Employ Candidates Compliantly in Ethiopia

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  1. Overview: Ethiopia
  2. Global PEO and payroll
  3. Global HR Compliance
  4. Work permit for hiring expats via PEO
  5. Expand without a company set up
  6. Contractor vs. employee: which is better?
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Global HR Compliance in Ethiopia

Expansion of the activities of the organization or its separate subdivision for additional loading of existing capacities or assets causes the company to enter the international market. And in this process, the primary task is to adapt the company’s processes to the legislative norms of Ethiopia.

The fundamental advantage of cooperation with Acumen International is the increase in the efficiency of the enterprise as a whole and the emergence of the opportunity to release the relevant organizational, financial and human resources in order to develop new directions, or concentrate efforts on existing, requiring increased attention.

The war for global talent has never been tougher. Attracting and keeping sought-after international employees requires knowledge. Whether your company is already engaging or planning to engage global workforce in Ethiopia, you need to trust that your operations are executed without flaw and without any unnecessary risks.

Businesses of all sizes face a devastating lack of information and support on global employment, taxation, and immigration in Ethiopia. There’s a common and significant gap between what’s required to be 100% compliant and what most organizations actually have at their disposal.

Acumen International can fill the gap in fragmented Global HR Compliance knowledge

We are experts in global workforce employment in Ethiopia, and our goal is to become your single provider. Instead of working with numerous local staffing agencies and legal advisors, Acumen International can solve your global business challenges and save you time, costs, and resources.

We act as an information service for corporate clients, agencies, and independent contractors and freelancers. Our Global HR Compliance service in Ethiopia will help you:

  1. Navigate legislation and local nuances of Ethiopia. You need to know what is acceptable and what can expose you to employment litigation as well as employee / independent contractor misclassification risk in Ethiopia.
  2. Avoid areas of possible risk. Certain areas and activities can create unnecessary risk, such as employer-employee relations. We can help you with worker classification, payroll and tax calculations, and social cost contributions.
  3. Handle currency exchanges and local invoicing in Ethiopia. We save you time and effort, freeing you from having to understand complicated regulations and tax calculations written in the local language and subject to frequent changes.
  4. Create employment contracts and handle compliant engagements. Our objective is to assist you with international HR compliance issues and offer you the best payment and taxation options in Ethiopia.
  5. Manage expatriate immigration and visa support nuances in Ethiopia. Acumen International provides information about the best scenarios of expat immigration and employment.
  6. Handle global recruitment issues. We can help you select the person and then employ him with our help. We advise you on local employment laws and implied compliance risks to determine the most cost-effective, compliant, and risk-free solution for you.
  7. Withdraw from the region in the least risky and most cost-effective way. If you choose to do so, we can help you withdraw from the region as simply as possible.

Our team of English-speaking professionals frees you from working through language nuances. Acumen International works 24/7 and can assist you whenever you need, regardless of time zones. Our goal is to create tailored labor solutions for you that are managed legally and in full compliance with the local employment laws.

With our knowledge and deep understanding of local nuances, you easily satisfy your need for skilled professionals in your global industry. With our qualified local partners, you can trust that your global workforce satisfies all local tax, social security, and immigration requirements in Ethiopia.

A Guide to Hiring & Firing in Ethiopia

# Employment contracts

Unless otherwise provided by law, a contract of employment shall not be subject to any special form.

Subject to the provisions of the relevant law, a written contract of employment shall specify the following:

  • the name and address of the employer;
  • the name, age, address and work card number, if any, of the worker;
  • the agreement of the contracting parties made in accordance with article 4(3) of the Proclamation; and
  • the signature of the contracting parties.

Where the contract of employment is not made in written form, the employer shall, within fifteen days from the conclusion of the contract, give the worker a written and signed statement containing the requirements specified under Article 6 of this Proclamation.

Any contract of employment shall be deemed to have been concluded for an indefinite period except for those provided for under Article 10 hereunder. A contract of employment may be concluded for a definite period or for piecework in the case of:

  • the performance of specified piece work;
  • the replacement of a worker who is temporarily absent due to leave or sickness or other causes;
  • the performance of work in the event of abnormal pressure of work;
  • the performance of urgent work to prevent damage or disaster to life or property, to repair defects or break downs in works, materials, buildings or plant of the undertaking;
  • an irregular work which relates to permanent part of the work of an employer but performed at irregular intervals;
  • seasonal works which relate to the permanent part of the works of an employment but performed only for a specified period of the year but which are regularly repeated in the course of the years;
  • an occasional work which does not form part of the permanent activity of the employer but which is done intermittently;
  • the temporary placement of a worker who has suddenly and permanently vacated from a post having a contract of an indefinite period;
  • the temporary placement of a worker to fill a vacant position in the period between the study of the organizational structure and its implementation.

A contract of employment for temporary placement of a worker shall not exceed forty-five consecutive days and shall be done only once

# Minimum (Statutory) Employment Rules and Regulations in Ethiopia

# Hours of work: Normal hours of work shall not exceed eight hours a day or fourty-eight hours a week. Hours of work shall spread equally over the working days of a week, provided, however, where the nature of the work so requires hours of work in any one of the working days may be shortened and the differences be distributed over the remaining days of the week without extending the daily limits of eight hours by more than two hours.

# Probation period: A person may be employed for a probation period for the purpose of testing his suitability to a post in which he is expected to be assigned on the basis of a contract of employment. The employee re-employed by the same employer for the same job shall not subject to probation.

Where the parties agree to have a probation period, the agreement shall be made in writing. In such a case, the probation period shall not exceed forty-five consecutive days. Unless the Proclamation or work rules or collective agreement provides otherwise, the worker shall have during the probation period, the same rights and obligations that a worker who has completed his probation period has.

If the worker proves to be unfit for the job during his probation, the employer can terminate the contract of employment without notice and being obliged to pay severance pay or compensation;

The employee on probation may terminate his contract of employment without notice. If the worker continues to work after the expiry of the probation period, a contract of employment for the intended period or type of work shall be deemed to have been concluded from the beginning of the probation period.

# Annual leave: The worker shall be entitled to uninterrupted annual leave with pay which shall in no case be less than:

  • fourteen (14) working days for the first one year of service;
  • fourteen (14) working days plus one working day for every additional year of service.

The additional annual leave with pay, for workers engaged in a work which is particularly arduous or the condition in which it is done is un-healthy, may be fixed in a collective agreement. The wage a worker receives during his annual leave shall be equal to what he would have received if he had continued to work.

For purpose of determining the qualifying period of service required for the entitlement of an annual leave, twenty-six days of service in an undertaking shall be deemed to be equivalent to one month of employment.

A worker whose contract of employment is terminated under the Proclamation is entitled to his pay for the leave he has not taken. Where the length of service of a worker does not qualify for an annual leave provided for in this Article, the worker shall be entitled to an annual leave proportion on the length of his service.

# Parental leave: An employer shall grant time off to a pregnant woman worker without deducting her wages, for medical examination connected with her pregnancy, provided, however, that she is obliged to present a medical certificate of her examination.

A pregnant woman work shall, upon the recommendation of a medical doctor, be entitled to a leave with pay. A woman employee shall be granted a period of 30 consecutive days of leave with pay preceding the presumed date of her confinement and a period of 60 consecutive days of leave after her confinement.

Where a pregnant woman employee does not deliver within the 30 days of her prenatal leave she is entitled to an additional leave until her confinement in accordance with the Proclamation. If delivery takes place before the 30 days period has elapsed, the post-natal leave under the Proclamation shall commence.

# Sick leave: Where a worker, after having completed his probation, is rendered incapable of work owing to sickness other than resulting from employment injury, he shall be entitled to a sick leave.

The sick leave could be more than six months counted consecutively or separately in the course of any twelve months period starting from the first day of his sickness. Where a worker absents himself from work on grounds of sickness, he shall, except where the employer is in a position to be aware of the sickness or it is impractical, notify the employer the day following his absence.

Unless the collective agreement provides otherwise, a worker shall be entitled to a sick leave upon presenting a valid medical certificate given by a medical organization recognized by the Government.

# Overtime: Work done in excess of the normal daily hours of work fixed in accordance with the provisions of this Proclamation shall be deemed to be overtime.

A worker may not be compelled to work over-time, however, over-time may be worked whenever the employer cannot be expected to resort to other measures and only where there is:

  • accident, actual or threatened
  • force – majeure;
  • urgent work;
  • substitution of absent workers assigned on work that runs continously without interruption.

Not withstanding the overtime work of an individual worker due to an urgent work shall not exceed 2 hours in a day or 20 hour in a month or 100 hours in a year.

# State minimum salary: Ethiopia has no national minimum wage. Some government institutions and public enterprises set their own minimum wages: public sector employees, the largest group of wage earners, earned a monthly minimum wage of 420 birr ($21); employees in the banking and insurance sector had a minimum monthly wage of 336 birr ($18). Ethiopia’s minimum wage was last changed in January 01, 2015.

# Employee dismissal: A contract of employment shall terminate on the following grounds:

  • on the expiry of the period or on the completion of the work where the contract of employment is for a definite period or piece work.
  • upon the death of the worker.
  • upon the retirement of the worker in accordance with the relevant law.
  • when the undertaking ceases operation permanently for due to bankruptcy or for any other cause.
  • when the worker is unable to work due to partial or total permanent incapacity.

The parties may terminate their contract of employment by agreement provided, however, that waiver by the worker of any of this rights under the law shall have no legal effect.

Termination by agreement shall be effective and binding on the worker only where it is made in writing.

A contract of employment may only be terminated where there are grounds connected with the worker’s conduct or with objective circumstances arising out of his ability to do his work or the organizational or operational requirements of the undertaking.

The following shall not be deemed to constitute legitimate grounds for the termination of a contract of employment:

  • his membership in a trade union or his participation in its lawful activities;
  • his seeking or holding office as a workers’ representative;
  • his submission of grievance or his participation in judicial or other proceedings against the employer;
  • his nationality, sex, religion, political outlook, marital status, race, color, family responsibility, pregnancy, lineage or social status.
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