eligible for up to six months of sick time:
|
||||||
| Maternity Leave | In Ethiopia, female employees are entitled to 120 days of paid maternity leave, of which up to 30 days may be taken before the due date and the remaining days may be used after delivery.
In Ethiopia, male employees are allowed up to three days of paternity leave. |
||||||
| Annual Leave Accrual Entitlement | 16 days of paid annual leave are available to employees who have worked for the company for more than a year.
After finishing, employees are given one extra day each year. two years of service |
||||||
| Leave Expiry | Employees are permitted to postpone a portion of their yearly leave with the employer’s approval. The leaves, however, cannot be postponed for more than two years straight. | ||||||
| Leave Cash Out | Only once the employment contract has expired may employees pay out their yearly leave. Any other agreement that offers payment in exchange for yearly leave is invalid. | ||||||
| Accrued Leave At Termination | Employees are entitled to comparable pay if their work contract terminates before they may use their yearly leave. | ||||||
| Employee Protection and Anti-discrimination Rights | According to the Ethiopian Constitution, everyone is treated equally under the law. Therefore, in accordance with the Labor Proclamation:
|
||||||
| Confidentiality of Personal Information | The Ministry of Innovation and Technology released a draft data protection proclamation, which has not yet been authorised. However, every Ethiopian has a right to privacy under the country’s constitution. |
In the Ethiopian employment landscape, there exist two primary types of employment agreements: contract-based and full-time arrangements. When opting for fixed-term employment contracts, it is imperative to ensure that the terms clearly delineate the workplace location, the mutually agreed-upon salary and benefits, the precise duration of the agreement, and any specific job-related details if applicable. Equally important is the adherence to Ethiopian employment regulations and any stipulations outlined in collective bargaining agreements, with a strict prohibition on the inclusion of any unfavorable clauses within these contracts.
In contrast, individuals engaged as contractors, freelancers, or part-time employees are considered less desirable choices due to the absence of benefits typically extended to full-time personnel, as well as the lack of financial security. This holds true even as Ethiopia’s economy continues to make significant strides. In this context, full-time employees receive the recognition and respect commensurate with fully integrated members of the workforce.
To successfully hire workers in Ethiopia, employers must diligently observe the country’s HR compliance requirements. For those seeking a straightforward path to securing top-notch talent, whether for full-time or contract roles, reaching out to Marzuna can be a hassle-free solution. Their expertise can simplify the process of recruiting the best personnel for your needs.
When employed in Ethiopia, it is crucial to adhere to the labour laws of the country. To begin the recruitment process, you can advertise job openings through local job portals like geezjobs, ethiojobs, and employethiopia
Once you have received applications, the next step is to shortlist suitable candidates and conduct personal interviews to assess their abilities. After finalising your selection, it is essential to provide comprehensive onboarding and orientation programs, introducing new hires to your company’s work culture and their future colleagues.
Complying with local labour laws also entails securing valid visas and work permits for international employees relocating to Ethiopia, ensuring their legal authorization to live and work in the country.
If you prefer to streamline the hiring process, consider utilising Employer of Record Ethiopia solutions. These services can handle HR management and compliance tasks on your behalf, allowing you to focus on other aspects of your international expansion.
The most recent Labor Proclamation, as endorsed by the House of People’s Representatives in 2019, prescribes that in Ethiopia, the customary probationary period spans 60 working days. During this timeframe, employers have the opportunity to assess a candidate’s suitability for the role. It’s essential that the terms of this probationary period are explicitly detailed in the employment contract, with mutual agreement between the employer and the employee being a prerequisite.
Notably, probation cannot be assumed in the absence of a specific probation clause within the employment contract. In Ethiopia, either party holds the prerogative to terminate the employment agreement at any point during the probationary period without the obligation to provide prior notice. Once the predetermined probationary period has run its course, the employment agreement automatically becomes ratified.
The Labor Proclamation stipulates that employment contracts can only be terminated under specific circumstances. Both parties have the authority to terminate an agreement for the following reasons:
In all scenarios, except those involving employee misconduct or persistent failure to perform duties after receiving prior warnings, the provision of a termination notice is mandatory. However, in certain circumstances, employment contracts may be terminated without prior notice.
The notice period varies as follows:
| Notice for termination of Employment Ethiopia | The employment agreement may be terminated by either party by giving the other party 30 days’ notice. An employer has the right to end a worker’s employment by giving the following notice:
|
Any termination of an employment contract that does not follow the aforementioned clauses will be deemed illegal and may result in:
either the employee is reinstated in his or her previous position or the employee has the right to severance pay.
Business expansion is a lengthy process that requires careful planning, especially when going global. Hiring employees in Ethiopia using the EOR method might speed up the growth process, despite the fact that it is challenging and may take many months to finish. Marzuna Employer of Record Ethiopia (EOR) solutions might expedite and simplify the process of doing business in Ethiopia. Our global reach and an HR platform with a strong digital component ensure compliance with local labor laws by handling employment responsibilities for your workers in Ethiopia, including monthly payroll, work permits, employment contracts, and taxes.
Except for citizens of Djibouti (up to three months) and Kenya (up to a year), all travelers must acquire an Ethiopian visa.
For any of your work visa needs, contact us.
The Ministry of Labor and Social Affairs issues Work and Residence Permits to foreign nationals moving to Ethiopia with the intention of working lawfully there and residing there for a prolonged length of time.
| Visa Category | Explanation |
|---|---|
| Ethiopia Tourist Visa | issued to international visitors to Ethiopia who are not there on business. |
| Ethiopia Work Visa | It is given to foreign citizens travelling to Ethiopia for business. Based on the type of company, it is further divided into several sorts of work visas.
International nationals who want to live and work in Ethiopia and who are employed by foreign-operated firms must apply for a Foreign Business Firm Employment Visa. |
| Ethiopia Work Visa Requirements | The following documents are required of international applicants for a Foreign Business Firm Employment Visa (WV):
|
| Processing Time | Three days (under normal circumstances) |
| Validity | Beginning on the anticipated date of entrance into Ethiopia, the business visa is valid. |
| Extension | Extension requests must be submitted before the deadline. |
You must put together a team and take care of payroll management if you want to grow your business in Ethiopia. You have two choices for this:
It might take time and effort to establish an internal team for payroll and HR administration. It is further governed by a number of regional tax laws. Employer of Record Ethiopia services for payroll outsourcing makes tax and payroll compliance simple and hassle-free.
Employer Taxation
| Tax Type | Rate | ||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Income Tax Rates |
|
||||||||||||||||
| Financial Year End Date | The fiscal year in Ethiopia starts on July 08 and ends on July 07 of the following year | ||||||||||||||||
| Corporate Tax | 30% | ||||||||||||||||
| Withholding Tax | 10% | ||||||||||||||||
| Ethiopia employer payroll taxes/ Ethiopia payroll tax rates | 20 percent tax with a deduction of 302.50 Birr | ||||||||||||||||
| VAT | 15% | ||||||||||||||||
| Employers Social Security and statutory contributions | 11% (civilian), 25% (military) | ||||||||||||||||
| Employees Social Security and statutory contributions | 7% | ||||||||||||||||
| Public Pension | Employees aged over 60 are eligible for a pension with contributions of at least ten years. |
Employee Taxation
| Taxes | Explanation |
|---|---|
| Income tax on employment income | Progressive employment income tax rates are in place, with the top rate being 35% for income over 10,900 Birr ($402). |
Bonuses are common in Ethiopia, but they are not necessary.
When expanding your business in Ethiopia, you have the option to establish a local subsidiary firm, a branch office, or a liaison office, each of which provides the necessary infrastructure for your chosen business operations, including internal functions like HR management.
In your pursuit of creating a distinct legal entity in Ethiopia, consider the following options:
It’s essential to bear in mind that, particularly without local support, the process of forming a distinct legal entity in Ethiopia can be arduous and may take several months. Seizing the right business opportunities promptly is crucial, as timing plays a pivotal role in international success. To expedite the process of company development, consider utilizing the services of an Employer of Record in Ethiopia. They can manage all regulatory compliance matters related to recruitment, hiring, and employee payroll administration, ensuring a swift and efficient path to business expansion.
