Hire in Rwanda through our Employer of Record (EOR)

An Employer of Record (EOR) is a third-party organization that takes on the legal and administrative responsibilities of employing workers on behalf of another company. This arrangement allows businesses to hire employees in countries where they don't have a legal entity, effectively expanding their global reach without the need to establish a local subsidiary.

For a country like Rwanda, with its growing economy and increasing attractiveness to foreign investors, the concept of EOR can be particularly beneficial. It provides a streamlined way for international companies to tap into Rwanda's talented workforce and contribute to the country's economic development without navigating the complexities of local labor laws and regulations on their own.

How Does EOR Work?

The EOR model operates by creating a triangular relationship between the EOR provider, the client company, and the employee. Here's a breakdown of how it typically functions:

1. The client company identifies a candidate they wish to hire in Rwanda.
2. The EOR provider legally employs the worker on behalf of the client company.
3. The EOR handles all employment-related tasks, including:
   • Drafting and signing employment contracts
   • Processing payroll and taxes
   • Ensuring compliance with local labor laws
   • Managing benefits and insurance
   • Handling HR-related issues
4. The client company maintains day-to-day management of the employee's work and responsibilities.
5. The EOR bills the client company for the employee's salary plus a service fee.

This arrangement allows companies to quickly and compliantly hire talent in Rwanda without establishing a local entity or risking non-compliance with local regulations.

Benefits of Using an EOR

Utilizing an EOR in Rwanda offers several advantages for both international companies and the local economy:

1. Simplified Market Entry: Companies can test the Rwandan market without committing to establishing a legal entity, reducing risk and initial investment.

2. Compliance Assurance: EORs are well-versed in Rwanda's labor laws, ensuring that companies remain compliant with local regulations, which can be complex and subject to change.

3. Cost-Effective Expansion: By eliminating the need for setting up a local subsidiary, companies can save on incorporation costs, office space, and administrative overhead.

4. Faster Hiring Process: EORs can onboard employees quickly, allowing companies to respond swiftly to market opportunities in Rwanda.

5. Local Expertise: EORs provide valuable insights into Rwanda's business culture, helping foreign companies navigate local customs and practices.

6. Risk Mitigation: The EOR assumes legal responsibility for employment, shielding the client company from potential employment-related liabilities.

7. Focus on Core Business: Companies can concentrate on their primary operations while the EOR handles HR and administrative tasks.

8. Flexibility: EORs offer scalability, allowing companies to easily adjust their workforce in Rwanda based on business needs.

9. Access to Benefits: EORs often have established relationships with local benefit providers, potentially offering better packages to employees.

10. Support for Rwanda's Economy: By facilitating foreign investment and job creation, EORs contribute to Rwanda's economic growth and development.

For Rwanda, a country that has made remarkable progress in recent years and is eager to attract foreign investment, the EOR model presents an opportunity to further integrate into the global economy. It allows Rwandan talent to connect with international companies, fostering skill transfer and economic diversification. As Rwanda continues to position itself as a business-friendly destination in East Africa, the role of EORs in facilitating this growth is likely to become increasingly significant.

Rwanda's employment landscape is characterized by a young, growing workforce predominantly engaged in agriculture, with an increasing shift towards service and technology sectors. The country faces challenges such as high youth unemployment and a skills gap, but government initiatives focusing on education and economic diversification are creating new opportunities. Rwanda's unique blend of traditional values and modern aspirations shapes its evolving work culture.

Overview of Labor Laws

Rwanda's labor laws aim to protect workers' rights while promoting economic growth. Key aspects include:

• A standard 45-hour workweek with provisions for overtime pay
• Minimum wage regulations, though not universally applied
• Mandatory social security contributions for both employers and employees
• Provisions for annual leave, sick leave, and maternity leave
• Protections against discrimination and unfair dismissal

The government regularly updates these laws to align with international standards and address emerging workplace issues.

Cultural Considerations

Understanding Rwanda's cultural nuances is crucial for successful employment relationships:

• Communal values: The concept of Ubuntu ("I am because we are") influences workplace dynamics, fostering a sense of shared responsibility.
• Respect for authority: Hierarchical structures are common, with formal titles and age-based respect being important.
• Indirect communication: To maintain harmony, feedback and requests may be expressed indirectly.
• Relationship-building: Personal connections are valued, often preceding business discussions.
• Work-life balance: There's often flexibility regarding personal and family obligations.

Challenges of Direct Hiring

Employers face several challenges when directly hiring in Rwanda:

1. Skills mismatch: Despite government efforts, there's often a gap between available skills and job market demands.

2. Language barriers: While English is widely used in business, proficiency levels vary, potentially complicating recruitment and training.

3. Cultural adaptation: International companies may struggle to align their practices with local cultural norms and expectations.

4. Legal complexities: Navigating Rwanda's evolving labor laws can be challenging, especially for foreign entities unfamiliar with the local legal landscape.

5. Informal sector competition: A significant portion of the workforce operates in the informal sector, which can complicate formal hiring processes.

6. Infrastructure limitations: Depending on the location, issues with transportation or internet connectivity may affect recruitment and remote work possibilities.

7. Retention challenges: As the job market evolves, retaining skilled employees in a competitive environment can be difficult.

Addressing these challenges requires a deep understanding of Rwanda's unique employment landscape, cultural nuances, and legal framework. Many companies find that partnering with local experts or using services like Rivermate's Employer of Record solution can help navigate these complexities more effectively.

Rwanda's payroll and tax system is designed to ensure fair contributions from both employers and employees while supporting the country's social security framework. The system incorporates various elements, including income tax, social security contributions, and skills development levies. Understanding these components is crucial for both employers and employees to navigate the Rwandan labor market effectively.

Employer Contributions

Employers in Rwanda have several financial obligations when it comes to payroll and taxes. These responsibilities are designed to support both the government's revenue collection and the social welfare of employees.

Pay As You Earn (PAYE)

One of the primary responsibilities of employers is the implementation of the Pay As You Earn (PAYE) system. This method involves withholding income tax from employees' salaries at source. The PAYE rates in Rwanda are progressive:

• 0% on the first 60,000 Rwandan Francs (RWF) of monthly income
• 20% on income between 60,001 RWF and 100,000 RWF
• 30% on income above 100,000 RWF

For casual laborers employed for less than 30 days in a tax year, a flat rate of 15% applies. Employers must remit the withheld PAYE to the tax authorities by the 15th of the month following the salary payment.

Social Security Contributions

Employers are required to contribute to the Rwanda Social Security Board (RSSB), which manages the country's pension scheme and other social security benefits. The employer's contribution is set at 5% of an employee's gross salary. Like PAYE, this contribution must be paid by the 15th of the following month.

Skills Development Levy (SDL)

Although currently not being collected, employers are subject to the Skills Development Levy. This is calculated as 1% of the gross salary of all employees. Employers should stay informed about any changes in the collection status of this levy.

Employee Contributions

Employees in Rwanda also have tax and social security obligations, which are typically deducted from their salaries by their employers.

Pay As You Earn (PAYE)

All employees with taxable income are subject to PAYE. The tax rates are progressive, mirroring the rates used by employers for withholding:

• 0% on the first 60,000 RWF of monthly income
• 20% on income between 60,001 RWF and 100,000 RWF
• 30% on income exceeding 100,000 RWF

Social Security Contributions

Employees in the formal sector are required to contribute to the Rwanda Social Security Board (RSSB). The employee's contribution is set at 3% of their gross salary. This is deducted from the employee's salary and remitted to the RSSB along with the employer's contribution.

It's important to note that specific rules may apply if an employee has more than one employer. In such cases, employees should consult with tax professionals or the Rwanda Revenue Authority to ensure proper compliance with tax regulations.

Understanding these payroll and tax obligations is crucial for both employers and employees in Rwanda. It ensures compliance with local laws, supports the country's social security system, and helps in effective financial planning. As regulations may change over time, it's advisable to stay updated with the latest information from official sources or consult with local tax experts.

Rwanda offers a comprehensive set of employee benefits, ensuring the well-being and security of its workforce. As an Employer of Record (EOR), Rivermate expertly manages these benefits, ensuring compliance with local labor laws while providing valuable support to both employers and employees. By partnering with an EOR, companies can navigate the complexities of Rwanda's benefit system with ease, allowing them to focus on their core business operations while providing their employees with the benefits they deserve.

Mandatory Benefits

• Annual leave of 18 days per year, increasing with tenure
• 14 paid public holidays annually
• Sick leave (duration not specified)
• 12 weeks of paid maternity leave
• 4 days of paid paternity leave
• Employer pension contributions of 3% of salary
• Contributions to maternity leave benefits fund
• Overtime pay for work beyond regular hours
• Notice period for employment termination
• Severance pay under certain circumstances

Optional Benefits

• Private medical insurance coverage
• Wellness programs and gym memberships
• Flexible work arrangements (remote work, flextime)
• Childcare support or on-site facilities
• Life insurance plans
• Pension top-up schemes
• Training and development programs
• Tuition reimbursement for job-relevant education

These optional benefits vary by employer and are often used to attract and retain top talent in Rwanda's competitive job market. As an EOR, Rivermate can help companies navigate both mandatory and optional benefits, ensuring compliance while creating attractive compensation packages for employees in Rwanda.

The process of termination and offboarding in Rwanda is governed by strict regulations to protect both employers and employees. Understanding these procedures is crucial for maintaining compliance and ensuring a smooth transition when an employment relationship comes to an end.

Termination Process in Rwanda

In Rwanda, the termination of employment is regulated by Law N° 66/2018 of 30/08/2018. This law outlines several legitimate reasons for dismissal, including employee misconduct, economic reasons, and mutual consent.

Grounds for Dismissal

Employers can terminate an employee's contract based on:

1. Employee misconduct (ordinary or gross)
2. Economic reasons
3. Mutual agreement

Ordinary misconduct includes unauthorized absences, poor job performance, policy breaches, and insubordination. Gross misconduct involves more severe offenses like theft, fraud, workplace violence, or being intoxicated at work.

Notice Requirements

When terminating an employee, employers must provide written notice, except in cases of gross misconduct. The notice period depends on the employee's length of service:

• Less than one year: Minimum 15 days notice
• More than one year: Minimum 30 days notice

The notice must clearly state the reason(s) for termination.

Severance Pay

In cases of unfair dismissal, Rwandan law mandates severance pay. The amount is calculated based on the employee's length of service and salary:

• Minimum: 3 months' salary
• Maximum: 6 months' salary (9 months for employees with over 10 years of service)

Offboarding Considerations

1. No notice period is required for terminations during the probation period.
2. Employees dismissed for gross misconduct are not entitled to notice or severance pay.
3. Given the complexity of Rwandan employment law, seeking legal advice during termination processes is advisable.

By following these guidelines, employers can ensure a compliant and fair termination process, while employees can better understand their rights and entitlements during offboarding in Rwanda.

Rwanda has been actively working to attract foreign talent and investment in recent years, implementing policies to streamline the process for international workers. Here's a concise overview of the visa and work permit requirements for foreign workers in Rwanda:

Entry Visa

Most foreign nationals require a visa to enter Rwanda. Visitors from many countries can obtain a 30-day tourist visa on arrival or apply for an e-visa online before travel. However, for work purposes, it's recommended to apply for the appropriate visa before arrival.

Work Permit

Foreign workers need a valid work permit to legally work in Rwanda. The process typically involves the following steps:

1. The employer must first obtain approval from the Rwanda Development Board (RDB) to hire a foreign worker.
2. Once approved, the foreign worker can apply for a work permit through the Directorate General of Immigration and Emigration.
3. Required documents usually include a valid passport, job offer letter, educational certificates, and police clearance from the home country.

Temporary Resident Permit

In addition to the work permit, foreign workers need to apply for a Temporary Resident Permit. This permit is usually valid for two years and can be renewed.

Special Permits

Rwanda offers special permits for investors and highly skilled professionals in certain sectors. These permits may have different requirements and offer additional benefits.

Processing Time and Fees

Processing times can vary, but work permits are typically issued within 2-4 weeks. Fees also vary depending on the type and duration of the permit.

It's important to note that regulations can change, so it's advisable to check with the Rwandan embassy or consulate in your home country for the most up-to-date information before initiating the application process.