Home Employer of record Employer of record in Ethiopia
Employer of record in Ethiopia
You can hire in Ethiopia without registering a company. We engage a vetted local partner as the locally registered legal employer in Ethiopia, with SLONEC Advisory Group as your single contracting party in the UK. We manage income tax under the July 2025 reform, private-sector pension contributions, contracts and work permits for foreign staff.
Services we coordinate in Ethiopia
Employer of record in Addis Ababa and elsewhere, subject to current travel advice, for manufacturing, agriculture, energy and NGO programmes; payroll and compliance; market entry support.
Payroll in Ethiopia
- Income tax: Proclamation No. 1395/2025 changed the monthly employment income bands from 8 July 2025: 0% up to ETB 2,000, then 15%, 20%, 25%, 30% and 35% above ETB 14,000. The tax year runs from 8 July to 7 July.
- Pension: under Proclamation No. 1268/2022, private employers pay 11% and employees 7% of basic salary, paid within 30 days of the end of the salary month. Foreign nationals without Ethiopian origin are generally outside the scheme.
Foreign staff
Foreign employees need a work permit, issued by the Ministry of Labour and Skills, or by the Ethiopian Investment Commission for companies under its investment jurisdiction. Employers are expected to show the skills are not available locally and to plan knowledge transfer. Since the 2025 amendment, agencies that issue or renew work permits must notify the tax authority with the employee’s details, salary and benefits.
Who hires in Ethiopia
Ethiopia received about US$4.0 billion of foreign direct investment in 2024 (UNCTAD), one of the largest totals in Africa, and the birr moved to a market-determined exchange rate in July 2024 under an IMF-supported reform programme.
UK tax angle (general information, not advice)
The UK and Ethiopia have a double taxation convention in force from 21 February 2013. Tax treaties do not cover National Insurance, and the UK has no social security agreement with Ethiopia. If a UK employer sends one of its own employees to work there, UK Class 1 National Insurance may continue for the first 52 weeks if the conditions are met; Ethiopian pension contributions generally do not apply to foreign nationals without Ethiopian origin. If the person is employed locally through the employer of record instead, UK Class 1 National Insurance does not normally continue, although they may be able to pay voluntary Class 3 contributions if they meet the conditions. UK income tax depends on residence under the Statutory Residence Test. Using an employer of record does not by itself prevent a permanent establishment. Ask us for a proposal and we will look at your facts.
Pricing. Our employer of record service in Ethiopia is US$199 to US$399 per employee per month (excluding UK VAT or any local sales tax, where either applies), plus the employment costs, which are charged at cost. We confirm the fee for your team in a written proposal.
Invoicing and VAT. Employment costs (salary, employer social security, pension contributions and other agreed employment costs) are charged at cost. VAT, where it applies, is charged on the total of the employment costs and our service fee. Our fees for this service are set out in US dollars in your proposal and invoiced in US dollars, exclusive of VAT. Where UK VAT applies, the VAT amount is also shown in pounds sterling on our invoice, as UK VAT rules require. SLONEC Advisory Group has applied for VAT registration. Where VAT applies, it will be charged at the applicable rate on fees for work carried out on or after our VAT registration date, and our VAT number will be shown on our invoices.
Frequently asked questions
Can I hire in Ethiopia without a local company?
Yes, where we engage a vetted local partner as the locally registered legal employer, with SLONEC Advisory Group as your single contracting party.
What changed in Ethiopian income tax in 2025?
The 0% band rose to ETB 2,000 a month and the bands were reduced to six, from 8 July 2025.
What are the pension rates?
11% employer and 7% employee, on basic salary.
Do expatriates pay into the pension scheme?
Foreign nationals without Ethiopian origin are generally outside it.
Is there a UK tax treaty with Ethiopia?
Yes, in force from 21 February 2013.
Do you cover Kenya and Uganda as well?
Yes.
How much does it cost?
Our service fee is US$199 to US$399 per employee per month. Salary, employer contributions and other agreed employment costs are charged at cost on top. UK VAT or any local sales tax is payable on top where either applies, and we confirm everything in a written proposal.