Key Legal Rules
Probation Period
As long as it is clearly stated in the employment contract concluded between the employee and the employer that the probation period shall last for two months, the court cannot, by deviating from the clear contractual provision, interpret the phrase “two months” as only referring to or including working days.
Payments Made Upon Termination of Employment Contract
When an employment contract is terminated, the employee’s wages and all payments related to the termination of the contract must be paid within seven working days. This time limit can only be extended if the delay is caused by the employee’s own fault in failing to return property received from the employer or settle accounts owed. This provision is stipulated under Article 36 of the Proclamation (Proclamation No. 1156-2019).
Furthermore, it can be understood from the content and purpose of Article 37 of the Proclamation that the payment which the employer is required to make to the employee within the time limit set under this Article must be a payment that is not subject to disagreement or dispute and is acknowledged by the employer.
Therefore, if the payment requested by the employee is undisputed and acknowledged by the employer, and the employer fails to make the payment to the employee within this time limit, it should be understood that, pursuant to Article 38 of the Proclamation, the labor dispute tribunal may order the employer to pay the employee up to three months’ wages as a penalty for the period the payment was delayed.
Case Brief
Case Name: SICIEC Ethiopia Branch v. Ato Beleshatser Haileleul Me/Tsedek
Case Number: 250942
Date of Decision: February 27, 2017 E.C.
Court: Federal Supreme Court, Cassation Division of Ethiopia
1. Facts:
Ato Beleshatser Haileleul Me/Tsedek (Respondent) filed a claim in the Federal First Instance Court against SICIEC Ethiopia Branch (Applicant), his former employer. Ato Beleshatser claimed he was unlawfully terminated from his position as a Bridge Work Engineer in the Arsi Robe Wabe River Project, where he earned 80,000 Birr per month. He sought compensation and related payments for the unlawful termination. SICIEC Ethiopia Branch argued that there was no employment contract between the two, and Ato Beleshatser was hired for the project and was a probation employee with repeated unexcused absences.
2. Procedural History:
- Ato Beleshatser initially filed a suit in the Federal First Instance Court. The Court ruled in favor of Ato Beleshatser.
- SICIEC Ethiopia Branch appealed to the Federal High Court, Case No. 296508, which partially amended the First Instance Court’s decision, reducing the salary amount to 70,000 Birr, but affirmed the core finding of unlawful termination and ordered payments.
- SICIEC Ethiopia Branch then appealed to the Federal Supreme Court, Cassation Division, arguing that the Federal High Court made fundamental errors of law. They claimed the termination was lawful because the employee was still in his probationary period, and the damages calculation was incorrect.
3. Legal Issue(s):
- Was the employee, Ato Beleshatser, terminated during or after his probationary period, making the termination lawful or unlawful under Ethiopian labor law?
- Did the Federal High Court correctly calculate the compensation and benefits due to the unlawfully terminated employee, specifically the compensation payment?
- Was the award of compensation for delayed payment of wages legally justified in this case, considering the employer’s arguments regarding the employee’s failure to clear accounts or return company property?
- Was the award of 14 days of salary to the employee appropriate given that the employee had not appealed the initial court decision regarding the payment of the 14 days salary?
4. Applicable Provisions of Law:
- Proclamation No. 1156/2011 (Ethiopian Labour Proclamation):
- Article 11(3): The probationary period shall not exceed 60 working days from the date the worker commences work.
- Article 11(5): An employer may terminate the employment contract of a worker on probation without notice and without being required to pay severance pay or compensation.
- Article 36: Wages and related payments are to be paid within seven working days of termination. This time can be extended if the employee delayed the payment by not clearing accounts or returning property.
- Article 37: The wages being requested by the employee should be free from dispute or disagreement and should be acknowledged by the employer.
- Article 38: If the employer does not pay the employee within the time frame in Article 36, the labor dispute tribunal can award the employee compensation up to three months of salary.
- Article 43(4)(b): Calculation of Compensation for unlawful termination.
- Federal Civil Procedure Code Article 320(1), 327: The appeal court cannot decide on an issue that wasn’t initially appealed.
5. Application/Analysis:
- Probationary Period: The Cassation Division found that the High Court erred in interpreting the employment contract. The contract stipulated a two-month probationary period, not 60 working days. Since the employer and employee agreed to two months, that is what the courts must use to determine whether or not he was terminated during probation. The court reasoned that the contract was more favorable to the employee than the law provides, it should stand. Since the employee was terminated after two months, the termination was unlawful. The court noted that the First Instance Court found the employee was terminated two months and nine days after the commencement of employment.
- Compensation Calculation: The Cassation Division upheld the High Court’s recalculation of the monthly salary to 70,000 Birr. It agreed that the compensation payment should be calculated based on the correct salary.
- Compensation for Delayed Payment: The Cassation Division overturned the High Court’s decision to award compensation for delayed payment of wages. It noted the employee did not present evidence that he had requested wages, did not clear accounts, and there was no acknowledged debt by the employer. The employee also did not provide proof that they returned any company property.
- 14 Days of Salary: The Cassation Division overturned the High Court’s decision to award the 14-day salary payment. The division notes that the first instance court dismissed the claim, and the employee did not appeal the decision.
6. Conclusion:
The Federal Supreme Court, Cassation Division, partially reversed the decisions of the Federal First Instance Court and the Federal High Court.
- The court upheld that the employee’s termination was unlawful, and that the employee must be paid compensation and notice payment.
- The court stated that the employee does not have to be paid the compensation for delayed payments or the 14-day salary.