The employment relationship, established through an employment contract between an employer and an employee, can be terminated through four primary avenues in Ethiopian Labour Law, as stipulated by Proclamation No. 1156/2011, Article 23(2):
- By Employer’s Initiative: Termination instigated by the employer, subject to specific legal grounds and procedures to protect employee rights.
- By Employee’s Initiative: Termination initiated by the employee, typically requiring proper notice or occurring under legally recognized grounds for immediate resignation.
- As Stipulated by Law: Termination occurring automatically or as a consequence of legal provisions (e.g., expiry of a fixed-term contract, retirement).
- By Agreement: Termination mutually agreed upon by both the employer and the employee.
While the Proclamation outlines these four main modes of contract termination, there are limited circumstances where employment contracts may terminate outside these explicitly stated categories. One such instance is an amendment introduced by Proclamation No. 1156/2011, Article 21(2). This provision states that if rights and obligations arising from an employment contract have been legally suspended due to employer-related reasons, and after the suspension period expires, the Ministry of Labour and Social Affairs or the relevant authority determines that the employer cannot resume operations, the employee’s contract shall be terminated with notice and severance pay.
However, this provision appears to create a clear contradiction with existing stipulations for contract termination due to the employer’s bankruptcy or permanent closure (Article 24(4)) or due to redundancy (Article 28(3)(a)). For example, if a company ceases operations, either wholly or partly, for not less than ten consecutive days due to force majeure or unforeseen financial difficulties that cannot be resolved through suspension provisions, it typically signifies a permanent closure. In such a scenario, the contract should be terminated in accordance with Article 24(4). If the company is not permanently closing but conditions lead to the direct and permanent cessation of work for which employees are engaged, this falls under the grounds for redundancy as per Article 28(3)(a). The emergence of such contradictory interpretations means that treating contract termination following a suspension as a distinct “fifth mode” of termination remains debatable until clarified by a cassation court ruling.
Other methods of employment contract termination not explicitly enumerated in the Proclamation are discussed elsewhere in this book, particularly in the section titled ‘6.5 Issues Not Included in the Proclamation’. As another example, consider a company driver whose driving license is suspended or revoked due to an offense unrelated to their work. The employment relationship cannot continue, as the individual cannot fulfill their duties as a driver without a valid license. Consequently, the contract will inevitably terminate due to an unavoidable circumstance, yet this mode of termination does not neatly fit under any of the four primary categories.
Among the four legally recognized modes of termination, employer-initiated termination holds the most significant position in labour law. The majority of employees’ job security concerns arise from termination actions taken by employers. Both the International Labour Organization’s Termination of Employment Convention, 1982 (No. 158), and the labour laws of many other countries primarily focus on dismissal actions taken at the employer’s initiative.
[1] See Proclamation No. 1156/2011, Article 23(2) concerning Labour Proclamation. Although collective agreements might be mentioned as a fifth mode of termination, the content of relevant detailed provisions of the Proclamation (especially Article 27) suggests that they merely define additional reasons for dismissal, rather than introducing a distinct termination method. [2] Proclamation No. 1156/2011, Article 21(2).