Employer of Record in Somalia

An Employer of Record (EOR) in Somalia helps you hire employees in the country without needing to set up your own local company. Think of an EOR as a partner that handles all the legal and administrative parts of employment for you. This means they take care of contracts, payroll, taxes, and benefits, making sure everything follows Somali labor laws. You manage your employees' day to day work, while the EOR handles the rest. For companies looking to hire in Somalia, an EOR like Rivermate can simplify the process.

How an Employer of Record (EOR) Works in Somalia

Using an EOR to hire in Somalia is a straightforward process. Here is how it generally works:

1. You Find the Talent: You identify the person you want to hire in Somalia.
2. The EOR Hires Them: The EOR legally hires the employee on your behalf through a compliant local employment contract.
3. Onboarding: The EOR manages the onboarding process, making sure all necessary paperwork is completed correctly.
4. Day to Day Management: You manage your employee's daily tasks and responsibilities, just as you would with any other team member.
5. Payroll and Benefits: The EOR handles all payroll, tax withholdings, and employee benefits according to Somali regulations.
6. Ongoing Compliance: The EOR stays up to date with any changes in local labor laws to ensure you remain compliant.

Benefits of Using an EOR for Hiring in Somalia

Using an EOR in Somalia offers several advantages, especially for international companies. It allows you to enter the Somali market and hire local talent quickly and efficiently. An EOR removes the need to establish a legal entity in the country, which can be a time consuming and expensive process.

Some of the key benefits include:

• Faster Hiring: You can hire and onboard new employees in a fraction of the time it would take to set up a local company.
• Reduced Costs: Avoid the high costs associated with establishing and maintaining a legal entity in Somalia.
• Compliance Assurance: EORs are experts in local labor laws, so you can be confident that your hiring practices are fully compliant.
• Simplified Payroll: All payroll and tax matters are handled by the EOR, saving you administrative headaches.
• Focus on Your Business: With the administrative side of employment taken care of, you can focus on your core business goals.

Rivermate's transparent pricing model eliminates complexity with a single, competitive monthly fee per employee. Unlike traditional PEO providers, our pricing in Somalia includes comprehensive HR support, benefits administration, compliance management, and access to our proprietary dashboard for real-time workforce analytics. No hidden costs, no setup fees—just straightforward pricing that scales with your business needs while ensuring full legal compliance in Somalia.

Hiring in Somalia requires navigating a unique landscape. The country's labor laws are based on the Labour Code from 1972, and while a framework exists, its enforcement can vary. For foreign companies, understanding the local context is key to successfully building a team. This means paying close attention to employment contracts, local customs, and legal requirements to ensure a smooth and compliant operation.

Employment contracts & must-have clauses

When you hire employees in Somalia, a clearly written employment agreement is essential. While not always mandatory, a written contract protects both you and your employee by outlining the terms of employment.

There are two main types of employment contracts in Somalia:

• Indefinite-Term Contracts: These are for permanent, ongoing roles with no specified end date.
• Fixed-Term Contracts: These contracts have a specific duration and are used for project-based or temporary work.

Your employment contracts should include the following essential clauses:

• Parties' Identification: Full names and addresses of both the employer and employee.
• Job Details: The employee's job title and a clear description of their duties.
• Place of Work: The location where the employee will be based.
• Start Date: The official start date of the employment.
• Contract Duration: If it's a fixed-term contract, the end date must be specified.
• Remuneration: Details of the salary, wages, and how often they will be paid.
• Working Hours: The expected hours of work.
• Leave Entitlements: Information on annual leave, sick leave, and public holidays.
• Probation Period: If applicable, the details of the probationary period.

Probation periods

A probationary period allows you and your new hire to assess if the role is a good fit. In Somalia, the probation period is typically three months. During this time, either you or the employee can terminate the contract with a shorter notice period than what is required after probation. If the employee successfully completes the probation, their employment continues under the terms of the contract.

Working hours & overtime

The standard workweek in Somalia is 48 hours, typically consisting of eight-hour days over six days. The usual rest day is Friday.

Here's a breakdown of overtime pay:

Overtime should not exceed two hours per day or 12 hours per week.

Public & regional holidays

Employees in Somalia are entitled to paid time off for public holidays. If an employee works on a public holiday, they must receive at least a 50% increase in their normal pay.

Here are some of the public holidays observed in Somalia:

• New Year's Day
• Eid al-Fitr
• Labour Day
• Eid al-Adha
• Independence Day
• Republic Day
• Ashura
• Milad un Nabi (Birth of the Prophet Muhammad)

Hiring contractors in Somalia

Hiring independent contractors in Somalia can be a flexible way to access specialized skills for specific projects. This approach allows you to scale your workforce without the long-term commitments of full-time employment.

However, it's crucial to correctly classify your workers. Misclassifying an employee as an independent contractor can lead to significant risks, including fines, back taxes, and other penalties. The key distinction lies in the level of control: employees are under your direct supervision, while independent contractors have more autonomy over their work.

An Employer of Record (EOR) can help you mitigate these risks. An EOR acts as the legal employer for your workers, ensuring they are classified correctly according to Somali labor laws. This means the EOR handles all the administrative and legal burdens, from compliant contracts to payroll and taxes, allowing you to focus on managing your team's day-to-day work with confidence.

Understanding compensation and payroll in Somalia requires a look at a system that is largely informal and decentralized. Due to a history of instability, formal country-wide regulations are not always established or enforced. As a result, employment terms, salaries, and payment practices often depend on the specific industry, the size of the company, and direct agreements between you and your employees. Sectors like telecommunications, banking, and international non-governmental organizations (INGOs) tend to offer higher pay and more structured compensation packages.

Payroll cycles & wage structure

The most common payroll cycle in Somalia is monthly. You will typically pay your employees once a month, often toward the end of the month. For workers paid on a daily basis, you must issue payments at least every two weeks.

While cash payments are still common, direct bank transfers and mobile money payments are growing in popularity, especially within larger companies.

In addition to base salary, your compensation packages might include allowances. Common additions are housing and transportation allowances to cover accommodation and commuting costs.

Overtime & minimums

Somalia does not have a legally mandated national minimum wage. Wages are typically set by you as the employer, through industry standards, or by collective agreements.

You must pay a premium for overtime work. The standard workweek is 8 hours a day for 6 days a week. For extra hours worked on a regular day, the pay rate is 125% of the normal hourly wage. If an employee works on a holiday, the rate increases to 150%. For work performed on specific national holidays like Labor Day, the rate is 200% of the regular pay.

Employer taxes and contributions

You are not required to make statutory social security contributions for your employees.

Employee taxes and deductions

Your employees do not have statutory payroll contributions or deductions for social security.

In Somalia, providing employee benefits and leave goes beyond basic legal compliance. It's about building a supportive work environment. While the law sets minimum standards, many companies offer more to attract and retain talent. Understanding these local expectations is key to hiring in the country.

Statutory leave

Your employees in Somalia have a right to several types of paid leave. These are the minimums set by law.

• Annual Leave: Employees are entitled to paid annual leave after a year of service. The exact number of days can vary, but it's typically around 15 to 21 working days. This entitlement may increase with the length of employment.
• Sick Leave: If your employee is sick or injured, they are entitled to paid sick leave. Typically, this is 7 days with full pay, followed by another 7 days with half pay. A medical certificate is usually required to justify the absence.
• Maternity Leave: Female employees are entitled to maternity leave. The length of this leave is generally around 14 weeks. To receive maternity benefits, an employee usually needs to have worked for you for at least six continuous months.
• Paternity Leave: Fathers are generally entitled to 2 weeks of paid leave immediately following the birth of a child.

Public holidays & regional holidays

Your employees are entitled to a paid day off for public holidays. If they need to work on these days, you must pay them a premium rate, often double their regular wage. Some holidays are based on the lunar calendar, so their dates change each year.

Typical supplemental benefits

To be a competitive employer in Somalia, you should consider offering more than the legal minimum. Here’s a look at what is required by law versus what is commonly offered as an additional benefit.

How an EOR can help with setting up benefits

Setting up a competitive benefits package in a new country can be complicated. An Employer of Record (EOR) simplifies this process for you.

An EOR acts as the legal employer for your team in Somalia. We handle all the administrative and HR tasks, including benefits.

Here’s how we help:

• Compliance: We ensure your benefits packages meet all of Somalia's labor laws.
• Local Expertise: We understand local expectations and can help you create a benefits package that attracts top talent.
• Administration: We manage everything from health insurance enrollment to tracking leave. This saves you time and reduces your administrative burden.
• Simplicity: You get one simple invoice for all your employment costs, including salaries and benefits.

Using an EOR allows you to focus on your business goals while we take care of the complexities of local employment.

When an employment relationship ends in Somalia, you need to follow a clear process to ensure everything is fair and compliant. This involves giving proper notice, calculating final pay, and handling all the necessary paperwork. A structured offboarding ensures a smooth transition for both you and the departing employee. It protects your company from legal issues and helps maintain a positive reputation.

Notice periods

When you decide to terminate an employment contract, you must provide written notice. The length of this notice period depends on how long the employee has worked for you.

In some cases, you can pay the employee their regular wages for the notice period instead of having them work.

Severance pay

If you terminate an employee without just cause, they are usually entitled to severance pay. The amount is calculated based on the employee's length of service and their final basic salary.

One common way to calculate severance is one month's basic wage for each year of continuous service. For partial years, six months or more of service is typically counted as a full year.

Another calculation for redundancy dismissal is based on the number of weeks of pay:

• One year of service: About 4 weeks of pay.
• Five years of service: About 21 weeks of pay.
• Ten years of service: About 43 weeks of pay.

How Rivermate handles compliant exits

At Rivermate, we manage the entire offboarding process to ensure you comply with Somali labor laws. We take care of the details so you can focus on your business.

Here’s how we help:

• Legal Compliance: We ensure every termination adheres to the correct notice periods and severance pay regulations. We stay up to date with local labor laws to protect you from legal risks.
• Documentation: We handle all the necessary paperwork. This includes drafting the termination letter and calculating the final payment, including any accrued benefits.
• Clear Communication: We facilitate clear communication with the departing employee. This helps ensure a professional and respectful process for everyone involved.
• Smooth Transition: Our process is designed to be efficient and straightforward. We manage the administrative tasks of offboarding, making the exit as smooth as possible for both you and your employee.

Navigating visas and work permits in Somalia can seem complex. If you're looking to hire employees in the country, you need to understand the requirements to ensure everything is done correctly. This guide breaks down what you need to know about employment visas and business travel.

Employment visas & sponsorship realities

Any foreign national seeking employment in Somalia needs a valid work permit. This applies to all non-Somali citizens, whether they are relocating for a long-term position or working on a temporary assignment. As the employer, you are responsible for ensuring your foreign employees have the necessary permits to work legally in the country.

An Employer of Record (EOR) can help you navigate local labor laws and sponsor work visas. This is a common route for companies hiring full-time foreign talent in Somalia. An EOR must have a registered legal entity in the country and issue a compliant offer of employment to sponsor a visa.

Here are the primary visa options for long-term employment:

• Work Permit: This is for long-term employment and is usually issued for up to one year and is renewable.
• Temporary Work Visa: This is valid for short-term contracts up to 6 months.
• Long-Term Work Visa: This is for contracts that exceed six months.

The application process for a work permit involves several steps:

1. The employer submits a sponsorship request to the Somali authorities.
2. The employee completes the application form and submits the required documents.
3. The application fees are paid.
4. The Ministry of Labor reviews the application.
5. Once approved, the employee receives the work permit.

Business travel compliance (short‑term visits)

For short-term business trips, a business visa is the most suitable option. This visa is typically valid for 30 to 90 days. Somalia also offers a visa on arrival for certain passport holders, which is generally valid for 30 days. This can be a good option for short-term assignments or initial business trips. However, you cannot convert a visa on arrival into a long-term work permit.

To apply for a visa on arrival, your representative in Somalia will need to file a formal request on your behalf.