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Employer of Record in Eritrea

Employer of Record in Eritrea

Skuad’s Employer of Record Eritrea (EOR) solutions make business expansion to Eritrea easy and hassle-free. Our unique HR platform allows companies to hire exceptionally talented employees in Eritrea, without having to set up a separate legal entity. It streamlines the process of hiring and onboarding a remote team by handling payroll management, taxation, and other legal compliances. To learn more about Skuad, Book a demo today.

Eritrea At A Glance

Population: 6,081,000(2020)

Currency: Nakfa (ERN)

Capital city: Asmara

Languages spoken: Tigrinya, English, Arabic 

GDP: $6.46 billion (2020)

Employment In Eritrea

The labor law in Eritrea is known as the "Labour Proclamation of Eritrea (No. 118 of 2001)." Besides, Eritrea has also ratified the International Labor Convention and is a member state. This factor reinforces confidence in the state concerning labor welfare and maintenance seeing through the lens of humanitarian values, principally. To understand the nuances involved, we must comprehend the essential aspects of Eritrean law. Understanding the law will help us resolve the convoluted strings in this regard and this is made easier with Skuad. Talk to us and learn more!

Entitlements Explanation
Statutory working hours The working hours are 44.5 - 48 hours spread over a week.
Day off Employees are entitled to 24 hours of rest per week. Day off is usually on Sunday(s).
Overtime Eligibility Overtime cannot exceed two hours per day unless there is an employment contract to the contrary.
Salary Salary ranges from 1,730 ERN (lowest average) to 30,500 ERN (highest average). There is no prescription for minimum wages . However, it is mandatory to provide 360 EARN per month in the public sector.
Paid Public Holidays Public Holidays in Eritrea include:
  • New Year (January 1)
  • Orthodox Christmas (January 7)
  • Eid-al-Fitr (variable)
  • Timket (January 18)
  • International Women’s Day (March 8)
  • Eid ul-Adha (variable)
  • Good Friday (variable)
  • Easter (variable)
  • International Labor Day (May 1)
  • Independence Day (May 24)
  • Prophet’s birthday (variable)
  • Martyr’s Day (June 20)
  • Start of the Armed Struggle (September 1)
  • Orthodox New Year (September 11)
  • Festival of Timket (September 27)
  • Christmas (December 25)
Medical Leaves Employees get six months of medical leave after completing the probation period. They get paid in full or partial only for the first two months.
Maternity leave Female employees are entitled to 60 consecutive days of fully paid maternity leave. A portion of the same leave can be taken before birth as well.
Annual leave Employees are entitled to 14 days of paid annual leave after one year of service. The same increases by one day for each year of service up to 35 working days.
Health Insurance Benefits Eritrea advocates a pay-for-services system. The only health insurance that is recommended is private insurance. The Eritrean government does not provide a health benefits system.
Employee Protection and Anti-discrimination rights Employees are guaranteed safety and security protocols. They are further protected from anti-discrimination policies by the law - ‘ Labour Proclamation of Eritrea (No. 118 of 2001)
Confidentiality of Personal Information Eritrea lacks data protection legislation . However, there is cloud-based data technology called Knoema in place to ensure first-hand protection of data.

To ensure your expansion endeavors are in compliance with the {country} employment laws, Contact Skuad today.

Contractors vs Full-Time Employees

Another major decision-making process for our clients after familiarizing themselves with the intricacies of the Eritrean law involves the question, ‘who is better than whom’ between contractors and full-time employees. They are the two sides of the same coin with their peculiar pros and cons. Contractors have the inherent advantage of being flexible. Owing to the same factor, they have a better experience than full-time employees who own exposures confined within a company. Since the target of contractors is to find more clients, they'll always be cost-conscious. They can afford that because of being independent. On the flip side, full-time employees will have an upper hand in matters conventional to a particular company. They get it with their long-term experience. They assure certainty in what they do like the contractors but the degree is more intense with full-time employees. Considering these and checking the compatibility aspect of your company, you can decide which one to choose. Come what may, you will have us holding your back, talk to Skuad Experts!

Hiring in Eritrea 

Companies look for resources online using popular employment sites. Professional sites like LinkedIn also play a significant role in hiring employees at a global level. Other local job search sites careersinafrica.com help companies in scouting for the best talent. The recruiters engage in several rounds of testing to analyze and understand the candidate’s potential and choose the best fit for the role.

The process of handling recruitment from scratch can be extremely tiring for companies. With Skuad, you can hire employees with much more ease and convenience. Skuad takes care of all the steps involved in the recruitment process so that you can focus on the other essential aspects of your business.


Probation & Termination

Probation Period 

Article 12 of the Labour Proclamation of Eritrea (No. 118 of 2001) law deals with the probation period. It mandates that the probation period cannot exceed 90 days. It is further directed that all conditions of work apply to employees on probation except the following: Article 29 - Compensation for unjustified termination;  Article 31 - Termination, which Requires no Notice; and Article 56(8) - Annual leave. If an employee on probation is found to be incompetent of the job then the said employee can be dismissed from the same by the employer without notice and severance pay. This is noted under clause 4 of Article 12. Furthermore, if an employee continues to work even after the expiry of the probation period, such an employee is deemed to have completed it and can carry on with it by having an employment contract in place. Lastly, under clause 6, it is provided that an employee on probation can terminate their employment without notice. Learn more about it at our website. 

Termination Of Service 

The Labour Proclamation of Eritrea (No. 118 of 2001) Of Eritrea has an exclusive chapter dedicated to 'termination of contract employment.' To be precise, chapters 1 and 2 under Title IV provide an exhaustive list of the matter at hand. A few of the important aspects are highlighted in the table below. To learn more, contact us.

Article Title Explanation
23 Non-Legitimate Grounds for Termination
  • Desire to hold office as a representative
  • Membership or participation in lawful activities.
  • Submission of grievances before concerned authorities.
  • An employee's race, color, nationality, sex, religion, lineage, pregnancy, family responsibility marital status, political orientation, or social status.
  • Participation in the National Service or a legally required public service activity.
  • Abstention due to an officially recognized medical doctor's certified illness or injury.
  • Refusal to work on a dangerous assignment.
24 Legitimate Grounds for Termination
  • Death of an employee.
  • Employer's death.
  • Employee’s decision to discontinue working.
  • Expiration of employment contract.
  • Usage of forged documents or false information.
  • Theft, breach of trust, or any other crime.
  • Contraction of disease by the employee unrelated to the environment of employment, and absents him/herself for more than 6 months.
  • Lack of technical knowledge, speed, honesty, interest, and reliability.
  • Redundancy due to reduction of work.
  • Bankruptcy, natural disaster, war, or other causes.
  • Consecutive abstention by an employee for 5 or 10 days within a year.
25 Termination by Collective Agreement The collective agreement takes place on the following grounds:
  • When contracting parties agree to the termination.
  • When an employee commits infractions to a collective agreement.
Termination under this head is effective only when done in writing.
26 Justified Termination Justified termination happens on the following grounds:

Article 21 - Obligations of an Employee.

Article 24 - Legitimate Grounds for Termination.

Article 25 - Termination by Collective Agreement.

28 Unjustified Termination Termination in violation of Article 23 (Non-Legitimate Grounds for Termination) is an unjustified violation.
29 Compensation for Unjustified Termination

For service up to two years - a day's pay for each month of service based on the previous month’s pay.

For service more than two years - a month's pay for each year of service based on average monthly pay.

However, no compensation will be provided exceeding six months' pay.

30 Notice for Termination The period for sending notice of termination is as follows:
Service Period
Less than a year 7 days
1 - 2 years 14 days
2 - 5 years 21 days
More than 5 years 30 days
31 Termination, which Requires no Notice There are 7 grounds for the employer and 4 grounds for employee enumerating circumstances where notice for termination is not required.

EOR Solution in Eritrea 

Business expansion is a long-drawn process that calls for extensive planning, especially when expanding to a foreign country. It is complicated and can take up to several months to complete but by choosing the EOR route for hiring employees in Eritrea, you can fast-track the expansion process. Employer of Record Eritrea (EOR) solutions by Skuad can make expansion to Eritrea much simpler and a lot quicker for business. Our global outreach and a tech-enriched HR platform ensure compliance with local labor laws by managing employment responsibilities such as monthly payroll, work permits, employment contracts as well as taxation for your employees in Eritrea.

Entitlements Explanation
Taxes that apply to invoices The applicable Tax rate is 15%
Minimum duration of service The validity of a work permit is 2 years and the same can be counted as the minimum duration of service.
Currency Accepted Nakfa (ERN) is the accepted currency.
Required Details & Documents
  1. Passport, with a photocopy.
  2. Passport size photographs.
  3. Address of the applicant.
  4. Biodata of the applicant.
  5. Biodata of the employer or company.
  6. Employer or Company’s address.
  7. Applicant’s CV.
  8. Education qualifications.

Outsourcing Employment Through An Employer Of Record

Outsourcing of employment in itself requires a third party, but undertaking the same with an employer of record is truly a game-changer. The setbacks in this area would be issues related to visas and work permits. If we can sort that out, the world is ours.

Types of Visas In Eritrea 

Eritrea will welcome you only if you have a visa from one of the Eritrean diplomatic missions. However, this does not apply if you are either from a visa-exempt country or from a country eligible for a visa on arrival. There are four important types of visas:

Types of Visas Explanation
Official Vias The application for this visa is made at the Eritrean Immigration Office in Asmara by Ministries or organizations directly. There is no visa fee for this type of visa.
Business Visa The application process for this visa is initiated by the company directly at the Eritrean Immigration Office in Asmara. The validity of this visa is 90 days from the date of issuance.
Family Visa Family visas are for individuals of Eritrean Origin without Eritrean National ID or individuals of Non-Eritrean origin with family members in Eritrea.
Tourist Visa As the name suggests, tourist visas are for tourism and can be availed only for a month’s stay. You cannot apply for employment using this visa. This visa is also applied at the Eritrean Immigration Office in Asmara.

Get in touch with us and learn more!

Work Permits

For nationals of other countries, a work permit is compulsory to be employed in Eritrea. It requires paperwork but once that is done, you can get approval from the Ministry of Labor and Human Welfare in Asmara, Ethiopia. Finding the right consulate could be the secret sauce here. Talk to us to know more!

Work Permits Explanation
Can Skuad Sponsor Work Permit in Eritrea? Yes
Processing time 2 weeks
Work permit process The process for obtaining Eritrea’s work permit entails the following:

Step 1: Finding employment in Eritrea. Your company must be braced up for dealing with paperwork.

Step 2: Applying for a work permit from the Ministry of Labor and Human Welfare in Asmara, Ethiopia. Your company must apply directly to the said Ministry.

Step 3: Getting it approved by the same Ministry.

Step 4: The approval will be sent to your company in Eritrea or to the consulate through which you applied.

Passport submission Work Permit Validity 6 months before the date of departure.
Work Permit Process for Different Countries For most countries, the process to obtain a work permit is the same.
When Can an Employee Travel to Eritrea? An employee can travel on receiving their work permits.
What’s The cost of a business visa? $50
Duration of business visa processing? 15 business days.
Switch Business Visa to Work Permit? No.
Can spouses work on dependent visas? Yes.
Termination of Work Permit Termination happens according to the Labour Proclamation of Eritrea (No. 118 of 2001) as enlisted in the preceding paragraph.
Special Requirements for Work Permit Cancellation Not in particular except for the cancellation of sponsorship.

Payroll & Taxes In Eritrea 

Things You Must Know To Set Up Payroll In Eritrea 

Eritrea devotedly follows the Pay-As-You-Earn (PAYE) system. Employee's pay is an exemption to the income tax revenue. Although employee's incomes are exempted from tax, employers are required to pay 4% municipal tax on behalf of employees. Payroll methodology in Eritrea can be overly complicated without us. Book a demo at Skuad and learn more!

Taxes

Tax Explanation
Sales Tax 5%
Corporate income tax 34% for both the Resident companies and non-resident companies.
Payroll tax Nil.
Municipality tax on earnings 4%
Municipality tax on land 1.85 % per square meter.
Municipality tax on property 1.75 per square meter.
Garbage fee 0.4% per square meter.
Rehabilitation tax This tax is imposed upon the people to take care of disabled freedom fighters. The tax rate is 2% and the Act is called “Proclamation Number 17/1991.”
Personal income tax 2%
Tax returns Yes.
Financial year-end date 31 December.
Employers Social Security And statutory contributions Nil
Reimbursement Not in particular, but remuneration is used in the same context of reimbursements according to Article 3 (15) of the Labour Proclamation of Eritrea (No. 118 of 2001)

Incorporation: How to Set Up A Subsidiary In Eritrea 

Expansion of business to Eritrea involves a leviathan amount of work. To set up subsidiaries in Eritrea, the normal procedures required for setting up companies are to be followed. It calls for a rigorous 11 stages process and the same is given below:

  • Depositing share capital - The minimum requirement is ERN 15,000 for a private limited liability company and ERN 50,000 for a share company.
  • Choosing the name for your company - Business License Office is the authority that looks into the company names. 
  • Attesting the statutes of the company - The articles of association and memorandum are signed by the shareholders and stamp duty is paid. The process of attestation costs ERN 715.2. 
  • Registering with the Commercial Registry - Registration is done at the License Department of the Ministry of Trade and Industry without any charges. 
  • Announcing company’s incorporation - The incorporation of the company is published in the official journal, Hadas Eritrea in both Arabic and English. 
  • Applying for a Tax Identification Number (TIN) - The company must register at the Inland Revenue Department for TIN. Furthermore, they must also procure tax clearance from the same Department. 
  • Applying for a business license - this would cost between from ERN 500 to ERN 1,000.
  • Receiving inspection from the Ministry of Trade and Industry - this procedure will take a week for its completion. 
  • Obtaining approval - Approvals are to be obtained at the local municipality.
  • Creating a seal for the company - A seal in this parlance means tax code. 
  • Applying for tax receipts - Tas receipts are to be applied from the Inland Revenue Department.

Nothing can be more hectic than this, but you cannot let worries settle in while having us. Talk to Skuad experts anytime now!

Professional Employer Organizations (PEOs)

The National Association of Professional Employer Organization (NAPEO) defines Professional Employer Organizations as an entity enabling “clients to cost-effectively outsource the management of human resources, employee benefits, payroll, and workers’ compensation.” Going by the definition, it is understood that PEOs provide a channel for governance by emphasizing HR-related aspects. An Employer Of Record (EOR), on the other hand, is an entity enabling a flexible avenue for outsourcing remote teams. The major benefit of EOR is that it allows for a diverse workforce because it involves international networks. It eliminates the complications arising out of numerous registration processes that have unique protocols in different countries. Furthermore, EORs provide a blanket cover over issues relating to employee contracts, payroll, compliances, and benefits. None of these are taken care of by PEOs. Skuad’s EOR solution is the need of the hour! We effortlessly provide EOR facilities using our tech-enriched system. We are just one call away, talk to us and learn more!

Conclusion

Do you think you are ready to expand your company’s business operations in Eritrea? Skuad’s Employer of Record Eritrea services can make the process fast and easy by handling your HR requirements in compliance with the local labor laws. If you want to discuss how Skuad’s payroll management services can help you, please get in touch with us today!


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