Introduction
The employment contract, at its core, is inherently personal, founded upon the individual capacities and characteristics of the employee. Consequently, in Ethiopian labor law, the unfortunate event of death directly impacts the continuation of the employment relationship, immediately nullifying the rights and obligations established between the parties. While Article 24(2) of the Labour Proclamation explicitly states that the death of the employee serves as a valid ground for the termination of an employment contract, the statute remains conspicuously silent on the implications of the employer’s death.
This silence gives rise to a critical legal question: Does the death of an individual employer lead to the termination of the employment contract, or does it continue with the employer’s heirs or surviving spouse? To navigate this ambiguity, it is essential to consider the definition of “employer” as provided in the Labour Proclamation and to draw upon relevant principles from the Ethiopian Civil Code.
The Ambiguity of “Employer’s Death” in the Labour Proclamation
Article 2(1) of the Labour Proclamation defines an employer broadly as an “individual or an organization.” This distinction is crucial. If the employer is an organization, the transfer of ownership of that organization does not, under Article 23(2) of the Labour Proclamation, terminate existing employment contracts. Therefore, in such cases, the death of an organizational owner generally does not pose a legal ambiguity regarding contract continuation.
However, the situation becomes considerably more complex when the employer is an “individual.” Two primary arguments emerge regarding the fate of the employment contract upon the death of an individual employer:
- Argument for Termination: One perspective suggests that since Article 23(2) (dealing with the transfer of ownership) specifically applies to organizations and not individual employers, the death of an individual employer should result in the termination of the employment contract.
- Argument for Continuation: Conversely, it can be argued that neither Article 23(1) (which outlines general grounds for termination) nor any other specific provision within the Labour Proclamation explicitly lists the employer’s death as a ground for contract termination. Furthermore, considering Article 42, which details circumstances rendering contract termination unlawful, this latter argument – that the contract should not terminate due to the employer’s death – appears more compelling from a strict interpretation of the Labour Proclamation itself.
Drawing Parallels from the Civil Code: The “Intuitu Personae” Principle
To properly resolve this legal conundrum, we must look beyond the Labour Proclamation and consider relevant provisions of the Ethiopian Civil Code, which apply either directly or by analogy.
Article 2586 of the Civil Code directly addresses the effect of the employer’s death on a contract of service. It stipulates that an employment contract shall not terminate upon the employer’s death, “unless his person has been a material element in making it.” This phrase, often referred to as the “intuitu personae” principle (meaning “because of the person” or “with a view to his/her personal qualities”), is key.
An employment contract can be considered “intuitu personae” when it is established with an individual employer whose unique personal circumstances or qualities are central to the agreement. For example, if a private secretary, personal assistant, chauffeur, or household servant is hired, the nature of their work is often intrinsically linked to the specific individual employer’s needs and characteristics. In such instances, the contract is clearly “made with a view to the employer’s person.”
Conversely, if an individual owns a commercial enterprise, but the business operations are managed by a dedicated management structure, the individual owner’s death might not fundamentally alter the ongoing business activities. If actions such as hiring, suspending, transferring, or dismissing employees are carried out by a formally appointed manager with delegated authority, then the employment contracts are arguably not “made with a view to the employer’s person.”
This concept is further elucidated in other legal systems. For example, Bulgarian Civil Law explicitly states that a labor contract concluded with a natural person, where the employment relationship is intuitu personae (e.g., for a private secretary, assistant, chauffeur, or household servant), immediately terminates upon the death of that natural employer. As explained by a Bulgarian legal scholar, Vasil Mrŭchkov, in Labour Law in Bulgaria:
“[W]here a labour contract is concluded with a natural person and with whom the worker has established an employment relationship intuitu personae, with a view to his/her personal qualities and needs such as to act as private secretary, assistant chauffeaur, household servant and the like, the natural employer having died, …the labour contract loses not only one of its parties but also the grounds for its existence, as a result of which it terminates.”
Reconciling Civil Code with the Labour Proclamation (Proclamation No. 1156/2019)
The “intuitu personae” criterion from Article 2586 of the Civil Code can be indirectly incorporated into the interpretation of Proclamation No. 1156/2019, particularly through the definition of “employer” in Article 2(1). This definition does not strictly differentiate between natural and legal persons for the classification of an employer.
For instance, a five-star hotel, even if solely owned by an individual, qualifies as an “organization” under Article 2(1) if it is an “entity established under a united management.” If the hotel fits this definition of an “organization-employer,” then the death of its individual owner would not result in the termination of employment contracts.
However, consider the owner of a dump truck who directly employs a driver. In this scenario, the truck owner acts as an employer in their individual capacity, not as an “organization.” When we compare this with the substance of Civil Code Article 2586, the employment contract between the truck owner and the driver is arguably “made with a view to the employer’s person.” Consequently, under the Civil Code, the death of the truck owner would terminate the employment contract.
From the perspective of Proclamation No. 1156/2019, there is no specific provision that explicitly indicates the employment contract terminates upon the death of such an individual employer. Furthermore, since Article 23(1) seems primarily applicable to organizations, the death of an individual employer would not fall under its scope, implying the contract would not continue with the heirs or the surviving spouse.
Therefore, applying Civil Code Article 2586 by analogy to the Labour Proclamation does not fully resolve the problems concerning contract continuity. The most viable alternative in this situation is to apply Civil Code Article 1986. This provision stipulates that, unless otherwise agreed or the nature of the contract prohibits it, the heirs of a contracting party step into the shoes of their predecessor concerning the contract.
However, the nature of an employment contract where the employer is an individual whose personal qualities were integral to the agreement (i.e., intuitu personae) would inherently prevent its continuation with the heirs. Thus, it is reasonable to conclude that the death of an individual employer in such a context would indeed result in the termination of the employment contract.
Conclusion
The Ethiopian Labour Proclamation, while clear on the effect of an employee’s death, presents a significant lacuna concerning the death of an employer. By carefully interpreting the definition of “employer” in conjunction with principles from the Civil Code, particularly the intuitu personae concept, a coherent legal stance can be derived. When an individual employer’s personal attributes are foundational to the employment relationship, their death likely terminates the contract. Conversely, if the employer is an organization or an individual whose business operates under a distinct management structure, the employment contracts are more likely to continue despite the owner’s demise. This nuanced understanding is essential for navigating the complexities of employment law in Ethiopia.