Probation Under Ethiopia’s Labour Proclamation: The 60-Day Rule and the Managerial Exception

For every business hiring in Ethiopia — from home-grown startups to foreign investors launching their first local operation — some of the most pressing questions that arise are: how does probation really work, and which employees actually fall under the Labour Proclamation? Get either one wrong, and you risk unenforceable contracts, surprise liabilities, and compliance gaps that often only surface when a dispute ends up in court.

What is a probationary period under Ethiopian labour law?

A probationary period is a trial window at the start of employment, meant to let an employer confirm that a new hire is genuinely suited to the role before the relationship becomes fully permanent. In Ethiopia, this is governed by the Labour Proclamation No. 1156/2019 — but only for non-managerial employees, a distinction we'll come back to.

Importantly, probation is not automatic. Ethiopian law does not impose it as a default term of employment. It exists only where the employer and employee have specifically agreed to it, and that agreement must be in writing. If a contract is silent on probation, the employee is treated as a regular worker from day one.

Key rules on probation under Proclamation No. 1156/2019

Once an employer and employee do agree to a probation period, several rules apply automatically:

• • Written agreement required. Probation must be documented in the employment contract or a related written agreement. A verbal understanding won't hold up.

• • 60 working days maximum. The probation period cannot exceed 60 working days, counted from the employee's first day of employment. Because rest days don't count toward this limit, 60 working days typically spans a somewhat longer calendar period.

• • No repeat probation. If a worker is re-employed by the same employer for the same job, they cannot be placed on probation again — the employer has already had the chance to assess them.

• • Streamlined termination during probation. If the employer finds the worker unsuitable during probation, the contract can be terminated without notice, severance, or compensation. The employee has the same flexibility and may resign without notice.

• • Same basic rights otherwise. Outside of this termination rule, probationary workers enjoy essentially the same rights and obligations as any other employee — wages, working hours, and workplace protections all continue to apply.

These rules make probation a useful, low-risk tool for employers — but only if it's documented correctly and the 60-day cap is respected.

Who is a managerial employee?

Here's where many employers, especially those newer to the Ethiopian market, run into trouble. Not every senior-sounding title qualifies someone as "managerial" under the law. The Proclamation defines a managerial employee specifically as someone who, either by law or by delegation from the employer, holds the authority to set and carry out management policy — and who typically also has the power to hire, transfer, suspend, lay off, or dismiss other employees. This category can also extend to heads of legal services who independently recommend disciplinary or managerial action on the employer's behalf.

The key test isn't job title or seniority — it's whether the person genuinely exercises this kind of policy-setting or personnel authority on the employer's behalf.

Why the Labour Proclamation does not govern managerial employees

This is a point that surprises many employers: managerial employees are expressly excluded from the scope of the Labour Proclamation. The reasoning is that managerial staff act as representatives of the employer itself, rather than as workers needing the Proclamation's protective framework.

Practically, this means the 60-working-day probation cap, the notice-free termination rule, and the other protections discussed above simply do not apply to genuinely managerial staff. Instead, a managerial employee's relationship with the company is governed by their individual employment contract and the general contractual provisions of the Civil Code. This does allow for a trial or probationary arrangement to be built into a managerial contract, but without the statutory 60-day ceiling that applies to non-managerial workers. In other words, the parties have considerably more contractual freedom to define probation terms for a managerial role, since there's no proclamation-imposed cap to work around.

Practical takeaways for employers and HR

• • Always put probation in writing for non-managerial hires, and specify the exact number of working days. Silence creates no probation period at all.

• • Track the 60-working-day limit carefully. Agreements that try to extend probation past this cap won't be enforceable.

• • Don't re-apply probation to returning employees in the same role with the same employer.

• • Classify roles correctly before drafting contracts. Ask whether the position genuinely carries policy-setting or hire/fire authority — that determines whether the Labour Proclamation applies at all.

• • Draft managerial contracts under the Civil Code framework, with clear, bespoke terms on any trial period, since the statutory protections and caps that apply to ordinary workers won't fill the gaps here.

Getting this distinction right at the hiring stage — probation terms for regular staff, and a properly tailored contract for managerial hires — is one of the simplest ways to reduce compliance risk when building a team in Ethiopia.