Eritrea’s location along the Red Sea shipping lanes and growing mining sector make it an increasingly attractive destination for international mining businesses and their contractors. 

Projected GDP growth of 2.9% in 2025 and major developments like the Colluli potash project drive expansion as global companies capitalize on this Horn of Africa market.

Although mining drives economic growth, agriculture forms the economic foundation of Eritrea, employing 80% of the workforce through the cultivation of sorghum, millet, barley, and livestock herding. Meanwhile, substantial diaspora remittances contribute 19-37% to the GDP. At the same time, infrastructure investments in irrigation, roads, and ports are modernizing traditional sectors and creating new opportunities in logistics and services.

The country’s youthful workforce, with a median age of 21.5 years, provides a ready pool of workers; however, foreign companies must ensure proper employment compliance. Since most businesses prefer focusing on their core activities rather than managing local payroll and regulatory requirements, Remote People’s employer of record (EOR) services offer a practical solution that handles these administrative responsibilities.

Read our article on Doing Business in Delaware to learn more about the corporate environment in the state.

How to Hire Employees in Eritrea

Companies wanting to hire in Eritrea have several options, each with its own benefits and challenges. The best choice depends on your budget and how quickly you want to get started.

Setting Up a Local Entity

Those planning to hire multiple employees or establish permanent operations in Eritrea can establish a local entity. Options include a Private Limited Liability Company (LLC), corporation, limited liability partnership, branch office, or representative office.

Key steps include:

  • Name Reservation: Search and reserve the company name with the Business License Office.
  • Document Preparation: Draft and note a memorandum and articles of association.
  • Company Registration: File with the Commercial Registry and the Ministry of Trade and Industry.
  • Tax Registration: Obtain a Tax Identification Number (TIN) from the Eritrean Revenue and Customs Authority.
  • Banking: Open a corporate bank account with a local bank, such as the Commercial Bank of Eritrea.

Registration takes between 1-2 months and costs $1,500 USD. Fees are modest by global standards, though legal support costs should be budgeted.

Note: In-person visits to the Asmara government offices are necessary, and ongoing compliance with local labor, tax, and licensing regulations is mandatory.

Working with an Employer of Record (EOR)

An Employer of Record offers a practical alternative to setting up your own company in Eritrea. The EOR becomes the legal employer and manages all paperwork, payroll, and legal requirements, as you maintain complete control of your team’s work and goals.

The main benefits:

  • Start Hiring Fast: Get your team working in weeks instead of waiting months for company registration and government approvals.
  • Stay Compliant: The EOR ensures you follow all local employment laws and tax rules, so you avoid costly mistakes and penalties.
  • Save Money: Skip the expense of setting up and running a local company, plus avoid ongoing legal and administrative costs.
  • Reduce Risk: Let experts manage Eritrea’s complex regulations as you focus on growing your business and leading your team.
Learn more about Employer of Record services

Hiring Independent Contractors

Hiring independent contractors is a good option for specific, project-based work. Contractors are self-employed individuals who provide services under a service agreement rather than an employment contract. However, misclassification risks are greater, given Eritrea’s developing labor frameworks.

If authorities determine contractors are performing employee duties, a company could face:

  • Back payment of all unpaid taxes, social security contributions, and mandatory employee benefits.
  • Fines, disputes, and potential issues with government authorities.

If you need someone working regular hours or for months at a time, skip the contractor route and use an EOR instead – it’s much simpler and avoids all these headaches.

Learn about hiring contractors in Eritrea

Hire in Eritrea

One of the most restricted employment markets globally with local social security and Eritrean Labour Proclamation compliance.

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Eritrea EOR vs Legal Entity in Eritrea

An entity provides complete control but requires 1-2 months setup time and USD $1,500 minimum capital. Companies also have to handle ongoing compliance responsibilities like managing payroll tax calculations, ensuring proper employment contract language, and staying current with regulations that can change without advance notice. 

By contrast, an EOR enables hiring within 2-4 weeks for a predictable monthly fee and takes care of legal and compliance responsibilities. Companies essentially transfer regulatory risk to the EOR provider. Therefore, choosing between the two comes down to speed, cost, and control. 

For market testing or quick hiring, an EOR removes barriers and compliance uncertainty. For long-term operations needing presence on the ground, a local entity provides greater control and potentially lower per-employee costs over time.

Using an Employer of Record in Eritrea

An EOR takes on the complexities of local employment – from managing Nakfa payroll calculations to securing work permits with immigration authorities – and allows companies to focus on their core operations. 

It operates through an established legal entity in Asmara and provides the infrastructure to hire and manage staff in a compliant manner.

An Employer of Record in Eritrea:

  • Acts as the registered employer through its local entity with the Ministry of Trade and Industry.
  • Draft employment contracts in Tigrinya, Arabic, or English in compliance with Labour Proclamation No. 118/2001.
  • Processes monthly salary payments in Eritrean nakfa and manages currency conversion requirements.
  • Calculates and withholds the 2% flat income tax rate on employee earnings.
  • Ensures compliance with Eritrea’s 40-hour work week and overtime compensation at 250% for public holiday work.
  • Provides statutory benefits, including 14 working days of annual leave in year one (increasing by 1 day per year of service up to 35 days maximum) and up to 6 months of sick leave (1 month full pay, 2 months half pay, remainder unpaid).
  • Secures work permits through the Eritrean Immigration Office in Asmara for foreign employees.
  • Manages probation periods up to 90 days with flexible termination arrangements.
  • Maintains employment records and handles termination procedures, including severance calculations.
  • For service beyond 10 years, severance continues to accrue per contractual terms or applicable collective agreements. Maximum severance entitlements should be verified against current practice and the specific employment contract.

How Much Does an Eritrea EOR Cost?

Most providers charge between $199 and $600+ per employee monthly. Pricing varies based on the level of support and services included. For instance, companies pay additional setup fees for new hires, especially when they’re bringing in foreign workers who need work permits.

Additional costs may apply for services like dedicated account management, expedited document processing, or enhanced benefits packages beyond the standard 14-day annual leave and statutory sick pay.

Employment and Labor Laws in Eritrea

Eritrea’s labor framework is governed by Labour Proclamation No. 118/2001, which sets the foundation for employment law and worker protections across the country. Understanding this framework is essential for any foreign employer hiring locally.

Beyond the legal framework, there are practical workforce considerations unique to Eritrea. Most notably, all citizens are subject to mandatory national service, and those who have not completed it — or received an official exemption — may face restrictions on civilian employment. Foreign employers should verify a candidate’s national service status before finalising any offer, as unresolved obligations can cause unexpected disruptions to your workforce.

With that in mind, here’s a closer look at the key employment and labor laws shaping the hiring landscape in Eritrea.

Employment Contracts

Under Eritrea’s Labour Proclamation No. 118/2001, there are three main contract types: indefinite-term contracts for permanent roles, fixed-term contracts for specific projects or time periods, and contracts for intermittent work. 

Although verbal agreements are legally valid, written contracts are standard practice and provide better legal protection for employers and employees. Contracts are usually written in Tigrinya, Arabic, or English and should include the job description, salary details, working hours, benefits, probation periods, and termination conditions. 

Working Hours

The standard workday is 8 hours maximum, and the workweek is 48 hours spread over six days (Monday to Saturday). Overtime work beyond these hours is generally voluntary except in exceptional cases like accidents or urgent work.

Employees cannot be required to work more than 2 hours of overtime per day without consent. Overtime pay rates are higher than regular wages: 1.5 times regular pay for weekday overtime, 2 times for weekend overtime, and 2.5 times for public holiday overtime.

Overtime

Overtime is limited to 2 hours per day beyond the standard 48-hour workweek (8 hours/day, 6 days/week) as defined in Labour Proclamation No. 118/2001.

Overtime TypeRate
Weekday Overtime150% of regular pay
Weekend Overtime200% of regular pay
Public Holiday Overtime250% of regular pay

Social Security Contributions

The government operates a small but structured social protection system focused on pension schemes for public sector employees and regular wage earners. These include the National Pension Scheme, a Public Sector Pension Scheme, and a Martyrs’ Survivors Benefit Scheme designed to support the families of those who died in conflict. 

However, coverage is relatively narrow, reaching only a fraction of the workforce, mostly in the formal sector. Exact contribution rates for employees and employers under the pension schemes are not clearly publicized, suggesting limited transparency or variation in implementation. 

As a result, most Eritreans continue to rely on traditional support networks such as extended family and community associations. While the government has expressed commitment to expanding social welfare, progress has been gradual, constrained by limited resources, administrative capacity, and a heavy focus on national security priorities.

Probation Periods

The maximum probation period is 90 consecutive days. During this time, all standard working conditions apply — including working hours, overtime pay, and safety protections — from day one.

However, probationary employees are exempt from three specific protections under Labor Proclamation No. 118/2001: Article 29 (advance notice for termination), Article 31 (severance pay), and Article 56(8) (certain benefit protections).

Under Article 12(4), employers may dismiss a probationary employee without notice or severance if they determine the employee is incompetent or unsuitable for the role. Equally, probationary employees may resign without giving notice.

If an employee continues working beyond the 90-day period without formal termination, they automatically receive full employment protections under their contract terms.

Payroll and Employment Taxes in Eritrea

Payroll Cycle

The standard payroll cycle in Eritrea is monthly. Payments must be made in Eritrean nakfa (ERN).

Minimum Wage

Eritrea has no national minimum wage. Private sector wages are set through individual employment contracts and industry standards rather than government mandates. For benchmarking purposes, public sector employees receive a minimum salary of 360 Eritrean nakfa (ERN) per month, approximately USD $23.30.

Bonus Payments

There’s no mandatory 13th-month bonus or holiday pay – employers decide what works for their business and budget through employment contracts and company policies. Standard packages include performance bonuses based on hitting targets or company success, housing allowances to help with accommodation costs (especially for expatriates), and transportation or food allowances to ease daily expenses. 

Employer & Employee Tax Contributions

Eritrea’s social security contribution rates are not consistently documented across official sources. Multiple references cite different rates (ranging from 1-2% employee / 2-6% employer).

Given the limited transparency from records employers should verify current rates directly with Eritrean authorities or their EOR partner. Remote People ensures accurate, up-to-date contribution calculations.

Income Tax

Salary income tax in Eritrea is withheld through payroll, so employers calculate the employee’s tax each pay period, deduct it from wages, and remit it to the tax authority. In addition to salary income tax, employers also withhold the 2% Recovery and Rehabilitation Tax (RRT) on employee earnings as a separate levy.

Monthly taxable income (ERN)Tax rate
Up to 2002%
201 to 1,20010%
1,201 to 2,50020%
2,501 to 3,50025%
Over 3,50030%

The RRT is withheld separately at 2% (commonly described as applying to net income for eligible Eritreans abroad, and referenced broadly as a 2% levy). Employers should treat it as an additional withholding line item alongside salary income tax in payroll records and payslips.

Pension System

Eritrea’s pension system primarily covers public sector employees, providing old-age, disability, and survivor benefits. For private sector employers, obligations are generally limited to standard social security contributions rather than a separate pension scheme.

That said, pension regulations in Eritrea — including retirement age, contribution rates, and benefit structures — are not always well-documented and can shift without much notice. Remote People tracks these regulatory changes and adjusts your payroll contributions accordingly, so you stay compliant without having to monitor developments yourself.

Tax Compliance and Payroll Reporting

Monthly business obligations include filing tax returns and remitting withheld income taxes by the 15th, plus submitting the mandatory 12% social security contributions. The annual tax report wraps up the year’s activity and must be filed by March 31st.

Work Permits and Visas in Eritrea

Foreign citizens who wish to work in Eritrea must obtain both a work permit and an entry visa through the Eritrean Immigration Office in Asmara. The primary visa types for foreign workers are business visas (for short-term work, extendable up to three months) and employment visas (for longer-term employment).

The employer files the work permit application and requires documentation such as criminal background checks, medical certificates, proof of educational qualifications, and employment contracts. Remote People can support companies through this process by managing the work permit application on your behalf or acting as the official sponsor to simplify the process.

Currently, Eritrea offers limited visa quotas that prioritize the mining and agriculture sectors. Employers are required to obtain permits and demonstrate that local workers are unavailable.

Note on National Service: All Eritrean citizens are legally required to complete national service. Candidates who have not fulfilled this obligation — or do not hold an official exemption — are not eligible for civilian employment. Before progressing any local hire, employers should confirm the candidate’s national service status as part of their pre-offer process. An EOR with local expertise can help verify this and flag any compliance risks early.

Priority Skills Permit

Employers can apply for Priority Skills Permits when specialized expertise isn’t available locally. Applications require certified qualifications, detailed work experience, and employer confirmation that no qualified Eritreans are available.

The government prioritizes positions in mining (geologists, mining engineers), healthcare (doctors, specialized nurses), technical fields (IT specialists, telecommunications engineers), and engineering (civil, mechanical, electrical engineers).

Processing takes 45-60 days.

Standard Employment Permit

Standard Employment Permits cover most foreign worker positions. Employers must demonstrate recruitment efforts through local employment offices for 60 days before applying to ensure proper labor market testing. 

The Ministry of Labour evaluates applications within 90 days, issuing permits valid for one year with renewal possible based on continued employment and legal compliance.

Investment-Related Transfer Permits

Foreign investors and key personnel working on government-approved development projects may obtain transfer permits through the Ministry of Labour and Social Welfare. These permits align with project timelines and usually last between 1-2 years. 

Investment-related transfers are exempt from standard labor market testing requirements, as they support approved economic development initiatives.

Note: All foreign workers must register with local authorities within 15 days of arrival and maintain valid residence documentation throughout their employment period in Eritrea.

Time Off and Leave in Eritrea

The country’s labor laws establish minimum standards for annual leave, sick leave, and maternity benefits, while other types of leave often depend on individual company policies and workplace agreements.

Mandatory Leave Entitlements

Employees receive 14 working days of paid annual leave for their first year of service, with one additional day added each year up to a maximum of 35 working days.

Public Holidays

Eritrean employees receive time off for public holidays, which reflect the country’s diverse religious traditions and national history:

  • New Year’s Day – January 1
  • Orthodox Christmas Day (Leddet) – January 7
  • Orthodox Epiphany (Timket) – January 19
  • Fenkil Day (commemorates the Battle of Massawa) – February 10
  • International Women’s Day – March 8
  • Eid al-Fitr (End of Ramadan) – March 30
  • Coptic Good Friday – April 18
  • Coptic Easter – April 20
  • International Workers’ Day (Labour Day) – May 1
  • Independence Day – May 24
  • Eid al-Adha (Feast of Sacrifice) – June 6
  • Martyrs’ Day – June 20
  • Revolution Day (commencement of Eritrean armed struggle) – September 1
  • The Prophet’s Birthday (Milad un Nabi) – September 5
  • Geez New Year (Keddus Johannes) – September 11
  • Meskel (Discovery of the True Cross) – September 27
  • Christmas Day – December 25

These holidays combine Orthodox Christian observances, Islamic festivals, and significant national commemorations. Islamic holiday dates shift annually based on lunar calendar observations but remain officially recognized, ensuring all employees can observe their religious and cultural traditions.

Sick Leave

Employees in Eritrea get up to 6 months of sick leave per year with medical certification. The first month is paid at full salary, the next two months at half salary, and any additional time is unpaid.

Maternity and Paternity Leave

Female employees are entitled to 60 consecutive days (approximately 8.5 weeks) of paid maternity leave, which can be taken before and/or after childbirth. Additional unpaid leave may be granted if medically necessary, and employment is fully protected during and after maternity leave, with dismissal due to pregnancy or maternity leave being prohibited.

Eritrean labor law does not explicitly mandate paternity leave, meaning fathers have no statutory entitlement to time off following childbirth. 

Other Leave

Bereavement leave isn’t required by law in Eritrea, so whether employees receive time off when a family member dies depends entirely on their employer’s policies. Some companies offer it, others don’t.

Other types of special leave, like time off for national service, military duty, or union activities, also aren’t guaranteed and depend on specific circumstances and what employers are willing to allow. 

Employee Benefits in Eritrea

All Eritrean employees have fundamental labor rights, including standard working hours with overtime pay, paid leave, maternity benefits, social security contributions, and protection from unfair dismissal.

Hiring Contractors in Eritrea

Hiring independent contractors in Eritrea is possible and increasingly common for specialized or project-based work. However, employers must carefully distinguish between contractors and employees to avoid misclassification penalties and legal risks.

A genuine contractor typically controls their own work methods, supplies their own tools, can serve multiple clients simultaneously, works without fixed hours, invoices for payment, and is engaged for a defined project scope rather than ongoing duties. If your arrangement doesn’t reflect most of these, the worker may be legally considered an employee.

  • Key Requirements: Independent contractors require clear, written agreements that specify their self-employed status, scope of work, payment terms, intellectual property rights, and project duration. 
  • Tax and Benefits: Contractors manage their own income tax, VAT, and business registration requirements. Employers do not withhold taxes or provide social security contributions, paid leave, or other employee benefits. 

Workers' Compensation in Eritrea

Eritrea has a legal framework for workers’ compensation embedded in its labor law, which requires employers to provide compensation and medical care for employees injured or made ill due to work. 

Injured employees are entitled to periodic wage payments (at least 75% of wages) during recovery, disability compensation if injuries result in permanent impairment, and death benefits for survivors. 

Workers must seek treatment from authorized medical providers and can appeal decisions related to claims. However, unlike many countries, Eritrea does not have a formal, centralized social security fund, so this compensation system operates within a limited and resource-constrained context. 

Still, employers are obligated to ensure safe working conditions and comply with workers’ compensation rules to protect employees.

Terminations and Severance in Eritrea

An employment contract can be ended by mutual agreement, resignation, or dismissal. Dismissal must be based on a valid reason, such as redundancy, employee misconduct, or incapacity. Employers are required to provide justifiable grounds for termination to ensure fairness and transparency.

Ending an Employment Contract

Either party can terminate contracts through resignation, mutual agreement, contract expiry, or for justifiable reasons, such as misconduct. However, discrimination based on race, gender, religion, pregnancy, or union activities is strictly prohibited.

Notice Periods

The length of service and type of contract dictate notice periods for ending an employment contract. The minimum notice periods are:

Length of EmploymentMinimum Notice Period
Less than 1 yearAt least 7 days
1 to 2 yearsAt least 14 days
2 to 5 yearsAt least 21 days
Over 5 yearsAt least 30 days

These notice periods apply to both the employer and employee unless otherwise specified in the contract. Employers may choose to pay the employee in lieu of notice instead of requiring them to work during the notice period.

Severance Pay

Employees who are dismissed without just cause are entitled to severance pay based on their length of service. For the first five years of continuous service, employees receive two weeks’ wages per year of service. For service beyond five years and up to ten years, the severance pay increases to three weeks’ wages per year.

Expand into Eritrea Easily with Remote People’s Employer of Record (EOR) Solution

Eritrea’s strategic Red Sea location and growing mining sector create real opportunities for businesses expanding into East Africa. But getting to grips with labor laws, mandatory benefits, and local compliance requirements can overwhelm even the most experienced teams.

Remote People’s EOR service handles all of this for you. We manage everything from employment contracts and payroll to social security contributions, so you can hire talent without establishing a local entity. 

Starting at $199 per month, you can skip the legal barriers and focus on growing your business in this emerging market.

Ready to hire in Eritrea? Get a free, no-obligation quote within 24 hours — or speak directly with our Eritrea hiring specialists. Onboarding can begin in as few as 2–4 weeks.

Frequently Asked Question

Yes. Through an Employer of Record, a foreign company can legally employ workers in Eritrea without registering a local entity. The EOR acts as the legal employer on record, handling contracts, payroll, and compliance — you retain full day-to-day control of your team.

Eritrea maintains a relatively restricted economic environment with limited foreign direct investment compared to neighboring countries. The government prioritizes sectors like mining, agriculture, and infrastructure. Foreign employers operate most smoothly in these industries, while other sectors may face more scrutiny or bureaucratic friction.

Salaries must be paid in Eritrean Nakfa (ERN). Currency controls are strict, and the Nakfa is not freely convertible. Foreign employers cannot simply wire USD or EUR — payments must go through licensed local banks. An EOR handles this conversion and banking infrastructure, removing a significant operational headache for international companies.

Eritrea has a national service program that can affect workforce availability, particularly for younger workers. Employees may be called for service obligations, which can interrupt employment. This is a practical reality employers should factor into workforce planning — an EOR familiar with the local context can help manage these situations.

Eritrea's Labour Proclamation No. 118/2001 provides a framework for resolving disputes, typically through mediation or the Ministry of Labour before escalating to courts. Dispute resolution can be slow given limited administrative resources, so having clear, well-drafted employment contracts from the start is the most effective way to prevent issues.