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Hiring in Eritrea

Eritrea, officially known as the State of Eritrea, is a country in the Horn of Africa. Asmara is the capital and the largest city of Eritrea. Eritrea’s economy relies mainly upon the agriculture sector. Its trading partners are the United States, United Arab Emirates (UAE), Italy and Saudi Arabia. Global PEO or Employer of Record (EOR) play a pivotal role in providing companies with services related to hiring employees, and ensuring compliance with Eritrea’s legal and tax regulations. Employment regulations including probation, holidays and termination are covered by the Labor Code. The Labor Code stipulates that employees are entitled to 14 days of paid annual leave for the first year of service. Resident individuals are taxed on their worldwide income. Nonresidents are taxed on their income arising from Eritrea. Global PEO’s or Employer of Record (EOR) facilitate companies by ensuring compliance with Eritrea’s Labor Code and tax laws.

statutory labor requirements

Probation Period

  • Probation period is 3 months

Annual Leave

  • An employee shall be entitled to annual leave with pay amounting to: 
  • fourteen working days for the first year of se and 
  • fourteen working days plus one working each additional year of service. 
  • Annual leave may not exceed thirty-five working

Public Holidays

  1. New Year's Day (1st January)
  2. Timkat (20th January)
  3. International Women's Day (8th March)
  4. Labor Day (1st May)
  5. Independence Day (24th May)
  6. Martyrs' Day (20th June)
  7. Revolution Day (1st September)
  8. Christmas Day (25th December)

Maternity Leave

  • A pregnant employee shall be entitled to sixty consecutive days of paid maternity leave beginning from the next day of- her delivery. 
  • She may, however choose to take her maternity leave in two parts, one preceding her presumed confinement and the other after her delivery.

Paternity Leave

  • There is no statutory paternity leave

Sick Leave

  • Where an employee, after having completed his probation, is rendered incapable to work owing to sickness resulting other than from an employment injury, lie shall be entitled to sick leave.
  • The leave may not exceed six months counted consecutively or separately in any twelve-month period starting from the first day of the employee's sickness.

Work Hours

  • Regular hours of work may not exceed eight hours a day and forty-eight hours a week.

Overtime

  • An employee who works overtime between six o'clock in the morning and ten o'clock in the evening shall be paid at the rate of one and a quarter (2/2) multiplied by the regular hourly rate.
  • For overtime work from ten o'clock in the evening up to six in the morning, he shall be paid at the rate of one and one half (1.5) multiplied by the regular hourly rate. 
  • An employee who works overtime on weekly rest day shall be paid at the rate of two (2) multiplied by the regular hourly rate. 
  • An employee who works overtime on public holidays shall be paid at the rate of two and one half (2 1/2) Multiplied by the regular hourly rate.

Notice Period

  • Unless specifically provided for in a contract of employment, the period of notice for termination both for the employer and the employee shall be as follows: 
    • seven days' notice for a contract of employment which lasted for less than a year;
    • fourteen days’ notice for a contract of employment which lasted for one year up to two years; 
    • twenty-one days' notice for a contract of employment which lasted for more than two years up to five years; and 
    • thirty days' notice for a contract of employment which lasted for more than five years.

Severance

  • An employee who has completed a year of service or more shall, upon the termination of his employment, be paid severance pay by the employer as follows: 
    • two weeks’ wages for each of the first five years of employment; 
    • three weeks’ wages for each year of employment after the fifth year up to and including the tenth year; and 
    • four weeks’ wages for each year of service after the tenth year. 
  • The severance pay of an employee who has served for less than a year shall be calculated at the rate of two weeks’ wages per annum.

13th / 14th Month Pay

  • No 
  • There is no statutory requirement to pay the 13th or the 14th month salary.
  • Employees are entitled to regular annual leave.
  • There is no suggestion that it is customary to give bonuses.

income tax

  • Income tax on employment is tax withheld monthly by employers on salaries, allowances, pension contributions, and other benefits and personal emoluments (cash and in kind)
  • Income tax on commercial farming is annual tax levied on taxable income of commercial farms, payable within four months after the end of the fiscal year for all taxpayer.
  • Income arising from employment is taxed at a progressive rate ranging from 2% to 38%
  • Residents are taxed on their worldwide income
  • Nonresidents are taxed on their income arising from Eritrea
  • Income tax on Eritreans working abroad is taxed at 2%

Employment Income

Taxable Income (nafka per month)

Rate (%)

Up to 200

2

201 – 500

7

501 – 1,200

12

1,201- 2000

17

2,001 – 3,500

24

3,501 – 5,500

29

5,501 – 8,000

34

Over 8,000

38

deductible expenses

  • Income from employment of unskilled workers, employed on a daily and irregular basis is exempt
  • Income of business representatives residing in the country for less than 183 days is exempt
  • A deduction equal to 5% of gross income is allowable for each accounting year.

immigration

  • Eritrea offers tourist visas for foreigners intending to visit for a short period of time
  • The following documents are necessary for a tourist visa: -
    • Valid passport
    • Completed visa application form
    • Proof of vaccination for yellow fever
    • Two passport size photos
    • Proof of sufficient funds
  • Tourist visas are issued for single entry only. 
  • The validity of the visa is based on consulate's discretion.
  • Business visas are issued to foreigners visiting Eritrea for business purposes
  • The following documents are required for a Business Visa: -
    • Valid passport
    • Completed visa application form
    • Proof of vaccination for yellow fever
    • Two passport size photos
    • Proof of sufficient funds
    • Business Cover Letter
    • Proof of Travel Arrangements
  • Business visas are issued for single or multiple entries based on applicant's request and consular fee paid. 
  • Multiple entry visas are usually valid for 3 months, 6 months, or 1 year.

Type of Visa/Permit

Documentation

Validity

Eligibility

Tourist Visa

  • Valid passport
  • Completed visa application form
  • Proof of vaccination for yellow fever
  • Two passport size photos
  • Proof of sufficient funds

Based on consulate's discretion

  • tourist visas are issued to foreigners intending to visit for tourist purposes

Business Visa

  • Valid passport
  • Completed visa application form
  • Proof of vaccination for yellow fever
  • Two passport size photos
  • Proof of sufficient funds
  • Business Cover Letter
  • Proof of Travel Arrangements

Multiple entry visas are usually valid for 3 months, 6 months, or 1 year

  • Business visas are issued to foreigners visiting Eritrea for business purposes

value added tax

  • Value added tax is normally called sales tax, and is levied on the supply of taxable goods and services and upon the importation of taxable goods and services.
  • VAT rate ranges from 5% to 10%

VAT

Rate

5% to 10%

withholding tax

Dividends

  • Dividends are subject to 0% withholding tax

Interest

  • Interest payments are subject to 10% withholding tax

Royalties

  • Royalties paid to mining companies are subject to 5% withholding tax
  • Other royalties are subject to 10% withholding tax

WHT

Dividends

0%

Interest

10%

Royalties

5%/10%

termination

Unless specifically provided for in a contract of employment, the period of notice for termination both for the employer and the employee shall be as follows: 

    • seven days' notice for a contract of employment which lasted for less than a year;
    • fourteen days’ notice for a contract of employment which lasted for one year up to two years; 
    • twenty-one days' notice for a contract of employment which lasted for more than two years up to five years; and 
    • thirty days' notice for a contract of employment which lasted for more than five years.
  • An employee who has completed a year of service or more shall, upon the termination of his employment, be paid severance pay by the employer as follows: 
    • two weeks’ wages for each of the first five years of employment; 
    • three weeks’ wages for each year of employment after the fifth year up to and including the tenth year; and 
    • four weeks’ wages for each year of service after the tenth year. 
  • The severance pay of an employee who has served for less than a year shall be calculated at the rate of two weeks’ wages per annum.

statutory benefits

  • These are mandatory benefits as postulated by law
  • These include probationary period, annual leave, public holidays, sick leave, maternity leave, overtime pay, notice period, and severance pay
  • Statutory benefits also include social security benefits

Statutory Benefits

Probationary Period

Annual Leave

Public Holidays

Maternity Leave

Sick Leave

Overtime Pay

Notice Period

Severance Pay

Social Security Benefits

payments and invoicing

  • Tax returns are filed yearly and the fiscal year runs January 1st to 31st December and taxes must be filed by the 31st of March of the subsequent fiscal year
  • Employers must submit to the relevant authorities, municipality tax contributions on behalf of their employees

 ease of doing business

  • The ease of doing business index is an index created by Simeon Djankov, an economist at the Central and Eastern Europe sector of the World Bank Group.
  • Higher rankings (a low numerical value) indicate better, usually simpler, regulations for businesses and stronger protections of property rights.
  • According to the World Bank Eritrea ranked 189th in the World in 2019 in terms of ease of doing business.

employee accruals

   
Christmas Bonus%

0%

Christmas Bonus Over Vacations %

0%

Severance per Year %

Employees ae entitled to severance pay that equals 2 weeks of pay after one year of service (2.74% of annual salary)

Vacations % An employee is entitled to 14 days of paid annual leave for the first year of service (3.83% of annual salary). The annual leave increases to 14 plus one day for each additional year of service. Maximum annual leave cannot exceed 35 working days (9.58% of annual salary)
Notice %

Employees are entitled to 14 days of notice period for one year of service or more (3.84%)

Christmas Bonus Over Notifications% 0%
Vacations Plus% 0%
Total percentage of Salary (yearly) The total employment accruals as a percentage of salary per anum are equal to 10.7%

employer accruals

Additional information (Country Accruals)

   
Descritption:  Couldn't find much on Eritrea

Employer Accruals Additional information

    Employment Accruals
Annual Leave An employee shall be entitled to annual leave with pay amounting to:
• fourteen working days for the first year of service and
• fourteen working days plus one working each additional year of service.
This equals 3.8% (14/365 days) of annual income
Maternity Leave A pregnant employee shall be entitled to sixty consecutive days of paid maternity leave beginning from the next day of- her delivery. This equals 16.4% (60/365 days) of annual income
Sick Leave Where an employee, after having completed his probation, is rendered incapable to work owing to sickness resulting other than from an employment injury, lie shall be entitled to sick leave.
The leave may not exceed six months counted consecutively or separately in any twelve-month period starting from the first day of the employee's sickness.
This equals 50% (6/12 months) of annual income
Overtime For overtime work from ten o'clock in the evening up to six in the morning, he shall be paid at the rate of one and one half (1.5) multiplied by the regular hourly rate. Depends on the number of overtime hours worked
Severance An employee who has completed a year of service or more shall, upon the termination of his employment, be paid severance pay by the employer as follows:
• two weeks’ wages for each of the first five years of employment;
• three weeks’ wages for each year of employment after the fifth year up to and including the tenth year; and
• four weeks’ wages for each year of service after the tenth year.
This equals 3.8% (2/52 weeks) of annual income

 

 

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