Ethiopia
Changes to overseas employment rules
Impact date: 8 August 2025 The Federal Government has updated the Overseas Employment rules with Proclamation No. 1389/2025. Its effect is to modernize licensing, digitalize recruitment services and strengthen protections for Ethiopians working abroad.
Employer implications/action needed Employers and recruitment agencies should review the new licensing, deposit and digital-registration requirements; update contracts, vendor (recruiter) due-diligence and compliance checklists; and prepare to use the national labor-market/overseas-employment digital platform.
Employer risk Non-compliant recruiters or employers may face license sanctions, repatriation liabilities, fines or administrative restrictions on placing workers abroad; reputational risk and greater regulatory scrutiny.
Changes to employment tax rules
Impact date: Proclamation passed on 17 July 2025 with the practical payroll implementation and guidance continued to be rolled out and acted upon during September-November 2025. The Income Tax (Amendment) introduced material revisions to employment-tax rules, updated income-tax brackets/withholding rules and other relevant payroll provisions that employers must apply in payroll and reporting.
Employer implications/action needed HR/payroll teams must update payroll systems to reflect new tax brackets and withholding rules, re-run payroll simulations, communicate net-pay changes to staff, and confirm withholding, return and remittance timelines with tax advisors; update employment contracts/offer letters if gross/net salary structures change materially.
Employer risk Incorrect withholding or failure to update payroll can cause employee tax under/overpayments, employer interests/penalties, tax audits and reputational/exposure for senior management.
Contact
© Eversheds Sutherland. All rights reserved. Eversheds Sutherland is a global provider of legal and other services operating through various separate and distinct legal entities. Eversheds Sutherland is the name and brand under which the members of Eversheds Sutherland Limited (Eversheds Sutherland (International) LLP and Eversheds Sutherland (US) LLP) and their respective controlled, managed and affiliated firms and the members of Eversheds Sutherland (Europe) Limited (each an "Eversheds Sutherland Entity" and together the "Eversheds Sutherland Entities") provide legal or other services to clients around the world. Eversheds Sutherland Entities are constituted and regulated in accordance with relevant local regulatory and legal requirements and operate in accordance with their locally registered names. The use of the name Eversheds Sutherland, is for description purposes only and does not imply that the Eversheds Sutherland Entities are in a partnership or are part of a global LLP. The responsibility for the provision of services to the client is defined in the terms of engagement between the instructed firm and the client.