Ethiopia
Min. wage
(x12 payments)
No statutory minimum
About the minimum wage
Employer tax
Annual leave
16 days
Learn about annual leave
Notice period
1-3 months (by tenure)
Termination and notice info
Updated
Sep 2026
The default and most common employment arrangement in Ethiopia; continues until lawfully terminated by either party under the Labour Proclamation's notice and severance rules, giving employees the fullest statutory protections.
Permitted only for work of a specified, temporary, seasonal, or project-based nature. The contract should state a clear end date or completion event. Repeated renewal without an objective business justification can cause the contract to be deemed indefinite, and statutory severance generally does not apply when a fixed-term contract simply expires at its agreed term.
Standard hours are 8 hours/day, 6 days/week (48 hrs/week). Overtime is paid at 150% for daytime hours (6am-10pm), 175% for night hours (10pm-6am), 200% for weekly rest days, and 250% for work on public holidays.
Employers may agree a probationary period of up to 60 working days, which must be recorded in writing. Either party may terminate the contract during probation without notice or severance pay.
Ethiopian labour law does not mandate a 13th or 14th month salary. Some employers pay a discretionary bonus (e.g., around the Ethiopian New Year, Enkutatash), but this is customary practice rather than a legal obligation.
None
Employer contributes 11% of the employee's gross monthly salary to the Private Organizations Employees' Pension Fund, calculated on a pensionable salary capped at ETB 15,000/month (max ETB 1,650). Employers separately bear the cost/liability of occupational injury coverage, which has no fixed statutory percentage.
Employee contributes 7% of gross monthly salary to the Private Organizations Employees' Pension Fund, withheld and remitted by the employer, calculated on a pensionable salary capped at ETB 15,000/month (max ETB 1,050).
In addition to statutory leave, employees are entitled to the following statutory benefits:
Ethiopia's mandatory social security scheme is the pension fund administered under the Private Organizations Employees' Pension Proclamation, covering old-age, invalidity, and survivors' benefits for private-sector employees.
Employers in Ethiopia are liable for occupational injury and work-related illness under the Labour Proclamation, which requires compensation for employees injured or disabled in the course of employment, including medical costs, disability payments, and death benefits to dependents.
There is no fixed statutory percentage; employers typically arrange insurance coverage (or self-insure, where permitted) to meet this liability, and costs vary by industry risk profile and insurer.
Employees who have completed probation and are terminated (other than for gross misconduct, resignation, or expiry of a fixed-term contract) are entitled to statutory severance pay based on length of service.
Severance is generally calculated as 30 days' wages for the first year of service, plus 10 days' wages for each additional year of service, up to a maximum cap of 12 months' total wages. Additional compensation may apply for termination due to redundancy/workforce reduction (an extra 60 days' wages) or termination linked to sexual harassment or violence (an extra 90 days' wages). Accrued but unused annual leave is paid separately.
Ethiopia does not legally require a 13th (or 14th) month salary. Any additional end-of-year or holiday bonus is discretionary and based on company policy or custom rather than a statutory entitlement, and is generally treated as taxable income when paid.
P.S. our team speaks multiple languages and we'd love to chat in your preferred language if requested.
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), Australian Dollars (AUD), or Singapore Dollars (SGD) around the 15th of each month to make sure your employees are paid on time. 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).
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.
Whenever the employee or employer has a question about, or anything else related to international employment, they can speak with our customer support team to get answers from our team of experts.
