Ethiopia is the second most-populated country in Africa, with a population of 112 million people and over 90 languages spoken. There are many payroll and labor requirements for employers in Ethiopia, so it is important to stay ahead of regulations to avoid compliance fines and penalties.

Payroll and Tax Considerations

  • The minimum wage in the public sector is determined at the national level and depends on the nature of the work. The monthly minimum wage is ETB 420. There is no minimum wage in the private sector
  • Overtime pay varies from 1.5 – 2.5 times the regular hourly rate depending on the type of overtime
  • Anyone living in Ethiopia for 183 days a year must pay tax on their income from Ethiopia and abroad
  • Taxes are either paid by PAYE (Pay As You Earn) or PAYG (Pay As You Go) systems
  • Tax rates vary from 0-35% of income per month

HR and Statutory Requirements

  • Employees are entitled to 16 days of leave for each year of service plus 1 day of leave for every 2 years of additional service
  • Employees can take up to 6 months of sick leave after completion of a probationary period. They are paid 100% for the first month, 50% during the second and third months, and unpaid from months 4 – 6
  • Females are entitled to 120 days of maternity leave, including 30 days prenatal
  • Fathers receive 3 days of paid paternity leave

Holidays in Ethiopia

  • January 7 – Ethiopian Christmas Day
  • January 19 – Epiphany / Timkat
  • March 2 – Adwa Victory Day
  • April 22 – Ethiopian Good Friday
  • April 24 – Ethiopian Easter Sunday
  • May 1 – International Labor Day
  • May 3 – Eid ul Fitr
  • May 5 – Patriots’ Day
  • May 28 – Derg Downfall Day
  • July 10 – Eid al-Adha
  • September 11 – Ethiopian New Year
  • September 27 – Meskel
  • October 8 – The Prophet’s Birthday

If you’re just getting started, or need to simplify operations in Ethiopia, Blue Marble makes it easy. Our cloud-based payroll platform with customized reporting gives you real-time access to your payroll across all countries and currencies. We have a dedicated US-based service team and in-country experts to help when questions come up. Simplify your payroll and compliance in Ethiopia: click here to get started