Employer of Record in Yemen

An Employer of Record (EOR) in Yemen is a company that legally hires and pays employees on your behalf. This allows you to build a team in Yemen without setting up a local company. The EOR handles all the legal and administrative parts of employment, like payroll, taxes, benefits, and contracts. You manage your employees' day to day work, and the EOR takes care of the rest. For companies looking to hire in Yemen, an EOR like Rivermate can simplify the process.

How an Employer of Record (EOR) Works in Yemen

Using an EOR in Yemen follows a straightforward process. You find the talent, and the EOR handles the employment logistics.

Here is how it works:

• You Find Your Candidate. You are responsible for recruiting and selecting the person you want to hire in Yemen.
• The EOR Hires Them. The EOR uses its local business entity in Yemen to legally hire the employee.
• A Local Contract is Created. The EOR drafts an employment contract that follows all of Yemen's labor laws.
• Onboarding is Handled. The EOR manages the paperwork and tasks to get your new hire started.
• You Manage Their Work. The employee is part of your team, and you direct their daily tasks and projects.
• HR and Payroll are Managed. The EOR handles payroll, benefits, taxes, and other HR tasks in compliance with Yemeni law.

Why use an Employer of Record in Yemen

Using an EOR in Yemen helps you expand your team there without the cost and complexity of setting up a local entity. It saves you time and money, allowing you to start operations in days instead of months. An EOR ensures everything is done correctly according to local laws, reducing your risk.

Here are some key benefits:

• Stay Compliant. An EOR understands local labor laws and ensures your hiring practices meet all legal requirements. This helps you avoid penalties from misclassifying employees.
• Save Time and Money. Setting up a legal entity in a new country is expensive and time consuming. An EOR allows you to bypass this process.
• Manage Payroll and Taxes. The EOR handles deducting and remitting taxes from employee salaries to the Yemen Tax Authority, ensuring you follow local tax laws.
• Offer Competitive Benefits. An EOR can help you provide statutory and supplemental benefits to attract and retain top talent in Yemen.
• Focus on Your Business. With the EOR managing HR and administrative tasks, you can focus on your core business goals and managing your team.

Rivermate's transparent pricing model eliminates complexity with a single, competitive monthly fee per employee. Unlike traditional PEO providers, our pricing in Yemen 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 Yemen.

Hiring in Yemen requires understanding a unique legal and cultural landscape. The primary legislation governing employment is the Labour Law No. 5 of 1995. This law provides the foundational rights for employees, which cannot be diminished by employment contracts. Any ambiguity in the law is interpreted in favor of the employee. The country's regulatory system can be complex, making detailed and well-drafted employment agreements crucial.

Employment contracts & must-have clauses

Yemeni law requires a written employment contract to formalize the relationship between an employer and an employee. While verbal agreements can be recognized, a written contract is highly recommended for clarity. There are two main types of employment contracts in Yemen:

• Fixed-term contracts: These contracts are for a specific duration or project.
• Indefinite-term contracts: These are the standard form of employment with no specified end date.

A fixed-term contract that extends beyond five years is typically treated as an indefinite contract.

To ensure compliance, your employment contracts should include the following essential clauses:

Probation periods

You can include a probationary period in an employment contract to assess a new hire's suitability for the role. The maximum duration for a probation period in Yemen is generally three to six months. An employee cannot be placed on probation more than once for the same position. During this period, either you or the employee can terminate the contract without notice.

Working hours & overtime

The standard workweek in Yemen is a maximum of 48 hours, spread over six days, with a maximum of eight hours per day. During the month of Ramadan, working hours are reduced to six hours per day or 36 hours per week.

Work performed beyond the standard hours is considered overtime. Overtime compensation is calculated as follows:

• Normal working days: 1.5 times the basic hourly wage.
• Night, weekends, or holidays: 2 times the basic hourly wage.

Public & regional holidays

Your employees in Yemen are entitled to paid leave on public holidays. These holidays include a mix of religious and national observances.

• New Year's Day
• Eid al-Fitr
• Labour Day
• Unity Day
• Eid al-Adha
• Islamic New Year
• September Revolution Day
• Liberation Day
• Independence Day
• Milad un Nabi (Birth of the Prophet Muhammad)

Hiring contractors in Yemen

Engaging independent contractors can offer your business flexibility. Unlike employees, independent contractors are not covered by the Yemeni Labour Law. Their work relationship is governed by the terms of their service agreement. This means they are not entitled to benefits like minimum wage, paid leave, or severance pay. Contractors are also responsible for their own taxes and social security contributions.

A significant risk when hiring contractors is misclassification. If a contractor is deemed to be an employee in practice, your company could face penalties. An Employer of Record (EOR) can help you mitigate this risk. An EOR ensures that workers are classified correctly according to Yemeni law, protecting you from potential legal issues. By partnering with an EOR, you can confidently engage contractors while remaining compliant with local regulations.

Understanding compensation and payroll in Yemen requires a look at local regulations and common practices. The landscape is shaped by specific laws that dictate how you pay your team. Navigating these rules helps you stay compliant and attract talent. A clear compensation strategy is key to your success in Yemen.

Payroll cycles & wage structure

In Yemen, the standard payroll cycle is monthly. You should pay your employees once per month, and it's best to keep the payday consistent. Direct bank transfers are the most common and secure way to pay your team.

Beyond the basic salary, it is common to offer additional allowances. These can include:

• Transportation allowance to cover commute costs.
• Housing allowance, especially for relocated employees.
• Food allowance to help with daily meal expenses.

Overtime & minimums

Yemen has regulations for minimum wage and overtime to ensure fair pay. The official minimum wage is 18,000 Yemeni Rials (YER) per month. For private sector workers, the minimum wage cannot be less than that of public sector employees, which is 21,000 YER per month.

Overtime pay is calculated at a higher rate.

• Employees earn 150% of their normal rate for overtime.
• For overtime worked at night, the rate increases to 200%.

Official working hours should not exceed eight hours a day or 48 hours a week, spread over six working days.

Employer taxes and contributions

As an employer in Yemen, you are responsible for contributing to social security for your employees. These contributions fund benefits like pensions and disability.

Employee taxes and deductions

Employees in Yemen also contribute to social security and pay income tax. You must withhold these amounts from your employees' salaries.

In Yemen, providing employee benefits and leave is a mix of legal requirements and company policies. The labor law sets the minimum standards you must follow. These rules cover things like time off, working hours, and social security. Understanding these basics is key to hiring in Yemen. It helps you stay compliant and attract good people.

Statutory leave

Yemeni law requires employers to provide several types of paid leave.

• Annual Leave: You must give employees at least 30 paid days of vacation per year. This is calculated as two and a half days for each month of service. To be eligible, an employee must have worked for you for a full year.

• Sick Leave: Employees are entitled to paid sick leave if they are ill or injured. The amount of pay changes the longer they are off.

  • First 2 months: Full salary
  • Months 3 and 4: 85% of salary
  • Months 5 and 6: 75% of salary
  • Months 7 and 8: 50% of salary

• Maternity Leave: Female employees get 70 days of fully paid maternity leave. They can take this time before and after giving birth.

• Pilgrimage Leave: Employees with at least four years of service can take 20 paid days for the Hajj pilgrimage. This is a once-in-a-lifetime entitlement during their employment with you.

Public holidays & regional holidays

Yemen has a number of public holidays. Employees are entitled to a paid day off for these.

Note: Islamic holiday dates are based on the lunar calendar and may vary.

Typical supplemental benefits

Here is a look at both required and common additional benefits in Yemen.

How an EOR can help with setting up benefits

Setting up employee benefits in a new country can be complex. An Employer of Record (EOR) simplifies this for you.

An EOR acts as the legal employer for your workers in Yemen. They handle all the HR tasks, including benefits. This means they:

• Ensure you comply with all of Yemen's labor laws.
• Manage payroll and social security contributions.
• Administer statutory leave and benefits.
• Can help you offer competitive supplemental benefits to attract top talent.

Using an EOR saves you time and reduces risk. You can focus on your business goals, knowing your team is taken care of.

When your company and an employee in Yemen part ways, you need to follow a specific process. This process, known as termination and offboarding, is governed by Yemeni labor law to ensure a fair and lawful separation. Understanding the rules for termination, the necessary documents, and employee rights is key to a smooth exit. The Ministry of Labor and Social Affairs oversees this process to make sure companies follow the regulations.

Notice Periods

Before ending an employment contract, you must give your employee a written notice period. The length of this notice depends on how the employee is paid.

• Monthly paid employees: 30 days notice
• Fortnightly paid employees: 15 days notice
• Hourly, daily, or weekly paid employees: 7 days notice

It's important to check the employment contract, as it might require a longer notice period than the legal minimum. If so, the longer period is the one you must follow. In some cases of serious misconduct, you can terminate an employee without notice.

Severance Pay

When an employee is terminated, they may be entitled to severance pay. The amount is usually based on their salary and how long they have worked for you. If an employee believes they were terminated unfairly, they can file a complaint. If the termination is found to be wrongful, you may have to reinstate the employee or pay compensation, which could be more than the standard severance pay.

How Rivermate handles compliant exits

At Rivermate, we manage the entire offboarding process to ensure it is compliant with Yemeni labor law. We handle every step with clarity and professionalism.

Here’s how we help you:

• Documentation: We prepare and provide all necessary written notices to the employee.
• Fair Process: If the termination is for cause, we ensure a proper investigation and hearing is conducted, giving the employee a chance to respond.
• Final Payments: We accurately calculate and process all final dues. This includes any outstanding wages, payment for accrued leave, and any required severance pay.
• Clear Communication: We maintain clear and direct communication with the employee throughout the process.
• Legal Compliance: We stay up-to-date with Yemeni labor laws to ensure every termination is handled correctly, protecting you from potential legal issues.

Navigating visas and work permits in Yemen presents unique challenges. The process is heavily reliant on an in-country employer to manage the necessary applications and paperwork. Foreign nationals looking to work in Yemen must first secure a job, as the employer initiates and sponsors the work permit process. You typically enter the country on a regular entry visa, and then your employer works to secure your work permit and residence permit once you have arrived.

Employment visas & sponsorship realities

Getting the right to work in Yemen depends entirely on your employer. They must sponsor your application for a work permit with the Ministry of Social Affairs and Labor. An Employer of Record (EOR) can act as this crucial local sponsor.

Here is what that process looks like:

• Initial Entry: You will first need to get an entry visa from a Yemeni embassy or consulate, which allows you to travel to Yemen for up to 30 days.
• Employer's Role: Once you are in Yemen, your employer takes over. They must get approval from the Ministry of Internal Affairs and register your arrival with the authorities.
• Work Permit: The employer applies for your work permit. This requires a formal job offer and a number of documents from both you and the company.
• Residence Permit: After securing a work permit, you can then be granted a residence permit, which is often valid for one year and can be renewed.

An EOR cannot sponsor every type of role. The job must not be on the list of positions prohibited for foreign nationals. The EOR handles the application process, gathers the required documents, and deals with the relevant government bodies.

Key documents you will likely need to provide include:

• A valid passport
• Passport-sized photos
• Educational and professional qualifications
• A signed employment contract
• A medical report and police clearance certificate

Business travel compliance

For short-term business trips, like attending meetings or conferences, you can use a business visa. This visa allows you to enter Yemen for business activities without needing a full work permit.

Keep these points in mind for business travel:

• Invitation: You will often need an invitation from your business partner in Yemen.
• Clear Purpose: Be clear about the purpose of your visit when you apply.
• Duration: Business visas are for temporary stays and do not authorize long-term employment.
• No Work: You cannot perform work that would otherwise require a work permit. Your activities should be limited to meetings, negotiations, and other typical business functions.