Employer of Record in Ruanda

How an Employer of Record works in Rwanda

An Employer of Record (EOR) is a company that hires employees on behalf of another business.

It is mostly used by overseas business owners to hire employees in a country where they don’t have a local legal entity.

The EOR acts as the legal employer and handles important legal and administrative aspects of hiring employees, including employee onboarding, employment contracts, payroll processing, tax filings, employee benefits, and contract terminations.

This allows business owners to enter the Rwanda employment market quickly, without having to establish their own entity or learn all the nuances of Rwanda’s labor laws.

Rivermate’s EOR services are built on three pillars:

• Local HR experts who understand the market and employment laws.
• A network of partners that allows us to provide competitive benefits.
• The Rivermate platform that simplifies every aspect of the employment relationship.

Using Rivermate to hire employees in Rwanda ensures they’re supported by an experienced local entity that understands local laws and practices.

Rwanda labor market: At a glance

The hiring market
Greatest hiring activity:	Kigali, Gisenyi.
Hiring timelines:	The onboarding process typically takes 3-5 days for national workers. Expat onboarding depends on work permit approval, which our local partner suggests typically takes around one month.
In-demand sectors:	Hospitality, finance.
Sectors with skills shortages:	Agriculture and other industrial sectors.2

The salary market
Employer tax contributions:	Pension: 6%; Occupational hazards scheme: 2%; Maternity leave benefits scheme: 0.3%; Medical insurance.6
Monthly minimum wage:	Rwanda does not have a statutory national minimum wage.5
Average gross annual salary:	RWF8,305,400.5
Personal income tax rates:	Rwanda uses a progressive tax system with brackets ranging from 0% - 30%.4

What will it cost to hire in Rwanda

Salary requirements

Lower wage demands are an undeniable advantage of hiring in Rwanda. This isn’t just due to the lack of a statutory minimum wage either.

The unemployment rate has been very high in Rwanda for quite some time, while many of those with jobs are “informally employed”, meaning they don’t receive the benefits and protections associated with formal employment.1

While this isn’t good for local talent or the Rwandan economy, it does put international businesses in a strong position to negotiate salaries with prospective employees.

Employer contributions

Employer tax contributions are reasonably low compared to other African countries. The contributions are split into four categories;

• Pension: 6% of each employee’s salary;
• Occupational hazards scheme: 2% of each employee’s salary;
• Maternity leave benefits scheme: 0.3% of each employee’s salary;
• Medical insurance.

Employers must contribute 6% of each employee's gross salary to the pension scheme. Employees pay 6% as well.

However, that rate will increase by 1% each calendar year until 2030, at which point both employees and employers will contribute 10% each.6

Statutory benefits

It is mandatory for employers to contribute toward health insurance payments for their employees.

For public sector employees, this will be Rwanda Social Security Board (RSSB) Medical Insurance, with both the employer and employee contributing 7.5% of the employee’s salary to pay for it.

However, private sector businesses have the option to choose a different insurer with different contribution rates. Either way, the employer must provide proof of their employee’s insurance and the contributions being made by each party.7

Employees must receive at least one-and-a-half days of paid leave per month of service, although this cannot be claimed until after they have served their employer for 12 months. For every three years of service, employees are granted an extra day of annual leave, up to a maximum of 21 days.

Employees aged 17 and under must receive at least 24 days of paid annual leave. In all cases, paid annual leave can be split into two phases.

Employees are entitled to 15 days of paid short-term sick leave per year. For illnesses longer than 15 days, they are entitled to long-term sick leave for up to six months.

In this case, they’ll be paid 100% for their first three months of this leave. After three months, their contract will be suspended. If they’re still unable to work after six months, the employer can terminate their contract.

Female employees must receive 14 weeks of maternity leave, which can be extended by a further month if there are certain complications with the childbirth.8. Male employees receive seven days of paternity leave.

Employment Cost Calculator

Use our Employment Cost Calculator to estimate the cost of hiring employees in Rwanda.

What it’s really like hiring in Rwanda

Market condition	What an employer needs to know
Talent availability	The unemployment rate is high in Rwanda, particularly among young workers.1
Top-paying sectors	The services industry is regularly among the top-paying sectors in terms of hourly wages.3
Skills shortages	Companies hiring in agricultural and other industrial sectors have reported skills shortages.2
Key employer challenge	The process for terminating employee contracts can be very complicated and long-winded.

The hiring process in Rwanda is mostly very straightforward. Onboarding can take as little as 3-5 days for national employees, provided they have all relevant documents ready to submit.

Onboarding expat workers can take up to one month, but the process is still relatively simple, especially if you have an experienced EOR handling it.

Applications for work permits and residence permits are completed through Rwanda’s hi-tech IremboGov portal.

Work permit approvals for expats in Rwanda

Although onboarding expats in Rwanda is simple, that doesn’t mean all expat workers will be granted a work permit. As with many countries, their approval will depend on the role being filled, among other factors.

If the position doesn’t appear on Rwanda’s Occupation in Demand List (ODL), the employer must conduct labour-market testing in an effort to hire a qualified Rwandan citizen before an expat can be hired.

Expats in Rwanda will be hired on a fixed-term contract. The length of this contract will typically match the length of their visa, and the importance of the job being filled plays a key role in the duration offered.

For example, H1 skilled workers filling roles on the ODL can be granted three-year contracts, while other less skilled workers could only be granted one or two years.9

Compliance risks that employers must know about in Rwanda

Confusion surrounding medical insurance in Rwanda

Private sector businesses are free to insure their employees with an alternative to the RSSB medical insurance policy. However, not all medical insurance policies will be deemed suitable alternatives. Employers must follow the regulations within Law 48/2015 regarding the organization, functioning and management of health insurance schemes in Rwanda.7

Employers are responsible for paying insurance premiums on the 15th day of each month, as well as documenting evidence of employee enrolments, policy terms, and contributions paid.

This medical insurance shouldn’t be confused with community-based health insurance (CBHI), which is a separate insurance scheme funded purely by employees via payroll deductions.

Compensating employees who work overtime

The standard workweek in Rwanda is 40 hours. If an employee works beyond this limit, they must be granted a period of paid time off equivalent to their overtime hours within 30 days.

There is no statutory requirement to pay higher rates for overtime hours, although employers can choose to do so.

Either way, an enhanced overtime rate doesn’t remove the requirement to provide compensatory rest within 30 days.10

If rest is not taken within 30 days, the overtime must be paid in the following month and shown on the employee’s payslip.

Terminating employee contracts

If you want to dismiss an employee outside of their probation period, you may need to prepare for a lengthy and complicated procedure.

In the case of making redundancies, that’ll require a consultation meeting with the affected employees, in which they can potentially suggest alternatives such as salary reductions. Employers must give reasons if they believe a suggestion is not feasible.

Minutes from these meeting(s) need to be taken by every attendee, including the employees, and these will be passed on to the Labor Inspectorate. The Labor Inspectorate must be given one month’s notice of planned redundancies, and then employees must receive one month’s notice after that.

Dismissing an employee for poor performance is even more arduous.

Doing so requires:

• A performance improvement plan (PIP) meeting;
• A month of monitoring the employee for improvements;
• A second PIP meeting if no improvements are spotted;
• A second month of monitoring for improvements.

Then, if you still want to proceed, you can arrange a performance hearing, then serve the employee with written notice of dismissal. The notice period lasts 15 days for those employed for less than a year and 30 days for everyone else.8

Agreeing mutual separation with departing employees

It is common for frustrated employers and unwanted employees to want to avoid these lengthy dismissal processes.

A common method of doing so is by agreeing on a mutual separation. This involves the employer and employee coming together and agreeing on suitable terms for dismissal.

A mutual separation contract becomes effective on the day it is signed by both parties.

Terminations due to gross misconduct from either party can also lead to faster dismissals, although a show cause letter, response and disciplinary hearing are still required.

Benefits of hiring employees through an EOR in Rwanda

Setting up a company is expensive, especially when you consider the licenses that must be renewed year on year.

Using an EOR to hire in Rwanda saves you significant costs compared with setting up your own business entity there.

Using an EOR also helps you to enter the Rwandan employment market much quicker, allowing you to launch this new arm of your business with far less stress.

You’ll also receive ongoing HR support to reduce the administrative burden of becoming a Rwanda employer.

At Rivermate, we help employers by:

• providing a local business entity in Rwanda.
• handling all administrative aspects of running a Rwandan business, including payroll, taxes, benefits, and all contract termination processes.
• ensuring full compliance with Rwandan labor laws.

This way, instead of worrying about social contributions, employee terminations and other complicated aspects of Rwandan HR administration, you can focus all efforts on managing staff and growing your business.

Ready to hire in Rwanda?

Hiring in Rwanda involves more than discovering the best person for the job. From managing payroll, taxes and benefits to ensuring full legal compliance with local labor laws, whether you’re hiring full-time employees or independent contractors, Rivermate has the local expertise to handle all the administration so you can hire with confidence.

Talk to a Rwanda Hiring Expert

SOURCES:

1. https://statistics.gov.rw/data-sources/surveys/Labour-Force-Survey/labour-force-survey-2024/labour-force-survey-annual-report-2024
2. https://www.worldbank.org/en/country/rwanda/publication/rwanda-economic-update-september-2024
3. https://en.igihe.com/social/article/inside-rwandas-pay-scale-who-earns-what-across-sectors
4. https://taxsummaries.pwc.com/rwanda/individual/taxes-on-personal-income
5. https://www.lloydsbanktrade.com/en/market-potential/rwanda/work-conditions
6. https://taxsummaries.pwc.com/rwanda/corporate/other-taxes
7. https://rwandalii.org/akn/rw/act/law/2015/48/eng%402016-01-25
8. https://www.minijust.gov.rw/fileadmin/user_upload/Minijust/Publications/Laws/Law_regulating_labour_in_Rwanda.pdf
9. https://bewiseapps.com/doing-business-in-rwanda/employment-hr-and-immigration/work-permits-and-residence-permits
10. https://www.minijust.gov.rw/fileadmin/user_upload/Minijust/Official_gazettes_2/_______2023_Official_Gazettes/__June/OG_n___Special_of_13.06.2023__Amasaha_akazi___Abakozi_ba_Leta_bagengwa_amasezerano_umurimo.pdf
11. https://theconversation.com/kinyafranglais-how-rwanda-became-a-melting-pot-of-official-languages-185441
12. https://www.officeholidays.com/countries/rwanda/2027