Hiring in Ethiopia? That’s excellent. But if your company’s HQ isn’t already in Ethiopia, things can get complicated—though they don’t need to. Here’s the deal: You can hire your talent as employees, or you can hire them as contractors. Because of Ethiopia’s labor law structure, there are benefits and disadvantages to each approach.
If you want to successfully hire in
Ethiopia
, you have two options:
Laws about hiring contractors are significantly more simple in
Ethiopia
. Onboarding talent takes days, not weeks or months. Both you, the company, and your talent have more flexibility. And in many cases, since you’re remote, the talent you’re hiring is better classified as a contractor, anyway. Of course, it’s not possible in every case, but it’s what we built Panther for.
This is the long route. You can either establish a physical presence with an entity and register as an employer, or you can use an Employer-of-Record (EOR) solution. Odds are, you’ll find using an EOR to be the easier route. Still, using an EOR in
Ethiopia
is expensive—it can often be $500 per month per employee—and sometimes prone to lengthy onboarding times.
Hiring contractors is normally the easier, faster, more flexible choice—but don’t just take it from us. Below are the specific benefits and drawbacks to hiring contractors in
Ethiopia
.
Hiring employees takes months, at the minimum. When you hire with Panther’s locally-generated contracts, it’s a matter of days or weeks. This means you can hire the best talent, fast, without losing them to a hellish procession of paperwork.
It costs just $0 to sign up for Panther, then $49 per month to hire your contractors with Panther. If you hired employees manually (or did contracting on your own), you’d likely be on the hook for thousands of dollars each month. Setting up an entity alone can cost tens of thousands of dollars.
Hiring contractors in
Ethiopia
means you’re generally not on the hook for things like health insurance and paid time off. This makes hiring flexible for you, and it gives your talent more options.
Hiring employees is a bigger commitment, and generally puts you at a bigger risk for legal fees. When you hire contractors overseas, your biggest risk is misclassification—but even then, misclassification penalties are often minimal and just require you to pay off any compensation that the person would have been owed as an employee.
The contractor life isn’t for everyone—some people want the security that being an employee often appears to provide. Though it’s rare, this does happen, and it’s one disadvantage of manage an all-contractor team.
Most countries’ contractor-employer relationship laws stipulate that the employer can’t set fixed working hours, among other things. These laws give contractors more freedom over how and when they do their work than an employee would have. In reality, however, most contractors are willing & able to work on the company’s schedule—it’s a matter of setting expectations beforehand.
If you’re hiring contractors in
Ethiopia
, you can pay them with Panther in a single click. You won’t need to worry about complicated wire transfers, fees, or currency conversions. We’ll take care of it all. Just make a click and your contractor will get paid in their currency of choice. This is a valuable bonus for talent in countries where the local currency is particularly weak—most people appreciate the ability to receive their payment in stronger currencies.
If you’ve read up until this point, you’ll know that it’s easier, cheaper, and more flexible to hire contractors in Ethiopia than employees. Still, there are valid reasons why you might want to hire employees instead. The content below is for you—we’ll cover employer taxes and obligations in Ethiopia.
In Ethiopia, employees receive one additional day per year for every two years of service.
Employees receive 16 days of paid annual leave after one year of service.
There are 13 public holidays.
Employees receive 100% of their pay for the first month while on leave and 50% for the following two months. Employees receive six months of sick leave.
Female employees in Ethiopia receive 120 days of paid maternity leave of which up to 30 days of leave can be availed before the due date and the remaining can be availed post-partum.
Male employees in Ethiopia are entitled to up to three days of paternity leave.
There are no statutory provisions for parental leave.
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Employees are entitled to 3 days paid leave for marriage.
Employees are entitled to 5 days unpaid leave for exceptional circumstances.
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:
Notice period in Ethiopia of termination depends on length of service, as follows:
In Ethiopia, severance is typically required, unless in case of redundancy. Severance pay is 30 times the average daily wage at the last week of service.
Probation period is 6 months.
The standard working hours in Ethiopia are 8 hours per day and 48 hours maximum per week.
Overtime is only permissible for a maximum of:
Employers compensate the employees for overtime as follows:
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