The Federal Democratic Republic of Ethiopia is a country located in Eastern Africa. Ethiopia is a wildly diverse country with over 90 spoken languages, although Amharic is considered the “business language.” The top industries in Ethiopia are agriculture, construction and manufacturing. With one of the world’s fasted growing economies, Ethiopia is an excellent destination for expansion, especially for companies in infrastructure.
Employment contracts in Ethiopia may be verbal or written but a written employment contract that details the terms and conditions of employment is recommended. The written employment contract should include the workplace location, salary, contract duration and other details related to employment. If the contract is unwritten then the employer must provide the employee with a signed letter containing the details of the employer, name and work card of the employee and both parties’ signatures within 15 days of the employment start date.
The standard workweek in Ethiopia is 48 hours. Employees typically work eight hours a day, six days a week. Limitations apply to younger workers. Overtime work is limited to two hours per day, 20 hours a month or 100 hours annually. Overtime is paid at 125% of the basic wage but can be more depending on when the overtime is worked. Weekend overtime is paid at double the standard rate and at 250% on a public holiday.
Employees receive six months of sick leave. Employees receive 100% of their pay for the first month while on leave and 50% for the following two months. After that, any remaining sick leave is unpaid.
Female employees receive 120 days paid leave with 30 days of maternity leave taken before the expected due date and the remaining taken after the birth. Male employees receive three days of paid paternity leave.
Employers are not required to pay employees bonuses but may elect to do so as part of their compensation package. Bonuses are fairly common in Ethiopia.
Employees receive 16 days of paid annual leave after one year of service. Employees then receive one additional day per year for every two years of service.
Ethiopia observes the following public holidays:
The country has a mandatory community-based health insurance, which is called CBHI.
Employers can terminate an employment contract by providing advance notice to the employee. The notice period depends on the employee’s length of service. The notice period is generally one to two months depending on the employee’s length of service. No notice is required if the employee is dismissed for misconduct. Severance pay is one month for the first year and then increases by a third for each year of service but cannot exceed the total annual wage. Special rules apply to redundancy dismissals.
We understand that local laws and regulations change and sourcing an accurate reference guide is not easy. Our data is researched and verified by our team of local international Employment Attorneys, HR and Benefit Professionals and Tax Accountants through our Atlas team and consultants, to ensure information up-to-date and accurate.
Our team of regional experts are here to support you with your global expansion plans. If you have any questions, just get in touch and we will be delighted to help.
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