Workforce Africa simplifies hiring, payroll, talent management as well as your compliance needs for employees and independent contractors in Djibouti. No need for a subsidiary or entity setup. From contracts and onboarding to taxes, payroll, and admin tasks, partnering with us — the Employer of Record in Djibouti, will help you focus on growth for greater levels of success.

How Employer of Record (EoR) in Djibouti Works

Workforce Africa makes it hassle free to hire and manage your remote staff in Djibouti without having to first set up a subsidiary or entity in the country. We handle staff contract management and onboarding, payroll, compliance, taxes, and other administrative matters. With Workforce Africa, you can now focus more on strategic activities and growing your business. These items include:

Employment Contracts in Djibouti

Djibouti’s Labor Law requires written employment contracts for all employees. Typically written in French, these contracts should be signed by both the Employer and employee and address the following provisions, but not limited to:

• Mutual Acknowledgement: Confirmation of agreement between both parties.
• Job Description & Responsibilities: Duties and tasks associated with the position.
• Working hours: Standard is 48 hours per week and overtime compensation (rates may be negotiated)
• Paid leave entitlements (annual leave)
• Work Location: The physical location where the work will be performed
• Compensation: Salary details, including pay structure, frequency, and benefits.
• Severance pays (under certain circumstances)
• Start Date & End Date: The employment contract’s official start and end dates (if applicable).
• The notice period for termination.
• Working Hours in Liberia

Working Hours in Djibouti

In Djibouti, the standard workweek is 48 hours, spread over six days. This 48-hour workweek is the benchmark for working hours in the country, translating to an average of eight hours per day. Other work schedules are applicable based on companies’ service needs.

Overtime Limits

The total working hour limit, including overtime, is 60 hours per week and 12 hours per day. This policy prevents excessively long workdays, demonstrating the value placed on employees’ well-being and work-life balance.

Overtime Pay Rates

In Djibouti, any work performed beyond the standard 48 hours is considered overtime and qualifies for compensation. To Djiboutian labor regulations, overtime compensation is structured as follows:

• • Overtime performed during regular days:
    • Overtime performed the following first eight hrs. – 25% of the hourly rate
    • Overtime performed between 22h to 5h – 75% of the hourly rate
  • Overtime performed during weekends and holidays:
    • 50%of the hourly rate if performed during the day
    • 150%of the hourly rate of performed night

Observed National Holidays and Vacation

Ten national holidays are celebrated in Djibouti. The Ministry of Interior communicates an official circular.

• January 1 (1 day) – New Year’s Day
• February (1 day) – Al Isra et Al Migraj (Lunar)
• April (2 days) – Eid al-Fitr (Lunar)
• May 01 (1 day) – Labor Day
• June (1 day) – Oum Arafat (Lunar)
• June (2 days) – Eid Al Adha
• June 27 & 28 (2 days) – Local Independence Day
• July (1 day) – Awal Muharram (Lunar)
• September (1 day) – Prophet Mohammed’s Birthday- Mawloud Al Nabi (Lunar)
• December 25 (1 day) – Christmas Day

Expats, Visas & Work Permits

E-visa before arrival/ Work Permit and Resident Card for Expat: Yes, before arrival in Djibouti, an E-visa shall be obtained.

Typically, your Employer in Djibouti will handle the work permit application process on your behalf, submitting the necessary documents and your Residence Card to the Institution in charge.

A Djibouti EoR offers this service to help businesses manage their clients.

Paid Leave

• Sick Leave – Djibouti offers a complex ill leave policy with two parts:
  • Temporary Disability: Employees receive 50% of their salary for the first 29 days of sick leave, paid by social security.
  • Extended Leave: After 29 days, employees receive 75% of their salary from social security.
• Maternity Leave – Female employees are granted 26 weeks of paid leave upon childbirth. Seven weeks are to be taken before the birth and nineteen after.
• Exceptional Leaves: 
  • Three days for an employee’s wedding/ marriage
  • One day for an employee’s child’s wedding/marriage
  • Three days for the death of employee’s spouse, child, father or mother
  • One day for the employee’s brother or sister’s death
  • One day for the employee’s father-in-law or mother-in-law’s death
  • Three days for employee’s childbirth
• Study Leave: Some employers offer paid or unpaid study leave for employees pursuing further education or professional development relevant to their work. This is typically not mandated by law but depends on individual company policy.
• Bereavement Leave: Employees may be eligible for bereavement leave upon the passing of a close family member. Individual employers determine the specifics regarding the duration and terms of bereavement leave, which may vary

Statutory Deductions

Personal Income Tax

Djibouti has a progressive personal income tax system. This means the tax rate you pay depends on your total annual income.

• Less than DJF 30,000: 2%
• DJF 30,001 to DJF 50,000: 12%
• DJF 50,001 to DJF 150,000: 15%
• DJF 150,001 to DJF 300,000: 22%
• DJF 300,001 to DJF 600,000: 25%
• DJF 600,001 to DJF 1,000,000: 30%
• DJF 1,000,001 to DJF 2,000,000: 35%
• Over DJF 2,000,000: 45%

Corporate Income Tax (CIT)

The Corporate Income Tax for local and foreign companies is 25% annually.

Health Insurance

In Djibouti, employee health benefits encompass a state-funded universal healthcare system, Local Social Security, CNSS.

CNSS contributions are shared by employees at 6% and employers at 15.7%—a total of 21.7% mandatory contributions, subject to penalties.

However, employers often need more quality healthcare provisions to acquire private medical insurance.

Additional Compensation and Benefits

• After one year of service, employees are entitled to 30 days of paid annual leave upon completing one (1) year of service, called “year of reference”. Accrual of 2.5 days per month. This policy reflects the company’s commitment to the well-being of its employees.
• Seniority allowance: 4% of basic salary upon completing two years of service on continuing service.
• Bonuses: Performance-based or 13th-month bonuses are not mandatory but might be offered by some companies.
• Housing Allowances: In some cases, companies might offer housing allowances, especially for expatriate employees.

Termination/Severance in Djibouti

Termination of Employment

An employment contract can be terminated for different reasons as outlined in the Djibouti Labor Law:

• Completion of Work: Fixed-term contracts naturally end upon project or timeframe completion.
• Employee Death: The contract is automatically terminated upon the employee’s passing.
• Restructuring or Economic Reasons: Termination may occur due to business needs, but specific regulations apply.
• Termination with Notice: According to Labor Law, either party can terminate the contract with prior written notice (the notice period varies depending on the reason and category). Either party who did not respect the notice period shall pay this notice period.
• Termination for Cause: An employee can be dismissed for violating the Labor Law or engaging in misconduct.
• Termination by Employee: Employees are generally not entitled to severance pay if they resign voluntarily.

Termination of Employment 

• Probationary period: Either party can terminate without notice or severance pay.
• Indefinite-term contracts: Requires just cause or operational reasons for termination. Notice period and severance pay may apply.

Termination Process

• A formal notice of termination must be provided in writing to the concerned party to ensure proper procedure.
• In the event of employer-initiated termination, employees are entitled to present a counterargument, which fosters fairness in the process.
• Employers must issue a termination certificate detailing the reasons for dismissal and end of work certificate upon termination.

Probationary/Trial Period

This complies with Djibouti’s local labor law.

• Temporary/Fixed-term contract: The probationary period does not apply to temporary/fixed-term contracts. During this time, both sides can terminate the contract without notice or compensation.
• Permanent contact: The probationary period varies based on the level/categories.
  • 15 days causal labourer paid an hourly rate
  • One month, regular employees
  • 3-month for supervisor middle management

Termination by Employee

Employees are generally not entitled to severance pay if they resign voluntarily.

Notice Period

The notice period required for termination depends on the type of employee and the reason for termination:

Employer Terminating

• Regular Employee: One month’s notice is required for termination without cause (dismissal due to misconduct or company restructuring) or resignation.
• Supervisory or Managerial Roles: Three months’ notice is required for termination without cause (dismissal due to misconduct or company restructuring) or resignation.

Severance Pay

Djibouti law mandates severance payments for employees under certain circumstances. Severance payments are based on the Collective Convention applicable to the Employer’s sector of activity and compensation plan.

• Employee Resignation: No entitlement to severance in case of resignation.

Again, this depends on companies’ compensation plans and policies.

Reason for termination

Employer Initiated

• Dismissal for cause: This might occur due to employee misconduct, serious negligence, or inability to perform the job.
• Redundancy: This could be due to company restructuring or downsizing.

Employee Initiated

• Resignation: Employees must typically provide written notice per the contract or Labour Code.