Hire in Ethiopia
Here’s where you get started with human resources best practices and hiring in Ethiopia.
Last updated at March 11, 2024
Ethiopian Currency
Ethiopian Birr (ETB)
The Capital of Ethiopia
Addis Ababa
Time Zone in Ethiopia
GMT+3
Important Facts About the Country of Ethiopia
Introduction to Ethiopia
Ethiopia, formally recognized as the Federal Democratic Republic of Ethiopia, is a landlocked nation located in the Horn of Africa. Encompassing a landmass of roughly 1.1 million square kilometers, Ethiopia stands out as one of Africa’s largest countries. The capital city, Addis Ababa, serves as the political, cultural and economic epicenter of the country. With a population of nearly 117 million inhabitants, Ethiopia claims the position of the second-most populous country in Africa.
What to Know about Ethiopia's Geography
Ethiopia shares borders with several countries, including Eritrea to the north, Djibouti and Somalia to the east, Kenya to the south, South Sudan to the west, and Sudan to the northwest. The country’s diverse geography features highlands, plateaus, rift valleys and lowlands. The Great Rift Valley runs through Ethiopia with stunning landscapes and unique geological formations.
Climate in Ethiopia
Generally, the country experiences three main climatic zones: the hot lowlands, the temperate highlands and the cool climate in the mountains. The highlands, including Addis Ababa, enjoy mild temperatures, while the lowlands can be extremely hot. Ethiopia’s climate is characterized by two primary seasons: the dry season from October to May and the rainy season from June to September.
The Culture of Ethiopia
Ethiopia has a rich and ancient cultural heritage that spans thousands of years. The country is famous for its diverse ethnic groups, each with its own distinct traditions, languages and customs. Music and dance are integral parts of Ethiopian culture, with traditional performances such as Eskista and Guragigna captivating both locals and visitors.
Religions Observed in Ethiopia
Christianity and Islam are the predominant religions in Ethiopia. The Ethiopian Orthodox Church holds a prominent place and is one of the oldest Christian churches globally. Islam is also widely practiced, particularly in the eastern and southeastern regions. Additionally, a small percentage of the population adheres to traditional indigenous beliefs, maintaining ancient customs and rituals.
Languages Spoken in Ethiopia
Ethiopia is a multilingual country with over 80 indigenous languages spoken. Amharic holds the position of the official language and is widely used for administrative and educational purposes. English is also used in business, government and education, serving as the country’s second language. In various regions, ethnic languages such as Oromo, Tigrinya, Somali and Afar are commonly spoken, reflecting the country’s linguistic diversity.
Ethiopian Human Resources at a Glance
Employment Law Protections in Ethiopia
The Labor Proclamation No. 1156/2019 serves as the primary legal framework governing employment relationships in Ethiopia. Additionally, there are other important rules and regulations that play a significant role, including:
- Constitution of Ethiopia
- Public Holidays and Rest Day Proclamation
- Social Health Insurance Proclamation
- The Right to Employment of Persons with Disabilities Proclamation
Employment Contracts in Ethiopia
An employment contract in Ethiopia can either be oral or written. Unless it is a contract for a definite period or piecework, it is considered to be an indefinite period contract.
If the employment contract is not in writing, the employer must give a written statement of employment particulars within 15 days of the contract’s conclusion.
Fixed Term Contacts for Ethiopian Employees
- the performance of a specified piece of work for which the employee is employed
- the replacement of a worker who is temporarily absent due to leave, 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 breakdowns in works, materials, buildings or plant of the undertaking
- an irregular work that relates to the 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 employer 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 implementation structure and its implementation
The Labor Proclamation does not limit the maximum term (including renewals) of the fixed-term contract except in the last two cases, where it specifies that the contract may not exceed 45 consecutive days and has to be concluded once only.
The maximum length of a fixed-term contract is five years.
Ethiopia's Guidelines Regarding Probation Period/Trial Period
The probationary period must be stated in writing, and it cannot last longer than 60 working days. An employee who is rehired by the same company for the same position is not subject to probation.
During a probationary period, if an employee is found to be unfit for the position, the employer may terminate the employment contract without the need for prior notice or the obligation to provide severance pay or other forms of compensation. Similarly, an employee has the option to resign from their employment contract, with or without providing a reason, during this probationary period.
Regulations and Rules Regarding Working Hours in Ethiopia
Typically, work hours are eight hours per day and 48 hours each week. However, depending on the nature of the work, some days may have shorter hours while others may require up to 10 hours of work per day.
Ethiopian Laws Regarding Overtime
Overtime refers to work done beyond the regular daily working hours. A worker cannot be forced to work overtime except in cases of accidents (actual or anticipated), force majeure, urgent work or to substitute for absent workers in jobs that run continuously without interruption.
The maximum overtime work allowed is four hours in a day or 12 hours in a week. If a worker works more than the set working hours during weekdays, they are eligible for an overtime premium as outlined below:
- 150% of the normal hourly rate for overtime work between 6 a.m. to 10 p.m.
- 175% of the normal hourly rate for overtime work between 10 p.m. to 6 a.m.
- 200% of the normal hourly rate for work on a weekly rest day
- 250% of the normal hourly rate for work on a public holiday
Termination
Either party has the option to end a contract through the service of a notice or by making a payment in lieu of notice. This should be done in accordance with the provisions of the law, a collective agreement or by mutual agreement between both parties.
As stipulated in the Labor Proclamation, an employment contract can be terminated under various circumstances, including the expiration of a fixed-term contract or piecework arrangement, the worker’s passing away, the worker’s legal retirement, the permanent cessation of operations by the undertaking due to reasons such as bankruptcy or other causes or the worker’s incapacity resulting from disability.
Furthermore, termination of the employment contract may also occur based on factors like the worker’s behavior, their ability to perform the job or the organizational and operational requirements of the undertaking. The Labor Proclamation also specifies certain grounds for contract termination that do not necessitate prior notice.
Ethiopia's Requirements Regarding Notice Periods
An employer may terminate an indefinite employment contract by observing a notice period as follows:
- One month for employees who have completed their probation and their period of service is not more than one year
- Two months for employees who have a period of service from one to nine years
- Three months for employees with more than nine years of service
- Two months for employees who have completed the probation period but whose employment is terminated due to the reduction of workforce
The length of notice required for fixed-term and piecework contracts is determined through mutual agreement between the parties involved.
Redundancy/Severance Pay in Ethiopia
Upon completion of probation, the Labor Proclamation states that an employee is eligible for severance pay. The employer must provide severance pay to the employee in the following situations:
- bankruptcy or other reasons resulting in permanent cessation of operations
- the termination violates legal provisions
- the workforce has been reduced
- the employer has violated the worker’s rights unlawfully
- the employer has not taken measures to ensure the safety and health of workers despite being notified of workplace hazards
- the contract is terminated due to partial or total disability
The severance pay varies based on the duration of employment and is given at the following rates:
- 30 days’ wages for one year (as well as the first year) of service (severance pay for employees with less than one year of service is calculated in proportion to the period of service);
- 10 days’ wages for every additional year of service after the first year (however, the total severance pay must not exceed 12 months’ wages);
- 60 days’ wages in addition to the above payments for workers who are terminated on the grounds of redundancy.
Apart from the severance payment mentioned earlier, employees are also eligible for an additional 30 days’ worth of wages as compensation if their employment contract is ended without notice.
Tax and Social Security Information for Employers in Ethiopia
Personal Income Tax in Ethiopia
In Ethiopia, the personal income tax is calculated according to the following monthly progressive tax table:
| Monthly Income Bracket (ETB) | Tax Rate % | Deductible Fee (ETB) |
|---|---|---|
| 0-600 | 0 | 0 |
| 601 – 1,650 | 10% | 60 |
| 1,651 – 3,200 | 15% | 142.50 |
| 3,201 – 5,250 | 20% | 302.50 |
| 5,251 – 7,800 | 25% | 565.00 |
| 7,801 – 10,900 | 30% | 955.00 |
| Over 10,900 | 35% | 1,500.00 |
Social Security in Ethiopia
In Ethiopia, every private organization must register with the Private Organization Employees Social Security Agency, also known as the “pension fund.” It is compulsory for all employers and employees to make contributions towards social security.
Employers are required to contribute 11% of the employee’s basic salary to the scheme, while the employee’s contribution is set at 7%.
Employers are responsible for submitting payments for both employee and employer contributions within 30 days of the deduction. If a company fails to make pension contributions for three consecutive months, the Social Security Agency is authorized to deduct the outstanding contributions from the company’s bank account. All banks are obligated to assist in this process.
*The above rates serve as a broad guideline. Actual rates charged will differ.
Important Information for Ethiopian Employees
Salary Payment
According to the Labor Proclamation, employers must pay their employees in cash on the working day at their work location, unless an alternative agreement has been made. If the payment date has already been set and falls on a public holiday or weekly rest day, wages must be paid on the prior working day. While wages may be paid in kind, this amount cannot exceed 30% of the cash wage payment.
Payslip
Employers are required to maintain a record of payment in a register that includes the gross pay, the method of calculating wages, any other variable remuneration, deductions made, net pay and other relevant details.
Annual Leave
After completing one year of service, workers are entitled to 16 working days of paid annual leave. In addition, they receive one working day for every two years of additional service.
If an employee desires it, they may request to take their annual leave in two separate parts or defer a period of leave as long as the employer agrees. However, this deferment cannot last for more than two consecutive years.
If an employee’s contract ends before they have had the opportunity to take their entitled annual leave, they will receive compensation proportionate to their length of service. Apart from this scenario, any agreement, whether it be a collective agreement or otherwise, that offers compensation in exchange for annual leave or waives the right to paid annual leave is not valid.
Sick Leave
Sick leave is granted if the employee is unable to work due to an illness not related to a work injury. Employees are eligible for up to six months of paid sick leave after completing their probationary period. The employee must inform their employer of their absence due to illness and provide a medical certificate from a government-recognized medical organization.
Employers shall provide paid sick leave at the following rates:
- 100% of wages during the first month of sick leave
- 50% of wages during the second and third months of sick leave
- unpaid leave from the fourth until the sixth month.
Maternity & Parental Leave
Maternity Leave
Women employees have the right to receive 120 working days of fully paid maternity leave which includes 30 days of antenatal leave and 90 days of postnatal leave, based on the recommendation of a medical practitioner. Apart from this, employees are also eligible for paid leave for medical examinations linked to pregnancy and paid leave during pregnancy, as advised by a medical doctor.
Paternity Leave
A male employee is entitled to three consecutive days of paternity leave with full pay.
Special Leave
An employee is entitled to three paid working days of “special leave” when:
- he or she gets married
- in the event of the death of a spouse, descendant, ascendant or relative to the second degree
An employee also has the right to take up to five consecutive days of unpaid leave for personal matters that are serious or exceptional.
Public Holidays
Employees are entitled to receive full payment for festival holidays, whether public or religious. These holidays include both memorial and religious holidays of Christian and Muslim origin. Typically, there are 13 public holidays annually.
If a public holiday falls on a designated rest day or coincides with another public holiday, employees will only receive one payment for working on that day.
Benefits to the Employee in Ethiopia
Ethiopian Statutory Benefits
Employees have the right to various benefits as mandated by law and collective agreements. These benefits include retirement pensions, annual leave, sick leave, maternity leave, special leave, etc.
Rules Regarding Visas and Foreign Workers in Ethiopia
General Information
Visas
Travelers, except for those who are citizens of Djibouti and Kenya, are required to obtain an Ethiopian Visa either prior to their trip or upon arrival.
The two main types of visas that the Ethiopian government issues are:
- Ethiopia Tourist Visas: Ethiopia Tourist Visas are issued to foreign nationals traveling to Ethiopia for tourism or other non-business-related purposes. They can be issued either at an embassy or consulate of Ethiopia, online or on arrival, depending on nationality.
- Ethiopia Business Visas: The Ethiopia Business Visa is issued for business-related purposes, and can be further sub-categorized into: Ethiopia Conference Visa (CV), Ethiopia Foreign Business Firm Employment Visa (WV), Ethiopia Government Employment Visa (GV), Ethiopia Private Business Firm Work Visa (PE), Ethiopia International Organizations/Embassies Work Visa (RI), Ethiopia Government Institutions Short Task Visa (GIV), Ethiopia Non-Governmental Organizations Visa (NGO), Ethiopia Investment Visa (IV) and Ethiopia Journalist Visa.
Individuals from any country can apply for an Ethiopia eVisa, with the condition that their stay is no longer than 90 days and they enter the country only once.
Work Permits
The government of Ethiopia has implemented a policy to prioritize the employment of local individuals rather than foreigners. Therefore, employers must fulfill certain criteria in order to hire non-citizens.
To employ a foreign worker for a specific role, employers must demonstrate to the Ministry of Labour and Social Affairs that the employee possesses the required skill set. During the application process, the employer must submit certain documents, such as your business or trading licenses. Additionally, the employer must provide evidence that Ethiopian workers will be assigned to these roles after the three-year work permit of non-national individuals expires.
Public Holidays Recognized by Ethiopia in 2024
| Occasion | Date | |
|---|---|---|
| 1 | Ethiopian Christmas | January 7 |
| 2 | Timket | January 20 |
| 3 | Adwa Victory Day | March 2 |
| 4 | Eid al-Fitr | April 10 |
| 5 | Labour Day | May 1 |
| 6 | Siklet | May 3 |
| 7 | Ethiopian Easter Sunday | May 5 |
| 8 | Patriots’ Victory Day | May 5 |
| 9 | Derg Downfall Day | May 28 |
| 10 | Eid al-Adha | June 16 |
| 11 | Ethiopian New Year | September 11 |
| 12 | Prophet Muhammad’s Birthday | September 16 |
| 13 | Meskel | September 27 |
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