Ethiopia, officially the Federal Democratic Republic of Ethiopia, is a landlocked country in the Horn of Africa. It shares borders with Eritrea to the north, Djibouti to the northeast, Somalia to the east and northeast, Kenya to the south, South Sudan to the west, and Sudan to the northwest. The country’s land area covers 1.1 million square kilometers. Ethiopia’s economy is based on agriculture, which accounts for 46% of GDP and 85% of total employment.
*Please note that the official currency is the currency of remuneration when employed through WorkMotion in Ethiopia.
Capital : Addis Ababa | Currency : Ethiopian Birr (ETB, Br, ብር) | Languages spoken : Amharic |
Population : 117.88 million (2021 est.) | Minimum wage 2023 : No minimum wage for the private sector. | Cost of Living index : $$ (69 of 139 nations) |
Payroll Frequency : Monthly | VAT - standard rate : 15% | GDP - real growth rate : 5.6% (2021 est.) |
The national holidays mentioned below are valid for the year 2023.
The approximate time for sharing the contract with an employee in Ethiopia is 14 business days assuming no special requests or changes to our standard employment contract. Any such requests or changes would need to undergo internal and external review, directly leading to a time delay.
NOTE: This number is subject to change and is only an estimation of the Contract Sharing Time. The estimated Contract Sharing Time begins from the moment that WorkMotion has received all required information from both the client and the employee.
Normal hours of work should not exceed eight hours a day or 48 hours a week.
Overtime work should not exceed four hours a day and 12 hours a week. In addition to the normal wage, a worker who works overtime is entitled to at least the following rate of payments:
| Time | Overtime Pay Rate |
| In the case of work done between 6:00 a.m. in the morning and 10:00 p.m. in the evening | 1.5 times the ordinary hourly rate |
| In the case of nighttime work between 10 p.m. in the evening and 6 a.m. in the morning | 1.75 times the ordinary hourly rate |
| In the case of work done on the weekly rest day | 2 times the ordinary hourly rate |
| In the case of work done on a public holiday | 2.5 times the ordinary hourly rate |
If the parties agree to have a probation period, the agreement should be made in writing. In this case, the probation period should not exceed 60 working days beginning from the first date of employment.
Notice by the Employer for Indefinite Contracts
| Length of Service | Notice Period |
| During Probation | No notice required |
| In the case of a worker who has completed probation and has a period of service not exceeding 1 year | 1 month |
| Above 1 year and not exceeding 9 years | 2 months |
| More than 9 years | 3 months |
| In the case of a worker who has completed probation and whose contract of employment is to be terminated due to a reduction in the workforce. | 2 months |
The period of notice for a contract of employment for a definite period should be as agreed upon by the parties to the contract.
The annual leave entitlement is:
The worker receives their usual wage during annual leave.
Where a worker, after having completed probation, is rendered incapable of working due to sickness other than employment injury, they should be entitled to sick leave. This leave should, in no case, be counted as more than six months consecutively or separately in the course of any 12 months starting from the first day of sickness.
The employer should provide paid sick leave as follows:
| Duration of Sickness | Sick Leave Pay |
| 1st month of sickness | 100% of the wages |
| Next 2 months of sickness | 50% of the wages |
| For the next 3 months | Without pay |
A pregnant worker should be granted a period of 30 consecutive days of leave with pay for pre-natal leave and a period of 90 consecutive days of postnatal leave with full pay from the employer.
Where a pregnant worker does not deliver within 30 working days of her pre-natal leave, she is entitled to an additional leave until her confinement. However, if birth takes place before the expiry of the pre-natal leave, the 90 working days of postnatal leave should commence.
A male employee is entitled to three consecutive days of paternity leave with full pay from the employer.
A worker is entitled to leave with pay for three working days for the following reasons;
A worker who appears at hearings before bodies competent to hear labor disputes or to enforce labor laws should be granted leave with pay by the employer only for the time utilized for the said purpose.
Workers should be granted leave with pay by the employer for the purpose of exercising their voting rights or discharging their obligation as a witness before judicial or quasi-judicial organs.
A worker is entitled to leave without pay for up to five consecutive days in the case of exceptional and serious events. However, such leave may only be granted twice in a budget year.
In Ethiopia, social insurance is available for all employees covering a full range of pensions such as:
The contributions payable to the Private Organizations employees’ Service Pension Fund should be based on the salary of the employee of the private organization. The employer contributes 11% to the Pension Fund.
In cases of sickness, employers pay cash benefits directly to employees whilst the government provides medical benefits free of charge.
There is no minimum qualifying period for cash benefits after the employee completes an employment probation period of up to 45 days.
Accidental insurance is funded by the pension fund, to which the employer contributes 11%.
Occupational accident means any organic injury or functional disorder sustained by a worker as a result of any cause extraneous to the injured worker or any effort they make during or in connection with the performance of their work.
There is no mandatory unemployment insurance in Ethiopia.
The public pension is funded by the pension fund, to which the employer contributes 11%.
An employee of a private organization who has served for at least 10 years, if their employment contract is terminated, receives retirement benefits for life upon attaining retirement age.
An employee who has completed at least 25 years of service and separates from the service by voluntary resignation or for any other causes other than those provided for by the Social Security Proclamation receives a retirement pension for life beginning five years prior to retirement age.
Invalidity Pension
The invalidity pension is funded by the pension fund, to which the employer contributes 11%.
An employee who has completed at least 10 years of service and separates from service due to health problems preventing them from engaging in any remunerated work receives an invalidity pension for life.
The information contained in this Country Guide is provided for informational purposes only and should not be construed as legal advice on any subject matter. The contents of this Country Guide contain general information and may not reflect current legal developments or address your situation. You should not act or refrain from acting on the basis of any content included in this Country Guide without seeking the advice or representation of a licensed attorney. WorkMotion Software GmbH disclaims all liability for actions you take or fail to take based on any content included in this Country Guide.
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