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Africa

Ethiopia

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Employer of Record (EOR) in Ethiopia

What you'll learn

  • Country Introduction
  • Tax Breakdown for Employers
  • Statutory Leave Laws
  • Minimum Wage and Working Hours
  • Termination Process
  • Additional Information
Ethiopia Introduction

Ethiopia is a landlocked country in eastern Africa, bordered by Eritrea, Djibouti, Somali, Kenya, South Sudan, and Sudan. It is a multi-ethnic state with 80+ ethnic groups, where modern humans are said to have emerged thousands of years ago. Ethiopia is Africa 2nd-most populous country with a transition economy and a large public sector. The country’s government is in the process of privatizing many state-owned businesses as it moves toward a market economy.

Paid Leave and Statutory Leave

Parental Leave

Pregnant employees in Ethiopia receive 120 days of paid maternity leave, where no less than 30 need to be taken prior to the due date and 60 days after the birth. Fathers are entitled to unpaid paternity leave for 3 working days.

Sick Leave

Employees can receive up to 6 months of sick leave each year, where the 1st month is paid at 100% of the regular salary, the 2nd month is paid at 50%, and the remaining months are unpaid.

Paid Leave

There are 13 national holidays in Ethiopia, and employees are entitled to 16 days of paid time off each year after they’ve worked at a company for 1 year (after that, this amount increases by 1 day for every 2 years of service). Employees can also receive paid leave for marriage or exceptional circumstances (including bereavement).

Wage Requirements and Working Hours

The minimum wage in Ethiopia is ETB 5,095 per month, and the standard workweek is 8 hours per day and maximum of 48 hours per week. Any work done past this is considered overtime with a maximum of 100 hours per year. Overtime pay will vary between 125% to 250% of the salary depending on the circumstances of the overtime work.

Termination Process

Process

Employers can terminate an employment contract for reasons related to business, personal, or misconduct. There must be notice in writing that details the reason for termination.

Notice Period

The notice period depends on how long the employee has worked at the company:

  • 0-1 years = 1 month notice
  • 1-9 years = 2 months notice
  • 9+ years = 3 months notice
  • Terminated due to workforce reduction = 2 months notice

Severance Pay

The severance pay also depends on how long the employee has worked at the company:

  • 1 year = 30 days wages
  • 2+ years = 30 days wages + 10 days for each additional year worked (max 12 months)
  • Terminated due to workforce reduction = 60 days wages

Additional Information

While there is no legal requirement to provide a 13th salary bonus, annual bonuses are common in Ethiopia.

OVERVIEW
Language(s):
Amharic
Currency:
Ethiopian Birr (ETB)
Capital City:
Addis Ababa
Population:
120 Million
Cost of Living Rank:
69th
VAT (Valued Added Tax):
15%
Employer TaxES
11%
(estimated)

★  11% - Social Security

Simplified Global HR and Payroll.
Let’s work on it together.

We've made the process really simple
with only 3 steps.

1

Remote candidate

You've sourced a full-time employee or contractor located in a country where your company is not incorporated.

2

Cost Calculation

Pass us the details of your candidate and we will let you know exactly what it costs to employ your candidate in that country.

3

Onboarding & Admin

Sit back and relax as we onboard your new team member and take care of all the local compliances and admin work.

Same-day onboarding
Best Pricing
Available in 150+ countries
How Remofirst employs in Ethiopia

It can be prohibitively expensive to establish an entity in every country you want to hire talent in, so Remofirst will hire and pay your employee on your behalf while you manage their daily duties. Remofirst will handle formal HR procedures and employment contracts that adhere to local laws, so that you can simply approve invoices via our platform. When you work with an Employer of Record (EOR) you can compliantly hire the best employees around the world.

How employees in Ethiopia get paid
Your employee's hours, time off, holidays, bonuses, and commissions are automatically calculated into payroll. Remofirst will invoice you in either US Dollars (USD), Euros (EUR), British Pounds (GBP), Canadian Dollars (CAD), or Singapore Dollars (SGD) around the 15th of each month to make sure your employees in Ethiopia are paid on time in Ethiopian Birr (ETB). To make it even easier, you can summarize your entire global team's salaries to aggregate them into one payment (instead of many individual payments).
Full-time Employees vs Global Contractors

Unlike full-time employees, contractors work on projects with multiple companies at a given time and are technically self-employed. Full-time employees are solely focused on their employer and usually receive benefits (such as health insurance, equity or stock options, and time off) as an additional form of compensation. While it can be cheaper to work with international contractors instead of paying benefits to a full-time employee, you run the risk of misclassification. It's recommended to work with an EOR for contractor onboarding and payments, so you can know that your international contractors are paid compliantly and on time.

Dependable support for employees
Whenever the employee or employer has a question about benefits, Visas, or anything else related to international employment in Ethiopia, they can use our platform's chat function to get answers from our team of experts. Every client of Remofirst also receives a dedicated account manager that will serve as a point of contact for global HR support.