Kuma Importer and Exporter Pvt. Ltd. Co. v. 23 Workers
Cassation Case No. 205626
October 30, 2021 E.C.)
In the complex landscape of employer-employee relations, few questions are as fundamental as the very existence of an employment relationship itself. A recent ruling by Ethiopia’s Cassation Bench has shed crucial light on this issue, clarifying who bears the initial burden of proof when this relationship is contested. This decision is a vital reminder of procedural fairness and the core principles of evidence in labor disputes.
The Heart of the Matter: Daily Wage or Formal Employment?
The case, Kuma Importer and Exporter Pvt. Ltd. Co. v. 23 Workers, originated from a dispute where 23 individuals (respondents) claimed before the Federal First Instance Court that their employment had been unlawfully terminated by Kuma Importer and Exporter (the applicant). They sought various payments including notice period, severance, and annual leave, asserting they were employees earning weekly wages (ranging from 1,500 to 3,500 ETB) and had been barred from their workplace by security.
Kuma Importer and Exporter countered that these individuals were merely daily laborers paid per task for unloading sesame, not employees under a formal contract governed by Labour Proclamation No. 1156/2011. Therefore, the company argued, no employment relationship as defined by law existed.
The lower court sided with the workers, concluding that an employment relationship did exist and that the termination was unlawful, ordering payments based on a minimum wage of 1,500 ETB. The Federal High Court upheld this decision, prompting Kuma Importer and Exporter to seek a cassation review, alleging fundamental errors of law, particularly concerning the burden of proof and their right to present evidence.
The Cassation Bench’s Clear Pronouncement: “He Who Asserts Must Prove”
The Cassation Bench pinpointed a critical error in how the lower courts handled the burden of proof and evidence. This error, the Bench clarified, violated established principles of both Ethiopian civil procedure and labor law.
The core legal principle reiterated by the Cassation Bench is this: In a labor dispute where the very existence of an employment relationship is challenged, the initial burden of proof rests squarely on the party asserting that such a relationship exists (the claimant/employee). An employer is not obliged to disprove the relationship unless the claimant first establishes a prima facie case (sufficient initial evidence to suggest a relationship exists) or the employer explicitly admits to facts that would then require them to provide further justification. The lower courts’ misallocation of this burden, coupled with their failure to allow the employer to present evidence to rebut the claim, was deemed a fundamental error of law, undermining procedural fairness and the right to defense under the Civil Procedure Code and Labour Proclamation.
Unpacking the Legal Framework:
The Cassation Bench’s decision was rooted in several key legal provisions:
Article 4 of Labour Proclamation No. 1156/2011: This article defines an “employment relationship” as a contractual arrangement where a worker performs work for an employer for wages under the employer’s direction. Crucially, the cassation court clarified that this provision does not presume an employment relationship exists; instead, it requires the claimant to prove its existence when it is contested.
Articles 258(1) and 259(1) of the Civil Procedure Code: These articles govern the burden of proof and evidence presentation. Article 258(1) places the initial burden on the party asserting a fact (in this case, the respondents claiming an employment relationship). Article 259(1) allows the burden to shift to the opposing party only if they admit the fact and introduce a new defense, or if a legal presumption applies. The Cassation Bench emphasized that in this case, no such presumption or admission existed to shift the burden to the applicant.
General Principle of Evidence: The universal legal principle that “he who asserts must prove” applies unless specific legal exceptions or circumstances alter it (such as an admission by the defendant or a statutory presumption). The lower court’s assumption of an employment relationship without requiring the respondents to meet this burden was therefore deemed erroneous.
Application to the Case: Where the Lower Courts Erred
The Federal First Instance Court incorrectly placed the initial burden of proof on Kuma Importer and Exporter to disprove the employment relationship, despite the company’s clear denial and assertion that the workers were daily laborers paid per task. The lower court’s reasoning—that the applicant’s failure to present evidence (attributed to repeated absences) justified presuming an employment relationship—was upheld by the High Court.
The Cassation Bench firmly ruled that the respondents, as claimants, bore the initial burden to prove the existence of an employment relationship under Article 4 of the Labour Proclamation. The employer’s denial did not automatically shift this burden without a prima facie case from the respondents or an admission that would trigger a new defense.
Furthermore, the lower court’s failure to hear the applicant’s witnesses—partly due to scheduling issues during the COVID-19 pandemic in July 2020 E.C.—and its subsequent dismissal of the applicant’s request to present evidence, violated the applicant’s right to a fair hearing. The Cassation Bench noted that the lower court did not adequately consider the pandemic’s impact on court operations, compounding the procedural error.
By presuming an employment relationship and ruling the termination unlawful without requiring the respondents to substantiate their claim, the lower court committed a “fundamental error of law,” necessitating the Cassation Bench’s intervention.
The Cassation Court’s Reasoning:
The Cassation Bench meticulously reasoned that:
The respondents’ claim of an employment relationship required them to prove, through evidence, that their work arrangement with the applicant met the criteria under Article 4 of the Labour Proclamation, such as regular wages and subordination. Payment per task alone does not inherently establish such a relationship.
The applicant’s clear denial of an employment relationship meant the burden remained with the respondents, contrary to the lower court’s finding that the applicant had to disprove it first.
The lower court’s reliance on the applicant’s failure to present witnesses (due to procedural constraints during COVID-19) ignored the principle that the claimant must first establish their case. The court’s refusal to accommodate the applicant’s evidence presentation further prejudiced its defense rights.
The Labour Proclamation does not provide a presumption shifting the burden to the employer in such disputes, unlike specific exceptions (e.g., workplace injury cases). Thus, the lower court’s interpretation misapplied the law.
The Outcome: A Remand for Proper Adjudication
The Cassation Bench ultimately overturned the decisions of both the Federal First Instance Court (Case No. 89033, May 5, 2021 E.C.) and the Federal High Court (Case No. 267743, July 20, 2021 E.C.) under Article 348(1) of the Civil Procedure Code.
The case was then remanded to the Federal First Instance Court under Article 343(1), with clear directives:
The respondents must first present evidence proving the employment relationship.
The applicant must be allowed to present its witnesses and evidence in response.
The court must determine the existence of an employment relationship before addressing the legality of the termination.
Conclusion: Upholding Procedural Fairness
This landmark ruling from the Cassation Bench reinforces a crucial legal principle: in labor disputes under Labour Proclamation No. 1156/2011, when the existence of an employment relationship is contested, the burden of proof initially rests with the employee to establish that relationship according to Article 4. Shifting this burden to the employer without sufficient evidence or legal basis, and denying the employer their right to present rebuttal evidence, constitutes a fundamental error of law. This interpretation upholds procedural fairness and aligns with the Civil Procedure Code’s evidence rules, ensuring that labor claims are adjudicated based on substantiated facts rather than presumptions.