Ethiopia’s Labour Proclamation No. 1156/2019 is the primary law governing employment relationships in the country. It replaced earlier proclamations and introduced updated protections for employees while clarifying obligations for employers. Most workers in the private sector are covered by this law, and understanding its core provisions means knowing your rights before a dispute arises rather than scrambling to catch up afterward. This guide covers the provisions that affect day-to-day working life: contracts, hours, leave, maternity protection, overtime, and what happens when employment ends.
Types of Employment Contracts
Ethiopian labour law recognises three main contract types, and which type you have significantly affects your rights, particularly around termination.
An indefinite contract is the default for any ongoing employment relationship. If you have been working for the same employer for more than 45 days without a written fixed-term contract, the law presumes you have an indefinite contract. The key feature of an indefinite contract is that your employer cannot terminate you without demonstrating a valid reason. Valid reasons include serious misconduct, inability to perform the work, and genuine operational redundancy. Termination without valid cause on an indefinite contract triggers your right to severance pay and potentially other compensation.
A definite or fixed-term contract specifies a start date and an end date. When the end date arrives, the employment simply concludes without either party owing the other notice or severance, provided the contract ends as agreed. However, the law limits how many times a definite contract can be renewed: repeated renewals that cumulatively suggest an ongoing employment relationship may cause the contract to be reclassified as indefinite.
A probationary arrangement allows an employer to assess a new employee for up to 60 days. During probation, either party can end the relationship without giving a reason or notice. After 60 days, the employee transitions to their permanent contract type, and the full protections of the proclamation apply.
Working Hours and the Standard Week
The standard working week under the proclamation is 48 hours, structured as eight hours per day across six days. Many employers in Addis Ababa and other cities have moved to a five-day week of eight hours per day, which totals 40 hours; this is legally permissible as long as employees receive at least the minimum entitlements required by law. Any hours worked beyond the standard daily limit qualify as overtime.
Overtime is permitted but regulated. The law sets maximum limits: no more than two hours per day, no more than 20 hours per month, and no more than 100 hours per year. Employers who consistently require overtime beyond these limits are operating outside the law. Employees are entitled to refuse overtime work that exceeds the legal limits.
The overtime premium rates are fixed by the Proclamation. Weekday overtime beyond the standard 8-hour day is paid at 125 percent of the regular hourly rate. Saturday work is paid at 150 percent regardless of whether it falls within or outside normal weekly hours. Work on Sundays and public holidays carries the highest premium at 200 percent of the regular rate.
These are minimum rates. An employment contract can provide higher rates, but no contract can lawfully provide lower rates.
Annual Leave
Employees earn annual leave based on their length of service with the same employer. After completing one year of continuous service, an employee is entitled to 16 working days of annual leave. For each additional year of service beyond the first, one more day is added, up to a maximum of 30 working days per year. An employee with five years of service is therefore entitled to 20 working days of annual leave; one with fifteen years is entitled to the maximum of 30.
Annual leave is paid leave at the employee’s normal rate of pay. Employers are not permitted to substitute cash for unused annual leave as a matter of routine practice; the purpose of the provision is to ensure employees actually rest. Carrying over unused leave is addressed by agreement between employer and employee, but employees cannot be forced to forfeit leave they have legitimately earned.
Sick Leave
Employees who fall ill and cannot work are entitled to sick leave with pay, provided they produce a medical certificate from a recognised health facility. The pay structure for sick leave is tiered by duration:
For the first month of sick leave in any year, the employee receives full pay. For the following two months, the rate is 75% of normal pay. For the subsequent three months after that, the rate is 50% of normal pay. Beyond six months of continuous illness, the employer may initiate a termination process on grounds of incapacity, but this must follow a specific procedure and the employee remains entitled to severance based on length of service.
Maternity Leave
Female employees are entitled to 90 days of paid maternity leave: 30 days before the expected date of birth and 60 days after the birth. The employer pays the employee’s full normal salary throughout this period. The employee cannot be dismissed or have her contract terminated on grounds related to pregnancy or maternity leave. If the birth is premature and the 30 pre-birth days have not been fully used, the remaining days are added to the post-birth period.
Termination, Notice Periods, and Severance
For a definite contract, termination is straightforward: the contract ends on its stated end date. Early termination by the employer without cause on a fixed-term contract may entitle the employee to damages equivalent to the remaining term.
For an indefinite contract, the employer must provide written notice before termination. Employees with less than one year of service are entitled to at least one month of notice. For longer-serving employees, the Proclamation sets minimums that collective agreements or individual contracts often extend, and the practical standard for most tenured employees is 30 days written notice.
Severance pay is calculated at one month’s salary per year of service. An employee who has worked for the same employer for seven years and is made redundant is entitled to seven months of severance pay, calculated based on their last regular salary. Severance is payable in addition to any accrued but untaken annual leave.
Public Holidays
Ethiopia has 13 official public holidays on which employees are entitled to a day off with pay. These include Enkutatash (Ethiopian New Year, Meskerem 1), Genna (Ethiopian Christmas, Tahsas 29), Timkat (Ethiopian Epiphany, Tir 11), Adwa Victory Day, Good Friday and Easter (Fasika), International Workers’ Day on May 1, Ethiopian Patriots’ Victory Day, Derg Downfall Day, Eid al-Fitr, and Eid al-Adha. Employees required to work on public holidays are entitled to the 200% overtime premium.
Where to Take a Dispute
If you believe your employer has violated your rights under the Labour Proclamation, the first step is usually to raise the matter internally through HR or management. If that does not resolve it, the Federal Ministry of Labour and Social Affairs (MoLSA) and its regional equivalents handle labour disputes and can facilitate mediation or refer matters to the labour court. Employees in trade-union-represented workplaces may also seek assistance through their union. Use our Annual Leave Calculator and Overtime Calculator to quickly calculate entitlements under the current law.