Yemen PEO & Employer of Record

WeHG provides an International PEO and global Employer of Record service in Yemen to companies willing to enter the Yemeni market or hire local/expat employees in this country.

Traditional approach requires establishing a subsidiary in Yemen.  However our solution allows you to start the operations in Yemen 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. .

Yemen fast facts

Population, million: 28.5
Land area: 527,968 km² 
Capital: Sanaa
Local currency: Yemeni rial

Hiring, Negotiating and Doing Business in Yemen

Necessity of written employment contract

Employment contracts are regulated under the Labour Code. A contract of employment is the agreement between a worker and employer whereby a worker undertakes to work under the direction and supervision of the employer in consideration of a remuneration. Labour Code requires employment contracts to be in writing. A written employment contract is drawn up in three copies (signed by all the parties), one copy each for the worker, the employer and the competent office of the Ministry. In the absence of written contracts, an employee has to establish his rights through any admissible evidence.

An employment contract must specify the following:

• remuneration;
• work description;
• workplace;
• commencement date;
• duration of employment contract.

Contracts for working in cooperatives are considered employment contracts and each worker receives a copy of such contract on commencement of work. A worker may request an employer to provide him with a receipt for any (personal) documents, records or certificates entrusted to him. In order to apply different contractual provisions, an employer must devise and follow procedures, a copy of which is issued to the worker.

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

• (a) employees of the state administration and the public sector;
• (b) officers of the judiciary and the diplomatic and consular corps;
• (c) staff of military and security establishments;
• (d) foreigners seconded to work with the State;
• (e) foreigners working in the Republic under an international Convention to which the Republic is a party, this exemption being subject to the limits set by the Convention in question;
• (f) foreigners holding diplomatic or special passports who have obtained a visa and who work in the Republic subject to the conditions of such political visas as may be issued to them;
• (g) casual workers;
• (h) persons related to and working with the employer who are effectively his dependants regardless of their degree of kinship;
• (i) household servants and workers of equivalent status;

Yemen Employment Contract

Types of employment agreements

Fixed Term Contracts 

Employment contracts are regulated under the provisions of Labour Code and Civil Code (Law No. 14 of 2002: Articles 781-825). 

Employment contracts are generally concluded for indefinite period unless agreed otherwise between the parties (in the case of Yemeni workers). The foreign workers (non-Yemenis) are employed for fixed term and duration or task is specified beforehand. If the employment relationship continues after expiry of an employment contract, the contract is considered extended/renewed for additional term. If the parties are in the process of negotiating an expired employment contract, its duration is automatically extended for a period of three months.

There are no statutory limitations on the use and renewal of fixed term contracts. Labour Code neither specifies the maximum term of a single fixed term employment contract nor does it put any limit on its subsequent renewals. Thus labour code does not put any limits on the hiring of fixed term contract workers for tasks of permanent nature.

Yemen working hours

The normal working hours are eight hours a day and 48 hours a week. During the month of Ramadan, the working hours are reduced and daily and weekly limit of six hours and 36 hours respectively is observed. 

Reduced working hours apply in the case of arduous and hazardous work (under an Order by the Minister, if any), young workers (seven hours), and pregnant as well as breastfeeding workers (five hours from sixth month of pregnancy to six months after childbirth). The working time for pregnant and breastfeeding workers may be further reduced for health reasons on the basis of a certified medical report. 

Total working hours, inclusive of overtime, are 12 hours per day.

Vacation leave in Yemen

Workers are entitled to the annual leave of at least 30 days with full pay for each calendar year, calculated on the basis of at least two-and-a-half days for each month of service. Public holidays falling within a worker’s period of annual leave are not counted as part of annual leave. In order to be entitled to annual leave, a worker must have completed one year of service. 

Employers must award workers the leave they are entitled to annually. Employer, however, may carry over a worker’s half leave entitlement (at least 15 days) to the following year, for reasons related to the interests of both parties. Any more favourable circumstances concerning workers’ leave entitlements and rates remain in force. Splitting of annual leave is allowed and minimum annual leave granted at one time cannot be less than two days. Annual leave entitlement for certain occupations and categories of workers can be increased by Order of the Minister.

Yemen Maternity Leave

A pregnant worker has the right to take maternity leave with full pay for a period of 70 days. Labour Code does not specify any qualifying conditions for access to maternity leave. Similarly, it does not differentiate between the pre-natal and post-natal leave. A pregnant worker cannot be made to work during the period of her maternity leave.

There is also provision for extension of maternity leave (by 20 days) if the labour (delivery of child) was difficult, as certified by a medical certificate (caesarian) and if she The text in this document was last updated in March 2020. 20 has given birth to twins.

Pregnant workers have the right to receive compensation for maternity leave. Pregnant Workers are paid their full wages (100%) during the term of maternity leave, i.e., 70 days to maximum 90 days. Maternity leave is paid by the employer.

Yemeni Severance Laws

Notice periods

Labour Code also lists the situations in which the contract terminating party must give notice to the other party before contract termination. These situations include: failure of the either party to observe the terms of contract or labour legislation (employee related reasons: conduct or capacity); permanent cessation of work, entirely or in part (economic reason); reduction in the number of workers for proven technical or economic reasons; absence for more than 30 days within the same year or for 15 consecutive days (without legitimate reason) provided that the termination is preceded by a written warning from employer after 15 days of absence in the former case and seven days in the latter (conduct related); employee reaching the statutory retirement age; and if the worker is declared unfit to work by decision of a competent medical committee (capacity related).

The required notice that a contract terminating party has to give to the other party is equivalent to the period prescribed for the payment of wages (wage payment period ranging from week to fortnight to month) or pay wages in lieu of such notice. The notice period is calculated as follows: 30 days for workers with monthly wages; 15 days for workers with fortnightly (15 days) wages; one week for workers working on hourly, daily or weekly rates, or piece rate or on the basis of production. If a worker’s wages are calculated on daily, hourly, weekly, fortnightly basis, and piece rate basis but paid at the end of each month, the period of notice is 30 days.

Severance payments

On the termination of employment, a worker is entitled to a monthly pension or a lump-sum payment in accordance with the provisions of Social Insurance Act or other special regulations whose provisions are more favourable to the worker. 

If a worker is not covered under the Social Insurance Act, he is entitled to receive severance pay from the employer at the rate of at least one month’s wage for each year of service. Severance pay is calculated on the basis of the last wage received by the employee. Labour Code does not differentiate between individual and collective dismissal in the case of severance pay. Thus, it can be safely assumed that the above referred severance pay is payable on both individual and collective dismissals. If a worker is dismissed arbitrarily by the employer or if a worker terminates the employment contract without notice due to the misconduct of the employer, he is entitled to compensation of maximum 6 months’ wages.

Yemen Tax

Profit tax is applied to the net income of business enterprises (which includes all companies i.e. limited responsibility companies, stock holder companies, etc.). Under Yemeni law ‘net income’ is defined as ‘income achieved by a business (company) during the year after deducting acceptable expenses’ where acceptable expenses are expense incurred in the creation of income, either directly or indirectly. The applicable tax rate is 25%.

Wages and Salaries 

Tax Wages and salaries tax are subject to tax at a rate of 15% (residents) and 20% (non-residents). An employer deducts the tax from the salaries/wages of each employee and remits it to the Yemen Tax Authority. 

Income tax rates 

Income tax is levied on income at a top tax rate of 15%. 

Social Security Contributions 

Social security contributions at levied at 6%. The SSC’s are paid towards old age, disability and death allowances. 

Non-resident individuals 

Non-resident individuals are subject to income tax at a rate of 20%. Capital gains on sale of shares in resident companies are taxed at 20%.

Health Insurance Benefits in Yemen

Paid sick leave is provided under the Labour Code. In the event of sickness, workers are entitled to continuous or non-continuous sick leave on the following basis: full pay for the first two months of sickness; 85% of pay for the third and fourth months of sickness; 75% of pay for fifth and sixth months of sickness; and 50% of wages for the seventh and eighth months of sickness. 

A worker may also use up the balance of annual leave entitlement after using all of sick leave entitlement. If a worker has exhausted both his annual leave (30 days) and sick leave (eight months) entitlement, he may be granted leave without pay until he recovers or the competent authorities establish that he is no longer medically fit for work. The period a worker spends in hospital for treatment is considered as sick leave. 

Sick leave is granted if it is certified by a doctor appointed by employer to treat workers or by a medical institution with which the employer has concluded an agreement for that purpose; or if it is certified by a medical establishment in the Republic; or if it is certified by an emergency clinic or any other hospital in the area.

Additional Benefits in Yemen

No provision could be located in law regarding additional benefits.

Yemen Holidays

Public holidays are paid rest days of religious or memorial nature. Yemen has fifteen such holidays. These are Labour Day (May 1), Unity Day (May 22), Revolution Day I (September 26), Revolution Day II (October 14), Yemen Independence/Evacuation Day (November 30), Eid al Adha (5 days), Eid al Fitr (4 days), and Muharram 1/Islamic New Year’s Day (one day).

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.