Ethiopia's informal economy is a significant sector of its labour market, accounting for a substantial portion of employment and GDP. Despite this economic importance, workers in this sector often lack formal legal protections under Ethiopia's labour laws. The research employs a mixed-methods approach, integrating legal analysis with qualitative interviews to assess the extent to which existing laws are applied or ignored in practice. The sample includes both formal and informal economy sectors. In-depth interviews revealed that while labour laws mandate certain protections, their enforcement is often lax, leading to widespread violations of workers' rights such as inadequate wages and unsafe working conditions. The study concludes that Ethiopia's current labour legislation inadequately safeguards the rights of informal economy workers, necessitating a review and potential amendments to align legal provisions with practical realities. To address these shortcomings, policy recommendations include strengthening enforcement mechanisms, providing training for labour inspectors, and enhancing public awareness campaigns about workers' rights under existing laws.