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Employer of Record Ethiopia | Employee Termination Policy in Ethiopia

employer of record ethiopia

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Probation Period
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Termination and Severance
Personal Income Tax

Are you planning to expand your business operations to Ethiopia? Navigating the complexities of local employment laws and establishing a workforce in a foreign country can be daunting. However, with the assistance of an Employer of Record (EOR) in Ethiopia, you can simplify your expansion efforts and ensure compliance with Ethiopian employment regulations. Our comprehensive insights into the role of an EOR in Ethiopia will guide you through the entire process, covering aspects such as payroll administration, HR support, and legal compliance. By leveraging the expertise and local knowledge of an EOR, you can navigate the Ethiopian employment landscape with confidence, allowing you to focus on your core business objectives. Explore the advantages of partnering with an EOR in Ethiopia and unlock the full potential of your international expansion.

CapitalAddis Ababa
Time zoneUTC+03:00 (EAT)
Total Time zones1
Working hours per week40
Working weekMonday–Friday
Typical hours worked8
Personal Tax filing deadlineAugust or September 7th
Financial Year8 July – 7 July
Date formatdd/mm/yyyy
CurrencyEthiopian birr (ETB)
VATthe standard rate is 15%

Employers% of Gross Salary
Social Security11%
Total Employment Cost11%

Employees% of Gross Salary
Social Security7%
Total Employee Cost7%

Minimum Wage
Minimum Wageno national minimum wage.

Payroll CycleMonthly
13th SalaryNot required by law.

Income Tax
0 - 600 ETB 0%
601 - 1650 ETB 10%
1651 - 3200 ETB 15%
3201 - 5250 ETB 20%
5251 - 7800 ETB 25%
7801 - 10900 ETB 30%

Employee Termination in Ethiopia

The termination of employment in Ethiopia is regulated by laws and agreements. A contract of employment can be terminated by the employer or the worker in accordance with the law, collective agreements, or mutual agreement. The termination may occur due to various reasons such as the completion of a contract period, death of the worker, retirement, bankruptcy of the employer, incapacity to work, or misconduct.

There are two types of termination: termination without notice and termination with notice. Termination without notice can happen in cases of repeated tardiness, unexcused absences, deceitful conduct, misappropriation of employer's property, inadequate performance, responsibility for workplace conflicts, criminal convictions, or other specified offenses. The employer must provide a written notice specifying the reasons for termination within 30 working days.

Termination with notice is based on factors such as the worker's inability to perform the assigned work, health issues, refusal to relocate, cancellation of the worker's post, organizational or operational requirements of the company, or reduction of workforce. The notice period varies depending on the length of the worker's service and must be agreed upon in writing.

Workers also have the right to terminate their contracts with notice or without notice under certain circumstances. They can terminate without notice if the employer has violated their dignity or committed acts punishable by law, failed to address imminent danger to their safety or health, or repeatedly failed to fulfill basic obligations. The worker must inform the employer in writing about the termination and its reasons.

Common provisions regarding termination include the requirement for written notice, the period of notice, payment of wages and other entitlements upon termination, severance pay for eligible workers, and compensation for termination without notice. The severance pay is calculated based on the worker's length of service, and additional compensation is provided for termination without notice.

In summary, employment termination in Ethiopia is governed by regulations that outline the grounds, procedures, and entitlements for both employers and workers. It aims to protect the rights of both parties and ensure fair treatment during the termination process.