Hiring in Ethiopia: the work permit, the contract and ending employment, step by step

Move someone who is already in Ethiopia

A work permit covers employment in a specific type of work. The permit a foreign national already holds is checked against the new role before they move. A different type of work needs a permit that covers it.

An Ethiopian citizen needs no permit. Their move turns on the notice they owe their current employer, which is 30 days once probation is over. A worker who leaves without that notice is liable to pay their employer compensation.

Check the role is open to a non-Ethiopian

Ethiopia's Labour Proclamation leaves the Ministry to decide the types of work that need a permit, and how permits are given. The employment services the Proclamation sets up also decide how foreign nationals are to be employed in Ethiopia.

The Ministry can cancel a permit where it finds the foreigner is not required for the work. So each role is weighed on whether a foreign national is needed for it.

Set the contract up right

A contract of employment needs no special form. It states the type of work, the place of work, the wage, how the wage is worked out, how and how often it is paid, and the contract's length. A written contract also gives the names and addresses of both sides, and both sign it. Where there is no written contract, the employer gives a signed letter with the same terms within 15 days. It stands as the contract unless the worker objects within 15 days.

A contract is open-ended unless it falls within the grounds for a fixed term or piece of work that the Proclamation lists, such as covering an absence or seasonal work.

A probation period is agreed in writing, and lasts up to 60 working days. During it, the employer can end the contract without notice where the worker proves unfit for the post. The worker can leave without notice. A worker re-employed by the same employer for the same job has no probation.

Wages are paid on working days at the place of work, unless agreed otherwise. A payday that falls on a rest day or a public holiday moves to the working day before it.

Normal hours are up to eight a day and 48 a week. Each week brings at least 24 hours' rest in a row, on Sunday where possible. Overtime is worked only for an accident, force majeure, urgent work or to cover an absence on continuous work, and never compulsorily. It is capped at four hours a day and 12 a week. It is paid at least one and a half times the ordinary hourly rate by day, 1.75 times at night from 10 p.m. to 6 a.m., and twice on the weekly rest day, with the wages.

Managerial employees are outside the Labour Proclamation, so their terms rest on the contract.

Know the employee test before you engage a contractor

Ethiopia's Labour Proclamation forms a contract of employment wherever a person agrees to work for an employer, and under its authority, for a wage. The agreement can be direct or indirect, for a period or for a piece of work.

The Proclamation does not reach someone who works for pay on their own business or professional responsibility.

A role that needs a work permit goes through employer of record.

Know the leave your people are entitled to

End employment on the law's terms

Notice is in writing, states the reasons and the date the contract ends, and is handed to the worker in person. It runs from the next working day. Notice not given is paid instead.

An employer ends a contract only on grounds the Proclamation recognises: the worker's conduct, their ability to do the work, or the needs of the business. A dismissal without notice is allowed for serious grounds, among them lateness eight times, or five days' absence, in six months after written warnings. The employer gives a written statement of the reasons and the date. The right lapses 30 working days after the employer learns of the ground.

A worker outside the pension scheme is owed severance on a closure, a reduction of the workforce, a dismissal in breach of the law, and the other cases the Proclamation lists. It is 30 days' average wages for the first year, and 10 days' for each year after, up to 12 months' wages. A closure or a reduction of the workforce adds 60 days' wages.

An unlawful dismissal of an open-ended contract leads to reinstatement or compensation. A worker not reinstated is owed 180 days' average wages and the notice pay. A worker reinstated by the first court is owed back pay for up to six months.

Wages and other sums due are paid within seven working days of the end of employment. The employer gives a certificate of the work done, the length of service and the wage, free of charge.

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