Eritrea

Eritrea PEO & Employer of Record

WeHG provides an International PEO and global Employer of Record service in Eritrea to companies attempting to enter into the Eritrean market or hire local/expat employees in this area.

Overall approach requires establishing a subsidiary in Eritrea.  Anyhow, our solution allows you to set up the operations in Eritrea within days hence save time and money.  WeHG would hire candidates on your behalf while you maintain full operational control of their work. So legally they would be our employees, on our local payroll, 100% compliant but will work on your behalf.

Eritrea fast facts

Population, million: 6
Land area: 117,600 km²
Capital: Asmara
Local currency: Nakfa (ERN)

GDP per capita:$ 1,797
GDP in currency:$ 11.263 billion

Eritrea, country of the Horn of Africa, located on the Red Sea. Eritrea’s coastal location has long been important in its history and culture—a fact reflected in its name, which is an Italianized version of Mare Erythraeum, Latin for “Red Sea.” The Red Sea was the route by which Christianity and Islam reached the area, and it was an important trade route that such powers as Turkey, Egypt, and Italy hoped to dominate by seizing control of ports on the Eritrean coast. Those ports promised access to the gold, coffee, and slaves sold by traders in the Ethiopian highlands to the south, and, in the second half of the 20th century, Ethiopia became the power from which the Eritrean people had to free themselves in order to create their own state.

Hiring, Negotiating and Doing Business in Eritrea

Necessity of written employment contract

A contract of employment concluded for more than a year shall be made in writing.

Different forms of engagement: employment, contracting, work with private entrepreneur

Elements of contract:

  • A contract of employment shall, inter alia, specify the duration of the contract, the date of employment, the type of work, the place of work, the rate of wages and other remuneration and the payment methods.
  • A contract of employment shall stipulate clearly the respective rights and obligations of the parties.
  • Conditions of work laid down in this Proclamation and in collective agreements, which are advantageous to the employee, shall be deemed to be an integral part of the contract of employment.
  • Terms in a contract of employment, which do not conform with the provisions of this Proclamation or provide less favorable conditions than those provided by law, shall be null and void.
  • Work rules in force in an undertaking shall be specifically mentioned in the contract of employment as part thereof.
  • Inventions made by an employee during the work done by him in the service of his employer shall belong to him, unless the employee has been expressly engaged for conducting research or making inventions. Inventions made by an employer shall however, belong to the employer

Work Permits for Non- nationals:

  • Non-nationals may not work in Eritrea without a valid work permit issued in accordance with guidelines issues by the Ministry. The conditions of employment of non-nationals shall be determined by directives issued by the Ministry.
  • A work permit issued to a non-national shall clearly show the type of work he is engaged in, the duration of his employment in Eritrea and such other details as may be required by the Ministry.
  • The Ministry may order the termination, cancellation or renewal of permits issued to non-nationals and may introduce in permits new conditions to be complied with.
  • The Eritrean government may amend the provisions of this chapter to harmonize them with bilateral agreements, international treaties or conventions it accedes to or ratifies.

Eritrea Employment Contract

Types of employment agreements

The duration of a contract of employment may be:

  • for an indefinite period; or
  • for a definite period; or
  • for a period required to carry out a definite piece of work; or
  • for intermittent periodical work.

If the work is of a continuous nature, a contract employment made for a definite period shall be deemed to be a contract made for an indefinite period.

Eritrea working hours

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

The Minister may issue directives reducing regular hours of work for any economic sector, industries or occupations where there are special conditions of work.

Such reduction may not entail reduction of the wages of an employee.

Overtime

An employer may make an employee work overtime, provided he may not make the latter work overtime for more than two hours without the latter’s consent.

Notwithstanding the provisions of sub-article hereof, an employee shall be compelled to work overtime in the following instances:

  • during an accident, actual or threatened;
  • where there is urgent work;
  • where force majeure occurs; or
  • to substitute an absent employee assigned on work which runs continuously.

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 clay 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.

Payment for overtime work shall be effected together with the payment of wages.

Vacation leave in Eritrea

All public holidays recognized by law shall be paid public holidays. Where more than one public holidays fall on the same day, payment shall be made for only one holiday. An employee who works on a public holiday shall be paid for each hour of work at the rate of two and a half (2 1/2) multiplied by the regular hourly rate.

Where a public holiday falls on a rest day designated by this Proclamation or any other special law, the employee who works on such a day shall only be entitled payment for a public holiday.

An employee shall, at the time he takes leave, be paid wages due to him for the period of 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. No postponement of annual leave shall be permitted. May, however, be postponed to for unforeseen shortages or breakdowns. An annual leave postponed under sub-article shall be taken after the cause of its postponement ceases to exist. An employee may take his leave in parts if his agrees. Where an employee falls sick during his annul the provisions of this Proclamation on sick apply.

Unless there is an agreement to the contrary for each annual leave, annual leave shall be taken at a time convenient to the employee. An employee whose contract of employment has been terminated under this Proclamation shall be paid wages in lieu of annual leave not taken. Where the employee has completed his probation period but not a year of service, he shall be paid wages in lieu of leave not taken proportionate to the length of time lie has worked during the year. Unless otherwise provided in this Proclamation and except with the consent of the employee, wages may not be paid in lieu of annual leave.

Eritrea Maternity Leave

A pregnant employee shall be granted leave with pay for medical examination connected with her pregnancy provided, however, that she is obliged to present a medical certificate of her examination to employer.

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.

Eritrea Severance Laws

An employee whose contract of employment has terminated according to the provisions of this Proclamation shall be entitled to severance pay.

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.

Eritrea Tax

Sales tax: General service tax, with rates between 5% to 12%.

Company Tax: Corporate tax: 30% + 4% municipal tax.

Petroleum Company: 35%.

Withholding Taxes: Dividends: 0%, Interests: 10%, Royalties: 5% (paid to mining companies)/10%.

Social Security Contributions Paid By Employers: Eritrea has not introduced a social security system yet.

Health Insurance Benefits in Eritrea

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 referred to in sub-article of this Article may not exceed six months counted consecutively or separately in any twelve-month period starting from the first day of the employee’s sickness.

Where the employee absents himself from work on grounds of sickness, he shall, except where the employer is in a position to be aware of the sickness, notify the employer the day following his absence.

Unless otherwise provided in the collective agreement, the employee may exercise his right of sick leave provided he presents a valid medical certificate at the beginning of his sickness or subsequently thereafter.

The period of sick leave provided for in this Article shall be grated in the following manner:

  • the first one month with 100% of his wages;
  • the next two months with 50% of his wages;
  • the next three months without pay.

Additional Benefits in Eritrea

In addition to the fiscal and financial incentives, Investment Proclamation No. 59/1994 provides guarantees for investors against political risks: “Investment and/or expansion allowed under this Proclamation and all property on such investment and/or expansion shall:

  • not be nationalized or confiscated; and,
  • not be attached, seized, frozen, expropriated, or put under custody by the government except for public purposes and with the due process of law.’

In the event of expropriation the government is obliged to pay full and fair compensation.

General market practice benefits/additional allowances

  • Employment in Eritrea

Many ambitious professionals are making the move to Africa and taking advantage of the huge economic growth the continent is experiencing. Eritrea in particular has made huge strides, and has many exciting prospects for young businessmen and women.

  • Economic Overview

Eritrea is bouncing back after the economic slump of the Eritrean-Ethiopian War years, and in 2011 had one of the fastest growing economies in the world. Growth has slowed of late; however, there was still a year on year GDP increase of 2.1% in 2015.

Mining, particularly of gold, has received a lot of foreign investment and is one of the country’s major employers. Eritrea has an abundance of valuable natural resources including copper, granite and marble, which has attracted investment from Australia, Canada, France, South Korea and the US.

The oil industry is also on the up; the US has been involved in drilling operations in the Red Sea and there are thought to be many more untapped sources. Renewable energy is also attracting investment and wind and solar energy projects are now underway.

Major Eritrean exports of food, livestock and textiles are mainly shipped to the six markets of China, Egypt, UK, Italy, Saudi Arabia and Sudan.

  • Work Permits for Eritrea

To work in Eritrea you will require either a business visa or, if you will be residing in the country, an employment visa. In order to be issued with an employment visa you will first need to get a work permit from the Eritrean Ministry of Labor and Human Welfare (MLHW). Your employer needs to verify your educational qualifications and work experience to the MLHW, and you must be able to show a passport that is valid for at least another year.

You should receive your work permit card within three months of your successful application; this card must be renewed every year. Be sure to carry this with you whenever you travel within the country, as you may be required to show this to the relevant authorities.

  • Income Taxation in Eritrea

All expats will have to pay income tax to the Eritrean government; the rate varies greatly depending on your income and circumstances but is anywhere between 2% and 30% of your earnings. You will also need to pay social security tax, which funds the state welfare system and pays out pensions and unemployment benefits.

The likelihood is that you won’t need to worry about how your taxes are paid as your employer should handle everything under the pay-as-you-earn (PAYE) system. Your tax contributions will be calculated as a percentage of your monthly earnings and you will receive a net wage.

Eritrea Holidays

The major public holidays include:

  • January 1 – New Year
  • January 7 – Orthodox Christmas
  • January 8 – Eid-al-Fitr
  • January 19 – Timket (baptism of Christ)
  • March 8 – International Women’s Day
  • March 5 – Eid el-Alha
  • April 28 – Good Friday (determined by Easter)
  • April 30 – Easter
  • May 1 – International Labor Day
  • May 24 – Independence Day
  • June 17 – Eid Mawleed el-Nabi (Prophet’s birthday)
  • June 20 – Martyr’s Day
  • September 1 – Start of the Armed Struggle
  • September 11 – Orthodox New Year
  • September 27 – Meskel/Festival of Timket (Finding of the True Cross)
  • December 25 – Christmas

Why Choose WeHireGlobally

WeHG takes care of all the onboarding hurdles, payroll, compensation and benefits, tax filing, and termination of employment. Our Employer of Record solution allows you to manage your overseas teams efficiently while minimizing cost and risk.

FAQ Eritrea

  • Working hours in Eritrea

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

  • What are the main holidays in Eritrea?

    • January 1 – New Year
    • January 7 – Orthodox Christmas
    • January 8 – Eid-al-Fitr
    • January 19 – Timket (baptism of Christ)
    • March 8 – International Women’s Day
    • March 5 – Eid el-Alha
    • April 28 – Good Friday (determined by Easter)
    • April 30 – Easter
    • May 1 – International Labor Day
    • May 24 – Independence Day
    • June 17 – Eid Mawleed el-Nabi (Prophet’s birthday)
    • June 20 – Martyr’s Day
    • September 1 – Start of the Armed Struggle
    • September 11 – Orthodox New Year
    • September 27 – Meskel/Festival of Timket (Finding of the True Cross)
    • December 25 – Christmas
  • What are payroll taxes in Eritrea?

    Sales tax: General service tax, with rates between 5% to 12%.

    Company Tax: Corporate tax: 30% + 4% municipal tax.

    Petroleum Company: 35%.

    Withholding Taxes: Dividends: 0%, Interests: 10%, Royalties: 5% (paid to mining companies)/10%.

    Social Security Contributions Paid By Employers: Eritrea has not introduced a social security system yet.

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