How to hire remote employees in

Ethiopia

There’s some great remote talent in Ethiopia. Want to know how you can hire there, legally, without wading into months of paperwork and thousands of dollars in fees? In the next few minutes, we’ll teach you.

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Employment requirements

Country snapshot

CURRENCY

Ethiopian Birr (ETB)

EMPLOYER TAXES

11%

PAYROLL FREQUENCY

Monthly

OFFICIAL LANGUAGE

Amharic, Oromo, Tigrinya, Somali, Afar

Why hire independent contractors in Ethiopia

Hiring contractors is normally the easier, faster, more flexible choice—but don’t just take it from us. Below are the specific benefits and drawbacks to hiring contractors in Ethiopia.

It’s the fastest way to hire globally

Hiring employees takes months, at the minimum. When you hire with Thera's locally-generated contracts, it’s a matter of days or weeks. This means you can hire the best talent, fast, without losing them to a hellish procession of paperwork.

It’s a lot cheaper

It costs just $0 to sign up for Thera, then $25 per month to hire your contractors with Thera. If you hired employees manually (or did contracting on your own), you’d likely be on the hook for thousands of dollars each month. Setting up an entity alone can cost tens of thousands of dollars.

It’s more flexible for you & your team

HHiring contractors in Ethiopia means you’re generally not on the hook for things like health insurance and paid time off. This makes hiring flexible for you, and it gives your talent more options.

Can be less risky than hiring employees

Hiring employees is a bigger commitment, and can open you up to increased liabilities and regulations. When you hire contractors overseas, your biggest risk is misclassification—but laws surrounding contractor classification are often significantly more straightforward.

Some people want to be employees

The contractor life isn’t for everyone—some people want the security that being an employee often appears to provide. Though it’s rare, this does happen, and it’s one disadvantage of manage an all-contractor team.

You might not have as much control over your talent

Most countries’ contractor-employer relationship laws stipulate that the employer can’t set fixed working hours, among other things. These laws give contractors more freedom over how and when they do their work than an employee would have. In reality, however, most contractors are willing & able to work on the company’s schedule—it’s a matter of setting expectations beforehand.

What to know before you hire in Ethiopia

Hiring in Ethiopia? That’s excellent. But if your company’s HQ isn’t already in Ethiopia, things can get complicated—though they don’t need to. Here’s the deal: You can hire your talent as employees, or you can hire them as contractors. Because of Ethiopia’s labor law structure, there are benefits and disadvantages to each approach.

If you want to successfully hire in Ethiopia, you have two options:

Hire talent as contractors

Laws about hiring contractors are significantly more simple in Ethiopia. Onboarding talent takes days, not weeks or months. Both you, the company, and your talent have more flexibility. And in many cases, since you’re remote, the talent you’re hiring is better classified as a contractor, anyway. Of course, it’s not possible in every case, but it’s what we built Thera for.

Hire talent as employees

This is the long route. You can either establish a physical presence with an entity and register as an employer, or you can use an Employer-of-Record (EOR) solution. Odds are, you’ll find using an EOR to be the easier route. Still, using an EOR in Ethiopia is expensive—it can often be $500 per month per employee—and sometimes prone to lengthy onboarding times.

Hire contractors in a couple clicks with Thera

How can I pay people in Ethiopia

If you’re hiring contractors in Ethiopia, you can pay them with Thera in a single click. You won’t need to worry about complicated wire transfers, fees, or currency conversions. We’ll take care of it all. Just make a click and your contractor will get paid in their currency of choice. This is a valuable bonus for talent in countries where the local currency is particularly weak—most people appreciate the ability to receive their payment in stronger currencies.

If you want to hire employees in Ethiopia

If you’ve read up until this point, you’ll know that it’s easier, cheaper, and more flexible to hire contractors in Ethiopia than employees. Still, there are valid reasons why you might want to hire employees instead. The content below is for you—we’ll cover employer taxes and obligations in Ethiopia.

Taxes in Ethiopia

Employer tax

Pension fund

Leave

Paid Time Off (PTO)

In Ethiopia, employees receive one additional day per year for every two years of service.

Employees receive 16 days of paid annual leave after one year of service.

Public Holidays

There are 13 public holidays.

Sick Days

Employees receive 100% of their pay for the first month while on leave and 50% for the following two months. Employees receive six months of sick leave.

Maternity Leave

Female employees in Ethiopia receive 120 days of paid maternity leave of which up to 30 days of leave can be availed before the due date and the remaining can be availed post-partum.

Paternity Leave

Male employees in Ethiopia are entitled to up to three days of paternity leave.

Parental Leave

There are no statutory provisions for parental leave.

Other Leave

No Info.

Marriage Leave

Employees are entitled to 3 days paid leave for marriage.

Bereavement Leave

Employees are entitled to 5 days unpaid leave for exceptional circumstances.

Termination

Termination Process

Termination of the employment contract is possible only by the provisions of the Labor Proclamation. The following are the grounds of termination of the contract by either party:

Expiry of the duration of the contract.
Upon the death of the worker.
When the employee retires.
It is impossible to fulfill the requirements of the contract due to force majeure.
With mutual agreement.

Notice Period

Notice period in Ethiopia of termination depends on length of service, as follows:

Under 1 year of service, 2 months of notice:
Between 1 year and 9 years of service, 2 months of notice:
Over nine years of service, 3 months of notice.

Severance Pay

In Ethiopia, severance is typically required, unless in case of redundancy. Severance pay is 30 times the average daily wage at the last week of service.

Probation Period

Probation period is 6 months.

Employee requirements in Ethiopia

Working Hours

The standard working hours in Ethiopia are 8 hours per day and 48 hours maximum per week.

Overtime

Overtime is only permissible for a maximum of:

In a day - 2 hours
In a month - 20 hours
Annually -100 hours

Employers compensate the employees for overtime as follows:

Overtime is paid at 125% of the basic wage unless it is between 10 p.m. and 6 a.m. when it is 150%.
Weekend overtime is paid at double the standard rate and at 250% on a public holiday.

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