Salary structure for Ethiopia
A salary in OLY ERP is built from Salary Components. A Salary Structure lists which components a group of employees gets and how each is calculated. A Salary Structure Assignment links one employee to a structure and sets their own amount.
Before you start
- Your consultant has set up the Salary Components, Salary Structures, the Income Tax Slab and the payroll accounts.
The components
| Component | Type | What it is |
|---|---|---|
| Basic | Earning | The monthly basic salary. |
| Allowances (for example transport or position) | Earning | Fixed monthly amounts agreed in the contract. |
| Overtime | Earning | Extra hours, at the rates in the Labour Proclamation. |
| Employee pension | Deduction | 7% of basic salary (private sector). |
| Income tax | Deduction | Calculated from the Income Tax Slab. |
| Other deductions | Deduction | For example a loan repayment or a salary advance. |
| Employer pension | Shown, not paid | 11% of basic salary (private sector), paid by the company. |
The employer pension is a company cost. It shows on the slip for information but is not added to the employee's pay.
Income tax
Income tax is calculated by the Income Tax Slab. OLY sets up the brackets during onboarding and updates the slab when the law changes. Which earnings are taxable is also set on each component by your consultant.
Do not edit the Income Tax Slab or a component's tax settings yourself. In the first month, check a few salary slips against your own calculation. If something does not match, report it at oly.et/issues before you submit the payroll.
Give an employee a salary
- Go to Payroll > Salary Structure Assignment > + Add Salary Structure Assignment.
- Select the Employee and the Salary Structure.
- Enter the From Date: the first day of the payroll month the salary starts (or the Date of Joining).
- Enter the Base: the monthly basic salary.
- Check the Income Tax Slab is selected.
- Click Save, then Submit.
Change a salary
Make a new Salary Structure Assignment with the new Base and a From Date at the start of the payroll month. Do not cancel the old one. Past salary slips keep the old amount.
Overtime and one-off amounts
Enter overtime, a bonus or a one-off deduction with Additional Salary: select the Employee, the Salary Component (for example the right overtime component), the Amount and the Payroll Date in the month it should be paid. Then Submit. The amount is added to that month's salary slip.
Example
Example Foods PLC pays Yonas a Base of 12,000 ETB. His employee pension is 840 ETB (7%). The company also pays 1,320 ETB (11%) employer pension. Income tax comes from the slab. His net pay is gross earnings minus pension, income tax and any other deductions.
Good to know
- Pension is calculated on basic salary, not on allowances or overtime.
- Never change a submitted structure that slips already use. Ask your consultant for a new one.
- One employee should have one active assignment for a month. Two with the same From Date cause errors.