ETHIOPIA
Payroll Outsourcing
Pay Your Talents in Ethiopia Compliantly
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Pay Your Team in Ethiopia. On Time. Everytime.
Ensure your team in Ethiopia is paid accurately and on time with our Payroll Outsourcing services. Gain expert support to keep your operations fully compliant with Ethiopia Labour Code and tax regulations.
- Pay anyone in Ethiopia - no matter the currency.
- Manage employee benefits easily. Get the support you need to navigate employee contributions in Ethiopia.
Flexible Payroll Solutions in Ethiopia.
Payroll solutions that adapt to your needs whether you are established or growing in Ethiopia.
Ethiopia Payroll expertise at your fingertips
Over more than a decade, Africa HR Solutions has become a leading payroll service provider in Ethiopia and across Africa with a proven track record of success with over 400 clients across many industries.
A single point of contact
Avoid unnecessary headaches and mistakes – manage everything from a single point of contact. Your dedicated account manager is always available to assist with any queries you may have.
Self service portal for your talents in Ethiopia
Give your team the tools they need to easily manage their payslips, leave allowances, and other claims. Powered by SAGE, the employee self-service portal will make their lives easier.
100% Compliant payroll operations
Ensuring your operations are carried out compliantly is a must. From country-specific employee contribution to tax policies, we make sure your company is up to code with Ethiopia’s legislation at all times.
Ethiopia Country Overview
Ethiopia was one of the first African countries to gain independence in 1896!
Geographic location: This landlocked country is located in the Horn of Africa and is bordered by Sudan, Somalia, Djibouti, Eritrea.
Population: Ethiopia is the second most populated country in Africa – which gives way to a myriad of business opportunities.
Economy: Ethiopia boasts one of the fastest-growing economies on the globe with an average 7%-12% annual growth rate. Ethiopia is driven by the agricultural sector – accounting for over 85% of Ethiopia’s employment. The country is also naturally rich in resources such as arable land, gas, Gold, copper, potash and platinum among others.
Payroll in Ethiopia - What You Should Know
- Population: 117,876,226
- Gross Domestic Product (GDP): $111.27 B
- GDP Growth (April 2021): 5.6%
- Inflation, consumer prices: 26.8%
- Foreign Direct Investment (% of GDP): 2.2%
- Unemployment Rate: 3.7%
- Capital: Addis Ababa
- Currency: Ethiopian birr
- Languages: Amharic, Oromo, Afar, Somali, Tigrigna
Employer Contribution
- 7.00% of the employer’s payroll must be contributed to social security.
Employee Contribution
- 11.00% of the employee’s payroll must be contributed to social security.
Value-added tax (VAT)
The standard VAT rate is 15% in Ethiopia – applied to the supply of goods and services both local and imported.
Non-business Organisations are exempt from charging Value-Added Tax on services but must still pay VAT on goods/services purchased.
Exports of goods and services are zero-rated in Ethiopia.
Paid Time-Off
Employees are generally entitled to 16 days of paid annual leave plus one day per year of service. A worker with 5 years of service is entitled to 18 days of paid leave.
Sick Leave
In Ethiopia, workers are entitled to a maximum of 6 months of sick leave.
Maternity Leave
According to the Constitution of Ethiopia and Labor Proclamation, women are entitled to 120 days of paid maternity leave remunerated at 100% of their regular wage.
Paternity Leave
There is no statutory paternity leave in Ethiopia.
An employer can terminate a worker’s contract based on valid grounds such as:
- The employee has demonstrated a loss of capacity or talent to accomplish their assigned work
- If the employee’s health and well-being are compromised by their position
- If the employee is unwilling to move to a locality as required by their company
- When the position of the worker is dismissed for a valid cause and the worker cannot be transferred to another position
The employer must provide the notice to the employee in person. If not possible, the notice shall be affixed on the notice board in the workplace for 10 consecutive days.
Severance pay in Ethiopia is regulated as follows:
- 30 x the average daily wages of the last week of service for the first year of service.
- For less than a year of service, severance pay shall be calculated on a pro-rata basis.
- The payment shall be increased by 1/3 of the sum for employees who accumulated more than a year of service. The total amount cannot exceed 12 months’ wage.
- Wherever a contract is terminated in accordance with sections 24(4) and 29 of the labour code, the employee is eligible for a sum equal to sixty multiplied by his average daily salary of their last week of service.
- Orthodox Christmas Day (7th January)
- Timkat (20th January)
- Adwa Victory Day (2nd March)
- Good Friday (Eastern) (17th April)
- Orthodox Easter (19th April)
- Labour Day (1st May)
- Patriots’ Victory Day (5th May)
- Eid al-Fitr
- Derg Downfall Day (28th May)
- Eid al-Adha
- Enkutash (11th September)
- Meskel (28th September)
- Prophet’s Birthday
Seeking a Reliable Payroll Partner in Ethiopia?
Pay your talents are paid on time and without error! Our team at Africa HR Solutions also provides your company the guidance you need to ensure that your operations comply with Ethiopia’s labour Code and tax policies. Over the years, we have played a pivotal role in the expansion of over 400 clients across Africa by providing reliable HR and payroll and cross-border payment outsourcing solutions.
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While the content presented on this webpage is accurate as of the time of publication, it is imperative to recognise that the content is provided solely for informational purposes and does not constitute legal and/or tax advice. To obtain the most current and precise guidance, it is essential to verify specific details related to employment or compliance with our experts or consult your own legal and/or tax advisor(s). Africa HR Solutions Ltd. explicitly does not offer legal or tax advice. The information provided is general in nature, not tailored to a specific company or workforce, and does not reflect the service delivery of Africa HR Solutions in any given jurisdiction. Africa HR Solutions makes no representations or warranties regarding the accuracy, completeness, or timeliness of this information and disclaims any liability arising out of or in connection with it, including any loss resulting from the use of or reliance on the information.
