Employer of Record in Ethiopia
Skuad’s Ethiopia Employer of Record Solutions provides an integrated, tech-enriched HR platform to help companies expand their business operations in Ethiopia. The platform is a unified interface for the onboarding and management of remote teams in over 150 countries across the globe.
Whether it is recruitment and hiring of a talented local workforce or setting up the payroll to manage employee compensations and benefits, Skuad’s Employer of Record Ethiopia solutions will ensure 100% compliance with the local labor and employment laws. Contact Skuad to know more about our customized EOR solutions.
Ethiopia at a Glance
Population: 114.96 million (in 2020)
Currency: Ethiopian Birr (ETB)
Capital city: Addis Ababa
Languages Spoken: The five official languages of Ethiopia are Amharic, Oromo, Somali, Afar, and Tigrinya. English is the foreign language that is most widely spoken and also taught in schools.
GDP: USD 91.913 Billion (2019)
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Employment in Ethiopia
What Should You Know Before Employing In Ethiopia?
Ethiopia is a landlocked country sharing borders with Sudan, South Sudan, Kenya, Somalia, Djibouti, and Eritrea. It is the second-most densely populated country in Africa after Nigeria. Global companies are attracted to lucrative Business opportunities in Ethiopia and are looking to expand their businesses here.
Ethiopia’s labor and employment laws are governed by the Labor Proclamation. The immigration laws allow foreign nationals to live and work in Ethiopia on work and residence permits.
However, obtaining the permits in compliance with the local laws and legislation can be complicated and overwhelming. In such a scenario, employing the services of a localized Employer of Record can prove immensely beneficial for companies expanding to Ethiopia.
Learn more on how Skuad’s Employer of Record Ethiopia services eliminate the risk of non-compliance and ensure a smooth recruiting and onboarding of employees. Here are a few important aspects of employment in Ethiopia:
Talk to Skuad experts today to know more about employment laws!
Full-time Employees Vs. Contractors
The employment agreement in Ethiopia can be either full-time or contractual based. Fixed-term employment contracts must specify the location of the workplace, agreed-upon compensation and benefits, the exact duration of the contract, and other specific details of employment if any. Employment contracts in Ethiopia cannot lay down unfavorable stipulations and must adhere to the provisions of Ethiopia employment laws and collective agreements.
Although the Ethiopia economy is rapidly improving, full-time employees are taken more seriously and are treated as full-fledged working adults inEthiopia, whereas contractors, freelancers, or part-time employers are a less favorable option as they are not subjected to benefits provided to full-time employees nor they bring financial security.
If you’re looking to hire employees in Ethiopia, employers must follow the HR compliance laws of the country. Get in touch with Skuad to experience the smooth hiring process of the best talents, whether full-time or contractually.
Hiring in Ethiopia
Recruitment and hiring of employees in Ethiopia must comply with the Ethiopia Labor Laws. If you want to hire employees in Ethiopia, you can begin advertising the job openings in your company on local job portals in Ethiopia such as Geez Jobs, Ethio Jobs, and Employ Ethiopia.
The next step in the hiring process would be to shortlist all the suitable employees and schedule personal interviews to gauge their capabilities. Upon finding and finalizing the employees you want to hire; it is important to conduct detailed onboarding and orientation programs where they can become acquainted with the working culture of your company as well as the other team members they’re expected to work with.
Another important aspect of completing the hiring process in compliance with the local labor laws is to obtain valid visas and work permits that enable international employees migrating to Ethiopia to legally live and work in the country.
The entire process of hiring and recruitment of employees in Ethiopia can take up to several months to complete if you choose to do it in-house. Skuad’s Employer of Record Ethiopia solutions can handle HR management and allied compliances on your behalf so that you can focus on the other aspects of international expansion. Connect with Skuad experts to know more about the hiring process in Ethiopia.
Probation & Termination
As per the latest Labor Proclamation adopted by the House of Peoples’ Representatives in 2019, the standard probation period in Ethiopia is 60 working days during which the employers can test the suitability of the employees. The probationary period must be mentioned in writing in all employment contracts and must be mutually agreed upon between both the employer and employee.
In the absence of a specific clause, probation cannot be presumed. During the probationary period in Ethiopia, either party can terminate the employment contract without serving a notice period. Upon the expiry of the agreed probationary period, the employment contract is automatically presumed to have been confirmed.
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.
In any case, serving a notice of termination by either party is mandatory unless there is misconduct on the employee’s part, or he/she repeatedly fails to do their job and a warning has been issued to them in this regard. In that case, the employment contracts can be terminated without any notice.
The notice period varies as follows:
Any termination of employment contract which is not in line with the above-mentioned provisions will be considered unlawful which can lead to:
- Reinstatement of the employee on his/her old position; or
- The employee becomes entitled to severance compensations.
Learn more on how Skuad's EOR services eliminate the risk of non-compliance and ensure a smooth expansion into Ethiopia.
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 Ethiopia, you can fast-track the expansion process. Employer of Record Ethiopia (EOR) solutions by Skuad can make expansion to Ethiopia 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 Ethiopia.
Learn more about Skuad’s EOR solution from experts at Skuad.
Types of Visas in Ethiopia
Anybody traveling to Ethiopia, apart from the residents of Djibouti (up to three months) and Kenya (up to a year), must obtain an Ethiopian visa.
Contact Skuad for all your work Visa requirements.
International citizens immigrating to Ethiopia to legally work and live in Ethiopia for an extended period must obtain Work and Residence Permits issued by the Ministry of Labor and Social Affairs.
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Payroll & taxes in Ethiopia
To expand your business in Ethiopia, you will need to build a team and look after its payroll management. For this, you have two options:
- In-house HR management
- Payroll outsourcing
Setting up an in-house team for payroll and HR management can be a long-drawn and complicated process. Additionally, it is subject to various local taxation regulations. Payroll outsourcing with Skuad’s Employer of Record Ethiopia services makes payroll and taxation compliance easy and hassle-free.
Taxes in Ethiopia:
Connect with Skuad experts to know more about Payroll and Taxation in Ethiopia.
In Ethiopia, bonuses are frequent, although they aren't required.
Incorporation: Incorporating A Subsidiary in Ethiopia
When as an organization you decide to undertake business expansion in Ethiopia, you can do so by setting up a subsidiary company, or a branch or liaison office locally. It will provide you with the necessary infrastructure for carrying out the business activities that you choose as well as various other in-house activities such as HR management.
If you wish to set up a separate legal entity in Ethiopia, you can:
- Set up a Private Limited Company (PLC)
- Set up a Branch Office.
To incorporate a PLC, the following procedure must be followed:
- Collect the Investment Permit Application Form.
- Gather the sample Memorandum and Articles of Association along with other information required for incorporating a PLC from the Investment Promotion Directorate.
- Submit a correctly filled and duly signed application form along with all the supporting documents like
- The Memorandum and Articles of Association.
- Business background of the holding company.
- Investment/business visa and copy of the valid passport of each shareholder to the Licensing and Registration Department.
- Submit the additional documents required in case if a company is a shareholder.
- Submit a duly filled company name application form.
- Once the company name is approved, submit the edited and authenticated MOA and AOA.
- Open a foreign currency bank account in the National Bank of Ethiopia and transfer the share capital.
- Submit 5 copies of the latest passport-sized photographs of the general manager.
- Upon completion of the above-mentioned process, you will receive a certificate permitting investment and the certificate of commercial registration.
To set up a branch office, the following procedure must be followed:
- Collect the Investment Permit Application Form.
- Submit the duly filled form with supporting documents of the parent company and the valid passport or investment/business visa to the Licensing and Registration Department.
- Open a foreign currency bank account in the National Bank of Ethiopia and deposit the share capital.
- Collect the investment permit certificate.
The process of incorporating a separate legal entity in Ethiopia can take up to several months to complete – especially in the absence of a local point of liaison. While executing international expansion plans, we understand that time is of the essence. Leveraging the right business opportunities at the right time is of utmost importance. Skuad’s Employer of Record Ethiopia services can handle all the regulatory compliances with regards to hiring, recruiting, and managing your employee payroll so that your business expansion process can follow a quick timeline.
Book a demo with Skuad today!
Professional Employer Organization
Hiring the right people and compensating them properly forms an integral part of your business expansion in Ethiopia. But ignorance of the local law leaves a lot of room for error which can result in heavy penalties.
To safeguard from this, companies can opt to engage the services of a Professional Employer Organization (PEO) or Employers of Record (EOR). Even though you can outsource your HR requirements to both PEO and EOR organizations, understanding the minor differences between the two will help you choose better.
A PEO acts as a co-employer, wherein it manages all the HR-related functions such as setting up the payroll, processing the compensation and other benefits, handling all the tax-related compliances, etc. However, you, as a company, will hold the allied liabilities and responsibilities.
On the other hand, an EOR is a complete payroll outsourcing that provides all the services offered by a Professional Employer Organization in Ethiopia, and in addition, it becomes the legal employer of all the employees on your payroll. This means that they are responsible for compliance with the regulations and liable for non-compliance as well.
Skuad's EOR solution is a good way to expand your business in Ethiopia without setting up a separate entity. Our solutions help you to stay focused on your business and leave all business compliances, payroll processing and complete management work to us. Connect with Skuad to know more.
If your business is ready to strategically benefit from Ethiopia’s growing economy, Skuad’s Employer of Record Ethiopia services can cater to all your expansion-related HR requirements. Want to know more about how Skuad’s EOR solutions can help with your expansion plans into Ethiopia? Get in touch with us today!