Rwanda, a landlocked developing country in central Africa, is diversifying its agricultural-based economy to promote sectors like tourism, information technology (IT) and light manufacturing. The country is also seeing significant progress in reducing poverty, improving healthcare and increasing access to education. However, the development of Rwanda’s infrastructure will rely heavily on foreign direct investment (FDI) and the government continues to explore ways to attract investments from multinational companies (MNCs).
- Untapped investment opportunities exist across a myriad of fast-growth industries, including IT, agritech, healthtech, construction, supply chain, real estate, fintech and financial services.
- Rwanda is the top-ranked low-income country for innovation worldwide and one of the most innovative in Africa, according to the Global Innovation Index.
- As the country makes inroads toward digital transformation and a knowledge-based economy, it’s been ranked 10th globally in the IT help desk support category of the 2022 GBS World Competitiveness Index.
- Rwanda has a bright future ahead. The population is one of the most youthful in the world, with an average age of 20. More than two-thirds (67%) of people are under the age of 25.
- Labor costs are among the lowest in the world and the workforce ranks 8th for efficiency globally, according to the World Economic Forum.
What is the main source of labor law in Rwanda?
The Rwandan Labor Law, enacted in 2013, is a set of laws and regulations that regulate the relationship between employers and employees in Rwanda. It aims to provide a framework for the rights and responsibilities of employers, while also protecting the rights and welfare of employees.
A wide range of topics are covered by the Rwandan Labor Law, including compensation, working conditions, contracts, discrimination, leave, termination, trade unions and dispute resolution.
Are written employment contracts required?
The Rwandan Labor Law maintains that employment contracts must be written if the term lasts more than six months. However, it is generally considered best practice for employers to draft a written contract for every employee in order to clearly establish the terms and conditions of employment. This helps avoid or settle disputes, as the contract can be used as evidence in the labor courts.
A written contract should specify job title, salary, work hours, benefits and any other agreements between employer and employee. It may also outline procedures for protecting both parties in case of any disputes that arise.
How is minimum wage determined?
The daily minimum wage is 100 RWF as determined by a national law passed in 1973. However, in practice, employees earn a much higher wage because each professional category and industry has a set wage that is determined under a collective labor agreement.
What are the regulations around termination?
Employers are allowed to enforce a probation period of up to six months. No notice of termination is required during the probationary period.
Indefinite-term contracts may be terminated for just cause, such as business, personal or employee misconduct. Written notice must be given except in cases of serious misconduct. Notice requirements are based on length of service:
- Less than one year: 5 days’ notice
- Greater than one year of service: one month’s notice
In general, an employee is entitled to severance pay after one year of service. Severance pay is determined by the employee’s length of service:
- Less than five years: one month’s salary
- Five to 10 years: two months’ salary
- 10-15 years: three months’ salary
- 15-20 years: four months’ salary
- 20-25 years: five months’ salary
- 25+ years: six months’ salary
Are bonuses required?
There is no statutory requirement for bonuses in Rwanda. However, some employers offer performance-based bonuses.
What are the regulations for paid time off?
Employees in Rwanda are to receive a minimum of 18 days of paid annual leave, with this allowance raised to 24 days for employees under the age of 18.
The number of days also increases with the employee’s length of service. This number must be stipulated in the employment contract in accordance with the Rwandan Labor Law.
How does sick leave work?
Employees have a right of up to six months of sickness absence per year. Three of these months are to be paid and three months can be unpaid. Evidence of illness will need to be provided by the employee.
What are the parameters for maternity and paternity leave?
Female employees have a right to 12 weeks of paid maternity leave, with no less than 14 days of this leave to be taken before the due date. Maternity confirmation certificates must be presented to the employer before any maternity leave can begin.
A father is entitled to unpaid leave of up to four working days per calendar year.
How do employees receive healthcare in Rwanda?
Rwanda has a public-private healthcare system, with funding coming from the government, payroll taxes and out-pocket expenses.
The majority of the Rwandan population pays into the country’s Community-Based Health Insurance Scheme. This enables them to access all public and nonprofit health centers with a 10% co-pay. Private clinics are not covered by this plan.
What supplemental benefits are offered in Rwanda?
As the workforce advances and competition increases in the labor market, more employers are offering supplemental benefits. The following are some common benefits:
- Car or transportation stipend
- Private healthcare
- Loan access
- Housing stipend
- Phone stipend
Why are Employer of Record (EOR) services growing in Rwanda?
The Rwandan government has made significant efforts in recent years to improve its infrastructure and attract investment from MNCs, such as tax incentives and efforts to simplify the process for establishing a business. However, there are still bureaucratic delays for setting up shop and, once established, MNCs will be responsible for administering tax, payroll and benefits.
Rather than establishing a legal entity, MNCs often find the EOR model to be a more agile, cost-effective solution for hiring in Rwanda. By engaging an EOR like GoGlobal, the MNC sidesteps the arduous process of setting up a company and tasking the internal HR team with learning the regulations for administering payroll in-country.
At the same time, the company mitigates many of the risks, requirements and restraints that usually come along with hiring in Rwanda – while still tapping into the country’s youthful, up-and-coming talent pool.
The EOR hiring arrangement can be used as a temporary bridge solution, which is ideal if the MNC wants to test drive the market or get a headstart on building a team in Rwanda while they set up a legal entity. Other times, the solution can be a permanent solution for fast, flexible and compliant hiring.
What makes the GoGlobal experience special?
GoGlobal is a people-first international HR and EOR service provider, which means we prioritize human-to-human touch points throughout the entire hiring lifecycle.
Our team members on the ground in Rwanda are experts when it comes to the country’s unique regulatory environment. They also deeply understand the cultural customs and can offer workers services in their time zone and in their preferred language. These features ensure a positive hiring experience for our clients as well as the client-workers we directly employ on your behalf.
GoGlobal can also take the reins on the end-to-end hiring process, including talent sourcing. As more MNCs eye Rwanda for expansion and hiring, the labor market is becoming increasingly competitive. Many of our clients choose to pair our EOR services with our Recruit & Hire solution, which gives them a leg up in securing top talent for hard-to-fill positions like technology, sales and customer service.
When GoGlobal is on the job, you can test the market, focus on core business development needs and build a team in Rwanda – with controlled risk and peace of mind!
GoGlobal has a significant on-the-ground footprint in Africa, maintaining local offices across 18 countries spanning from North Africa to Sub-Saharan Africa. This extensive on-the-ground footprint empowers GoGlobal to offer exceptional assistance to clients in expanding their operations and building successful teams across Africa.