How to Hire Remote Employees In 

Djibouti

The Basics

Currency
Djiboutian Franc
Employer Taxes
15%
Payroll Frequency
Bi-weekly/Monthly
Official Language
French, Arabic

Employment in 

Djibouti

Hire Independent Contractors

Independent contractors or freelancers are self-employed individuals who provide services to companies as a non-employee. This is one of the most common ways companies tend to hire non-local designers, engineers, support reps, etc.

For legal and tax purposes, independent contractors are not classified as employees. They may work for multiple clients, set their own work hours, negotiate their pay rate, and decide how a job gets done.

For example, the IRS says that if an independent contractor or freelancer does work that can be controlled (what will be done and how it will be done) by an employer then they are, in fact, classified as an employee.

As you can imagine, hiring someone as an independent contractor versus an employee is a fine line to tread.

While there are benefits when you choose the contractor route, there are quite a few drawbacks to consider and you’ll need to weigh them carefully to determine the best fit for your company.

Benefits of Hiring Independent Contractors
Time savings: Hiring through a subsidiary or EOR can take months of onerous paperwork and legal wrangling. This is only multiplied if you want to hire in multiple countries.
Reduced overhead: You can save tens of thousands of dollars in onboarding costs by hiring through a company like Panther. You also have fewer responsibilities to provide benefits, further reducing overhead.
Greater flexibility: Contractors can be brought on as-needed. If they are not a good fit, you can choose not to renew them without incurring significant additional termination costs.
Reduced legal risk: Contractors generally don't have the host of legal protections that typically cover full-time employees.
Disadvantages of Hiring Independent Contractors
Risk of Misclassification: While it's important to understand local contractor law, for most firms, misclassification risk is minimal.
Lack of Control: For a worker to be classified as a contractor, they should be allowed to work independently on their assigned tasks. Hiring full-time employees offers a wider range of management options.
Lack of Loyalty: Contractors come and go as-needed. Many companies hire contractors for short-term work, which makes it difficult to cultivate loyalty.

Set up a subsidiary in 

Djibouti

A foreign subsidiary is a company that operates overseas as part of a larger company who’s HQ is in another country.

Establishing a foreign entity is great for having an international presence and accessing new markets. Though, setting up a subsidiary in Djibouti can be expensive, stressful, and time-consuming. It's not for the faint of heart.

To set up a subsidiary in Djibouti, you have to:

  1. Register your business name and file articles of incorporation
  2. File for local bank accounts
  3. Learn and keep track of the local employment laws
  4. Set up local payroll
  5. Hire local accounting, legal, and HR people

If you're lucky, this process can take months. If you're not so lucky, it can take up to a year. And on average, it costs about $50k-$80k, all-in-all, to get setup. And that's just for Djibouti.

Use an Employer-of-Record (EOR)

An employer-of-record (EOR) is a company that hires and pays an employee on behalf of another company.

An EOR is typically used to overcome the financial and regulatory hurdles that often come with employing remote workers.

Each country has its own payroll, employment, and work permit requirements for non-resident companies doing business in their jurisdiction. Meeting those demands can be a huge obstacle when it comes to hiring remotely.

At Panther, we help companies employ and pay people in over 160 countries, without having to set up a foreign subsidiary. Payroll, benefits, taxes, compliance, and more are all handled by us, at a fraction of the cost.

Outside of saving you months and tens of thousands of dollars, other advantages of using Panther are:

  • Ability to attract talented and motivated employees from all over the world.
  • Full legal compliance: There is no risk of violating local employment laws.
  • Transparency: Employees are still your employees. All the work, processes, operations and day-to-day business belong to you, the company, just like with any other employee. Panther just takes on all of the responsibilities, obligations and admin work related to your team's employment.
  • No risk of misclassification

Because you no longer have to set up your own subsidiary, you’ll save a ton of time and tens of thousands of dollars using Panther.

Paying Remote Employees

Paying employees in Djibouti is not the same as paying workers in your own country. Employees have to be paid using Djibouti's employment and payroll standards.

This means that you have to know, understand, and keep up with 1) fluctuating currency changes, and 2) local payroll and tax laws in the countries you’re looking to hire in.

Outside of the laws and regulations around payroll, there may be different conditions surrounding leave, overtime, termination, and more. As you can imagine, maintaining this kind of regulatory knowledge can be challenging. But it is crucial and necessary to follow local legislation.

After, you’ll have to determine the best way to pay your international employees. This can be done in a number of ways, including but not limited to:

Pay through a local entity

One of the most challenging (and expensive) parts of paying international employees is setting up the infrastructure to do so.

Before you start to run payroll, you have to register your company as the local employer in the country the worker resides in. As you can see in the “Set up a subsidiary” section, this is a multi-step process that can take up to a year and put you on your way to bankruptcy.

Work with an EOR

Outside of EORs acting as the full admin employer, many also provide remote payroll.

For example, at Panther, in just 1-click, you’re able to pay your entire global team, anywhere in the world. We send you an invoice each month, charge you in US Dollars, and pay your employees the same amount in their local currency.

We factor in currency fluctuations and use the mid-market rate plus any applicable fee passed on by our provider at cost at the time of billing.

Djibouti

 Specific Information

Working Hours

The standard working hours in Djibouti is 47 hours for a six-day week, 8 hours per day.

Overtime

Employees in Djibouti overtime is paid as per convention or an agreement between both parties. Overtime should not exceed 4 hrs a day and cannot cross 60 hrs per week.

Any additional overtime beyond the defined hours requires authorization from the inspector of labor.

Payroll Tax

Employer

Employer

  • Family Allowance
  • Disability Insurance
  • Social Security:


Minimum Wage

The Djibouti minimum wage for public sector workers is 35,000 DJF.

Payroll

Pay Cycle

The typical payroll cycle in Djibouti is 12 months.

13th Salary

Employers in  Djibouti are not required to provide bonuses. However, some employers may choose to offer performance-based benefits.

Leave

Paid Time Off (PTO)

Employees are eligible for paid leave after completing 12 months of employment. It is calculated at 2.5 days per month amounting to 30 days of annual paid leave.

Annual leave can be split into 2- batches of 14 days each. Employees are also eligible for 12 days of unpaid leave that is not deducted from the annual leave.

Public Holidays

There are 9 public holidays.

Sick Days

Employees receive 29 days of sick leave paid at 50% of the basic rate by social security. For any additional day  exceed in 29 days, the employee receives 75% of the basic salary.

Maternity Leave

Employees receive maternity benefits, equally split between the employer and Social Advancement Organization. Female employees receive 14 weeks of paid maternity leave.

It is divided into two batches with 8-weeks before delivery and 6-weeks post-delivery. The leave period can be extended in case of complications with the pregnancy.

Paternity Leave

Male employees receive three days of paid paternity leave after the child’s birth.

Parental Leave

There are no statutory provisions for parental leave.

Other Leave

No Info.

Marriage Leave

No Info.

Bereavement Leave

No Info.

Termination

Termination Process

Employment in Djibouti can be terminated by either party by giving a minimum notice period.

An employment contract can also be terminated due to non-performance or inability to perform following the demands of the job. It can also include reasons related to health, lack of professional skills, and even misconduct.

For all such cases, a 48-hr notice is provided to the employee.

Notice Period

The minimum notice period in Djibouti:

  • One month for regular positions
  • Three months for executive positions

Severance Pay

Employees may be entitled to damages in the event of an unjust dismissal. Damages cannot exceed:

  • Two months’ salary for employees in a company with less than 11 employees.
  • Four months’ salary for employees employed in a company with 11 to 49 employees.
  • Six months’ salary for employees employed in a company with more than 49 employees.

Probation Period

The probation period in Djibouti:

  • 15 days for part-time hourly paid employees;
  • 30 days for full-time monthly paid non-executive positions;and
  • 3 months for full-time monthly paid executive positions.