Understanding Wages and its Determination under Ethiopian Labour Proclamation No. 1156/2019
Understanding wages and its determination is crucial for both employers and employees. In Ethiopia, the Labour Proclamation No. 1156/2019 sets out the framework for fair and equitable remuneration. This article explores the key provisions related to wages and its determination under the Ethiopian Labour Proclamation, citing relevant legal articles.
Definition of Wages
General Definition
Wages, as defined by the Ethiopian Labour Proclamation, are regular payments made by an employer to an employee for work performed. This includes salary, allowances, bonuses, and other benefits (Article 53(1)).
Specific Inclusions
The proclamation specifies that wages include:
- Basic Salary: Regular fixed payments, usually monthly (Article 53(2)(a)).
- Allowances: Additional payments like housing, transportation, and medical allowances (Article 53(2)(b)).
- Bonuses and Incentives: Extra payments based on performance or productivity (Article 53(2)(c)).
- Overtime Payments: Compensation for work beyond regular hours (Article 59).
- Other Benefits: Any additional payments or benefits (Article 53(2)(d)).
Determination of Wages
Contractual Agreement
Wages are primarily determined through mutual agreement between employer and employee, formalized in the employment contract (Article 12(1)).
Minimum Wage
The proclamation provides for a mechanism to set minimum wage to protect employees from exploitation and ensure a basic standard of living. The minimum wage is to be determined by the government, considering factors like:
- Cost of Living
- Economic Conditions
- Industry Standards (Article 55)
Collective Bargaining
Wages can also be determined through collective bargaining, involving negotiations between employers or employers’ associations and employees’ unions. Collective agreements set wage standards and employment conditions (Article 131).
Wage Adjustments
Periodic adjustments to wages account for changes in economic conditions, such as:
- Inflation: Rising costs of goods and services.
- Productivity: Increased efficiency and output.
- Market Rates: Changes in wage levels within the industry or region.
Payment of Wages
Timeliness and Method
Employers must pay wages timely, typically monthly. Payment methods can vary but must be specified in the employment contract (Article 57).
Deductions and Withholdings
The proclamation outlines conditions for wage deductions, including:
- Legal Deductions: Taxes, social security contributions, and other statutory withholdings (Article 58(1)).
- Authorized Deductions: Agreed deductions like loan repayments or savings contributions (Article 58(2)).
- Penalties and Fines: Disciplinary deductions in line with the employment contract (Article 58(3)).
Record-Keeping
Employers must maintain accurate wage payment records, including payment amounts, methods, and deductions. These records must be available to employees upon request and are subject to labor authority inspections (Article 57(3)).
The Ethiopian Labour Proclamation provides a comprehensive framework for wages and its determination and payment. By establishing clear guidelines, it ensures fair compensation and promotes harmonious employment relationships. Understanding these provisions is essential for both employers and employees to navigate their rights and obligations effectively.
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