EOR Service in Ethiopia

Hire, Onboard and Pay Employees in Ethiopia Quickly and Efficiently

Hiring in Ethiopia at a glance

CURRENCY
Ethiopian Birr (ETB)
working hours
48 hours per week.
public/bank holidays
12 days
capital
Addis Ababa
language
Amharic, Somali, Afar, Oromo, Tigrigna
date format
DD/MM/YYYY
remote workers
1.2M
tax year
8 July - 7 July
minimum hourly salary
No minimum wage
CURRENCY
Ethiopian Birr (ETB)
working hours
48 hours per week.
public/bank holidays
12 days
capital
Addis Ababa
language
Amharic, Somali, Afar, Oromo, Tigrigna
date format
DD/MM/YYYY
tax year
8 July - 7 July
payroll frequency
Monthly
GDP
$126.78B (2022)

Employer of Record in Ethiopia

Ethiopia, the second-most populous nation in Africa has experienced remarkable economic growth (averaging 9.5%) over the past 15 years. Engaging an Employer of Record (EOR) service can be a strategic choice to navigate this dynamic market and leverage its potential. An EOR assists with essential HR, compliance, and payroll functions, allowing employers to focus on their core business operations while ensuring adherence to local regulations and labor laws in Ethiopia.

Why use Ethiopia EOR?

For employers unfamiliar with Ethiopian local labor laws, handling compliance in-house will slow their efforts at hiring and expansion. Laws governing minimum wages, working hours, and payrolling are set and changed based on macroeconomic conditions. Labor unions have a strong say in setting these terms leading to the formation of Collective Bargaining Agreements.

This scene is unlike the systems in business-friendly countries. For example, labor unions in the USA do not have much bargaining power. And there are no federally-mandated provisions for paid time-offs in the USA - it is up to the employer to provide paid time-offs. In contrast, Ethiopia has strong labor unions, and employees have right to collect bargaining agreements.

Partner with an Argentina Employer of Record (EOR) like Gloroots to onboard local talent in under a day. With a single partner to manage payroll, taxes, your HR operations become less confused and more streamlined. The Argentina EOR  will ensure full compliance with local employment obligations, and you can fully focus on core business functions and growth plans.

EOR Costs in Ethiopia

The cost of Ethiopia EOR/PEO services in Ethiopia may differ based on various factors, such as the number of employees, the extent of services needed, and the intricacy of the project. The pricing structure for Ethiopia EOR/PEO services usually involves a monthly fee per employee or a percentage of the employee's salary. Extra charges may apply for additional services or customization.

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Key Metrics For Foreign Employers 

The Ethiopian government has implemented various incentives for foreign businesses, including tax holidays, duty-free imports of materials and machinery, and streamlined business starting processes. These policies make it easier for U.S. companies to set up operations and employ local talent.

The table below depicts key indicators from the Global Talent Competitiveness Report for employers wishing to hire from Ethiopia.

Factors Global Ranking Interpretation
Rule of law 102 Indicates effectiveness of law enforcement
Labour-employer cooperation 133 Indicates positive labor-employee relationships
Reading Maths, and Science n/a Indicates average scores in OECD's survey of 15-year-old students
University Ranking 76 Indicates average QS rankings
Labour productivity per employee 112 Indicates total output by the total labor input used to produce that output
Ease of finding skilled employees 116 Indicates findability of skilled talent
Workforce with tertiary education 130 Indicates % of the workforce with PG degrees
Digital Skills n/a Indicates the prevalence of advanced digital skills in the population

Source: The Global Talent Competitiveness Index 2023

Through the Gloroots’ Recrew platform, you can discover amazing talent in Ethiopia.

Why work in Ethiopia?

What’s a Rich Text element?

The rich text element allows you to create and format headings, paragraphs, blockquotes, images, and video all in one place instead of having to add and format them individually. Just double-click and easily create content.

Static and dynamic content editing

A rich text element can be used with static or dynamic content. For static content, just drop it into any page and begin editing. For dynamic content, add a rich text field to any collection and then connect a rich text element to that field in the settings panel. Voila!

How to customize formatting for each rich text

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Grow your team in Ethiopia

Expanding your workforce in Ethiopia involves strategic hiring, but it also means dealing with challenges like compliance, payroll, tax, and benefits. Gloroots offers a global Employer of Record (EoR) service to handle these complexities, allowing you to focus on your employees and business growth. Partner with us for a streamlined process in Ethiopia's dynamic market.

Risks of misclassification

The issue of "Misclassification of Workers" involves incorrectly categorizing employees, like labeling them as independent contractors or exempt from certain regulations, when they should be legally recognized as employees. In Ethiopia, utilizing a PEO/EOR effectively reduces these risks by ensuring compliance with labor laws, accurate worker classification, efficient payroll management, and proper employee benefits. This delegation to experienced professionals ensures a compliant and smooth experience in Ethiopia's labor environment, enhancing operational efficiency and confidence.

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Avoid hefty penalties with Gloroots.

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Employing in Ethiopia

What’s a Rich Text element?

The rich text element allows you to create and format headings, paragraphs, blockquotes, images, and video all in one place instead of having to add and format them individually. Just double-click and easily create content.

Static and dynamic content editing

A rich text element can be used with static or dynamic content. For static content, just drop it into any page and begin editing. For dynamic content, add a rich text field to any collection and then connect a rich text element to that field in the settings panel. Voila!

How to customize formatting for each rich text

Headings, paragraphs, blockquotes, figures, images, and figure captions can all be styled after a class is added to the rich text element using the "When inside of" nested selector system.

Tax

Tax and Social Security contribution:

Employer Payroll Contribution

Tax Rate
Public/Private Sector Pension Fund 11.00%
Total Employment Cost 11.00%

Employee Payroll Contribution

Tax Rate
Public/Private Sector Pension Fund or Military and Police Service Pension Fund 7.00 %
Total Employee Cost 7.00%

Employee Income tax

Rate Income
0.00% Up to 600 ETB
10.00% 601 ETB – 1,650 ETB
15.00% 1,651 ETB – 3,200 ETB
20.00% 3,201 ETB – 5,250 ETB
25.00% 5,251 ETB – 7,800 ETB
30.00% 7,801 ETB – 10,900 ETB
35.00% 10,901 ETB and above

Separation

Employment contracts cannot be terminated without a valid reason in Ethiopia. Acceptable reasons for termination include the end of the agreed employment period, the completion of the assigned task, the employer going bankrupt, the employee being unable to fulfill their duties, or both parties agreeing to it.

Severance Pay

In Ethiopia, the amount of severance pay depends on how long someone has worked. For each year of service, they receive 30 days' pay at their regular rate, adjusted for part-years. After the first year, every additional year of service gets them 10 days' pay. However, the total severance pay cannot exceed 12 months' wages. If the termination is due to redundancy, an additional 60 days' pay at the regular rate is given.

Notice Period

The notice period an employer must give in Ethiopia varies:

  • One month for an employee who finished their probation and has less than a year of service.
  • Two months for an employee with over one year but less than nine years of service.
  • Three months for those with more than nine years of service.
  • Two months if the employee completed probation but is terminated due to workforce reduction.

During the probation period, no notice is needed. On the other hand, employees can end the contract by giving 15 days' notice.

Probation period

Probation periods in Ethiopia last for 60 working days.

Start Hiring in Ethiopia today

Expanding your global workforce comes with a host of compliance challenges, from employment laws to data protection and diversity requirements. At Gloroots, we streamline this process with a unified platform. Our experts handle everything from employment contracts to on-time payments and compliant benefits. This way, you can concentrate on talent acquisition, while we ensure a stress-free global employment experience for both you and your employees. Connect with our experts today to kickstart your global hiring journey.

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Experience Seamless Hiring in Ethiopia?

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