Two administrations, two rial series
Yemen has two administrations: the internationally recognised government with the Central Bank in Aden, and the Houthi authorities with the Central Bank in Sana’a. They use different exchange rates and different note series, and Sana’a has banned new Aden-issued notes. The same salary in Yemeni rials (YER) therefore has a different real value depending on location and note class.
Taxes, social insurance and labour offices are also split. Each side may demand filings, and paying one does not discharge the other.
Income tax
Yemen taxes salaries under Income Tax Law No. 17 of 2010. The tax year is the calendar year. Employers withhold monthly and remit within 15 days after month end.
For Yemeni residents, annual bands are applied monthly, with a zero band of YER 10,000 a month:
| Annual taxable income (YER) | Rate |
|---|---|
| 0 – 120,000 | 0% |
| 120,000 – 240,000 | 10% |
| Above 240,000 | 15% |
There are no family allowances. Employee social insurance and transport or representation allowances up to a limit are deductible. According to Moore and Mercans, non-Yemeni residents and non-residents pay a flat 20% with no exemption.
Social insurance
Social insurance falls under Social Insurance Law No. 26 of 1991. The authority is split between Aden and Sana’a.
| Source | Employer | Employee |
|---|---|---|
| NRC guide (Art. 27) and Mercans | 9% | 6% |
| Moore Global | 11% | 7% |
The sources conflict, and the gap may reflect work-injury cover or later amendments. Confirm the rate before running payroll. Contributions are based on basic monthly salary, though some sources say gross. We found no published floor or ceiling.
The scheme is mandatory only for employers with more than 5 workers and voluntary for smaller firms. In practice expatriates are generally outside the scheme, but sources contradict each other, so confirm for each hire.
End of service
Sources indicate that workers not covered by social insurance are entitled to at least one month’s last wage per year of service (Labour Code Art. 120). Insured workers receive their entitlement through the social insurance fund. Arbitrary dismissal compensation is set by the Arbitration Committee. Treat these points as provisional and confirm with local counsel.
Notice: 30 days for monthly-paid workers.
Wage payment rules
There is no wage protection system. The Labour Code requires periodic payment in legal tender. Disciplinary deductions are capped at 20% of basic salary. Payroll is monthly.
Working time and leave
- Hours: 8 a day and 48 a week. In Ramadan, at most 6 a day and 36 a week.
- Overtime: 150% on regular days and 200% for night overtime. Rest-day and holiday work is compensated with replacement time off within the month. Working time is capped at 12 hours a day.
- Annual leave: 30 days fully paid per year (2.5 days a month). A one-time 20-day Hajj leave is available after 4 years.
- Maternity leave: 60 days fully paid, plus 20 days for a difficult birth or twins.
- Bonuses: no statutory 13th month. Ramadan and Eid bonuses are customary.
Minimum wage
The figure usually cited is YER 21,000 a month, a public-sector minimum from around 2012 that the Labour Code applies as the private-sector floor. It has never been revalued, and sources are thin. Treat it as a nominal floor only. Market pay is set in USD terms or by note class.
Sanctions and banking
The United States designated Ansarallah (the Houthis) a Foreign Terrorist Organization, effective March 2025, in addition to its earlier SDGT listing. Payments that touch Houthi-controlled authorities, banks or taxes in Sana’a can create material-support exposure. UN and EU sanctions also apply to listed individuals. Take sanctions advice before paying staff in Houthi-controlled areas.
Correspondent banking is limited, and screening often freezes payroll runs. Most international employers pay through an Employer of Record or humanitarian payment providers.
Gotchas for foreign employers
- Map each employee to an administration and a note series before setting pay.
- Foreign workers need a Ministry of Labour work permit. Foreign headcount must stay below 10% of Yemeni workers, and the employer must certify that no Yemeni is available.
- Social insurance rates and expatriate coverage are uncertain. Get a written position.
- Statutes are old and data is limited, so recheck every figure before each payroll cycle.