G-P’s Employer of Record (EOR) model allows your company to start hiring talent in minutes via our global entity infrastructure. Unlike a Professional Employer Organization (PEO), G-P allows your company to expand your global footprint without the hassle of entity setup and management.
Our global employment products, including G-P Meridian Prime™ and G-P Meridian Core™, are backed by the largest team of HR and legal experts in the industry. We handle the growing complexities of compliant global expansion — so you can focus on opportunities ahead.
As a global EOR expert, we manage payroll, employment contract best practices, statutory and market norm benefits, employee expenses, as well as severance and termination. You’ll have peace of mind knowing you have a team of dedicated employment experts assisting with every hire. G-P allows you to harness the talent of the brightest people in 180+ countries around the world, quickly and easily.
Employment contracts in Ethiopia
Before hiring new employees, it’s important to draft an employment contract that outlines both parties’ responsibilities. In the agreement, companies can include a probationary period of up to 45 days. During this time, the employee is entitled to rights and benefits. However, employers may terminate the contract at any time without notice, severance pay, or additional compensation.
Ethiopia’s labor laws stipulate that employment contracts must include the following information at a minimum:
- Employer’s name and address
- Employee’s name, age, address, and work card number (if applicable)
- Agreement between the contracting parties in adherence to regulations
- Signatures of all contracting parties
Companies are obligated to provide work for employees in accordance with their agreements and supply any materials and payment agreed upon in the contract.
Working hours in Ethiopia
The standard workweek is 40 hours, and the law stipulates that work hours should be 8 hours a day or 48 hours in a week. If required, daily hours may be increased, provided that they do not exceed 10 hours per day.
Each week, employees are also entitled to a consecutive 24 hours of rest. The standard rest day is Sunday, but workers may choose a substitute if the nature of the job requires work.
Employees who work overtime or night shifts are entitled to receive additional compensation at rates based on their hours and shift times. They may not work more than 20 hours of overtime in a month or over 100 hours in a year.
The Ministry of Work and Social Affairs may make provisions for decreased work hours or other special arrangements for specific industry conditions.
Vacation leave in Ethiopia
For 1 year of service, employees are entitled to 16 days of annual paid leave. Then for every additional 2 years of service, 1 working day of annual leave is added. For example:
- 1 year of service: 16 days
- 2 years of service: 16 days
- 3 years of service: 17 days
- 4 years of service: 17 days
- 5 years of service: 18 days
Holidays in Ethiopia
Employees are entitled to the following paid holidays each year:
- Adwa Victory Day
- International Labor Day
- Patriots’ Victory Day
- Derg Downfall Day
- Enkutatash
- Christmas Day
- Epiphany
- Ethiopian Good Friday
- Ethiopian Easter
- Meskel
- Mawlid
- Eid-al-Fitr
- Eid al-Adha
Sick leave in Ethiopia
Once employees have completed their probationary period, they may receive up to 6 months of sick leave. Pay rates depend on the duration of leave:
- Full wages: First month of leave
- Half wages: Second and third month of leave
- No wages: Last 3 months of leave
Maternity leave in Ethiopia
Pregnant employees are entitled to 30 days of leave before the birth and an additional 90 days after delivery. Employers are responsible for providing full pay during the duration of maternity leave.
Benefits and bonuses
Companies must be a member of the social health system and are responsible for providing health insurance for employees. Social insurance contribution on employees’ behalf is 11% of the payroll for each worker.
Termination and severance in Ethiopia
If an employee concludes their employment with a company before utilizing accrued annual leave, they are entitled to compensation equivalent to the length of their service. Companies reserve the right to terminate a contract without notice if there is justified cause by meeting one of the following criteria:
- Repeated and unjustified tardiness after multiple warnings
- Unjustified absence for 5 consecutive workdays, 10 workdays in a month, or 30 workdays in a year
- Fraudulent or deceitful conduct while completing duties
- Misappropriation of employer funds or property for personal or third-party enrichment
- Producing output consistently below the required standards
- Responsibility for altercations at the workplace
- Conviction for an offense that inhibits the employee from working
- Causing damage to employer property intentionally or through gross negligence
- Unlawful activities
If termination is for other reasons, companies are obligated to provide written notice to the worker and pay all wages owed within 7 days prior to termination. Severance pay is also mandated based on the circumstances of the termination and years of service.
Paying taxes in Ethiopia
Employers are responsible for withholding income from each month’s paycheck. The withheld tax must be paid to the Ethiopian Revenues and Customs Authority (ERCA) within 30 days of the end of the payment month.
Why G-P?
At G-P, we help companies unlock the power of the everywhere workforce through our industry-leading Global Growth Platform™. Let us handle the complex and costly tasks involved in finding, hiring, onboarding, and paying your team members, anywhere in the world, with the speed and guaranteed global compliance your business needs.
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