Over Time Earning

Ethiopia has not ratified the Convention 01 & 171.

Working overtime is to be avoided. Whenever it is unavoidable, extra
compensation is at stake - minimally the basic hourly wage plus all
additional benefits you are entitled to. In accordance with ILO
Convention 1, overtime pay rate should not be less than one and a
quarter times (125%) the regular rate.

A night worker is a worker whose work requires

performance of a substantial number of hours of night work which
exceeds a specified limit (at least 3 hours). Convention 171 requires
that night workers be compensated with reduced working time or
higher pay or similar benefits.

Overtime is the work done in excess of the normal daily hours of work. A worker may
not be compelled to work overtime except in case of accident (actual or expected), force
majeure, urgent work, or substitution of absent workers assigned on work that runs
continuously without interruption. Overtime work may not exceed 4 hours in a day or
12 hours in a week. If a worker works beyond the stipulated working hours during the
week days, i.e., 8 hours a day and 48 hours a week, he/she is entitled to an overtime
premium as follows:

 150% of normal hourly rate for overtime work between 06 a.m. to 10 p.m.;
 175% of normal hourly rate for overtime work between 10 p.m. to 06 a.m.;
 200% of the normal hourly rate for work on a weekly rest day; and
 250% of the normal hourly rate for work on a public holiday.

Public Holidays

Ethiopia observes the following public holidays:

Compiled By: Yehualashet Mekonnin 1 of 3 Accounting & Finance- “Overtime Pay”

  Eastern Orthodox
 Timkat
 Adwa Victory Day
 Good Friday (Eastern)
 Orthodox Easter
 Labor Day
 Patriots’ Victory Day
 Eid al-Fitr
 Derg Downfall Day
 Eid al-Adha
 Enkutatash
 Meskel
 Mawlid

Working Hours

The standard workweek in Ethiopia is 48 hours. Employees typically work eight hours a day, six
days a week. Limitations apply to younger workers. Overtime work is limited to two hours per
day, 20 hours a month or 100 hours annually.

Example: consider the following information and compute the OT earning of employees.

No. Name Basic Overtime OT scenarios OT earning

Salary work hours
in the month
1 Almaz Haile 10,950 6 Hrs. OT between 06 a.m -10 p.m
2 Abdisa Dejene 8,500 8 Hrs. OT between 10 p.m -06 a.m
3 Besufikad Lema 3,800 3 Hrs. OT on Public Holiday
4 Yeshiwork Abebe 2,500 7 Hrs. Weekly rest day
5 Wubnesh Haile 4,300 12 Hrs. 2hrs on public holiday& 10
hrs. b/n 06 a.m – 10 p.m

Assumptions

Compiled By: Yehualashet Mekonnin 2 of 3 Accounting & Finance- “Overtime Pay”

  All employees are permanent employees
 The weekly expected working hours is 48 hrs.
 All other allowance to employees are exempted from tax.
 Compute the OT earning, tax and Net Pay
1. Almaz Haile
a. Hourly pay = B.S/monthly hours
= 10,950/192 hrs.
= 57.03
b. OT earning = Hourly pay X work hours X Rate
= 57.03 X 6hrs. X 1.5
= 513.27
c. Tax = (Total earning X tax rate) – Deduction
= (10,950+513.27)
= (11,463.27 X 0.35) – 1,500
= 2,512.14
d. Net Pay = Total earning – Tax
=11,463.27 – 2,512.14
= 8,951.13
2. Abdisa Dejene

Compiled By: Yehualashet Mekonnin 3 of 3 Accounting & Finance- “Overtime Pay”