Africa employer of record

Employer of record in Ethiopia

Countries

Ethiopia

Employer of record in Ethiopia

Ethiopia

Ethiopia

Ethiopia is a landlocked country located in the Horn of Africa, in the eastern part of the continent. It is bordered by Eritrea to the north, Djibouti and Somalia to the east, Kenya to the south, South Sudan to the west, and Sudan to the northwest. Ethiopia has diverse topography, including highlands, plateaus, and lowlands. The Great Rift Valley, a geological trench, runs through the country.

Capital: Addis Ababa

Population:(2023 est.) 106,359,000

Language(s): Amharic, Oromo, Tigrinya, Somali, Afar

Currency: Ethiopian birr

Employer of record in Ethiopia

Employee Benefits

  • 7 Jan          Ethiopian Christmas
  • 19 Jan        Timket
  • 2 Mar         Adwa Victory Day
  • 14 Apr       Siklet
  • 16 Apr       Ethiopian Easter Sunday
  • 22 Apr       Eid al-Fitr
  • 1 May        Labour Day
  • 5 May        Patriots’ Victory Day
  • 28 May      Derg Downfall Day
  • 29 Jun        Eid al-Adha
  • 12 Sep        Ethiopian New Year
  • 27 Sep        Meskel
  • 27 Sep        Prophet Muhammad’s Birthday

Upon completing one year of service, employees are granted 16 working days of paid annual leave, and for each additional year of service, an extra working day is added. Consequently, a worker with 5 years of service is eligible for 18 working days of paid annual leave, with one additional day for every two extra years of service.

As per the Constitution of Ethiopia and the Labor Proclamation, female employees are eligible for a fully paid maternity leave spanning 120 working days, consisting of 30 days antenatal and 90 days postnatal, upon the recommendation of a medical doctor.

Currently, there is no provision for paternity leave.

The probationary period must not extend beyond 60 days.

Within the initial year of service, an employee is allowed to take a maximum of 6 months of sick leave.

The payment of a 13th or 14th month salary is not mandated by statutory requirements. Notably, Ethiopia employs a distinct 13-month calendar, and it does not appear customary for employees to receive any bonus payment during festive periods.

  1. Tourist Visa:
    • Description: An electronic single-entry visa for visitors intending to travel to Ethiopia solely for tourism or non-business-related purposes.
    • Required Documents: Recent passport-size photo, valid passport (at least 6 months from the intended entry date), and the visa is valid for up to 90 days for a single entry.
  2. Investment Visa:
    • Description: Issued to foreign nationals engaged in investment activities in Ethiopia or potential investors intending to invest in the country.
    • Additional Details: Specific requirements may apply for those involved in investment-related activities.
  3. Foreign Business Firm Employment Visa – WV:
    • Description: Issued to foreign nationals entering Ethiopia for employment by business firms owned or operated by foreigners.
    • Note: Tailored for individuals employed by foreign-owned or operated businesses.
  4. Ethiopian Private Business Firm Work Visa – PE:
    • Description: Issued to foreign nationals entering Ethiopia for employment or short-term assignments with private business firms based in Ethiopia.
    • Note: Designed for those engaged in employment or specific short-term projects with Ethiopian private businesses.
  5. Ethiopian Government Employment Visa – GV:
    • Description: Government employment visa issued to foreign nationals to be employed by various Ethiopian government institutions or ministries.
    • Note: Specifically for individuals hired to work within different governmental bodies in Ethiopia.

Each visa category has its specific requirements, and applicants need to submit relevant documents to obtain the respective visa. It’s important for individuals planning to travel to Ethiopia to adhere to the guidelines associated with their intended visa type

For the first year of service, the severance pay is calculated as thirty times the average daily wage for the previous week. The severance pay is computed proportionately for service lengths shorter than a year. In the event that the employee has worked for more than a year, an extra one-third (1/3) of this sum is added, up to a maximum of one year’s salary. The employee is entitled to a reimbursement equal to sixty times their average daily wage for the final week of employment if their termination satisfies the requirements stated in section 24(4) and section 29 of the labor code.

The overtime rates are structured as follows:

  1. Overtime Between 06 a.m. to 10 p.m.:
    • Overtime rate: 150% of the normal hourly rate.
  2. Overtime Between 10 p.m. to 06 a.m.:
    • Overtime rate: 175% of the normal hourly rate.
  3. Work on a Weekly Rest Day:
    • Overtime rate: 200% of the normal hourly rate.
  4. Work on a Public Holiday:
    • Overtime rate: 250% of the normal hourly rate.

Ethiopia imposes income tax based on both location and source, with distinct rules for residents and non-residents:

  1. Residents of Ethiopia:
    • Residents are obligated to pay tax on their international income.
    • All income, unless explicitly exempted, is subject to taxation.
    • Taxable income includes earnings from businesses, investments, and employment (including fringe benefits).
  2. Non-Residents:
    • Non-residents are only liable for taxation on income originating within Ethiopia.
    • Only income with an Ethiopian source is subject to taxation for non-residents.
  3. Business and Investment Income:
    • Income derived from business operations and investments is subject to taxation.
  4. Employment Income:
    • Employment income, along with associated fringe benefits, is also taxed.
  5. Rental Revenue for Ethiopian Citizens:
    • Ethiopian citizens who rent out buildings are subject to taxes on their rental income, with rates potentially reaching up to 35%.



In Ethiopia, Value Added Tax (VAT) is applicable to both imports and the supply of goods and services. Here are some key points regarding VAT in Ethiopia:

  1. Scope of VAT:
    • VAT is imposed on imports, as well as the sale of products and services within the country.
  2. Non-Commercial Organizations:
    • Non-commercial organizations are not authorized to levy VAT on services they provide. However, they are still obligated to pay VAT on the products or services they acquire unless specifically exempted by a relevant bilateral agreement.
  3. VAT Rate:
    • The standard VAT rate in Ethiopia is set at 15%.
  4. Exemptions for Exports:
    • Goods and services that are exported are exempt from VAT.

This VAT framework ensures that the tax is applied to both domestic and imported goods and services while providing certain exemptions for non-commercial organizations and exports to encourage international trade.

The contract of employment can be terminated with notice under the following circumstances:

  1. Manifested Incapacity or Lack of Skill:
    • Termination may occur if the worker demonstrates an inability to perform assigned duties or lacks the necessary skills for the job.
  2. Permanent Health or Disability Reasons:
    • If, due to health or disability reasons, the worker is permanently unable to fulfill contractual obligations, termination may be initiated.
  3. Relocation Unwillingness:
    • Termination is permitted if the worker refuses to move to a new location to which the undertaking is relocated.
  4. Cancellation of Worker’s Post for Just Cause:
    • If a worker’s position is canceled for substantial reasons, and there is no possibility of transferring them to another post, termination is justified.

The notice period is determined based on the length of service:

  1. One Month Notice:
    • Applicable to a worker who has completed the probationary period and has a service period not exceeding one year.
  2. Two Months Notice:
    • Relevant for a worker with a service period exceeding one year but not exceeding nine years.
  3. Three Months Notice:
    • Required for a worker with a service period of more than nine years.
  4. Two Months Notice (Due to Reduction of Workforce):
    • If a worker completes the probationary period and their contract is terminated due to a reduction in the workforce, a notice period of two months is applicable.