Effortless Hiring in Rwanda

Employment Laws

Rwanda's labor relations are primarily governed by Law No. 66/2018 of 30/08/2018, which regulates labor in Rwanda. This legislation outlines the rights and obligations of both employers and employees, covering essential aspects such as:

• Employment contracts
• Working conditions
• Dispute resolution mechanisms

Onboarding Process

Employers are required to formalize employment relationships through written contracts. The onboarding process typically includes:

• Verification of Identity and Qualifications: Employers must confirm the employee's identity and validate their qualifications.
• Registration with the Rwanda Social Security Board (RSSB): Employers must register employees for social security benefits, which include health insurance, pensions, and maternity leave.
• Provision of Job Description: A clear job description and terms of employment must be provided to the employee.

Types of Employment Contracts

1. Open-ended Contracts:

• These are indefinite duration contracts that offer standard benefits and protections under Rwandan law.

2. Fixed-term Contracts:

• These contracts are for a specified period or task and automatically terminate upon completion of the specified work.

3. Probationary Contracts:

• These initial contracts can last up to six months, allowing employers to assess the employee's suitability for the role.

Payroll Frequency

Salaries in Rwanda are typically paid on a monthly basis, with payments made at the end of each month. Employers must ensure that wages are disbursed within seven days of the end of the wage period, as stipulated by law.

Minimum Wage

• Rwanda does not have a national minimum wage that is actively enforced. The daily minimum wage, established in 1973 at 100 Rwandan Francs (RWF), is considered outdated and does not reflect current economic conditions.
• In practice, wages are determined through collective labor agreements and negotiations between employers and employees. The government has been working towards establishing a new, more relevant minimum wage, which may be around 60,000 RWF per month (approximately 3,000 RWF per day), but confirmation and implementation details are still pending.

Payroll Deductions

Employers are responsible for deducting and remitting several statutory contributions from employees' salaries:

1. Pay As You Earn (PAYE) Tax:

• This is a progressive income tax with rates ranging from 0% to 30%, depending on income levels. The tax brackets are as follows:
• 0%: Monthly taxable income up to 30,000 RWF
• 15%: Monthly taxable income above 30,000 RWF

2. RSSB Contributions:

• Employers must contribute to the Rwanda Social Security Board (RSSB) for social security benefits. The total contribution is 8.3% of the employee's gross salary:
• 5.3% paid by the employer
• 3% deducted from the employee's salary
• These contributions cover pension, medical insurance, occupational hazards, and maternity benefits.

How Cadana Simplifies Payroll in Rwanda

Cadana helps businesses navigate complex payroll regulations by:

• Offering centralized platforms for payroll data and secure management.
• Managing tax withholdings and overtime calculations.
• Ensuring accurate and compliant payroll processing.

###Employee Income Tax Rwanda employs a progressive income tax system for individuals, with the following tax brackets:

• Up to 60,000 RWF: 0%
• 60,001 – 100,000 RWF: 10%
• 100,001 – 200,000 RWF: 20%
• Above 200,000 RWF: 30%

Employers are required to withhold the appropriate tax amount from employees' salaries and remit it to the Rwanda Revenue Authority (RRA). This system ensures that higher earners contribute a larger percentage of their income in taxes.

Employer Contributions

In addition to withholding employee income tax, employers in Rwanda must contribute to the Rwanda Social Security Board (RSSB) for various social security benefits. The contributions include:

1. Pension Scheme:

• Employers contribute 3% of the employee's gross salary towards the pension scheme.

2. Medical Insurance:

• Employers contribute 7.5% of the employee's gross salary for medical insurance coverage.

3. Occupational Hazards:

• Employers are responsible for contributing 2% of the employee's gross salary to cover occupational hazards.

4. Maternity Leave Benefits:

• A contribution of 0.3% of the employee's gross salary is made for maternity leave benefits.

Types of Leave in Rwanda

1. Annual Leave

• Employees are entitled to a minimum of 18 working days of paid annual leave after completing one year of service.
• For every three years of continuous service, employees gain an additional day of leave, capped at a maximum of 21 working days.
• Employees under the age of 18 are entitled to 2 working days of leave for each month of continuous service.

2. Sick Leave

• Employees are entitled to 15 days of paid sick leave, provided they submit a medical certificate.
• If sick leave exceeds 15 days, employees can apply for long-term sick leave, which can last up to six months. During the first three months, employees receive their full salary, and they may request an additional three months of unpaid leave thereafter.

3. Maternity Leave

• Female employees are entitled to 12 weeks of paid maternity leave, with at least two weeks taken before the expected due date.
• Maternity benefits are covered by the Rwanda Social Security Board (RSSB).

4. Paternity Leave

• Male employees are entitled to four working days of unpaid paternity leave within one calendar year.

5. Public Holidays Rwanda observes several public holidays, which include:

• New Year's Day (January 1)
• Genocide Memorial Day (April 7)
• Labor Day (May 1)
• Independence Day (July 1)
• Liberation Day (July 4)
• Assumption Day (August 15)
• Christmas Day (December 25)

If a public holiday falls on a weekend, it is typically moved to the next working day, except for Genocide Memorial Day.

Mandatory Benefits

Employers in Rwanda are required to provide certain benefits, which include:

1. Social Security:

• Employers must contribute to the Rwanda Social Security Board (RSSB), which covers various social security benefits, including pensions, medical insurance, occupational hazards, and maternity benefits. This ensures that employees have access to essential health services and financial support during retirement.

2. Annual Leave:

• Employees are entitled to a minimum of 18 working days of paid annual leave after completing one year of service. For every three years of continuous service, employees gain an additional day of leave, capped at a maximum of 21 working days.

3. Sick Leave:

• Employees are entitled to 15 days of paid sick leave, provided they submit a medical certificate. If sick leave exceeds this duration, employees may apply for long-term sick leave.

4. Maternity Leave:

• Female employees are entitled to 12 weeks of paid maternity leave, with at least two weeks taken before the expected due date. Maternity benefits are covered by the RSSB.

5. Paternity Leave:

• Male employees are entitled to four working days of unpaid paternity leave within one calendar year.

Supplemental Benefits

While not mandated by law, many employers in Rwanda offer additional benefits to attract and retain talent, such as:

• Health Insurance: Enhanced medical coverage beyond the basic provisions of the RSSB, often including private health insurance plans that cover a wider range of services.

• Transportation Allowances: Support for commuting expenses to ease the financial burden on employees.

• Meal Subsidies: Employers may provide allowances or subsidized meals to improve employee satisfaction.

• Performance-Based Bonuses: Many organizations offer bonuses based on employee performance as an incentive for productivity.

• Housing Allowances: Some employers provide assistance with housing costs to attract skilled workers.

Process

• Termination of employment in Rwanda must comply with the provisions of Law No. 66/2018 of 30/08/2018 Regulating Labour in Rwanda. Acceptable grounds for termination include:
• Mutual agreement between the employer and the employee.
• Expiry of the employment contract (for fixed-term contracts).
• Redundancy due to organizational restructuring or economic challenges.
• Employee misconduct, incompetence, or consistent underperformance.
• Employers must provide a written notice of termination and, in some cases, conduct a disciplinary hearing to allow the employee to present their case.

Notice Period

The length of the notice period depends on the employee’s tenure:

• Less than 1 year: 1 month of notice.
• 1–5 years: 2 months of notice.
• More than 5 years: 3 months of notice.
• During the notice period, employees are allowed to be absent from work for one day per week to search for a new job.

Severance Pay

Employees dismissed due to redundancy or other authorized causes are entitled to severance pay based on their length of service:

• Less than 1 year: No severance.
• 1–5 years: 1 month's gross salary for every completed year of service.
• More than 5 years: 2 months' gross salary for every completed year of service.

Just Cause Dismissal

In cases of serious misconduct (e.g., theft, violence, or fraud), the employer may terminate employment without notice or severance pay, provided the misconduct is substantiated. The employer must notify the employee within 48 hours of obtaining evidence of the misconduct.