The New Labor Law of Ethiopia: Major Points of Departure

A new Labor Proclamation 1156/2019 has been issued in September 2019 by the House of People’s Representatives of Ethiopia replacing Proclamation no 377/2003, which was in force for the last 16 years. The law has been enacted with a view to securing durable industrial peace, sustainable productivity and competitiveness that will contribute to the overall development of the country. The Proclamation has introduced new concepts. It has also modified some of the existing provisions which were unclear, and therefore, prone to various interpretations. A few other provisions of Proclamation 377/2003 have been repealed altogether. The following are among the major shifts made by the new law

1.New Rules Introduced

(a) Sexual Harassment and Sexual Violence

The new law obviates the need for interpretation of sexual harassment and sexual violence by providing definitions. It also provides prohibitions and punishments specific to the acts. The commission of either or both of the two acts at workplaces either by the employee or employer may be used as grounds of termination of an employment contract without notice by the employer or the employee respectively. Additionally, an employee who resigns on the ground of sexual harassment or violence is entitled to severance pay as well as a compensation amounting to 90 times the daily rate of the last week of service of the employee.

(B) Social Dialogue

Social dialogue is recognized by the new proclamation as an alternative dispute settlement mechanism to resolve conflicts between employers and employees or their respective associations.

(C) Paternity Leave

This concept was first introduced in Ethiopia by the Civil Servants Proclamation No. 1064/2017. The new labor law adopts the concept by granting a male worker a paternity leave for 3 working days with pay. The English version entitles any man (married or unmarried) for paternity leave while the Amharic version only refers to married man. The civil servants proclamation, on the other hand, makes reference to married man both on the English and Amharic version.   The benefit is lesser compared to civil servants who are entitled to a paternity leave with pay for 10 working days.

(D) Minimum Wage

The introduction of minimum wage may be cited as one of the major changes brought by the new law. The Council of Ministers is mandated with issuing a Regulation to establish and determine the powers and responsibilities of a Wage Board that will periodically revise minimum wage.

2. Added clarity to existing rules

In addition to the introduction of new rules, the proclamation has clarified existing concepts which lacked clarity and were creating confusions.

(a) Contract of personal service

The phrase contract of personal service was unclear under the repealed proclamation. Proclamation 377/2003 neither defined the concept nor listed matters that are considered private service. With a view to solving this issue, the new law defines private service as well as provides examples. It defines it as an employment of a non-profit careening, cleaning, guardianship, gardening, driving for the employer and his family consumption.

(b) Managerial Employee

Previously, a person who has power ‘to assign and take disciplinary measures against employees’ was considered as a managerial employee. This made it harder to determine the types of disciplinary measures that constitute managerial nature. Taking into consideration the wider scope of ‘taking disciplinary measures’ and the associated confusion, it has been amended as a person who can ‘dismiss or assign employees’.

Furthermore, the term ‘discrimination’ in employment relationships has been defined. Additionally, reference has been made to the definition in the commercial code with regard to commercial travellers and representatives.

3. Extension of Periods

(i) Probation Period

An employer and employee could agree to a probation period not exceeding 45 consecutive days under the repealed law. This was intended to enable the employer to evaluate the ability and fitness of the employee for the assigned task. In response to employers’ concern with respect to the shortness of the time to assess the employee’s performance, this period has been extended to 60 working days in the new proclamation. This may allow the employer to test the suitability of the employee within an extended 3 months period.

(ii) Minimum Age for Employment

A worker who has attained a minimum age of 14 years was capable of being employed under the repealed law. The minimum age for employment has now been increased to 15 years by the new proclamation. Moreover, the definition of young workers has been amended so as to include workers between 15 and 18 years of age. The new law prohibits employing a person under 15.

(iii) Overtime Work

The normal working hours have been maintained not to exceed eight hours a day and 48 hours a week. Work done beyond this time limit is considered as overtime work. The 20 hours monthly and 100 hours annual cap to overtime work have been lifted. Under the new law, a person may work overtime for maximum of 4 hours in a day and 12 hours in a week. Certain modifications are also made to payment for overtime work. Payment for work done between 6:00 AM and 10:00PM has been raised from (1.25 x hourly rate) to (1.5 x hourly rate). Likewise, payment for work done between 10:00PM and 6:00 AM has been increased from (1.5 x hourly rate) to (1.75 x hourly rate).

(iv) Amount of Annual Leave

The period of annual leave has been extended from 14 working days to 16 working days for the first year of service. However, unlike the repealed law that granted an additional day for each additional year of service, the current law grants 1 day for every additional two years of service.

In relation to this, the provision which entitled workers who are engaged in a work that is arduous or unhealthy, to additional annual leave with pay to be fixed by collective agreement has been eliminated.

(v) Maternity Leave

An extension of 30 days post natal maternity leave is allowed by the new law. Thus, a pregnant woman is granted a total of 120 days of maternity leave; 30 consecutive days of prenatal and 90 consecutive days of post natal leave. In case where a woman encounters miscarriage of pregnancy and it is confirmed by a medical certificate, the provisions for reduction of wage upon sickness will not apply. However, unlike the civil servants’ law, the Labor Proclamation fails to specify the amount of leave the woman who encounters miscarriage of her pregnancy is entitled to. The provision might be interpreted as, despite the reduction of wage applicable on a worker who has been sick for more than a month, a woman who encounters miscarriage will be entitled to 6 months sick leave with payment of 100% of her salary.

4. Additional Obligations of the Employer

In addition to the existing obligations in the repealed law, an employer has obligations to: a) deduct union dues from the worker’s regular wage, upon the worker’s request of such deduction in writing, and transfer the amount into the trade union’s bank account; b) keep a register containing health conditions of the employees Except HIV AIDS; c) Undertake registration of information on workplace location and work related data as per the form to be prepared by the Ministry; and d) arrange awareness raising program for the concerned workers, whenever an enterprise has work rules.

Moreover, the list of prohibited acts by the employer also includes: a) discrimination based on HIV or disablement; b) unduly delaying collective bargaining by withholding   relevant information for the negotiation or performing any other act contrary to good faith; c) committing   sexual harassment or sexual assault at workplace; d) physically abusing anyone in a work place and e) coercing a worker in any manner to work or discharge an obligation

(a) Modifications on Reinstatement of a Suspended Employee

An employer is obliged to reinstate an employee, who has been suspended and reports for work, in a relevant position to his profession without adversely affecting his job position and wage before his suspension. The law has added an emphasis on the conditions of reinstatement securing the employee’s right to be reinstated in a position relevant to his profession without affecting his wage.

(B) Termination of Contract based on Loss of Capacity

An employer’s action of termination of a worker due to loss of capacity must be verified by periodical performance assessment unless the conditions are stated in a collective agreement.

Moreover, with regard to weekly rest of a worker, where the nature of the task do not enable the worker to make use of his weekly rest day, the employer is obliged to grant 4 working days of rest in a month.

5. Rights and Obligations of the Employee

In addition to matters that were listed under the repealed law, the following have been newly added to prohibitions addressed at a worker. a) Making use of falsified document or an attempt thereof; b) using drugs; c) conducting meeting during working hours in disregard to the time assigned by the collective agreement or without obtaining the permission of the employer; d) committing sexual harassment or sexual violence at workplace and e) physically abusing anyone in a workplace.

(a) Repeated and Unjustified Tardiness

Repeated and unjustified tardiness was a ground for termination without notice failing a satisfactory to explanation under the repealed law. The new law clearly specifies that being late from duty 8 times in six months ignoring written warning may be a ground for termination. Additionally absence from work for 5 working days in six months period may be a ground for termination without notice. This provision has amended the previous calculation which was 5 consecutive days or 10 working days in a month.

(b) Compensation due to an Employer

The law retains the principle that a worker who terminates a contract without giving notice in accordance with the law should pay compensation to the employer. The new law clearly states that the amount of compensation should not exceed 30 days’ wage to be payable from the remaining amount due to the worker. This provision seems to emphasize that the employer may not claim compensation where there is no outstanding payment due to the employee and the later terminates the contract without giving notice.

6. Provisions Related to Women

The new proclamation recognizes further benefits addressing the special needs of women including provisions related to maternity leave, sexual harassment and violence. A provision acknowledging affirmative action to women is included. Accordingly, women candidates who score equal points with men will have right to priority in competitions for employment, promotion and related opportunities.

7. Content of Collective Agreement

In addition to the contents provided in the repealed law, conditions on the establishment and working system of bipartite social dialogue and establishment of daycare may be determined by collective agreement.

8. Labor Courts

(a) Labor Divisions of Federal and Regional Courts

Unlike Proclamation No. 377/2003, the new law stipulates that labor divisions may be established both at federal and regional courts at different levels. The mandates which were given to labor divisions of regional first instance courts under the old law are now shared with the Federal First Instance Courts as well. In addition to the previously given mandates, the labor divisions of the federal or regional first instance courts may entertain issues related to transfer, promotion, training and other matters of similar nature. Similarly, the mandates of labor divisions of regional appellate courts under the repealed law are shared /with divisions under federal appellate courts. These divisions may additionally hear and decide on appeals against the decisions of the Board on question of law. The provision defining the jurisdiction of labor divisions of High courts has been deleted.

9. Establishment of Labor Relations Board

Under the repealed law, permanent or ad-hoc labor relations Board could be established in regional states to entertain cases specified under the proclamation. Currently, federal governments are allowed to establish permanent and ad hoc labor relations board to entertain cases involving undertakings owned by the Federal government in Addis Ababa and Dire Dawa city administration. These Boards will be established and be accountable to the Ministry of Labor and Social Affairs.

With regard to appeal, in any labor disputes, a party dissatisfied by the decisions may lodge an appeal to High court (both Federal and Regional). The repealed law stated that appeal may be made to Federal High courts.  

10. The New Powers of the Ministry of Labor and Social Affairs

In addition to the powers that were listed in the repealed law, the Ministry has new mandate to issue : a) directive on conditions of operation for private employment agencies; b) procedures on the establishment of Permanent Advisory Board and the duties and responsibilities thereto; c) conditions for private employment agency to participate in local employment service; d) procedures on the requirements for the certification of private labor inspection service providers and e) procedures on the establishment of occupational safety and health committee in undertakings.

11. Private Inspection Service

As per the new law, private labor inspection, i.e. technical inspection, consultancy or training, may be undertaken by any person upon obtaining certificate of competence from the Ministry or another appropriate organ. This is a newly introduced inspection system.

12. Increased Penalty for Non-compliance

The new law has provides graver penalties for acts done in violation of the provisions of the proclamation. The amount of penalty imposed on persons who violate the provisions of the law has been revised. The new law has increased the penalty of Birr 1200 and 10,000 limit for administrative penalty under Proclamation No. 377/2003 and its amendment significantly. Accordingly, an employer who fails to observe the provisions of the proclamation as listed under Art 186(1)(a-e) may be fined Birr 5000 up to 20,000 where the violation is for the first time; Birr 20,000 up to 40,000 if the violation is for a second time and a fine up to 70,000 if committed for a third time. Where violation is repeated more than three times closure of the undertaking could be the penalty.  

Any employer, trade union, trade union leader or a representative of an employer who fails to appear for collective bargaining within 10 days of receiving a request or a party who does not bargain in good faith are liable to fine from Birr 5000 up to 20,000 for violation for the first time; From Birr 20,000 up to 40,000 for violation for the second time and a fine of Birr up to 70,000 where violation is committed more than twice.  In this case the amount of penalty is fixed in consideration to the economic and organizational standing of the undertaking or the trade union’s general set up and the manner the fault was committed.

A private employment agency that engages in private employment exchange service without obtaining a license from the competent organ may be punished by 5 years to 10 years imprisonment and a fine of Birr 100,000. Moreover, engaging in any employment exchange activity while its license is suspended is punishable with imprisonment for a term not less than three years and not exceeding five years and with a fine of Birr 75,000. Additionally, violation of other provisions of regulations and directives is punishable with imprisonment of up to two years or a fine of up to Birr 75,000.

13. The Power to Institute Cases

The repealed law empowered labor inspectors to file criminal suits against violators of the proclamation. The new law gives them the power to institute both civil and criminal action against those who transgress the provisions of the proclamation and regulation and directives to be issued under it.


In general, the new law does not make a sea change to the regulation of labour relationship.  It does not, in particular, address a number of issues that were raised by many stakeholders engaged in various sectors. It does, however, introduce provisions that obviate some confusion and ambiguity that surrounded some of the provisions of the repealed law.  It also introduces new rules to govern matters that had not been addressed under Proclamation No 377/2003.

That being said, it is hard to say that all the main concerns have been addressed and major changes introduced, especially considering the time taken for the amendment of the law. The new proclamation still falls short of allowing employers and employees to freely determine conditions of work by their mutual agreement. In particular, it does not leave space to parties to an employment contract to regulate their relationship in view of the peculiarities of the sector, the type of work required and even the need of some employees, perhaps. Moreover, modern elements of the industry, such as technology transfer and intellectual property rights have not been addressed in the law. Besides, unlike the Civil Servants’ Proclamation, the new labour law does not cover arrangements such as secondment and transfers between institutions.


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