LAW OF EMPLOYMENT

Employment relationship is a contractual relationship to render service in an anticipation of wage. As a result,

Capacity

In the case of the issue of capacity, the parties should be capable of contracting in the sense that they should be
people who can express their consent sustainable at law. Sustainable consent may emanate either from mental
condition or age. Because, some times, not only minors but also people with mental deficiency may not be
considered to be capable of contracting by law. They may not also be in a position to give consent sustainable at
law. In the majority of cases, the minimum age enabling a person to enter into a contract is the age of majority
(18). But, in the case of labor or employment relation of labor law, the minimum age enabling a person to enter
into a contract of employment is the age of 14 which seems to be much earlier than the one required under
general law of contract (art 89). Art. 89 General 1/ For the purpose of this Proclamation, “Young worker”
means a person who has attained the age of fourteen but is not over the age of 18 years. 2/ It is prohibited to
employ persons under fourteen years of age. 3/ It is prohibited to employ young workers which, on account
of its nature or due to the condition in which it is carried out, endangers the life or health of the young workers
performing it. 4/ The Minister may prescribe the list of activities prohibited to young worker which shall
include in particular:

a) work in the transport of passengers and goods by road, railway, air and internal waterway, docksides
and warehouses involving heavy weight lifting, pulling or pushing or any other related type of labor;

b) work connected with electric power generation plants transformers or transmission, lines;

c) Underground work, such as mines, quarries and similar works;

d) work in sewers and digging tunnels. 5/ the provisions of sub-article (4) of this Article shall not apply
to work performed by young workers following courses in vocational schools that are approved and
inspected by the competent authority.

The contrario reading of sub-article 2 of this article shows that it is possible to enter into a contract with people
above 14 years of age. People between 14 and 18 years of age are young employees having special category of
employees. There are protections that the law gives to these categories of employees. But now, we will try only

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to establish the general framework. For the time being, the point to note is that entering into a contract as far as
employment relation is concerned, there is a deviation from the general principle of contract. Because, as we
have already noted, in the case of the general principle of contract, capacity begins at the age of 18. But, in the
case of contract of employment, capacity begins 14 years earlier than the above limit.

Lawful and moral element

As regards to legality, the general principle of contract (article 1678/B and 1716) shall apply to contract of
employment as well. A contract is a juridical act. At the end of the day, if and when a dispute arises, the
contract is going to be brought and enforced before a court of law. On the other hand, the court of law is a legal
institution. And it is impossible to take illegal transaction to such institution for enforcement. This principle of
legality is designed under article 4/4 of the labor proc. According to this sub-article, a contract of employment
shall not be concluded for the performance of unlawful or immoral activities. This sub-article seems to be the
direct reproduction of the general principle of contract (article 1716/1 of the Civil Code.

Form

As regards form, the general principle of contract states that unless otherwise provided by law, no special form
shall be required and a contract shall be valid where the parties agree (article 1719). According to this general
principle, there may be cases where the law prescribes a contract to be in written form and get observance and
obedience by the parties. But, in all other cases, it is a consensual relationship of the parties that determines the
form of the contract. Article 5 of the labor proclamation, hereto, seems to be the direct reproduction of this
general principle of contract. This article provides that unless otherwise provided by law, a contract of
employment shall not be subject to any special form. So long as the law doesn’t require any special form, the
parties may not need the written instrument to assert the existence of their contract. Parties can prove its
existence by any other means. For example, despite the fact that the contract is unwritten, if an employee is able
to show that he is rendering service and the employer is providing him with the required wage every month, or
if he shows that he has continued with that transaction for a certain period of time such as a month or a year,
there is a contract of employment fully acceptable by law.

But, here again, there may be areas where the law may require the parties to have special form. One of those
areas by which parties are required to have a special form is period of probation (article 11/3). This sub-article
provides that where the parties agree to have a probation period, the agreement shall be made in writing. This
period of probation is one of the areas where the law provides otherwise (article 5). The other area whereby the
parties are required to have a special form for their contract of employment is contract of Apprenticeship

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(article 48/3). This sub-article provides that the contract of apprenticeship and its modifications shall be valid
only where it is made in writing and attested to by the Ministry. As we are able to observe here, the contract of
apprenticeship is not only required to be in writing but also attested by the ministry. I.e. it requires more than
special form.

But, where the law is silent whether a contract of employment should be in written form or not, the parties are at
liberty to proceed with their interaction with no formal requirement for their contract. Of course,

The parties themselves are at liberty to provide a special form. Sometimes, there exists confusion between form
required by law and form agreed by the parties. When a form is required by law, in addition to reducing the
agreement of the parties into writing, there are some more requirements to be fulfilled. For instance, it should be
signed by the parties; it should be attested by two witnesses. Unless these requirements are met, the law
considers the contract to be a mere draft of a contract (article 1720/1). But, when the form is agreed by the
parties, it is not a must to have signature of the parties and attestation by two witnesses for their contract to be
valid. Ada agreed to sell his car to Bada.

Then, the two parties decided to prepare a written instrument as to their transaction. They put their signature on
their written instrument but no attestation of the two witnesses therein. At a later stage, one of the parties
wanted the contract to be enforced while the other did not. He argued that there is no valid contract with out the
attestation of two witnesses. Is his argument valid under law of contract? People tend to evade reading of article
1726 versus 27 of the Civil Code. Article 1727 talks about when a form is required by law. But, article 1726
tries to give effect when a form is stipulated or agreed by the parties. If the parties have agreed to make their
contract in writing and, at the same time, are silent as to signature and attestation of two witnesses, then it is the
agreed term. If they are in need of turning their contract into writing thereby inserting their signature and
attesting by two witnesses, then it is still the agreed term. So, when a contract is made in writing, to believe that
it should not only be signed by the parties but also attested by two witnesses, is a misconception.

Object

As regards the content, the general principle of a contract states that as long as the content of a contract or the
obligation of the parties is clearly defined, possible, lawful and moral, then the contract is valid. When we come
to contract of employment, even if the content is clearly defined, lawful, possible, there is a restriction. For
example, the content of the contract should not bring about less favorable conditions for the employee than what
has been prescribed by law, work rules, collective agreements and etc (article 4/5 of the LP. Article 4/5 of the
same proc provides that 5/ the contract of employment shall not lay down less favorable conditions for the

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 employee than those provided for by law, collective agreement or work rules. It is remembered that there are
minimum conditions stipulated as to annual leave, maternity leave, sick leave, maximum working hour and etc
designed in the form of provisions provided by law. Any contract of employment cannot deviate from these
minimum labor conditions. On the other hand, the content of the contract should be checked against these
minimum labor conditions provided by law or collective agreement, if any, to which the enterprise is a party.
The principle is meet or exceed rule. This means that the contract should either meet the minimum standards
required by law or go above it.

If the contract is found to have gone below one of the minimum standards required by law, not the whole
contract but only that part of the contract which has been found to have gone below the minimum labor
condition shall be called off and replaced by the prescription of the law. We have already indicated that the
employee is the weaker party at the time of bargaining. If we allow the content of the contract to be determined
by the parties, it will be detrimental to the welfare and wellbeing of the employee. So, any contract of
employment, no matter how clearly defined or possible it may be, is deemed to be invalid if it does not meet
one of the minimum labor conditions provided by law. For example, it is possible for a worker to render service
with out annual leave. But, annual leave has been enshrined to be one of the minimum labor conditions under
Article 76 and 77 of the LP. Article 76/1 provides that an agreement by a worker to waive in any manner his
right to annual leave shall be null and void. Article 77/1 also provides that a worker shall be entitled to
uninterrupted annual leave with pay which shall in no case be less than:

a. fourteen (14) working days for the first one year of service;

b. Fourteen (14) working days plus one working day for every additional year of service. This is again a
deviation from the general principle of a contract as to consent. Because, the consent of the parties is not
respected due to the fact that the law has stepped in the transaction of the unequal parties for the market to work
well.

The arrangement for a contract of employment under the federal civil servant proc is a little bit different from
that of the labor proc because of the fact that one of the parties to the transaction is a public power or state. When a
certain state institution as a public power decided to employ a civil servant especially for permanent position, the
procedure is a little bit strict and laborious. The first procedure to be made is vacancy announcement (article 16 of
FCSP. Article 16 provides that:

1) Government institutions shall advertise every vacant position to be filled by a new civil servant.

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2) Notwithstanding Sub-Article /1/ of this Article, whenever there is shortage of professionals in the labour market, a
government institution may solicit graduates of higher educational institutions for recruitment in cooperation with
the institutions.

3) The Agency shall issue directives with regard to advertising vacant positions, and the preparation and conducting of
examinations and disclosing the results thereof. According to sub-article 2, in case where the required field is not available or
available in a scares quantity in the market, the government institutions may directly deal with the producer of the labour.
So, this sub-article seems to be an exceptional arrangement.

Technically, vacancy should be announced to the whole world in a news paper of wider circulation, electronic
media, in a notice board of the concerned government institution or in any other means. Vacancy announcement
primarily serves transparency despite the fact that it may have additional objectives. Vacancy usually comes up
with some requirements to be met in terms of qualification, year of service, some times salary, place of work and
etc. in short, vacancy announcement is, more than anything else, an expression of transparent working system. Of
course, it emanates from the prescription of the constitution. It is beneficial not only for job seekers or applicants
but also for government institutions due to the fact that it widens choice opportunity for the latter. Whenever
vacancy is made transparent and open, the institutions will obtain candidates of various qualities from a wider pool.
Once applicants expressed their interest, the next step shall be recruitment stage (article 13 of the FCSP). This
article provides that:

1) There shall be no discrimination among job seekers or civil servants in filling vacancies because of their ethnic origin,
sex, religion, political outlook, disability, HIV/AIDS or any other ground.

2) A vacant position shall be filled only by a person who meets the qualification required for the position and scores
higher than other candidates.

3) Notwithstanding the provisions of Sub-Articles (1) and (2) of this Article, in recruitment promotion and
deployment preference shall be given to: a) female candidates; b) candidates with disabilities; and c) members of
nationalities comparatively less represented in the government office, having equal or close scores to that other
candidates.

4) The definition of disability applicable in the appropriate law relating to disability shall also apply for the purposes of
this Article.

Recruitment shall be undertaken among the applicants on the basis of non-discrimination (13/1 and on the basis of
merits (13/2). 13/3 has apparently deviated from 13/1 and 2. There should be no discrimination among the

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applicants with any ground. Because, the employer is a public institution being financed by the revenue generated
from all tax payers. So, it should be available even handedly and horizontally to all who meet the qualifications
irrespective of their ethnic origin, religion, political outlook and or any other means. Needless to say, the principle
of nondiscrimination is also available in the private sector or labor law employment regime. Because, it is a
principle emanated from the constitution (article 25) and that should be observed not only by public actors or
employers but also private actors. The labor proclamation has also its own provision as to non-discrimination.

The other principle of filling vacancy is that vacant position shall be filled only by a person who meets the
qualification required for the position and scores higher than other candidates. Discrimination should be avoided and the
recruitment must be merit based. When the recruitment is merit based, it will be beneficial to the government institution
because it gives the position to qualified candidate capable of rendering qualitative service for the employer. The other
advantage of the fact that employment is merit based is that people who are aware of such fact will invest on themselves to be
meritorious. So, in one way of another, if an employment is merit based, hard working people shall be rewarded. It is
important to stick to merits to be determined some times by performance.

Written or oral examination may also be taken. Previous card of a transcript may be taken into account. Recruiting candidates
based on their card of transcript is, however, misleading and difficult due to the fact that some institutions are generous while
others are not in their grading system. As a government office, the institution must provide with a sort of affirmative action.
So, 13/3 provides that Preference shall be given not only at the time of pre-employment but also at the time of promotion to
female candidates, persons with disability and members of nationalities comparatively less represented in government office
having equal of close scores to that of the candidates. Under 13/3, the principle of equity seems to have come into picture. For
example, there may be so many candidates equally meritorious while there is only one vacant job. In this case, even if one of
them is going to be assigned, we don’t draw lots. Rather, we will make the assignment be enforced in another mode or
fashion.

As a government, the most equitable way is to reward the historically marginalized members of the society. In this case,
females, persons with disability and persons who are not well represented in the civil service for what ever historical reason
shall be made to take priority. Through this arrangement, in addition to non-discrimination and merit based recruitment, the
law is trying to achieve other equally important goal, the goal of equity. i.e. it tries to narrow the gap in employment as far as
sex, disabilities and historically disadvantaged group are concerned. Even if we have already said that there should be the
principle of non-discrimination on the basis of variables, it doesn’t mean that everybody will be eligible. There are some
elements to be taken into account as to eligibility in public service as well. In the labour law regime, we have said that a
person with 18 years of age is able to enter into a contract of employment with out limitation as young employees are. The
minimum age for civil service regime is the age of 18 years (14). It could somehow be a reason for discrimination. Article 14
provides that 1) the following shall not be eligible to be civil servants:
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a) A person under the age of 18 years;

b) Any person who has been convicted by a court of competent jurisdiction of breach of trust, theft, or fraud;

c) Any person who is unwilling to take oath fidelity according to Article 18 of this Proclamation

d) Without prejudice to Sub-Article (1) (b) of this Article a civil servant who has been dismissed on grounds
of disciplinary offence, before the lapse of five years from the date of his dismissal. The eligibility of attaining
18years of age has an exception under sub-article 2 of the same article. Because, the same sub-article provides that
the Agency may issue directives on circumstances in which young persons above the age of 14 under 18 may be
appointed as civil servants and on the conditions of service applicable to them.

Unlike the labour proclamation, previous character of the applicant is another important element of eligibility
under the civil service proc. In the civil service case, since the employer is a public office, the employee is
expected to be a person of integrity and good character. As to good character, breach of trust, theft and fraud are
the most important crimes that have been given serious attention. If an applicant is found to have convicted of a
breach of trust, the law presumes that the applicant’s integrity is in question. Here, it must be noted that for a
person’s denial of eligibility, not accusation and investigation but conviction is taken to be a precondition. Note
must also be taken that a person is denied of his right to be a civil servant not for all types of crimes but only for
those crimes that are very much associated with integrity or faithfulness.

But, it is too much confrontational whether these are the only crimes that must be taken into account or not
while assessing the previous character of an applicant. The other mode of assessing eligibility is loyalty to the
constitution. People who do not accept the constitution usually refuse to take oath as to loyalty to the
constitution and enter into conflict with their employer. Hence, they may lose the opportunity to win the
candidacy. But, what they have been asked is not the matter of accepting but respecting the constitution.

Even if we do not accept laws personally, we should be bound by them. This is the main nature of not only the
constitution but also other ordinary laws. As to fidelity, not only loyalty to the constitution, but also office
secret, truthfulness, faithful service and loyalty to other laws are also included(18/2). Article 18/2 reads as The
appointed civil servant shall, before commencement of his work, take the following oath of fidelity: “I being a civil
servant solemnly and sincerely swear to faithfully serve the people and execute government policy, and to respect at all
times the Constitution and the laws of the Country and not to disclose to any party information that is
revealed to me by reason of my duties and is classified as secret or confidential by law or standard
transparent procedure. In short, people are misunderstanding the concept of non-acceptance and compliance
with laws. The condition of taking oath is not available under the labour proclamation. Because, it is business
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oriented employment relation. Rather, it is deemed to be an implicit term of the contract. And because, if the
employee failed to be faithful, he may be dismissed of disciplinary ground. Other associated conditions for
eligibility are submission of medical certificate and written testimony of police record as to theft, breach of trust
and fraud (17).

The candidate, who has scored the highest mark from among the competitors and passed the examination, shall
submit medical certificate except HIV/AIDS test to prove his fitness for service and written testimony to prove that
he has no police record with regard to crimes referred to in sub-Article/1/ /b/ of Article 14 of this proclamation. These
are not also expressly found under the labour law regime. The civil service would like to make sure that the job
seeker is medically fit for the civil service under consideration. Such medical fitness is verified in terms of
medical certificate. Some times, these requirements are found to be missing their targate. Because, people with
disability may be victims of medical certificate since medical doctors may say that he is not medically fit by
looking at their external and physical conditions. So, this must be wisely handled. There is also confusion as
regards the police record. Because, there is a variance between what we find in a police record and what the law
requires. The police give to the candidate a certificate that proves his innocence of any crimes or that he has
previously a record of crime.

On the other hand, the law does not require a police record as to all types of crimes but theft, breach of trust and
fraud only. Once a candidate has satisfied all these procedures or steps, they shall be employed as public servant
of probational employment. Consequently, letter of probational and not permanent appointment shall be issued
(18/1). Article 18/1 reads as a newly appointed civil servant shall be served with a letter of probational
appointment, signed by the Head or any other authorized official of the government institution, stating the title and
grade of his position, his s a l a r y a n d d a t e o f commencement of his appointment, together with job descriptions of
his position. But, it must be noted that unlike the labour law regime where we can negotiate as to what service we are
going to render and what not, any job in the civil service is non-negotiable. Rather, it is already determined by the
government office together with the position and the salary since they have, in advance, a cheque list of the job. To begin
with, it is not a contract of employment that can be negotiated by the parties but a letter of appointment which is a
unilateral instrument issued by the employer alone.

The employee is not expected to sign on the letter; rather, he will have to receive the letter after signing in advance. But,
as far as the contents are concerned, it is a contract of employment because of the fact that the employee shall render
service under the control and authority of the employer in return for remuneration and so on. The fact that the employee
can resign at any time makes the letter a voluntary arrangement. As to how long a probational arrangement lasts, there is
the so-called probational period (article 20/2). According to the same sub-article, the period of probation of a civil
servant on the position of his appointment shall be for six months; provided however, if the performance result is
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below satisfactory, it may be extended for an additional period of three months. As a principle, a probational period lasts
for 6 months but extends itself to the period of 9 months under exceptional situations.

So, the letter of probational appointment will enable the government office to assess whether the candidate is suitable for
the post he is assigned or not (20/1). Because, the purpose of probation is to prove the competence of a newly appointed
civil servant through follow-up of his performance. This seems to be the main purpose of the letter of probation
for the fact that academic credentials are usually misleading. These credentials do not show character and integrity even if
they may show skill and qualification. On the other hand, skills and qualification, though necessary, are not sufficient.
After such probational period, performance evaluation will be filled. If the performance evaluation shows that the
performance of the employee during the lasts 6 months is below satisfactory, he will be given an additional grace period
of three months mainly for the benefit of the civil servant. But, if she/he passed the test of probation, letter of permanent
appointment will be issued (21). In other words, where the civil servant on probation has recorded satisfactory or above
satisfactory performance result, a letter of permanent appointment shall be issued to him.

So long as the civil servant resumes on the same position, there will be no change in job description. The nature of the
letter, how ever, shall be changed from a letter of probational appointment to a letter of permanent appointment which
describes his being permanent civil servant of that specific government institution. These are generally the procedures of
forming employment relation be it under the civil service or labour law employment regime. Note must be taken that we
have a probation period under the labour law regime as well (11). Article 11 provides that

1/ a person may be employed for a probation period for the purpose of testing his suitability to a post in which
he is expected to be assigned on the basis of a contract of employment.

2/ a worker re-employed by the same employer for the same job shall not subject to probation.

3/ where the parties agree to have a probation period, the agreement shall be made in writing. In such a case, the
probation period shall not exceed forty-five consecutive days.

4/ unless this Proclamation or work rules or collective agreement provides otherwise, the worker shall have
during the probation period, the same rights and obligations that a worker who has completed his probation
period has.

5/ If the worker proves to be unfit for the job during his probation, the employer can terminate the contract of
employment without notice and being obliged to pay severance pay or compensation;

6/ a worker on probation may terminate his contract of employment without notice.

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7/ If the worker continues to work after the expiry of the probation period, a contract of employment for the
intended period or type of work shall be deemed to have been concluded from the beginning of the probation
period. The clause “may be employed” under 11/1 of the labor proc indicates that enforcing the probational
period is, however, optional. An employee under the labor law regime may be employed as a permanent
employee beginning from the first day of his involvement in the employment relation. If the parties have agreed
as to the existence of a probation period, such probation period should be in writing and expressly stated. As far
as the duration is concerned, the probational period under the labor proc is much shorter than that of the
probational period under the civil service proc. i.e. the probation period under the labor proc shall, in no way,
exceed forty-five consecutive days. It is not even for forty five working days but consecutive days.

If the probation is going to be made on working days, Assessment in such days is much longer than assessment
in consecutive days as the working days exclude holidays. Of course, the parties may agree to the extent of no
probation or with in that latitude. Probation is very important because it has a certain impact on job security.
The longer the period of probation, the less secured the job will be. Because, at the time of probation, the
employer can easily terminate the contract of employment with out being required to show inefficiency of the
employee. Under the civil code, probation is left to the parties. For example, for a contract of three years
employment, the employer may determine that the first year would be period of probation. Because, when it is
left to the parties, the employer usually detects its terms. The employer shall be beneficiary when the period of
probation is much longer. Because, he can dismiss the employee at anytime within the range of the period of
probation simply by stating that the employee is unfit to the position. The alleged inefficiency of the employee
may not also be checked by an outside organ. At the time of probation, only the appreciation of the employer is
taken to be sufficient.

The employer is not required to give notice of termination as well. Under the civil code, the fact that probation
is left to the parties is disadvantageous to the employee due to the weakness of the latter in bargaining power.
Under the military regime, the prevailing legal actors would consider undefined or undetermined probation
period to be unfair to the employee. So, they came up with a labor proclamation No 64 of 1975 with a probation
period of, at most, 90 days. But, the law was not of any problem if the parties had agreed to have a probation
period less than 90 days. Then came labor proclamation No 42 of 1993. This proclamation was the labor
proclamation of the transitional period following the downfall of the military regime. Under such proclamation,
the probation period was determined to be, as a ceiling, forty five days. The shorter the probation period,
relatively, the better secured the job will be for the employee.

Even if the employers get disappointed at this arrangement, the labor proclamation No 377 of 203 has
maintained the maximum ceiling of forty five days as a probation period. But, at the time of enacting this new
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proclamation, the employers’ association was very much objecting to this arrangement. Because, they believe
that the probation period of forty five days is too short to determine suitability. They would also take
comparison from the civil servants proclamation. The government has set aside the whole 6 months to
determine suitability. But, when we come to the private sector, the law limits the probation period to a
maximum ceiling of forty five days.

In connection with probation period, there are at least theoretical arguments. Let’s assume that there is a
contract of employment concluded by a certain employee and an employer. One of the terms of the contract
states that the first three months of employment shall be period of probation. Two months later, the employer
terminated the contract of employment by invoking the employee’s unfitness to the position. Then, the
employee took the case to court of law and argued that there is unlawful termination. The employer responded
that the first three months were mint for probation period. On the other hand, in a probation period, the
employer argued that he, on the basis of article 11/5 of the LP, has made a valid termination of contract of
employment. Whom do you think the winner? Even if the parties have agreed that the first three months be
period of probation, the maximum limit for probation period provided under the LP is only forty five
consecutive days.

So, we could not give effect to such probation period agreed by the parties. As soon as the first consecutive
forty five days has lapsed devoid of objection from the employer, the law assumes that the employee has been
employed for indefinite period. On the other hand, if the status of the employee has been changed from
probational employee to permanent employee, the employer can no longer terminate the contract of
employment by invoking the provisions of probation period. This does not mean, however, he cannot terminate
the contract at all. Rather, the termination should go into another territory. Meaning, he must show that the
employee was incompetent, ill-disciplined and other related causes. So, any contract of the parties that goes
beyond the maximum ceiling of the law is not simply given effect as a probational period. As far as the parties
have agreed that the first three months be probational period, there are three options as to the decision of the
court. One option is to consider as if there were zero probation.

The second option is that there is probation; but, the probational period is only forty five days. The third option
is to maintain the agreement of the parties. When we talk of the right of the employee, we should not neglect the
right of the employer. Because, in the absence of the employer, there is no employee. If we ignore the employer,
we may have an excessive pro-labor position. There are conflicting interests as to this position. One of them is
labor investment and the other is capital. Excessive pro-labor position which is of socialist nature is an extremist
position. This position may have a negative impact on investment. Specially, when the investment is a sort of

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foreign investment, and the investors come to know of the fact that Ethiopian law is excessively pro-labor, they
will be forced to look for another country to invest their capital.

Consequently, capitals would fly away and unemployment will prevail. Strategically, it is not beneficial to the
whole employees. On the other hand, if we have become an excessive pro-investment, it will again have a
negative impact on labor. Because, we are going to negatively affect the fundamental rights and well being of
the labor force. Hence, it will be a crude exploitation and the laborers shall revolt thereby becoming a source of
social and political unrest. From such an angle, everybody will be the loser. So, it needs to strike a balance. But,
striking the balance doesn’t mean that we should presume the employee and the employer to be on equal
footing. While striking the balance, the weakness of the labor must be taken into account. When we come to the
point of choosing one of the options we mentioned above, we can solve such a dilemma in terms of
interpretation by analogy.

Under the general law of contract, if two parties concluded a contract of loan with interest and the rate of
interest is not specified in the contract or if the mentioned interest is found to be above 12 %, the rate of the
interest shall be reduced to the legal interest rate(9)(article 1751). So, if the parties have agreed that the
probational period be more than forty five days, it seems to be possible to bring down to the legal maximum by
analogy.

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Chapter Two

Persons excluded from Employment law Regime

Agent-principal and Client-Contract

We have tried to see the scope of labor proclamation by comparing with agent-principal relationship and client-
contract relationship on the one hand employee-employer relationship on the other. In the case of agent-
principal and client-contract relationship, command and control is loose or non-existent as compared to the
command and control the employer exercises over the employee. Because, the employee is to render service
under the authority or the direction of the employer. For such reason, these two relationships are excluded from
the ambit of labor proclamation or employment relation. Of course, they are similar to employee-employer
relationship as they are sourced predominantly of contract and they are to render service. So, what must be
noted here is that, in the client-contract and agent-principal relationship, the command and control one party has
against the other is loose or non-existent. Therefore, we excluded such relationships from the ambit of
employment law.

Religious services

Sometimes, even if there is a command-control relationship, there could still be other relationships that could be
excluded. We have already said that for employment relationship to exist, we need a physical person rendering
service under the direction and control of the employer for the benefit of the employer in consideration for wage
in terms of definite or indefinite period or piece work. So, even if these definitions may be satisfied under
employment relationship, we again said that religious service is outside of the ambit of employment law. On the
basis of the decision of the Supreme Court, when the service that is rendered by the person is a religious one,
we cannot regulate such religious service or employment relationship by a secular law (the labor proclamation).
Because, it has something associated with religion and state cannot interfere with the religious affairs.

Others expressly excluded

In short, in face of the absence of command and control from the employer, we excluded client-contractor and
agent-principal relationship. We also excluded some services due to the religious nature they have from the
ambit of the labor proclamation. But, we have still further exclusions that have been spelt out under article 3/2

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of the labor proclamation itself. The mentioned sub-article reads, this Proclamation shall not be applicable to the
following employment relations arising out of a contract of employment.

a) Contracts for the purpose of upbringing, treatment, care or rehabilitation.

b) Contracts for the purpose of educating or training other than as apprentice.

c) managerial employee who is vested with powers or prerogatives to lay down and execute management
policies by law or delegation of the employer depending on the type of activities of the undertaking with or
without the aforementioned powers is vested with the power to hire transfer suspend layoff, recall, discharge,
assign or discipline employees and include professionals who recommend measures to be taken by the employer
regarding managerial issues by using his independent judgment in the interest of the employer.

d) Contracts of personal service for non-profit making purposes.

e) Contracts relating to persons such as members of the Armed Force members of the Police Force, employees
of state administration, judges of courts of law, prosecutors and others whose employment relationship is
governed by special laws.

f) Contracts relating to a person who performs an act, on consideration of payments, at his won business or
trade risk or professional responsibility under a contract of service. Article 3/1 states that this Proclamation is
applicable to employment relations based on a contract of employment that exist between a worker and an
employer except the exclusion under sub-article two.

Managerial employees

Among the exclusions of sub-article 2, the most controversial ones before Ethiopian courts are management
employees, domestic employees and employees of state administration. Even if command and control exists or
the service is of no religious nature, all these employees are excluded from the ambit of the labor proclamation.

But, why is it controversial? Who are these? Management employees are employees exercising or holding
managerial function or position in an enterprise. Decision makers on various things of the company such as
recruitment, promotion, demotion, transfer, termination, operational plan, the size and the nature of the product
and so on are within the prerogative of the management. Sometimes, owners may be share holders of a
company.

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They are throughout the year out of picture. They appear there once a year in the form of general assembly to
determine the profit and loss of the company for that specific year. Needless to say, a person may be both an
owner and a manager especially when we are speaking of very smaller enterprises such as a garage, bar and etc.
But, when we speak of a full-fledged company the owners are usually far from the day to day activities of the
company run by a manager. Strategically decisions of the company are given by the board. So, unlike the
owners who are usually passive, the board and the manager are people who would be always in the picture.
Because, the latter are people having multiple says on the fate and destiny of the enterprise. Since these are very
much associated with the interest of the company in one way or another, they have power of determining the
fate of the employees and they are there on behalf and for the benefit of the owner.

Therefore, they have a conflicting interest with the labor force. Because of this nature, the law tries to exclude
these people from the ambit of the labor proclamation. Of course, the general manager could be an employee for
the fact that the board can appoint and dismiss him. He is rendering service having no religious nature under the
command and control of the board in an anticipation of wage. As a result, the definitional elements of
employment relationship are somehow satisfied. But, the nature of the service he is rendering is more of
representing the enterprise. In short, he is more allied to the enterprise than to the labor force thereby being
excluded. Excluding the managerial employees from the ambit of the labor proclamation is not new. At the time
of the military regime, the managerial employees were not beneficiaries of the labor proclamation as well.

How do we determine whether some one is a managerial or ordinary employee? At least, Ethiopian labor
history has witnessed two mechanisms as to determining whether an employee is a managerial or ordinary.
These approaches are structural and functional approaches. Structural and functional approaches are used to
determine managerial and ordinary employees.

Labor proclamation 64 of 75 was mainly making use of structural approach. By structural approach, we mean
that any official in an enterprise or company who is accountable to the general manager or to his deputy(s) shall
be a member of the management team. So, in order to determine whether some one is a member of the
management or not, we shall see the structure of the company. In general, in a management team of a company,
we include board of directors, general manager, organs accountable to the general manager such as legal service
and communication or public relation directors, then, two deputy general managers, 1 for operation and another
for administration and finance, and under the deputy general manager for operation, sales manager and
production manager, under deputy general manager for administration and finance, administration head and
finance head.

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Actually, this list is not exhaustive. These officials could not benefit from the minimum labor conditions of the
proclamation and they cannot be members of trade unions or beneficiary of unionization. If a contract of
employment for a manager is terminated, he cannot claim reinstatement by invoking the provisions of the labor
proclamation. These are of course implications of exclusion. Persons such as the sales officer, the production
section, casher, the personnel and etc may seem to be members of the management team. But, these officials are
not included under the management team for the fact that none of them are accountable to the general manager
or to his deputy manager(s). Rather, they are governed under the ambit of the labor proclamation. In general, in
structural approach, we are not interested in what activity or function a particular employee is undertaking. Note
must be taken that this approach is somehow problematic. Case.

In 1983, there was a hotel which had about 20 employees beneath it. The owner was, at the same time, manager
of the hotel. Below him, there were three managers 1) manager of beverage affairs, 2 manager of bedding
affairs, 3) manager of meal affairs. Then, the employees of the hotel were in need of forming association which
was a fashion brought by the prevailing ideology. The employees were allowed to have a meeting hall and the
general manager was admitting the legally recognized employees by standing at the gate of the hall. The
beverage, meal and sleeping managers were to join the meeting by regarding themselves as an employee of the
hotel. Then, the general manager forbid the other managers from taking part in the meeting by alleging that they
are managers not employees and they are accountable to him as per the proclamation. On the other hand, the
forbidden managers were eager to be members of the association for the fact that they were gaining no benefit
from their managerial position.

Then, they took the case to the competent labor court under the ministry of labor and social affairs. The general
manager responded that the plaintiffs were accountable to general manager and hence they are side of the
management team. The confused court ordered the owner of the hotel to bring their job description before the
court. The job description stated that the manager of the beverage affairs unlocked and scanned over the
refrigetor whether a verity of drinks had been inserted therein and prepared to be consumed. The manager of the
sleeping affairs checked whether the sheet and pillow on which a guest spent the night had been changed and
bed rooms had kept clean or not. The manager of the meal affairs was doing the same activities in connection
with meal. The court asked the defendant whether they were taking measures such as cutting of salary,
dismissing employees if found undisciplined against the employees beneath them.

The general manager responded that they would bring the employee which was at fault to him to take measures
upon the employee found to have been at fault. The court explained that the law made officials below the
general manager to be included under the management team because of the fact that they were involved in
passing crucial management decisions. So, even if they seem to be managerial staff in form, in terms of content,
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they had no managerial functions. They could not be considered to be included under the management team.
Finally the court decided that they could form workers’ association together with the other employees. From
then on wards, structural approach was found to be misleading. If we are going to focus solely on the structure,
there could be a danger that people who should not have been member of the management staff will be
categorized under the management team and denied of the protection of the law. After the repeal of the labor
proclamation 64 of 1975, the labor proclamation 42 of 1993 of the transitional period substituted the structural
approach for the functional approach. The functional approach was again taken over by the current
proclamation. So, under the current proclamation, it is not the structure that matters but the actual function a
particular employee undertakes to determine whether someone is a management staff or not.

Article 3/2/c tries to let’s know what managerial functions are as follows. managerial employee is he who is
vested with powers or prerogatives to lay down and execute management policies by law or delegation of the
employer depending on the type of activities of the undertaking with or without the aforementioned powers is
vested with the power to hire transfer suspend layoff, recall, discharge, assign or discipline employees and
include professionals who recommend measures to be taken by the employer regarding managerial issues by
using his independent judgment in the interest of the employer.

From this provision, we can understand that laying down and executing management policies, hiring,
transferring, suspending, laying off, assigning and taking disciplinary measures against employees are assumed
to be managerial functions. Generally speaking, if an employee is found to be involved in any of these
functions, the law presumes him to be member of the management staff. The law considers that the managerial
positions are positions of trust. The employer or the owner of the enterprise assigns people to these positions if
he has sufficient trust on them. On the other hand, if these people have obtained the confidence of the employer,
the law assumes that they will be better protected by the employer as far as they are assigned there to protect the
interest of the employer. So, there may not be a need to give further protection. That is why the law decides to
exclude them from the umbrella of the labor law. The other reason by which the law wants to exclude members
of the management team here is that if the law treats them to be employees, they will have the opportunity to
join the labor or trade union.

On the other hand, if they joined the labor union, the union will suffer from heterogeneous interest. If so, there
will be members who are more associated with the employer in one hand and ordinary employees on the other.
In such a case, divergence in interest could be created in it and unlike homogeneous interest; this will make the
union yellow, teletafi. Because, apparently, as a yellow union, even if they are deemed to be unions of the labor
force, but actually, they stand for the interest of the employer. Finally, if these people are allowed to be
members of such unions, the unions shall be directly or indirectly under the control of the employer. The third
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reason is that if the law allows members of the management team to join trade unions, there could be a danger
that company secret would go to the trade unions. Because, due to their positions, they have the opportunity to
know of certain secrets of the company be it business secret or whatever that should not be divulged to
outsiders. Such company secrets will again be passed to other outsiders through the trade unions. So, the
exclusion is important not only to protect the interest of the union but also to protect the interest of the
company.

The other justification for exclusion is that people who are assigned to those posts are more of technocrats or
white-collar employees. When someone is assigned to these positions, the assumption is that he is skillful. If he
is a skilled employee, because of his skill, his marketability is higher. If his marketability is higher, he can
negotiate better benefit by himself even without protection of the law. So, even if the law does not provide any
protection to them and they are not found to have equal bargaining power with the employer, they can stand by
themselves backed by their skill and knowledge as compared with the ordinary employees that are unskilled or
semiskilled and abundant in the market.

Even, in some points, they can hire the advice of a lawyer to protect their interest since they are better relatively
paid. They may be able to understand the provisions of the law and try to customize their contractual relation in
line with the law. In the majority of the cases, they are literate and understand the implications of their acts
while signing the contract or bargaining. For all these reasons, members of the management team are outside of
the ambit of the labor proclamation. Rather, they will be protected by the employer if they have obtained the
confidence and trust of the employer. Secondly, if they have a problem, they need to exhaustively put their
terms of protections in their contract of employment.

We have already said that the civil code serves as gap filling instrument. On the other hand, unlike the labor
proclamation, the civil code does not exclude them. So, their contract of employment will govern their
employment relation. In case their contract employment does not cover subject-matters for their protections, the
civil code may be of some help. At the time of the derg regime, since managerial positions were excluded from
the ambit of the labor law proclamation, there was a directive issued by the ministry of industry as to how
management staff should be hired, promoted, transferred, dismissed. This directive was also concerned with
what annual leave they are entitled, what procedures to be followed in order to dismiss them, what benefits they
are going to get in the form of bonus and salary increment. However, this directive was applicable to only state
enterprises and not private sectors. At this time, the government is moving away from state enterprises through
privatization. And the application of this proclamation is becoming very limited as it has no effect to apply in
private sector. Of course, still, it may apply in some state enterprises that are not yet privatized.

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Employees of Household

The other employment relationship that has not been covered by the labor proclamation is employees of
household. Article 3/2/d provides that contracts of personal service for non-profit making purposes are
excluded from contract of employment under the labor proclamation. Who are these people? Why are they
excluded under the umbrella of the labor proclamation? The people referred under article 3/2/d are domestic
workers. Some people may say that domestic workers are even more oppressed than any other labor force.
However, domestic workers are outside of the ambit of the labor proclamation. If we consider that these people
be covered by the labor proclamation and if the purchaser of their service has to dismiss a domestic worker, he
will not only have to inform her fault but also be expected to prove her fault before a court. Secondly, if the
employer has ordered her to work in the evening or on night such as cooking meal and serving dinner, she will
claim overtime fee. Unfortunately, if she came having conceived somewhere outside, the employer will have to
give maternity leave as per the proclamation. So, all the entitlements that are available in the labor proclamation
shall be extended to her as well. If so, the employers would prefer to perform the work by themselves and it will
back fire. The employers are marginal consumers. They will consume or purchase the service to the extent that
it is within their economic power. When it becomes expensive, they shall leave it and develop copying
mechanism or survival strategy. ²²Survival strategy refers to the work done by the employers by cutting time of
their leisure. So, the fear of the law seems to be that excessive protection to domestic workers may back fire.
Because, they may lose the job altogether.

The other thing is that in industrial relation, almost all working systems are more or less similar. In this case,
labor standardization is possible as to the minimum labor conditions. But, when we come to the domestic
service, every household is unique by its very nature due to factors such as economic consideration and the
likes. So, domestic service will be too domestic to be regulated by the law. Of course, the law does not exclude
them altogether. Because, there is a promise that the council of ministers will come up with a certain regulations
to regulate their employment relation under article 3/3/c of the labor proclamation. Such promise reads, the
Council of Ministers shall issue regulations governing conditions of work applicable to personal services. Akin
to the current proclamation, Even if this promise was also included under the labor proclamation 42 of 1993, the
council of ministers did not yet come up with the promised regulation governing such personal service to this
effect. In the absence of such regulation, they are going to be protected by their individual contract of
employment which is less likely to be observed. Otherwise, they shall be protected by the Civil Code (article
2601, 02, 04). Because, the labor proclamation has excluded them from the umbrella of the labor proc not from
the protection of the civil code.

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It must be noted that it is not the nature of the service that has been excluded. It is rather the nature and identity
of the employer. If the service is rendered to the profit making enterprise, even if the service is assimilated to a
household service, it would be within the coverage of the labor proclamation. To illustrate this case, we can
compare and contrast two janitors 1 employed to keep a hotel clean, and the other employed to keep a residence
clean. In this case, the work is more or less the same. But, the employee of the hotel is with in ambit of the labor
proclamation since a hotel is a profit making enterprise. Her employer can pass of the cost to the consumers.
But, when it is a personal service at a household level, the purchaser of the service cannot claim that his
employer could increase his salary by invoking that he has made wage increment to his domestic worker. A
guard at a hotel and a guard at a household can also be taken as additional examples. The guard at the hotel is
under the ambit of the labor proclamation while the guard at the household is not.

So, it is not the nature of the service that has been excluded but the identity of the employer. In such a case, we
should ask whether the employer is a profit making or not. This does not mean that the labor proclamation is
limited to profit making enterprises only. It is only in this particular case that it seems to be limited to prophet-
making enterprises only. There are some articles which are relevant whether the owner is a profit making or not.
In other cases, there are situations where employment relation in non-profit making enterprises will be governed
by the labor proclamation. For the purpose of sub-article under consideration, whether the employer is a profit
making or not is important rather than the nature of the service.

We have said that if there is an employment relationship, the labor proclamation shall apply. Because of such
fact, we excluded agency-principal relationship and client-contractor relationship from the sphere of the labor
proclamation. On the other hand, even if an employment contract exists, there are situations where the labor law
will not apply. If the nature of service tends to be a religious type, we will exclude it from the umbrella of the
labor proclamation. Even from the aspect of the material service, we have tried to exclude managerial
employees and domestic servants. When we talk of domestic service, we should remember that there exists the
so-called mixed service.

Mixed service is a situation where the employee is required to render both domestic and business service at the
same time. Let’s assume that a certain person is a household employee who serves as a driver to take the kids
from home to school. He will also transport the wife when ever she wants to go shopping and so on. This is
purely domestic service since it is for the purpose of non-profit making. Let’s also assume that this household
has a garage and the driver, at time the kids are at school, may be required to work in the garage as a driver
working in the garage or as rendering labor to the garage. In this case, we can say that the driver is rendering
mixed service to his employer. Where is he categorized? Is he a domestic servant or not? There was also
another practical case.
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A householder began carrying out weaving business in the household’ residence. Then, a 20 years girl who was
employed by the household to cook meal and keep the house clean also started keeping the business center
clean as well. She also helps in taking part in weaving with the other workers after she kept everywhere clean.
Then, as a result of disagreement between the wife and the servant, the former told the latter that she has
dismissed her from then on wards.

On the other hand, the domestic servant brought the case before a court of law and pleaded that she was an
employee governed by the labor proclamation and should be back to her position as far as the employer became
unable to establish the fact that I was at fault. Even, she argued that, if she has to be dismissed, she should be
paid compensation. She also pleaded that the annual leave that she did not take be paid her in terms of money
and be given a certificate. On the other side, the employer responded that she was a domestic servant and they
were at liberty to dismiss her at their pleasure. In this case, in order to decide whether she was a domestic
servant or not, we may take into account what the original contract of employment was about irrespective of the
function or outcome. However, this method may sometimes be of unfair outcome.

Secondly, we should take into account as to which part of the job consumes substantial part of her time. Then,
even if the contract states that she is a domestic servant, if we find that the domestic service consumes more
substantial part of her time than the service she renders to the business, we can consider her as a domestic
servant and vice versa. Because, we should not be interested in the form but in the content. But, if the time that
has been spent to both services is more or less comparable and doubtful to determine as to which part of the job
consumes substantial part of her time, then the benefit of doubt makes the employee to be a business servant.
The benefit of doubt is to benefit the employee. Because, the employee, from the very beginning, is a weaker
party and she needs protection whenever doubt arises.

The other thing that exclusion is exception. As a principle, we have said that whenever there is an employment
contract, the labor law will apply. On the other hand, one of the principles of interpretation is that exception
should be interpreted very narrowly. By interpreting exceptions very narrowly, we mean that in case of doubt,
we are going to resort to the general principle. So, if we are not sure that she is a domestic servant from the facts
before us, we should categorize her as an employee to be governed under the labor proclamation.

Conditional exclusions

There is another modality of exclusion technically called conditional exclusion. What we have discussed so far
is termed as express or outright exclusion in the sense that the labor proclamation has excluded them expressly.
Among the express exclusion the excluded employees are employees of state administration. Article 3/2/e states

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that contracts relating to persons such as members of the Armed Force members of the Police Force, employees
of state administration, judges of courts of law, prosecutors and others whose employment relationship is
governed by special laws are also excluded from the ambit of the labor proclamation.

It is remembered that we have the three traditional functions of a state. They are legislative, executive and
judiciary. There are many experts who work there and on whom the labor law does not apply even if there is an
employer-employee relationship. They may have their own especial laws regulating their type of employment
relationship. For example, we have special laws for the armed force, the police force, the judges, public
prosecutors, the parliamentarians and etc. so long as they have their special law; we don’t need to resort to the
general law. Because, for special circumstances, the special privileges over the general.

On the other hand, state service requires uninterrupted service. For example, if we take the police force, they are
almost 24 hours in duty. The same is true for the armed force. Even if the employees of the state administration
are to render service with in the 8 hours maximum limit, the service should be obtained every day without
interruption. So, if we bring these members of the society into the labor proclamation, they will be tempted to
form an association; they will also bargain with the employer; if the employer fails to accept their terms, they
will call upon a strike. On the one hand, we need uninterrupted service for the interest of peace and order and on
the other we are going to allow them to call upon a strike.

As to the employees of state administration, they are not entitled to bargain; but, they are entitled to resign.
Because, the nature of the service is not amenable to bargain. The wage and other benefit, since they are
allocated in the form of budget, are not flexible. But, in any relation that is covered by the employment law or
labor law, we can bargain and we can flexibly arrange the benefits. Because, unlike the public service, after all
it is a profit making enterprise, an increase in wage and any benefit in the form of bonus will be distributed to
the consumers. On the other hand, the government is trying to make its service available to all at the minimal
cost. So, there is no room for bargain under the government service; there is no room for strike because of the
very nature of the service that it needs to be given uninterruptedly.

But, because of these and other considerations, employees of the state administration are outside of the coverage
of the labor proclamation. There may be confusion when employees of state administration become employees
of state enterprise. As indicated earlier, there are the traditional functions of a state, legislation, execution and
interpretation of law. But, at a latter time in history, though the degree varies depending on the type of
government, state is also involved in economic function. For example, under the military regime due to the
ideology it was following, the visibility of the state in economic activities was very much high in the sense that

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it nationalized the means of production that were to be privately owned. So, the state was very much visible not
only in law making but also in economic activities.

As a result of this, there may be employees of state enterprise. These are, broadly speaking, employees of the
state. Because, these state enterprises are owned by the state. The point to note is that the exclusion applies only
to employees of the state administration. The employees of the state enterprises are covered by the labor
proclamation. It must be noted that the labor proclamation does not say that the employees of the state but the
employees of the state administration are excluded from the ambit thereof. In short, when the state acts as an
administrator, its employees are excluded from the ambit of the labor proclamation. But, when the state acts as a
business man, its employees are covered by the labor proclamation. How do we determine whether a given
employer is a state administration or a state enterprise? National bank and commercial bank are both banks;
both are owned by the state. But, the national bank is different from the commercial bank in many respects. The
national bank is an agency of state administration while the commercial bank is a state enterprise.

So, employees of the commercial bank which is of business purpose are with in the ambit of the labor
proclamation while employees of the national bank which is of regulatory, licensing or quasi-judicial or
legislative(the power to issue directives) power are out side of the labor proclamation. Basically, what makes an
entity a state administration is the power in the form of regulatory actings. The other method which helps us to
determine whether a certain entity a state administration or state enterprise is the issue of budgeting.
Government allocates annual budget for state administration. However, when it is a business entity, not every
year but at the time of formation, allocation of capital in the form of authorized or paid-up capital will be made
by the government. After that, this capital will generate profit and the enterprise will justify its existence
through that arrangement. The Ethiopian civil aviation is a state administration while the Ethiopian air line is a
state enterprise. The telecommunication agency is a state administration while the telecommunication
corporation is a state enterprise. The same is true for the Ethiopian electric power authority and electric power
corporation.

Foreign diplomatic missions

When we come to the point, conditional exclusion refers to the situation where certain conditions are satisfied,
the employees will be excluded from the ambit of the labor proclamation (article 3/3 of the LP). This sub-
article reads, notwithstanding the provisions of sub-article (1) of this Article.

a) Employment relation between Ethiopian citizens and foreign diplomatic missions or international
organizations operating within the territory of Ethiopia is a signatory provides, otherwise; unless the council of

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Ministers by regulations decides, or an international agreement to which Ethiopia is a signatory provides,
otherwise.

b) The Council of Ministers may, by regulations, determine the inapplicable provisions of this Proclamation on
employment relations established by religious or charitable organizations:

c) The Council of Ministers shall issue regulations governing conditions of work applicable to personal
services. Employees of foreign diplomatic mission, international organization, employees of religious
institutions employees of non-governmental organization and employees of charitable organization are some of
the categories of employees that may be excluded on condition.

But, if those conditions are not satisfied, those employees remain to be the subject-matter of the labor
proclamation. International organization or embassies have a lot of local employees. In the case of embassies,
the most sensitive aspect of the job is rendered by their own nationals. But, for those non-sensitive activities,
they employ local staff. These local employees are basically to render service under the direction of the
embassies in return for wage for definite or indefinite period.

So long as the definitional elements are satisfied, there is employer-employee relationship; therefore, the labor
proclamation shall apply. But, the employer is a special entity in Ethiopia. He is a diplomatic mission or a
representative of foreign government. Ethiopia also opens embassies over other countries. So, the principle of
reciprocity is to be applicable. If we treat the embassies here in a very acceptable way, the other countries will
also treat Ethiopian embassies there in a similar way. And if we do the opposite, retaliation shall follow. This is
what the principle of reciprocity means under diplomatic parlance. When a foreign government opens an
embassy in Ethiopia, they will make an agreement with the ministry of foreign affairs. One of the items that will
be included in the agreement is that they don’t want to submit to Ethiopian courts as a defendant. In the case of
employment, they may respect the provisions of the labor proclamation. But, if and when a dispute arises with
one of the local employees, they don’t want to submit to Ethiopian courts. If the Ethiopian government does not
accept their demand, Ethiopian embassies will also submit to foreign courts.

When we come to the practice, there is a certain unit under the ministry of foreign affairs that tries to handle
disputes between local employees and the embassies in the form of amicable settlement. By amicable
settlement, we mean that the Ethiopian government does want to accord a minimal protection to its nationals.
On the other hand, it doesn’t obligate embassies to submit to Ethiopian courts. This is recognized on the basis of
article 3/3/a. in principle; their relationship is governed by this proclamation due to the satisfaction of the
definitional elements of employer-employee relationship. But, either the council of ministers will issue

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regulation excluding this type of employment from the ambit of the labor proclamation. Or Ethiopia may sign
an international agreement with these diplomatic missions or international organizations to this effect. But, the
council of ministers did nothing as to coming up with a regulation excluding the employment relationship
between embassies and their local staff from the ambit of the labor proclamation. Instead, there is an
international agreement that has been handled by the ministry of foreign affairs with the embassies or
international organizations.

This agreement is called headquarter agreement. So long as there is this type of agreement either in the form of
headquarter agreement or an agreement with a diplomatic mission or an embassy, the applicability of the labor
proclamation, as far as its aspect of judicial settlement, will be excluded. Of course, it depends on the nature of
the agreement. Practically, they don’t exclude the applicability of the labor proclamation; rather, they only
exclude the dispute settlement forum. I.e. they don’t to go to court; simply, they would like to appear before the
unit under the ministry of foreign affairs. But, actually even if our labor proclamation does not apply on them,
since most of the embassies and international organizations apply the ILO standard, it is deemed to be favorable
to our nationals.

Religious organization

The other conditional exclusion is the exclusion given under article 3/3/b. employees of religious organizations
rendering a religious service have been already excluded at a higher level. Because, their service is not what has
been envisaged as a service by the labor proclamation. But, employees of religious organizations are not only
those employees rendering a religious service. Some employees of religious organizations such as the Gardner,
guard, seller and receiver of alms materials, and etc may render material service as well.

So, for these types of employees, what the law is saying is that if the council of ministers comes up with a
regulation that will have an effect of excluding them from the labor proclamation, they will be subject to
exclusion. In default of that regulation, they will continue being subject-matter of the labor proclamation. This
dependence on the determination of the council of ministers is what makes it conditional. Even if this sub-
article is existent since the time when the proclamation 42 of 1993 was vibrant, there is no regulation issued by
the council of ministers to this effect. As a result of the absence of such regulation, employees of religious
organization with the exception of those rendering religious service are still under the protection of the labor
proclamation.

The same is true in respect of the NGOs or charitable organization. Practically, these religious employees are
disturbing the religious institutions. They request bonuses from them while there is no profit derived by them.

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On the other hand, the labor proclamation is mainly issued for profit making organizations. So, the religious
institutions are requesting the council of ministers to make them out side of the labor proclamation and issue
regulation to this effect. Because, they found the labor proclamation difficult for execution without profit
making purpose and making profit. The council of ministers, on its part, states that it is ready to approve if the
ministry of labor and social affairs has come up with the draft of the regulation.

This is because the ministry of labor and social affairs is entrusted with managing and supervising the labor
proclamation. However, nothing has been created so far. The same thing is going on as to the regulation of the
NGOs. The parliament has not ever examined the council of ministers why the latter did not do the assignment
(coming up with regulation) given to it before 20 years. The council of ministers, on the other hand, has not
ever asked the ministry of labor and social affairs why the latter has not come up with the draft of the regulation
yet. Scope of application of the civil servant proclamation.

Exclusion under Civil service proclamation

There are some exclusions under the civil service proclamation as well. We have just seen that the labor
proclamation is basically to regulate profit making organizations. But, with respect to the currant application, it
has also applications in non-profit making entities such as religious organizations and NGOs. Article three of
the FCSP reads, this proclamation shall be applicable on “government institutions” and “civil servants” covered
by the definition given under article 2 of this proclamation. As to what government institution and civil servant mean,
the above article has made a cross reference to article two. So, In order to understand the full meaning of article three, we
need to go to the definitional provision, article 2.

According to article two, “Civil Servant” means a person employed permanently by federal government
institution. On the other hand, the same article provides that “Government Institution” means any federal
government office established as an autonomous entity by a proclamation or regulations and fully or partially
financed by government budget, included in the list of government institutions to be drawn up by the Council of
Ministers. The word “permanently” implies that permanent employee is the subject-matter of the civil service
proclamation. It is remembered that under the labor proclamation, we said that a contract of employment could be
for definite, indefinite or peace work. Of course, the word “indefinite period” has equivalent effect with the word
“permanent” while the word” definite period” has equivalent effect with “temporary period”.

When we come to the civil service, it applies only to permanent employment. This seems to be one of the major
distinctions in between. As we have tried to briefly notice, once employees are employed as probationer employee
for 6 months and they satisfied the requirements, they will be issued with a letter for permanent employee only in

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government institution. The scope of application of this civil servant proclamation is limited to federal government
offices. It authomatically excluded the regional government offices. The assumption is that they will have their own
legal instrument regulating their respective civil servants. So federal government office established as an
autonomous entity by proclamation (parliament) or regulation (council of ministers) are the main subject-matter of
the civil service proclamation.

Practically, ministerial offices are established by proclamation or parliament. Offices below ministries such as
agencies and authorities are established by council of ministers through regulation. So, the nature of the instrument
does not matter. Rather, the point is that there should be an established legal instrument. By legal instrument, we are
referring to federal agency or authority establishing instruments. This instrument will give the institution a legal
personality. This legal personality, in return, will give it an autonomous position. Another implication for the federal
government office, is that it must fully or partially financed by government budget. This point is an important point
to put distinction between state agencies and state enterprises.

For example, the Ethiopian telecommunication corporation is a federal entity. So, it satisfies the first element. Its
establishment was also born out of a legal instrument, regulation since every state enterprises are established by
regulation. The second element to be federal government institution has been satisfied as well. But, when we come
to the requirement of being fully or partially financed by government budget, even if partial or full financing may
come from a government to a state owned enterprise, it is not in the form of budget but in the form of working
capital. This element makes the entity under consideration out side of such definition. Because, state enterprises are
not financed by government budget or periodical allocation of resources.

The other element is that the institution must be included in the least of council of ministers. This definition doesn’t
seem to be very much interested in the function. In our previous section, we have put emphasis on regulatory power
for government offices. But, under this proclamation, the requirement of regulatory power is very much hidden. Of
course, the establishing instrument provides the agency with certain powers and responsibilities. Under such list of
powers and responsibilities, its regulatory power will also be spelt out. But, as a definitional element, we don’t find it
expressly being spelt out. Because of this, organs that do not have regulatory power are included under government
office.

Typical examples are the Universities. Strictly speaking, Universities are service rendering entities. They do not have
regulatory power. The power to regulate Universities lies on the ministry of education. So, since regulatory power is
not taken as a requirement in determining whether a certain entity is a government office or an enterprise, institutions
such as Universities and hospitals are included within the category of government offices. Therefore, their
employees are to be considered as civil servants. But, employees of the Unity or the Admas Universities are subject-
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matters of the labor proclamation whereas employees of the Addis Ababa University are subject-matter of the civil
servant proclamation. The formers can form an association by the existing law while the latter cannot. The formers
can call on strike; but, even if the job and the working atmosphere is similar, it is not possible for the latter to call
upon a strike on government Universities. So, in general, permanent employees are employees rendering services in
these institutions. Here too, there are exclusions under article 2/one. The same sub-article carrying the exclusions
reads, 1) “Civil Servant” means a person employed permanently by federal government institution;
provided, however, that it shall not include the following:

a) Government officials with the rank of state minister, deputy director general and their equivalent and above;

b) Members of the House of Peoples' Representatives and the House of the Federation;

c) Federal judges and prosecutors;

d) members of the Armed Forces and the Federal Police including other employees governed by the regulations of
the Armed forces and the Federal Police.

e) Employees excluded from the coverage of this Proclamation by other appropriate laws. Government officials with
the rank of state minister, deputy director general and their equivalent and above are excluded from the ambit of
the civil servant proclamation.

Actually, even if we do not put such exclusions, since they are assigned to a specific position not by employment but
by appointment, we can say that there is no employment relationship. As a result, they are excluded at the
definitional level. Our drafters seem to be confused in that they have included them under these exclusions.

Members of the House of Peoples' Representatives and the House of the Federation are also excluded since they
are people holding position by nomination or periodical election. By definition, they don’t have employment relation
as well. To begin with, if the civil service is to be formulated through a contract of employment, they are not
employees. The drafters seem to have included them as a result of lack of clarity of understanding the concept.
Federal judges and prosecutors are excluded from the ambit of the civil service proclamation in that they are
holding office through appointment. We have already said that there are two broad employment regimes. All
the exclusions, be it on election or employment, are the third regimes of service rendering arrangement.

We have said that members of the Armed Force are excluded from the ambit of the labor proclamation. But,
there are employees rendering service of a civilian nature with in the military camp. Though, they are still
categorized as members of military. For example, there are doctors working in tor hailoch hospital. These
doctors may have the title of colonel and other military ranks. Basically, they are not military people. But, they
are assimilated with the military so long as they associate themselves with the title of the military. So, they are
to be governed by the special law. But, other supporting staff will be subject-matter of the civil servant
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proclamation. The same is true for parliamentarians, judges and the police force. I.e. parliamentarians, judges
and the police force will be governed by the special law while the supporting staff remains to be subject-matter
of the civil servant proclamation.

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Chapter Three

Obligation of the parties

So far, we have seen the scope of application of both proclamations. Now we shall move to the operating part of
the proclamation.

Obligations of the parties, in principle, are to be regulated by their respective contract. Especially in the case of
the labor law, the contract will have a lot of details. There are requirements by law even if the contract is silent
about some things. Because, these are implied terms that will be read into the contract. Article 12 and 13 of the
labor proclamation talks about the obligations of the employer and employee respectively. Article 14/1and 2
talks about obligations of the employer and employees respectively again. Obligations of the employer article
12 talks about are positive duties (actions). Obligations of the employees under article 13 are also positive
obligations (actions). Obligations of the employer and the employee under article 14 /1&2 are, however,
negative obligation (inactions).

Obligation of the Employer

Positive duties

Article 12 reads

1/ an employer shall in addition to special stipulations in the contract of employment have the following
obligations.

a) To provide work to the worker; in accordance with the contract of employment and

b) Unless otherwise stipulated in the contract of employment, to provide him with implements and materials
necessary for the performance of the work.

2/ to pay the worker wages and other emoluments in accordance with this Proclamation or the collective
agreement.

3/ to respect the worker’s human dignity;.

4/ to take all the necessary occupational safety and health measures and to abide by the standards and
directives to be given by the appropriate authorities in respect of these measures;

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5/ to defray the cost of medical examination, of the worker whenever such medical examination is required by
law or the appropriate authority.

6/ to keep a register containing the relevant particulars specified in Article 6, hereof weekly rest days public
holidays and leave utilized by the worker, health conditions and employment injury of the worker and other
particulars required by the Ministry.

7/ upon termination of a contract of employment or whenever the worker so requests, to provide the worker,
free of charge, with a certificate stating the type of work he performed, the length of service and the wages he
was earning.

8/ to observe the provisions of this Proclamation, collective agreement, work rules and directives issued in
accordance with law.

9/ to record and keep of information as required by this Proclamation, and any other information necessary for
the Ministry to carryout its powers and duties, and submit same within a reasonable time when requested by the
Ministry.

The employer is obligated to provide work to the employee. Assume that the employee is paid wage for long
without being provided with work by the employer. Is there any irrationality behind this? When we try to see
the labor law development, traditionally, the main and almost the sole obligation of the employer was to pay
wage. The law was not interested in the obligation of the employer to provide the employee with a job or not.
The assumption was that the employer is an economically rational person and he will not give a free lunch. He
will exploit a certain service for a certain wage. When we come to our point, Except in a certain arrangement,
unlike periodical payment, when the job is associated with or paid on the basis of piece work or piece
rate(yequrt kifiya), not providing an employee with a job amounts to denying wage. An employee was
employed in an organization to make clothes whenever the latter serves him with a machine and article of closes
to be sewed.

The employee was contracted with his employer that he could obtain 8, 12&15 $s per a browse, a pair of
trousers and coat respectively. In this case, if the tailor is successful in making a browse, a pair of trousers and
coat per day, he will obtain 35 $s per day. In short, peace rate is closely associated with output or result-
oriented. But, some times, the employer may indirectly deny the employee of his wage by not serving machine
and article of closes to be made. So, denying a job will occasionally have an impact of denying wage. Because,
when the payment is not periodical or when the payment arrangement is peace rate, unless and until the
employee has been given job, he will not obtain wages anyways.
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So, for piece rate arrangement, the obligation to provide wage from the side of the employer is a valid
obligation. Of course, at a latter stage, with the international human right movement, there appears a concept
that job is a source of pleasure, development and human dignity. Unless a person renders something beneficial
to the society, he will not have dignity before his society. The other one is that job is beneficial for career
development. Unless an employee is given an opportunity to develop his career within a certain qualification, he
will freeze at a certain level. In such a way, the employer is restricting his development as a human being if he
is allowed to deny him of job despite payment of wage.

The other obligation of the employer is the duty to provide wage as agreed by the parties or not lower than the
minimum wage if any. Of course, in Ethiopia, we do not have a minimum wage for the private sector or labor
law regime. The parties should mention the wage in their agreement. If they fail to do so, the civil code seems to
have its own solution for such a case. According to the Civil Code, The ordinary wage for that particular job in
a similar position shall be taken to fill the gap. If there is an employee who is working in the same position and
rendering the same service, the wage that is paid to that individual will be paid to the other individual as well.
Because, the principle, “equal pay for job of equivalent value” will be taken into consideration. On the other
hand, the employee is not rendering a pro bono service but expecting wage in return. In some enterprises, there
may be additional benefits such as transport allowance, housing allowance and etc other than wage. These
benefits may have emanated from the contract, work rules or collective agreement. If there is such kind of
arrangement, this will also be part of the obligation of the employer that needs to be paid.

Provision of working tools and materials is within the obligation of the employer unless it is contracted out.
Some times, parties (mechanic and the employing car owner, for example), in their contract, may provide that
the employee will come with his own tools. If they expressly agree in advance that the employee will bring the
necessary tools to render service the provision of working tools by the employer can be contracted out. But, in
the absence of such agreement, the assumption is that working tools and materials shall be supplied by the
employer and the laborer will report for duty having solely his labor.

The employer is also obligated to respect the worker’s human dignity. Some times, in some corners, employers
especially the traditional ones have or want to have a form of master and servant relationship with their
employees. So, they try to treat them as a servant. Note must be taken that we had a tradition of slavery.
Employers of such mentality do not give the necessary dignity to their employees. The employer has also a duty
to take all the necessary occupational safety and health measures and to abide by the standards and directives to
be given by the appropriate authorities in respect of these measures.

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By the word “safe”, we refer to a working environment free from accident. By the word “healthy”, we refer to a
working environment free from occupational disease. So, the employer is duty bound to make working
environments safe and healthy. The necessary protective tools depending on what type of activities or services
the employee is going to render should be well provided. For example, while rendering services, if the
employee is going to be exposed to ray, he may be in need of being provided with goggle. In short, the
employer is duty bound to prevent preventable risks. One of the mechanisms to prevent risks is to provide the
necessary safety equipments and to instruct the employee when and how to make use of them. This seems to be
an implicit obligation. Voluntary assumption of risks no longer exists under the current Ethiopian labor law
relation. Traditionally, employees would report for duty to have anointed holly ashes or holy water to prevent
risks. And the employer was not expected to care about the possibility of the risks that might be caused to the
employee. If these obligations are mentioned in the contract, life will be good. If they are not mentioned in the
contract, the law will step in and make them part of the contract. On the other hand, there are negative
obligations that the employer is not allowed to do (14/1).

Negative Duties

Article 14/1 provides that 1/ it shall be unlawful for an employer to.

a) Impede the worker in any manner in the exercise of his rights or take any measure against him because he
exercises his right.

b) Discriminate against female workers, in matters of remuneration, on the ground of their sex.

c) Terminate a contract of employment contrary to the provisions of this Proclamation.

d) Coerce any worker by force or in any other manner to join or not to join or to cease to be a member of a
trade union or to vote for or against any given candidate in elections for trade union offices.

e) Require any worker to execute any work which is hazardous to his life.

f) Discriminate between workers on the basis of nationality, sex, religion, political outlook or any other
conditions.

According to sub1/a, the employer should not take retaliatory measure against an employee because the
employee exercises his right under the law. An employee who feels that his right under the law or the contract
has been violated may take his case to court and proceed against his employer. The employer may, on the other
hand, take retaliatory measures by demoting, dismissing him and so on. In another case, a suit may be instituted
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against the employer by an employee. The other employee may have an intention or be forced to appear as a
witness against the employer. In this case, he will take retaliatory measure as well even if he is not allowed to
take unilateral action against the employee because of the fact that the latter exercised his right of taking
grievance to court. Of course, employers with a mentality of master and servant relationship are seen to take
such type of measures. But, as an effect, they will pay the price.

The other prohibited act is discriminatory payment on the basis of sex. Employers should not create
discrimination among employees on the basis of their sex. Historically, even today in some sectors, employees
of a similar job are paid differently on the basis of their sex. This fact can be observed between two female and
male day laborers of construction to day. This sub-article seems to be talking solely about discrimination at the
level of payment. It does not seem to be concerned with discrimination at the level of employment. But, this
seems because the constitution has already regulated that aspect (discrimination at the level of employment).
Practically, female workers are not discriminated at the level of payment. Rather, they are discriminated at the
level of recruitment, training opportunities, promotion and etc. but, this part has only limited itself to
discrimination at the level of payment. In fact, there is a conventions called equal remuneration convention no
100 to which Ethiopia became a party in 1999.

This convention states that there should not be discriminatory payment on the basis of sex. Jobs of equal value
irrespective of which sex is rendering them should be paid equally. The employer is also prohibited from
interfering with worker’s freedom of association. Employees have the right to form an association so as to have
an organized voice against the employer so that their bargaining power could be promoted because of the
collectivity. To be member of the trade union or not, to remain as a member of the union or withdraw from the
trade union should lay on the interest of the employee.

No one, be it an employer or a state, shouldn’t interfere with such affair. Traditionally, there was an agreement
called yellow dog contract. Under such contract, when an employee enters into a contract with an employer, one
of the terms of the contract would be that the employee would commit himself not to join to trade union. Then,
if this employee was found to have joined the trade union, it would be breach of contract. This breach of
contract would also be valid ground for termination of contract. Even, Courts would accept such type of
contract under the principle of freedom of contract.

But, after freedom of association was made one of the fundamental rights, persons come to know of the fact that
none of the fundamental rights cannot be renounced or waved through contract. In the case of yellow unions
(unions influenced by the employers), the pressure of the employer upon the employee could be to join the
union. But, if the union is free from the influence of the employer, the pressure of the employer upon the
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employee could be not to join or withdraw from the union. There is positive freedom of association. Implicitly,
there is also negative freedom of association. Positive freedom of association is to mean the right to form or join
an association. Implicit in it, when we have a freedom of association, we have the right not to form or join or to
withdraw from that an association at any time. This amount to be negative freedoms. In general, if an employer
takes part in such kind of activities, it is considered to be unfair labor practice.

There is also a broader formulation of non-discrimination among workers on the basis of nationality, sex,
religion, political outlook and any other conditions. It must be noted that the employer is allowed to make
discrimination among workers on the basis of productivity, discipline, integrity and etc. because; these are very
relevant for the production and the interaction in between.

So, an employer may reward the productive employee and demote the lazy one. However, if the employer tends
to discriminate workers on the basis of ethnicity, religious belief or sex, it would be unfair and unjustified.
Because, there is no scientific relationship between productivity and sex, productivity and ethnicity,
productivity and religion or productivity and political outlook. Productivity, by its very nature, is related to
individuality. In the majority of cases, these variables of social life, sex, ethnicity and sometimes religion are
unchosen things.

No one can choose his ethnic origin, or sex. Rather, he will find himself belonging to a certain ethnic group or
either of the two sexes. If so, people should not be victims of a factor that they did not choose. These factors are
not only unchosen but also immutable by their very nature. Of course, there may be an exception to this
discrimination. There is what we call inherent job requirement. They are also called genuine occupational
qualifications. Sometimes, the very nature of the job may require a particular sex or someone of a particular
ethnic origin or a certain religion. For example, the job of same sex search inherently requires a certain sex. The
job of acting female character in a movie or theatre also requires feminine sex only. In general, the issue of
discrimination should be understood with the foot note of the exception.

Obligation of the Employee

The other one is obligation of the employee (13&14/2). Article 13 reads, every worker shall have the following
obligations.

1/ to perform in person the work specified in the contract of employment.

2/ to follow instructions given by the employer based on the terms of the contract and work rules.

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3/ to handle with due care all instruments and tools entrusted to him for work.

4/ to report for work always in fit mental and physical conditions.

5/ to give all proper aid when an accident occurs or an imminent danger threatens life or property in his place
of work without, endangering his safety and health.

6/ to inform immediately the employer any act which endangers himself or his fellow workers or which
prejudice the interests of the employer.

7/ to observe the provisions of this Proclamation, collective agreement, work rules and directives issued in
accordance with the law.

Perform personally

The employee is expected to give personal service or to perform the work personally. He cannot delegate it as
of right. Because, it was his personal character that was taken into account at the time of employment. Of
course, if he validly delegate because he is ill or faces accidentally the death of his close relative or anything
else, he is considered as if he was rendering service personally. Factors or variables that were taken into account
shall be meaningless. In such a case, the duty to look for a substitute lies on the employer. In short, personal
service is, in one hand an obligation and a sort of entitlement on the other.

Follow instruction

The employee has a duty to obey instructions given by the employer based on the terms of the contract and
work rules. Under the definitional element, we’ve said that the employee agrees directly or indirectly to perform
work for and under the authority of an employer. This is what we call command and control. So, the employee
is duty bound to obey lawful orders of the employer.

Handling instruments with due care

The employee is also duty bound to handle with due care all instruments and tools entrusted to him for work.
We’ve said that the employer is duty bound, unless otherwise stipulated in the contract of employment, to
provide him with implements and materials necessary for the performance of the work. Then, a corresponding
obligation of the employee will be to handle those tools and materials with the at most care and sense of
ownership or responsibility even despite dissatisfaction with his job.

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To be mentally fit

The employee is also duty bound not only to report for work but also always be in fit mental and physical
conditions. For example, the employee is not allowed to report for duty in a state of intoxication (14/2/c).

Article 14/2 provides that 2/ it shall be unlawful for a worker to.

a) Property. b) Take away property from the work place without the express authorization of the employer. c)
Report for work in a state of intoxication.

d) Except for HIV/AIDS test, refuse to submit himself for medical examination when required by law or by the
employer for good cause.

e) Refuse to observe safety and accident prevention rules and to take the necessary safety precautions

.Because, it will have a negative impact on the production process. He may also create a danger to himself or to
others as a result of his unfitness. No employee is allowed to report for duty in a state of intoxication. It will
have a negative impact on his job responsibility. So, it could be a ground for termination. Secondly, if an
employee reports for duty in a state of intoxication and sustain injury, there will not be compensation for
employment injury. Rather, he will be his own insurer (14/2/c cum 96/2). Article 96/2 reads, 2/ The employer
shall not be liable for any injury intentionally caused by the injured worker himself; any injury resulting from
the following acts in particular shall be deemed to be intentionally caused by the worker.

A) Non-obedience of express safety instructions or non-observance of the provisions of accident prevention rule
specifically issued by the employer; or.

b) Reporting to work in a state of intoxication that prevents him from properly regulating his conduct or
understanding.

As far as the employment security concerned, read 27/1/i. Article 27/1/I reads unless otherwise determined by a
collective agreement, a contract of employment shall be terminated without notice if the employee is found to
have been involved in the commission of any of the unlawful activities referred to in Article 14(2).

To give aid

The employee is duty bound to give all proper aid when an accident occurs or an imminent danger threatens life
or property in his place of work without, endangering his safety and health. Not giving all proper aid when an

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accident occurs or an imminent danger threatens life or property without, endangering his safety and health is
also a crime under the criminal law. Of course, this obligation may not be mentioned in the contract.

Observe rules

The employee is obligated to observe the provisions of the Proclamation, collective agreement, work rules and
directives issued in accordance with the law. Employers may come up with work rules such as search at the
gate, dress code or uniform, safety clothes and the likes that will have an impact on respective discipline or
work ethics. Employers may prescribe the applicability of some work rules very strictly. For example, they may
oblige male employees to have a suit, white browse, tie and black pair of shoes while reporting for duty. At the
same time, they may be obliged to shave their beards, get their hairs cut and so on. Female employees, on their
part, may be obliged to have dress, keep their hair clean and so on. Both sexes may object to such work rules in
light of privacy. For example, employees may refuse to be searched without warrant from court of law. But,
search by checking in and out may envisage property right of the employer. Some times, the opposition may
come in connection with religion.

Employees may object to the work rule by invoking that their religion never allows them to shave their beard. Is
there any legitimate purpose to be served that determines whether it is necessary or not? Is it being undertaken
in a rational way? In the case of rational taste, it should not be discriminatory. If employees are searched in a
discriminatory way, the rationality of such measure will be at issue. In some offices, the searcher is, at the same
time, a Gardner. Then, when a person is to come in, the Gardner may come and search with muddy palms of
hand. This may also challenge rationality of the measure. In general, for such measure to be rational, they
should arrange same sex search.

The expectation of our privacy is usually relative. When we are at home, we may have maximum privacy. But,
when we step in to a public place, there will be a counter bearing interest from that side. This purpose of
making peace security prevalent may have an impact of limiting one’s privacy. So, in the majority of cases,
searching at the gate while coming in is usually associated with safety. Searching at the gate while coming out
is also a legitimate business purpose in the sense that it is the manner of protecting the right of ownership.
We’ve said that legal obligations, even if they are not spelt out in their contract, should be read into it. The
employer is entitled to draw up work rules in order to take strict decisions at work places. Some times, these
work rules may seem to affect privacy.

They may also seem to contradict to the right of the religious belief. Companies may require their employees to
dress a certain type of clothes as a uniform. The uniforms that are required to dress may be found to be

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contradictory to the religious code of dressing. Can an employer prescribe dress code that may have a certain
contradiction to the religious code of dressing? In our previous discussion, we had some parameters of
evaluating whether a search is at conflict or not. Is there any legitimate and necessary business purpose to be
attained by prescribing uniform at work place? The existence of uniform seems to pass the necessary taste. If
there is any uniform, we can easily identify an employee so that customers may not have a problem to address
their issues To Whom It May Concern. In this case, companies can achieve customers’ satisfaction. Secondly, if
dressing uniform presumes for long, it will be associated with a certain business brand.

So, if we consider that there is a certain business purpose to be achieved, then it can be said that it has passed
the first taste. The second one is rational taste. In the case of rational taste, neutrality is the first requirement to
be taken into account. If the uniform tends to favor a certain religion to the exclusion of the other, it will not be
rational. At least, it should apparently be neutral of religion. For example, a uniform do not have to bear an
image of cross lest it should be suspicious of favoring religion. This is the way how we reconcile legitimate
business purpose on the one hand and personal individual preferences on the other hand. For a search to violate
constitutional right of privacy, the employee who has been searched must have subjective expectation of
privacy which would be considered reasonable by society.

An employee may have subjective expectation of privacy. But, that is not sufficient. So long as he is living in
society, his subjective expectation of privacy must be considered reasonable by society. If so, at the end of the
day, it will not be a subjective but an objective standard. People may have maximum privacy if they are living
far from society. People may have maximum privacy at home. But, when we come to public places such as
work place or offices, a person’s subjective expectation of privacy is not sufficient. I.e. it should be regarded
reasonable by society. It should go to the extent of the society’s objective expectation of privacy so that one’s
subjective expectation of privacy is to be respected.

Sanctions

So far, we have put obligations of the employer in both directive and prohibitive form. We have also put
obligations of the employee in the form of instruction and prohibitions. The attribute of the law is that it puts
directive or prohibitive norm and what happens when these norms are not observed. Sanction for non-
compliance is an attribute of law. Because, law, by its very nature, is not a mere recommendation; it is attached
to a certain sanction for the failure to observe it. In this case also, for failure to fulfill some of the obligation, the
law has its own remedy. For example, under article 12/4, the employer has the obligation to take all the
necessary occupational safety and health measures and to abide by the standards and directives to be given by
the appropriate authorities in respect of these measures. If the employer fails to discharge such obligation, the
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law under article 184/2/a of the LP provides the remedy. According to this article, an employer who fails to
fulfill the obligations laid down in Article 12(4) of this Proclamation shall be liable to a fine not exceeding Birr
one thousand (Birr 1200).

Under article 12/6 of the LP, The employer has the obligation to keep a register containing the relevant
particulars specified in Article 6 of the LP weekly rest days public holidays and leave utilized by the worker,
health conditions and employment injury of the worker and other particulars required by the Ministry. If he fails
to discharge such obligation, the law under article 184/2(b) of the LP has put the remedy. So, according to this
article, an employer who fails to keep records required by this Proclamation, and provide type of information at
a reasonable time to the Ministry in accordance with this Proclamation shall be liable to a fine not exceeding
Birr one thousand (Birr 1200). We’ve seen that the employer is also required to discharge the prohibitive
obligation enshrined under article 14 /1of the LP. If he fails to do so, the law under article 184/2(c) of the LP
provides the remedy. On the basis of this sub-article, an employer who violates the provisions of Article 14(1)
of this Proclamation shall be liable to a fine not exceeding Birr one thousand (Birr 1200).

There are pressures that this punishment should be raised to a certain level so that it should be deterrent enough.
We remember that article two of the LP defines employer as “employer” means a person or an undertaking who
employs one or more persons in accordance with Article 4 of this Proclamation. So, on the basis of this
definition, an employer who has employed only one employee and an employer who has employed 3000
employees would be subject to the same fine. At a certain level, in small enterprises, the punishment may have a
certain deterrence effect. But, in bigger companies, this amount of punishment seems to be a toothless and
irrelevant. Companies, no matter how big they are, are not sanctioned to pay a fine of more than 1200 ETB.
Because, it is the maximum amount to be imposed upon an employer who failed to fulfill his obligation. So, for
enterprises that may employ to the extent of 50 employees, it may have a deterrence effect. But, for bigger ones,
it seems to be a joke. Because, they will not have an incentive to comply the law as they will be subject to a
very small amount of fine.

The punishment doesn’t also take into account the persistence of violence. Even if an employer commits a
repeated violation of the law, he is subject to the same fine for every violation of the law he commits. With
these limitations, the point to know is that there is a sanction attached with each of the directive or prohibitive
norms. There are also sanctions attached to the obligations of the employees. If an employee fails to discharge
the obligation under article 14/2, the law under article 27/1(I) provides the solution. Article 27/1(I) provides that
unless otherwise determined by a collective agreement a contract of employment shall be terminated without
notice if the employee is involved in the commission of any of the unlawful activities referred to in Article

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14(2). So, non-observance of the prohibitive norms may subject an employee to losing his job. Article 14/2C)
must be read with article 96/2(B).

If someone reports for work in a state of intoxication and sustains employment injury at a time, he will be
subject to the risk of not being compensated by the employer. In short, if the employee is found in the above
situation, (1) he will lose his job or (2) he will be his own insurer at the time of accident. If the employee
doesn’t obey express safety instructions or doesn’t observe the provisions of accident prevention rule
specifically issued by the employer (96/2(a)), he will be considered as if he intentionally inflicted an injury
upon himself. As a result, the employer is not required to compensate him in the event of an accident. in
general, In the case of non-observance, either termination or non-compensation or both may follow.

When we go to the civil service proclamation, we have more or less the same obligations on the employer and
the employee even if they are not clearly drafted like those of the labor law regime. Applying the principle of
non-discrimination between workers on the basis of nationality, sex, religion, political outlook or any other
conditions is one of the duties of the employer. We’ve seen this obligation under article 14/1(F) of the LP.
We’ve tried to explain the rationales for condemning discrimination. Of course, the civil service proclamation
has moved forward one step. Other than non-discrimination under article 13/1, the civil service proclamation
obligates the employer to undertake a sort of affirmative action for certain members of the society (13/3) when
he has a civil post and the candidates are more than one. I.e. there are other policy considerations that must be
taken into account.

This is non-discrimination at the level of employment. But, there is also another obligation of non-
discrimination at the level of payment (7). Article 7 of the FCSP pertaining to equall Pay for Equal Work
provides that all positions of equal value shall have equal base salary. Irrespective of who performed the job,
employees should be equally remunerated. Of course, this is also constitutionally recognized. Historically,
females were not equally paid even if they rendered service of a comparable value. In short, there are so many
implicit obligations of the employer here and there under the civil service proclamation. Obligations of the
employees under the civil service proclamation are also listed from article 61-64 of the FCSP.

Article 61 provides that any civil servant shall. 1) Be loyal to the public and the Constitution. 2) Devote his
whole energy and ability to the service of the public. 3) Discharge the functions specified in his job description and
accomplish other tasks ordered legally. 4) Observe laws, regulations and directives related to the civil service. 5)
Have a duty to perform government policy efficiently. So long as employees are working for public interest, they should
be loyal to the public. They should also be loyal to the constitution. But, their loyality to the constitution does not imply
their acceptance but respect thereof. The employees are required to give faithful service and obey laws, regulations and
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directives. Every time, there will be subsidiary instruments that will be issued by the competent authority. These
instruments have an impact on the working system of the civil servants. The duty to obey these instruments is left for the
civil servants not for others. Policies are the bases for the legal instruments.

Strictly speaking, policies are political documents. So, even if an employee has a stand against those policies, he is
required to implement them as a civil servant. If an employee’s objection to the policies outweighs his implementation,
the option that the employee may have is to resign the post. There is also an ethical requirement under article 62 of the
FCSP. Because, civil service is the area where maximum integrity of the civil servant is required. Article 62 reads,
without prejudice to the provisions of Article 61 of this proclamation, the Council of Ministers shall issue detailed
code of conduct Regulations of the Civil Servannt. Employees in their vertical and horizontal relation with their
customers and boss in one hand fellow civil servants on the other respectively are required to comply with the
rules of code of conduct to be issued by the council of ministers.

Article 62 provides that 1) any civil servant shall have the obligation to take medical examination, with the exception
for HIV/AIDS, when required by the government institution on sufficient grounds related to the service. 2) Expenses
incurred pursuant to Sub-Article (1) of this Article shall be covered by the government institution. Employees may
be required to undertake periodical or random medical examination of different type except for that of HIV AIDS. It is
remembered that the employer is obligated to create a healthy working condition. On the other hand, employees, be it in a
company or public service, are working in groups. In such a time, if there is a certain contagious disease at a certain
corner, unless it is medically verified and the necessary protection is to be undertaken, the existence of healthy working
condition will be very unlikely. But, note must be taken that the coast is to be covered by the employer. Not only the
employer under the civil service, but also the employer under the labor law regime has the obligation to defray the cost
of medical examination, of the worker whenever such medical examination is required by law or the appropriate
authority (12/5).

Under the labor law regime, we’ve said that the employer is duty bound to supply tools and materials for
rendering service. Correspondingly, the employee is required to handle the tools and materials with due care.
The same thing is enshrined under article 64 of the FCSP. Article 64 of the FCSP reads, any civil servant shall
have the responsibility to properly handle and use the equipment and materials provided to him for the carrying out
of his duties. In case the tools and materials are consumable, the employee is required to consume them very
efficiently. If the tools and materials are non-consumable, they are also required to handle them as if the materials were
their own properties.

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Chapter Four

Termination and suspension of Contract of Employment

Suspension

Technically, suspension is a temporary measure. Suspension is a gray area in the sense that the employee has bare
employment with rights and obligations of the parties suspended. At the time of suspension, rights and obligations of
the parties will be withheld for some time. But, still, the contract exists. Suspension has an attribute of termination.
Because, the obligation of the parties are being withheld. But, the parties will be reinstated to their former position at
the end of the suspension due to the fact that the contract is still alive. So, suspention consists of such an attribute of
contract of employment and termination that it is said to be a grey area. Article 17 reads, 1/ Rights and obligations
arising out of a contract of employment may be temporarily suspended in the manner provided for in this
section. 2/ Temporary suspension of rights and obligations arising out of a contract of employment shall not
imply termination or interruption of the contract provided, however, a contract of employment shall interrupt
the obligation of. a) The worker to perform the work. b) The employer to pay wages, other benefits and
allowances unless otherwise provided for in this Proclamation or in the collective agreement. Suspension is a
situation where the employee will not be required to provide service to the employer and the employer will not
be obligated to pay wages and other benefits to the employee. Nonetheless, their contractual engagement
remains intact. Therefore, suspension is a grey area in the sense that it has attributes of termination on the one
hand and of employment relation on the other hand.

Article 18 provides that The following shall be valid grounds for the suspension, in accordance with Article 17,
of rights and obligations arising out of a contract of employment:

1. leave without pay granted by the employer upon request by the worker;

2. leave of absence for the purpose of holding office in trade unions or other social services;

3. detention for a period not exceeding thirty days, provided that the employer is notified within ten days or
is supposed to know of the detention;

4. national call;

5. full or partially suspension due to force majeure of the activities of the employer for a period of not less
than 10 consecutive days;

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 6. financial problems, not attributable to the fault of the employer, that requires the suspension of the
activities of the employer for not less than ten consecutive days.

A contract of employment may be suspended for a variety of reasons. Some of the grounds are:

- Voluntary arrangement of the parties;

- Societal interest;

- Due to reasons beyond the control of the employer;

- Due to disciplinary reasons.

Voluntary arrangement

The employer and the employee may agree to suspend their contractual relation for sometime. For example, the
employee may get an offer for a better pay for six months of employment. In such case she may request her
employer to grant her leave without pay for six months. If the employer accepted the request, this is a typical
case of suspension. Within the agreed six months, the employer will not pay the wages and other benefits to the
employee and the employee will not be required to render service for her employer. At the expiry of the six
months period, however, the parties will be reinstated to their previous employment relation. 1

Suspension for the benefit of society.

An employee may be elected to hold office at higher level trade union structure which may demand full time
engagement. The other possibility is he may hold office at kebele or woreda level or he may be elected as
parliamentarian. It is also possible that the employee may be required to discharge national service (be it
military service or otherwise). In such cases what will be the fate of his contract of employment? Should it be
terminated? Should he be still considered as an employee and collect wage from the employer even if he is not
rendering service to him? It seems unfair to terminate the contract of employment of this individual because he
is rendering service which is important to society at large and should not be sanctioned for that. Individuals
should be encouraged to serve society. This can be achieved by ensuring employment security to such
individuals. Should the employer then be required to pay him wages while the employee is not rendering service
to him? This is again unfair to the employer because as the service is being rendered to society at large it should
be society which should incur such costs and not the employer individually.

1
Art. 18(1) LP & Art.45 (1) FCSP.
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 To strike the balance between these two concerns, the Labour Proclamation has come up with this solution.
This solution is suspending the contract of employment until such time the employee accomplishes his societal
service after which he will regain his employment.2

Suspension due to reasons beyond the control of the employer.

At times situations which will have an impact of temporary cassation of activities of the undertaking may occur.
Most of these situations are economic reasons though there may also other reasons. For example, the Wonji
sugar factory may be compelled to temporary suspend its operations fully or partially due to the over flow of the
Awash River. This may be one incident where suspension may result from non-economic reasons. Financial
problem may also be a ground for temporary cassation of operations.

Suspension under these grounds is not within the sole discretion of the employer. Article 19 pertaining to Duty
to inform reads, when rights and obligations arising out of a contract of employment are suspended in
accordance with sub article 5 or 6 of Article 18, the employer shall inform the Ministry in writing within three
days of the occurrence of the ground for suspension. It is subject to revision by the Ministry of Labour and
Social Affairs or Regional Labour and Social Bureaus. In order for the Ministry to determine whether the stated
reason is adequate to suspend operation or not, the employer should notify the Ministry within three days of the
occurrence of the alleged ground of suspension.

Article 20 with regard to Determination by the Ministry also provides that 1/ The Ministry shall determine
the existence of a good cause for suspension within three days after receipt of the written information pursuant
to Article 19. 2/ Where the Ministry finds that there is no good cause for suspension it shall order the
resumption of the work and payment for the days on which the work was suspended. 3/ The party who is
aggrieved by the decision of the Minister in accordance with sub-articles (1) and (2) of this Article may, with in
five (5) working days, appeal to the competent labour court. The Ministry is expected to determine whether or
not there is sufficient ground for suspension or not within three working days after the receipt of the report.
Article 21 dealing with Effect of Confirmation or Authorization of Suspension reads, 1/ Where the Ministry
confirms or proves the existence of good causes for suspension, it shall fix the duration of the suspension,
provided, however, that the duration shall not exceed a maximum of ninety days. 2/ Where the Ministry is
convinced that the employer cannot resume its activities with the maximum period set under sub-article (1) of
this Article, the worker shall be entitled to the benefits specified under Articles 39 and 44. If the Ministry
determines there is sufficient ground for suspension, it will approve it and fix the duration for it. But the
duration shall not exceed ninety days.

2
Art.18(2) LP & Art.45(2) FCSP.
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If the Ministry determines that there is no adequate reason to withhold operation, it will order the resumption of
the activities and payment of wage for the days on which the employees were suspended. The employer may
appeal within five working days against this decision to the appellate court of the Region where it runs its
business. If the employer fails to inform the Ministry of the occurrence of a ground for suspension, it will not
have valid ground to suspend its operation. Furthermore it may be liable to fine for failure to notify. 3

Disciplinary Suspension.

One of the prerogatives of an employer is to take disciplinary action against an employee. The employee on its
part is required to render faithful service to the employer. Failure to observe such faithfulness may subject the
employee to disciplinary action. But prior to taking action, the employer is expected to undertake the necessary
investigation into alleged misconduct of the employee. Until such time the investigation is completed, it may be
appropriate to suspend the employee so that investigation could go smoothly.

With this purpose in view, the Labour Proclamation delegated collective agreements to deal with the matter.
Nevertheless, disciplinary suspension is not to exceed one month in duration within which time the employer
should complete its investigation and arrive at a decision (27/4). Thus, as the Labour Proclamation now stands,
disciplinary suspension is not within the unilateral power of the employer, it is rather to be determined by the
employer and the trade union (i.e. collective agreement). Besides, its length is not even left to collective
agreement; it is rather fixed by law and cannot exceed one month.4

Note & Exercises.

* Under the Civil Service law, disciplinary suspension is within the sole prerogative of the employer. Its length
could also be as long as two months.(compare Art.27(4) Labour Proclamation and Art.70 of Civil Service
Proclamation) Why do you think the legislature decided to adopt double standard in this regard? Is it justified?
Why? Why not?

* More often than not, misbehaviors which may subject an employee to disciplinary investigation could at the
same time be reasons for filing a criminal charge against the same. Let us assume that parallel actions (i.e
disciplinary & criminal proceedings) were being commenced against the employee. Let us further assume that
the disciplinary proceedings resulted in positive determination that the employee indeed committed that alleged
misconduct and summarily dismissed due to it. Let us also assume that the criminal proceedings failed to
convict the accused for lack of adequate evidence and hence the accused has been acquitted. What effect will

3
Ibid, Art.184(1)(c)
4
Art.27(4) LP & Art.70 FCSP.
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the acquittal have, if any, on the disciplinary action? I mean, should the employee be reinstated now that his/her
innocence has been judicially determined? Why/ why not?

Consequences of expiry of period of suspension.

Normally as soon as the duration for suspension expires, the employee will be reinstated to his/her previous
employment. But there may also be circumstances where suspension may be transformed into termination. For
instance, in case of disciplinary suspension (e.g. if the outcome of the investigation shows a serious misconduct
attributed to the employee), the contract of the suspended employee may be terminated. In case of suspension
for reasons beyond the control of the employer, particularly suspension due to economic reasons,(e.g. if the
undertaking cannot resume operation within ninety days) suspension will be transformed into termination.

Termination

Termination of contract of employment under the labor proclamation (23-29 and 31-32).

Article 23-29 and 31-32 are, in one or the other, associated with termination of contract. Article 23 provides that

1/ a contract of employment shall only be terminated upon initiation by the employer or worker and in
accordance with the provisions of the law or a collective agreement or by the agreement of the two parties. 2.
The amalgamation or division or transfer of ownership of an undertaking shall not have the effect of
terminating a contract of employment.

Firstly, termination is made by the initiation of one of the parties, the employer or the employee. Secondly,
termination is made by the operation of the law. Thirdly, termination is made by the agreement of the parties.
The agreement of the parties may be collective agreement or agreement of termination by the parties.
Termination at the initiation of the employer is technically called dismissal. Termination at the initiation of the
employee is also called resignation.

Dismissal

Termination at the initiation of the employer may be with or without notice. Termination at the initiation of the
employer without notice is termed as summery dismissal. Termination at the initiation of the employer with
notice is also called ordinary dismissal. Termination at the initiation of the employee may also be with or
without notice. Termination at the initiation of the employee without notice is termed as ordinary resignation. If
it is without notice, it will be termed as extra-ordinary resignation. Termination by the operation of the law is of
no additional requirements. The occurrence of a certain fact will have an effect of terminating the contract of

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employment. Termination by the agreement of the parties depends upon the agreement entered into by the
parties.

Terminations at the initiation of the employer are elucidated under article27, 28 and 29. Termination at the
initiation of the employee is listed under 31 and 32.

Article 27 is concerned with termination or dismissal without notice. Article 28 and 29 are concerned with
termination or dismissal with notice. Resignation with notice is dealt with under article 31 and resignation
without notice is dealt with under article 32. Termination by the operation of law is dealt with under article 24.
Article 25 also deals with termination by the agreement of the parties. Article 26 is different from the other
articles dealing with termination in that the former is concerned with unlawful termination. It reads,

1. A contract of employment may only be terminated where there are grounds connected with the worker’s
conduct or with objective circumstances arising out of his ability to do his work or the organizational or
operational requirements of the undertaking.

2. The following shall not be deemed to constitute legitimate grounds for the termination of a contract of
employment.

A. His membership in a trade union or his participation in its lawful activities.

B. His seeking or holding office as a workers’ representative.

C. His submission of grievance or his participation in judicial or other proceedings against the employer.

D. His nationality, sex, religion, political outlook, martial status, race, colour, family responsibility,
pregnancy, lineage or social status.

Among the stages of contracting, some of them are essential while others are not. For example, formation of a
contract is essential even if it does not require a special form. Probation in the labor law regime is not essential
in the sense that an employee could be employed with or without probation. Obligations of the parties are
essential; because it is in an anticipation of obligation that the parties are committing to each other. Suspension
is non-essential; because, it is possible for a contract to be formulated and terminated without being suspended.
Unlike marriage where the spouses commit to each other to live together until death, in the case of employment
contract, no one can commit himself as an employee until death. Unlike any ordinary contract, the contract of
employment is not to be terminated for what ever reason. There should be reason to terminate it.

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In the past, the parties would remain engaged so long as they were willing. If one of them was unwilling, he
could terminate the contract at any time. That was the period of contract, contract at will. At the period of
freedom of contract, if one of the parties, especially if the employer is unwilling, that will be the end of the
matter. This had its own danger in terms of employment security. But now, we are very much attached for
social reasons; we are very much detached from employment at will. Rather, we are under the principle of no
termination without justified cause. For termination, Not only we need to have a justified cause, but, that cause
should be proportionate to termination. Had the contract of employment been an ordinary contract, it can be
terminated at any time and for whatever reason. The law is not very much conservative as to the other contracts.

When we come to labor, social protection is very important; unless we protect the weaker and the majority, at
the end of the day, social stability will be negatively affected. Unemployment will be prevalent. So, we need to
have a mechanism of protection through law by creating legal framework that wills strict termination to the
extent possible. Of course, we cannot avoid termination altogether. There could be a llot of legitimate business
reasons to terminate the contract of employment. But, at least, it needs to be minimized. Because, the other
option, unemployment, is very much dangerous not only to the unemployed but also to the society at large. So
long as social instability exists, the natural consequence thereof, political instability may follow.

The first ground is termination by the operation of the law (24). Article 24 as regards Termination by Law
provides that a contract of employment shall terminate on the following grounds.

1. On the expiry of the period or on the completion of the work where the contract of employment is for a
definite period or piece work.

2. Upon the death of the worker.

3. Upon the retirement of the worker in accordance with the relevant law.

4. When the undertaking ceases operation permanently for due to bankruptcy or for any other cause.

5. When the worker is unable to work due to partial or total permanent incapacity.

When a contract of employment is to be terminated by the operation of the law, the occurrence of a certain legal
fact will automatically terminate the contract of employment without any requirement from the side of the
employer. For example, for terminating the contract of employment, there are cases where the employer or the
employee is required to provide notice prior to termination. But, in the case of termination by the operation of
the law, there is no requirement of providing with notice. The mere occurrence of a certain legal fact will put
the employment relation to an end.
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Employments for defined period of time

The facts to be occurred are mentioned under article 24 in an apparent clarity. The first element is the expiry of
the period of the contract. If the contract of employment was concluded for a definite period of time, for
example, one year, the contract shall come to an end upon the expiry of the stipulated one year period. If the
contract of employment was concluded to perform a certain job, the completion of the job will automatically
bring the relationship to an end.

A controversy arises when the contract is concluded for definite period of time. Because, it seems to be an
employment at will. The job may be there. The performance and the discipline of the employee is fine and
acceptable. But, simply because of the expiry of the stipulated period, we are entitling the employer to
terminate. If that is the case, we are going back to the principle of freedom of contract, employment at will. So,
when we come to termination, one of the controversial areas in the labor law regime is the provision under
article 24/1. In order to illustrate 24/1, we need to go back to article 9.

The principle under the labor proclamation is the principle of indefiniteness (9). Article 9 reads, any contract of
employment shall be deemed to have been concluded for an indefinite period except for those provided for
under Article 10 hereunder. This is an important principle for employment security. Any contract of
employment is considered as if it were concluded for indefinite period of time. Even if the contract provides a
period by itself, the principle is indefinite period. The period of the parties is not taken into account. The reason
behind is to insure employment security to the maximum possible to the employee. Employment security is, on
the other hand, one of the main objectives of the labor proclamation. It is only when any of the conditions under
article ten are satisfied that a contract of employment will be considered as though it were concluded for a
definite period. Article ten is an exception to the general principle under article 9. It reads:

1. a contract of employment may be concluded for a definite period or for piecework in the case of.

a. The performance of specified piece work.

b. The replacement of a worker who is temporarily absent due to leave or sickness or other causes.

c. The performance of work in the event of abnormal pressure of work.

d. The performance of urgent work to prevent damage or disaster to life or property, to repair defects
or break downs in works, materials, buildings or plant of the undertaking.

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 e. An irregular work which relates to permanent part of the work of an employer but performed at
irregular intervals.

f. Seasonal works which relate to the permanent part of the works of an employment but performed
only for a specified period of the year but which are regularly repeated in the course of the years.

g. An occasional work which does not form part of the permanent activity of the employer but which is
done intermittently.

h. The temporary placement of a worker who has suddenly and permanently vacated from a post
having a contract of an indefinite period.

i. The temporary placement of a worker to fill a vacant position in the period between the study of the
organizational structure and its implementation.

2. A contract of employment for temporary placement of a worker under sub-article 1(h) and (i) of this
Article shall not exceed forty five consecutive days and shall be done only once. If any of contracts of
employment cannot fall under article ten, even if the parties have stipulated period, that will be
irrelevant as far as the law is concerned.

Therefore, in order to apply article 24/1, we need to evaluate the terms of the contract in light of article ten. If
the contract entered into by the parties forms any of the conditions under article ten, the expiry of the period
will result in termination. But, if it does not fall under any of the conditions of article ten, the general principle
of article 9 will apply. Article 24/1 should, in no way, be read in isolation. So, we need to read it in connection
with article ten to understand the true meaning of article 24/1 concerning with expiry of period and to determine
whether the terms of the contract stipulated by the parties as to period fits or not to any of the conditions of
article ten. If we understand article 24 in isolation, article 9 will automatically be irrelevant. We’ve just seen
that article 9 is laying down the general principle. On the other hand, we cannot have an interpretation that
makes a very visible principle irrelevant. So, the best approach is to conjointly read article 24/1 with
articles9and 10. . When a contract of employment is determined in terms of job, there is no much controversy.

Temporary work

Assume that there is a casher in an enterprise entered into a contract of permanent employment. But, now, she
has got maternity leave (three months). For these three months, the management of the enterprise has decided to
employ another casher. In this case, the fact that the new casher is being employed is to temporarily replace the

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permanent employee. After the expiry of such three months, the original casher will report from maternity leave
for work and the enterprise shall terminate the substitute. The new casher may object to the termination as
follows. This is a service of a casher; so long as the enterprise exists, financial transaction will be there. If there
is financial transaction, the position of the casher will also be alive. So, I will not be terminated. I.e. the
employment is a permanent activity of the enterprise. Despite such objection, if the enterprise can show that the
position is already occupied by the employee currently under maternity leave, it can validly terminate the
contract. Otherwise, if the company employs a casher and if there is no one to replace her, even if she is
employed for a definite period, six months or 9 months or whatever, she will have a permanent status of
employment.( Cassation, file No. 11924).

Death and retirement

The other ground for termination by the operation of the law is natural attrition (sub-article two and three of
24). Of course, these sub-articles are more or less the same. One of the natural attritions is death of the
employee and the other is retirement of the employee. It is remembered that a contract of employment is for
personal service. So, if the person who is expected to render service personally dies, it will be logical to
terminate the contract of employment. Of course, in principle, death of the parties will not have an effect of
terminating a contract of employment unless the nature of the service requires the personal performance (1986).
Article 1986 reads, the heirs of the person shall be substituted for him in contracts to which he was a party
unless the contrary is stipulated or flows from the nature of the contract.

If the parties agree otherwise or if the nature of the contract requires personal service, the heirs will not be
substituted. But, in all other cases, the principle is that the heirs will stand at the foot of the deceased and
continue with the rights and obligations emanating from the contract. But, in case of employment relationship,
since the very nature of the relationship requires personal service of the employee, the death of the employee is
a valid ground to terminate the contract. It is only the death of the employee to be taken into account. The death
of the employer may not necessarily put the contractual relationship to an end. Because, the personal service of
the employer is not required for the performance of the job. So, the right of employment is not something that
can be inherited. Rather, it is personal to the employee. We are not required to provide notice in advance.
Because, it serves no purpose. The very purpose of providing notice is to give an opportunity for the notified
individual to look for a substitute. If the notifier is an employee, the notice gives the employer an opportunity to
look for a substitute employee. If the notifier is the employer, the notice gives the employee an opportunity to
look for a substitute job.

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The other natural attrition is the attainment of retirement age. Until recently, it was also controversial in some
respects. At the time of the emperor, we have a retirement age that had discriminatory approach. Because of the
then prevailing social attitude, female employees were retired earlier than male employees. I.e. female were
retired at the age of 55 while male employees were retired at the age of 60. At the time of the derg regime, it
was made equal; both female and male employees were retired at the age of 55. Currently, the age of retirement
for both is 60.

The scope of application of the pention proclamation no 345/2003 was very limited. It was not intended to
apply upon the private sector. It applied to civil service, state enterprises and privatized enterprises. When
privatized enterprises were state owned enterprises, they had already a pension scheme. Even if they became
privatized, that scheme would continue. These were the three areas where the pension proclamation no
345/2003 applied. For the green field investment and for those which remain private at the time of the derg, the
pension proclamation was not applicable. The new government liberalized the economic policy and encouraged
the private sector. Some actors of the private sector bought formerly state owned enterprises while others
simply invested fresh investment. Investing fresh investment is termed as green field investment. But, beginning
from last year, two new pension proclamations have come into picture. They are pension proclamation no 714
and 715/2011.

So, in the current case, even, the private sector has been covered by the pension scheme. Therefore, the
retirement age, 60, is now horizontally applicable for both sectors. What is the rationale behind the retirement
age? One rationale is deemed to be that productivity diminishes with the attainment of certain age. Of course,
some people argue that retirement age should be job specific. It must be noted that the retirement age for lay
soldiers is the age of 45 while that of military members with the rank up to colonel is 52 and above is 55. The
retirement age for military members is earlier because the military job requires physical strength. The other
rationale could be employment creation. As long as a person is getting old, the power of Training and
information retention rate could be reduced.

On the other hand, modern industrial relation requires modern technological development. In order to operate
these technological facilities, we need trainings. But, when people attain a certain age, their capacity to observe
training will also diminish. Absenteeism may also occur repeatedly due to the fact that the older the man, the
more vulnerable to various diseases he will be. The degree of social instability involved in youth unemployment
is higher than that of unemployment of old age. Some of the above rationales are legitimate business concern
while others such as employment creation are legitimate social concern.

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Bankruptcy

The other ground for termination by the operation of the law is bankruptcy. Competition is the vital feature of
business. If competition exists, some of the enterprises may stand as winners while others will stand as losers.
So the losers may go bankrupt. If the business is bankrupt, there may not be further transaction. It is not only
bankruptcy but also any other causes may be ground for termination. Among other causes, the employer may
decide to shift business. In this case, the employees of the former enterprise may not easily transfer to the new
business enterprise due to non-compatibility of their profession to the latter business.

Cassation bench case number 3314

An oil producing factory borrowed some amount of money from commercial bank of Ethiopia. The factory was,
however, unable to pay the loan back on the due date. Hence, the bank attached the factory and made it open to
sell by auction. But, no buyer was found to purchase the factory with the minimum price the bank determined.
So, the bank decided to hold the factory with minimum price by itself and told the employees of the factory that
their contract of employment was terminated from then on wards. The employees took the case to court. They
argued that they should continue working there or should their contract of employment be terminated, they
should get severance pay.

The first instance court decided that the bank should pay severance pay for them if the contract should be
terminated. The high court also approved the decision of the first instance court. The bank appealed to federal
Supreme Court. Then, the cassation bench decided that the bank should not pay severance pay for the
employees since their relation is not with the bank but with the former owner of the factory. Secondly, the bank
owned the factory not to have the factory continued working the same business but to earn its money by selling
it. There is no legal reason in which the bank bears any obligation as to the employees of the factory.

Incapacity

Partial or total incapacity could also be another ground for termination by the operation of the law. When the
employee is proved to be partially or fully incapacitated permanently, then, it will be a valid ground to terminate
the contract. It will be unfair to require the employer continue employing unproductive individual. Some times,
there is a misunderstanding between article 24/5 and 28/1(B). 28/1(B) reads, the worker is for reasons of health
or disability, permanently unable to carry out his obligations under the contract of employment. The
terminology between the two sub-articles is more or less the same. One of the employees is to be regulated
under 24/5. In this case, no notice is required. But, another employee with a similar problem is to be regulated

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under 28/1(B). In that case, he will be entitled to notice. If the employee has worked for about 5 years, he will
be given a notice of two months. If notice is not given to him, he will provide with a salary of additional two
months instead of the notice.

So, the provisions under 24/5 and 28/1(B) have different legal effects. One of the interpretations given for these
provisions is that Article 24/5 tries to regulate injuries outside of employment while the article 28/1(B) regulates
injuries with in employment. So, the one who sustained injury at the time of employment should be favorable
by being providing with notice. The other interpretation is the issue of evidence. According to this
interpretation, if the employee has come up with a medical certificate proving his incapacity, there is no need to
give notice. But, if the employee is short of medical certification and simply reports for duty despite illness
highly diminishing his productivity, the employer has the power to give notice on the basis of article 28/1(B)
and terminate the contract.

So, the difference lies on the production and non-production of medical certificate. The English version of
article 24/5 is a bit vague than the Amharic version in terms of clarity. This argument is strengthened by the
civil service proclamation article 79/2 which is counter part of article 24/5 of the LP. The strengthening sub-
article reads, without prejudice to the provisions of Article 53/2/ of this Proclamation, where a civil servant who has
sustained employment injury is medically determined to be permanently disabled, his service shall forthwith be
terminated. Unlike the sub-article under consideration, Under 79/2 of the FCSP the word “medically” has been clearly
designed.

So, the gap created by the absence of the word “medically” under article 24/5 of the LP can be covered by the analogical
extension of article 79/2 of the FCSP to article 24/5 of the LP. We’ve already seen that the occurrence of certain fact
will have the effect of putting a contract of employment to an end without any further proceeding. Once the
occurrence of that fact is proved, the natural consequence thereof will bring the relationship to an end. We’ve
also seen that some of the facts are natural attritions such as death and retirement while others are associated
with the enterprise such as bankruptcy, change of business and the likes.

Termination by agreement

The second possibility for termination is termination by the agreement of the parties. At the beginning, we’ve
said that contract of employment is a consensual arrangement. I.e. the parties agree to remain engaged in that
relationship. On the other hand, if they want to put that relationship to an end by agreement, the law does have
no objection. But, some times, the agreement between the parties may put the weaker party in a detrimental
position. In such a time, the law wants to provide the disadvantaged party with some protection. Among the

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different protections, one is that the agreement will not have an effect of waving one’s right under the law. No
employee can wave his right provided under the law. For example, when a contract of employment is
terminated, the employee is entitled to get severance payment of a certain amount. This employee cannot enter
into a contract of employment by waving his right to ask severance payment (39). Secondly, after termination of
the contract of employment, unutilized annual leave, if any, could be converted into cash (77/5).

According to the above sub-article, a worker whose contract of employment is terminated under the Labor
Proclamation is entitled to his pay for the leave he has not taken. If, prior to using to his annual leave, the
contract of employment is terminated, the law says that it needs to be converted into cash and given to the
employee. No employee can wave his right to accept an annual leave. If so, this makes the contract of
employment null and void. In short, the agreement should not have an effect of nullifying the rights provided
under the law. This is one of the protections given to the employee.

The other protection is that any agreement for termination should be made into writing. This is because the
written instrument is better considered than oral declaration. So, in order to make sure that the parties were
serious, especially, the employee was serious at termination, it must be reduced into writing. In case
disagreement arises, the written instrument will be a conclusive proof. We have already said that a contract of
employment is to mean a contract either to establish or terminate employment. On the other hand, under article
5 of the LP, we’ve stated that unless otherwise provided by law, a contract of employment shall not be subject
to any special form. So, termination is one of the exceptional areas where a contract of employment should be
made in writing (25). Article 25 provides that:

1. The parties may terminate their contract of employment by agreement provided, however, that waiver by
the worker of any of these rights under the law shall have no legal effect.

2. Termination by agreement shall be effective and binding on the worker only where it is made in writing.
It must be noted that when the law requires the contract to be made in writing, it must be signed by both
parties (1727).

Article 6 with regard to written contract of employment reads, Subject to the provisions of the relevant law, a
written contract of employment shall specify the following.

1. The name and address of the employer.

2. The name, age, address and work card number, if any, of the worker.

3. The agreement of the contracting parties made in accordance with article 4(3) of this Proclamation.
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 4. The signature of the contracting parties.

The phrase “Subject to the provisions of the relevant law” in the introductory part of article 6 refers to many
laws one of which is the general principle of contract. When we go to the general principle of contract, if the
law requires a contract to be made in writing, not only it should be signed by the parties but also attested by two
witnesses. This requirement is also implicit under article 25. Provided that these rigorous requirements are
fulfilled, the law does not have any problem if the parties bring the relationship to an end by their bilateral
arrangement.

Dismissal

The other ground is termination by either party. This is the most usual and controversial ground for termination.
The most controversial one is, however, termination at the initiation of the employer (27, 28, and 29). Grounds
where the employer can terminate the contract of employment by unilateral decision seems to be incorporated
under article 26/1. It reads, a contract of employment may only be terminated where there are grounds
connected with the worker’s conduct or with objective circumstances arising out of his ability to do his work or
the organizational or operational requirements of the undertaking. Grounds connected with the worker’s
conduct, grounds associated with the worker’s ability to perform his work or the grounds associated with
organizational or operational requirements of the undertaking are the three grounds where an employer can
validly terminate a contract of employment.

Disciplinary or behavioral problem or problems of integrity are possible problems that may be grounds for
termination. Grounds associated with the ability, skill, productivity, competence and so on are also other causes
for termination. The third ground is associated with market conditions or companies’ structural or operational
requirement. For companies, to remain competitive in business, cost reduction is the best strategy. Companies
revise their overhead cost. To this end, they may bring structural changes. Some positions could be cancelled;
new positions could be created. When positions are cancelled, employees may be terminated or laid off.

This is what structural requirement means. Operational requirements are more or less the same with structural
requirements. Some times, a lot of the products of a company may be at stock and remain unsold for long. In
that case, the company may not be in need of producing more prior to selling all these out. In the mean time, if
the company was operating in three shifts within 24 ours, one of the shifts could be cancelled due to operational
requirement. In that case, it may have an effect of terminating a contract of employment. All these could be
grounds for termination that may be initiated by the employer. Grounds for termination associated with
misbehavior are well dealt with under article 27 while those associated with employee’s ability to do his work

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are also well dealt with under article 28/1. On the other hand, grounds associated with the undertakings’
structural or operational arrangement are elucidated under article 28/2 and 29. The source for these facts of
termination is ILO convention called employment termination convention no 158 of 1982. Ethiopia is a
signatory to this convention. So article 27,28and29 must be read in line with the provision of the convention
under consideration. Termination at the initiation of the employer (dismissal) is called summery dismissal.

Summary dismissal

Article 27 as regards termination without notice is provided as:

1. Unless otherwise determined by a collective agreement a contract of employment shall be terminated

a. Repeated and unjustified tardiness despite warning to that effect.

b. Absence from work without good cause for a period of five consecutive working days or ten working
days in any period of one month or thirty working days in a year.

c. Deceitful or fraudulent conduct in carrying out his duties having regard to the gravity of the case.

d. Misappropriation of the property or fund of the employer with intent to procure for himself or to a
third person undue enrichment.

e. Returning output which, despite the potential of the worker, is persistently below the qualities and
quantities stipulated in the collective agreement or determined by the agreement of the two parties.

f. Responsibility for brawls or quarrels at the work place having regard to the gravity of the case.

g. Conviction for an offence where such conviction renders him unsuitable for the post which he holds.

h. Responsibility for causing damage intentionally or through gross negligence to any property of the
employer or to another property which is directly connected with the work of the employer.

i. Commission of any of the unlawful activities referred to in Article 14(2).

j. Absence from work due to a sentence of imprisonment passed against him for more than thirty days.

k. Commission of other offences stipulated in a collective agreement as grounds for terminating a

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 2. Where an employer terminates a contract of employment in accordance with this Article, he shall give
written notice specifying the reasons for and the date of termination.

3. The right of an employer to terminate contract of employment in accordance with this Article, shall
lapse after 30 working days from the date the employer knows the ground for the termination.

4. The grounds for suspension of a worker from duty before terminating the contract of employment of the
worker in accordance with this Article may be determined by collective agreement, provided however,
that the duration for suspension shall not exceed thirty working days.

The common problem is that there is misconduct from the side of the employee. Different expressions of
misconduct are put in place under sub-article 1. These grounds can be summarized as the reason why the
employee is terminated without notice is because of the serious conduct he has been engaged in at the place of
work. So, in employment, it is not only skill or professional qualification that gives security to employment.
Conduct is also as important security as professional qualification at the place of employment since an
employee may lose his employment if his conduct is incompatible to team work, with the orders of the
employer, in his relation with customers and the like. This aspect of termination is one of the controversial areas
under labor law.

There was a practical case related to article 27/1/C. an office had an attendance sheet which is one aspect of
work rule. On this attendance sheet, workers put their signature when they report for duty in the morning. They
would do the same in the afternoon to make sure their presence at work. One day, a worker put his signature for
both shifts in the morning. Then, he worked in the morning and absented himself in the afternoon. The
employer, after being informed the employee’s act, wrote a letter to him that his employment was terminated on
the basis of article 27/1/C. the employee, on his part, took the case to court by invoking the invalidity of the
termination. While assessing the fraud committed at the place of work, the gravity of the fraudulent act must be
taken into account.

On the other hand, termination is the maximum punishment that the employer can impose against the
employment. So, while deciding termination, there must be substantive fairness. I.e. the punishment must be
proportional to the gravity of fault committed by the employee. There are so many possible punishments that
could be imposed upon the employee short of termination. Reprimand, oral or written warnings and deduction
of wage for that specific day are good examples. Even if the employee has committed fraud, it may not lead to
dismissal. Because, the law tries to call the attention of the employer and the judge that it should be determined
on the gravity of the misleading committed. In this case, the court stated that fault or fraud has been committed.

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However, this fraud may not entail termination of contract of employment but other less serious penalties.
Because, it is not a fraud committed repeatedly. Of course, if this fraud has been committed recurrently, it could
be added up and become serious. So, both quantity and quality are important. A single act, if serious enough,
may result in termination. Small frauds could also be added up to result in termination. But, the fraud under
consideration is committed for the first time; it is relatively minor. So, the court decided that the fraud cannot
result in termination of employment. Rather, the employer could punish the fraudster with other alternative
penalties.

Case: There was a hotel which had a cafeteria which serves food only for the employees at low cost. But, it
had a ground rule which states that no employee can invite external guests therein. One day, a driver employed
in the hotel invited a guest in the cafeteria. Then, the employer informed the driver of the fact that his contract
of employment has been terminated on the basis of article 27/1/C. the driver, on his part, took the case to court
of law by alleging that his contract of employment should not be terminated solely on this ground. The
cassation bench rendered decision that the fraud could not result in termination of employment. Because, the
fraud committed by the driver has no that much gravity. Secondly, the employee is a driver. So, the fraud he
committed is not associated with the work of the employee. Thirdly, the duty to control the guests to be
entertained in the cafeteria is left for the waiters working therein.

Case: There was an organization which was in need of producing ice-cream for its customers. It posted
vacancy announcement therefore. Then, a man with a fraudulent certificate of ice-cream making experience
from an organization applied for the post. After employment, the employer found that the employee committed
fraud during his employment and terminated the contract. The employee took the case to court by invoking
invalidity of termination. The first instance and the high courts rendered decision in favor of the employee by
alleging that the fraud was not committed at work place. But, the cassation bench, however, interpreted the
phrase “deceitful or fraudulent conduct in carrying out his duties” extensively. Therefore, so long as the
employee has been employed using fraudulent document and after he began carrying out his duty on the basis of
this evidence, the employer found that he committed fraudulent act at his work place, it can be interpreted as if
it was committed at work place. Because, whenever each ice-cream is produced, there is a fraud committed by
the employee. So, the termination is valid.

Case: There is also another practical case connected with article 27/1/F which reads as responsibility for
brawls or quarrels at the work place having regard to the gravity of the case. The organization was rendering a
certain service to its customers. It has no meeting hall of its own. It evaluates its activities every 6 months
renting a meeting hall. During evaluation, an employee angered with another employee’s criticism threw and hit

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the criticizer with a stapler. The criticizer was too much injured. Then, the employer terminated the employment
by invoking article 27/1/F. the employee, on his part, took the case to court of law by invoking invalidity of
termination. The first instance court rendered decision that the contract cannot be terminated due to the fact that
the brawl was not committed at work place.

Case 49958: There was a travel agency. This agency had several drivers employed under it. One day, one of
those drivers presented an exaggerated fuel receipt. But, the manager did not receive it; rather, he ordered the
driver to produce another receipt. Then, the driver threatened the manager that he would inflict danger against
him by saying “either I or you shall live”. The frustrated manager terminated the contract on the basis of article
27/1/F. the employee took the case to court of law. The first instance court rendered decision by alleging that
the termination is invalid. Because the employee did not commit brawls or quarrels against the manager. Rather,
he threatened the manager instead of committing brawl or quarrel.

On the other hand, the cassation bench states that the employee’s word of threat “either I or you shall live” is
enough to urge quarrel. An employee, so long as the order of his employer is lawful, is required to respect and
implement it. As clearly designed under article 13/2, the employee has the obligation to follow instructions
given by the employer based on the terms of the contract and work rules. The employee had to give proper
explanation for what he has been asked by the employer. The fact that the employee has committed the fault
against the manager also indicates the gravity of the fault. So, as opposed to the decision of the lower courts, the
cassation bench passed decision that the termination of the contract is valid. From these cases, we can
understand that during interpretation, not only the letters of the law (mechanical interpretation) but also the sprit
of the law should be taken into account.

Case 41 115: A driver of a heavy track was employed in an organization. One day, this driver forgot his key
as being plugged in the lock of the car and got off. Then, the assistant opened the car and drove a few meters
back. While driving back, he collided with another car of the organization and inflicted danger against the
property thereof. The employer terminated the contract with the driver by invoking article 27/1/H which reads
as responsibility for causing damage intentionally or through gross negligence to any property of the employer
or to another property which is directly connected with the work of the employer. Now, the issue is whether
there is mere intention or gross negligence. Because, the fault was committed within the compound of the
organization; it was committed at the presence of the assistant. It is a heavy track which is less susceptible to
theft. But, the fault was committed for the second time. The lower courts passed decision in favor of the
defendant. However, the cassation bench also agreed that the fault was not gross negligence. But, it passed
decision that the driver should terminate his contract with the employer For the sake of industrial peace and

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security. We’ve just seen that dismissal is a very harsh punishment especially in countries such as Ethiopia
where employment is very scarce resource. So, it should be imposed on a very serious mislead. I.e. the gravity
of the mislead is highly important. Unless and otherwise, the quantity of the mislead should be taken into
account. If a mislead has occurred repeatedly, its addition can be used to show gravity.

The other point in connection with disciplinary dismissal is the relation with criminal proceeding. Some times,
one civil incident could be a cause for both disciplinary measure and criminal proceeding. Though, even if the
disciplinary measure is finalized by dismissing the employee, the criminal proceedings may be finalized by
acquitting the employee. A student of this University committed fraud at the clinic of the University by using
forged medical prescription. Then, the issue was brought before a disciplinary committee. The committee
rendered a decision of suspending him from learning for two years. The student, however, was never out of the
compass. He would get in and out of the compass using an ID card of his friends. In another day, the same
student was caught while tacitly taking books out of Kennedy’s library. The fault was again presented to the
disciplinary committee. The committee, having taken the repeated faults in account, dismissed him from
schooling forever.

On the other hand, the issue was directed to the nearby police station in the form of criminal fault. Even if the
student was criminally proceeded against, the court acquitted him due to lack of sufficient evidence submitted
by the plaintiff. Then, the student pleaded that the University passed invalid dismissal against him by using his
acquittal letter. The University also led the case to the legal service so that legal opinion should be given
thereupon. The legal service gave its opinion that the disciplinary measure is an internal measure. The issue is
whether he should continue being a student or not with these disciplinary faults. On the other hand, the issue of
crime is not about whether the student should continue being a student or not. Rather, the issue is whether the
fault that the student committed has dangerous disposition to the public or not. Criminal law is concerned with
public interest, public peace and security. So, it must deal with whether the student should go to prison or not.
In general, the court, after taking into account the gravity of the evidence, should only decide not whether the
student should continue being a student or not but whether he is dangerous to the public or not. Because,
criminal proceeding is different from civil proceeding in terms of purpose, gravity of evidence and procedure.

Case 345 85: The guard of electric power corporation was caught when he tried to take out 8 gallons of
transformer’s oil by the employees and manager of the corporation. The corporation terminated the contract
with him. On the other side, the corporation had also criminally proceeded against the dismissed employee.
What would be the decision of the court? Read “Case 37.”

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The other thing in connection with disciplinary dismissal but which is not found in the labor proclamation is the
issue of procedural fairness. As indicated earlier, there is a convention called termination of employment
convention no 158 1982 to which Ethiopia is a signatory. The contents of this convention should be read into
this proclamation. One of the provisions of that convention states that the employment of a worker shall not be
terminated for reasons related to the worker’s conduct or performance before he is provided an opportunity to
defend himself. This is, as we have earlier tried to indicate, a procedural fairness. Since dismissal is the
maximum measure an employer can impose, the employee should have the right or opportunity to be herd. It
could be before a disciplinary committee or an investigator within the internal structure of the enterprise. Unless
this situation is fulfilled, the measure could be challenged before a court of law because of procedural
irregularities. There are two issues, procedural fairness and substantive fairness. In the case of substantive
fairness, we are concerned with that the punishment should be proportionate to the gravity or quantity of
mislead committed. In the case of procedural fairness, the employer is expected to give an opportunity for the
employee to defend himself. Of course, in the case of flagrant cases, or if the offender is caught red-handed,
procedural fairness may not be necessary.

If the employer is suspicious of that until such time he provides that opportunity, evidences could be destroyed
or witnesses could be convinced or persuaded to the disadvantage of the enterprise, he can, pending
investigation, suspend the employee for a maximum of 30 working days from job and wage (27/4). As per sub-
article 3 of the same article, the right of an employer to terminate contract of employment in accordance with
this Article, shall lapse after 30 working days from the date the employer knows the ground for the termination.
This is only to facilitate investigation and disciplinary proceedings within the internal structure of the enterprise.
Then, depending on the outcome of the investigation, the employee will either be terminated or reinstated to his
former position. Some times, there are confusions between article 12/7 and 27/2. on the basis of the former, the
employer has the obligation, upon termination of a contract of employment or whenever the worker so requests,
to provide the worker, free of charge, with a certificate stating the type of work he performed, the length of
service and the wages he was earning. The length of service, the position the employee had occupied and the
wage he was earning should be clearly mentioned in the certificate. The ground in which the employment
contract is terminated is not, however, wanted to be mentioned in the certificate under article 12/7. The
recommendation no 110 of ILO convention also states that nothing unfavorable to the employee shall be
inserted in such certificate. If the employer wants, he can add qualified references on such certificate such as
mentioning of integrity, diligence, sociability and carefulness of the employee.

On the other hand, on the basis of article 27/2, if an employer terminates a contract of employment, he is
required to give written notice specifying the grounds for and the date of termination. If an employee is found

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guilty in an enterprise, such guilt may serve as a ground for terminating the contract. But, terminating the
contract as a result of the guilt found is an internal measure and it is meant for internal consumption. What has
been indicated under article 27/2 is a written notice which is to be addressed only to the employee. The purpose
of the written notice is to make the employee cognizant of the reasons why the employer is terminating the
contract and if the employee is to object to such decision, to give the opportunity and plead his grievance to
whom the issue may concern. The certificate envisaged under article 12/7 is something broader and it is
addressed to the whole world using the phrase “to whom it may concern”. But, article 27/2 is applicable to the
issue of letter that is addressed particularly and directly to the employee.

The other one is termination with notice at the initiation of the employer(28&29. article 28 reads:

1. The following grounds relating to the loss of capacity of, and situations affecting, the worker shall constitute
good cause for terminating a contract of employment with notice.

a. the worker’s manifest loss of capacity to perform the work to which he has been assigned; or his lack of
skill to continue his work as a result of his refusal to take the opportunity of training prepared by the
employer to upgrade his skill or after having been trained, his inability to acquire the necessary skill.

b. The worker is for reasons of health or disability, permanently unable to carry out his obligations under
the contract of employment.

c. The worker’s unwillingness to move to a locality to which the undertaking moves.

d. The post of the worker is cancelled for good cause and the worker cannot be transferred to another post.

2. The following grounds relating to the organizational or operational requirements of the undertaking, shall
constitute good cause for the termination of a contract of employment with notice. A

a. Any event which entails direct and permanent cessation of the worker’s activities in part or in whole
resulting in the necessity of a reduction of the work force.

b. without prejudice to the provisions of sub-article 6 of Article 18, fall in demand for the products or
services of the employer resulting in the reduction of the volume of the work and profit and thereby
resulting in the necessity of the reduction of the work force.

c. A decision to alter work methods or introduce new technology with a view to raise productivity resulting
in the reduction of the work force.

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3. Where the cancellation of a post affects a number of workers thereby constituting a reduction of work force
in accordance with sub-article (1) of Article 29, the termination shall take place in compliance with the
requirements laid down in sub-article (3).

Some of the grounds are associated with the incompetence of the employee while others are associated with the
organizational and functional requirements of the enterprise. In this case, the employer is required to provide
notice prior to terminating an employment contract. This enables the employee to have an opportunity to look
for alternative employment before it is too late. This is usually a case of soft landing or safe exit. Unlike
termination by the operation of the law, in this case, even if a certain fact exists, the employer is required to
notify the employee in advance as to when his employment contract will be terminated. The duration of the
notice should also be proportionate to the length of service. The longer the period of service an employee has,
the longer the period of notice will be. For article 28 to be clear, it must be read conjointly with article 34&35.
Article 34 provides that:

1. Notice of termination required under the provisions of this Proclamation shall be in writing. The notice
shall specify the reasons for the termination of the contract and the date on which the termination shall take
effect.

2. Notice of termination by the employer or his representative shall be handed to the worker in person. Where
it is not possible to find the worker or he refuses to receive the notice, it shall be affixed on the notice board
in the work place of the worker for ten consecutive days.

3. Notice of termination by the worker shall be handed to the employer or his representative or delivered to his
office.

4. Notice of termination given to a worker by an employer in accordance with Article 17 during the time in
which the contract of employment is suspended shall be null and void. This article shows how notice should
be served. I.e. it should be in writing; it should be addressed or delivered to the employee personally. In
short, the article under consideration is concerned with form and content of termination notice.

Article 35 is concerned with length of time in which termination notice shall remain vibrant. It provides that:

1. Unless otherwise provided for in this Proclamation, the period of notice given by the employer for the
termination of a contract of employment shall be as follows.

a. One month in the case of a worker who has completed his probation and has a period of service not
exceeding one year.
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 b. Two months in the case of a worker who has a period of service above one year to nine years.

c. Three months in the case of a worker who has a period of service of more than nine years.

d. Two months in the case of a worker who has completed his probation and whose contract of
employment is terminated due to reduction of work force.

2. Notwithstanding the provisions of sub-article (1) of this Article, the period of notice for a contract of
employment for a definite period or piece work shall be agreed upon by the parties in the said contract.

3. The period of notice fixed in this Proclamation shall run from the first working day following the date
which notice is dully given.

4. The obligations of the parties deriving from the contract of employment shall continue in force during
the period of notice.

As to period of notice under Ethiopian labor law, the shortest and the longest are 1&3 months respectively. If
the contract employment of people who have a longer service period is to be terminated some time in July, they
should be notified some time in April. When the worker shows manifest loss of capacity, the employer is
entitled to provide notice and terminate the employment. People may lose productivity through time because of
many reasons such as old age, health problem, because of the fact that they could not adopt themselves with the
technological innovation and the likes. In that case, it would be unfair to the employer to require him to
maintain the employer-employee relationship. The first clause “the worker’s manifest loss of capacity to
perform the work to which he has been assigned” under article 28/1/a appears to be similar with the situation
under article 27/1/e which reads as returning output which, despite the potential of the worker, is persistently
below the qualities and quantities stipulated in the collective agreement or determined by the agreement of the
two parties. In both cases, the employees have lost productivity; they are earning low output. But, one of the
employees is to be terminated without notice while the other employee is to be terminated with notice. The
difference is that, in the case of article 27/1/e, the employee has potential.

But, he is unwilling to make his energy and knowledge available to the interest of the enterprise. For such kind
of employee, it is a behavioral problem. In such a case, the law tends to provide that such employee should not
even be given the opportunity of notice. The employee under article 28/1/a is naturally incapable of performing
his duty. So, it would be unfair to terminate the employment relationship with such employee without notice. In
general, article 27/1/e deals with issue of unwillingness while article 28/1/a deals with incapacity. Otherwise,
the outcome, in both cases, are more or the same. Both of them are underperforming.

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Some times, there is a confusion in relation to article 28/1/c which reads as the worker’s unwillingness to move
to a locality to which the undertaking moves. Assume that there is a company whose head office is located in
Addis Ababa. It has branches in Hawasa, Gondar and Harar. There is also a vacant position advertised for the
Addis Ababa head office. A candidate who met the requirement was assigned for the post. 6 months latter, the
employee was told to move to the other branch found in Gondar. The employee refused to move there by
alleging that he was employed only for the head office. He added that if he had to move there, it should be in
the form of promotion. Then, the employee was served with a written notice stating that his employment
contract would be terminated a month latter.

The confusion is that the employer interprets it by alleging that they would terminate any employee who refused
to move to any branch of the enterprise. But, this is not the case dealt with under the sub-article in question. If
they want to take the employee to any branch of the company, they should have entered into the contract
without citing place of employment. If so happened, the employer could have moved or assigned the employee
to any place he wished. In this case, if the employee refused to move to the alleged branch, his refusal would be
valid and no termination would follow. So, the sub-article in question is put in force when the enterprise is
totally moving to another location owing to various reasons such as market and labor conditions. The
controversial aspect of article 28 is found under its sub-article 2. In order to remain competitive, cost
minimization is important. In order to reduce cost, there are various economically rational alternatives. One of
them is structural arrangement.

Companies usually revise how their production process is being structured. As a result, they revise their
structure with a view to reducing the labor force. So long as the labor is reduced, certain amount of cost is to be
saved. To this end, some positions will be done away with while others will be mixed. So, this is one way of
terminating employment contract with notice. The other one is change of work methods. Some times,
companies may be active for about three shifts. If there is a large amount of stock unsold, these companies may
be compelled to close one of the shifts. In such a time, employees of that particular shift will be affected. The
other reason is the issue of new technology.

When a new technology is introduced, it may have an effect of canceling some positions of certain employees.
The new technology may make the company capital intensive and minimize the labor intensiveness. There is
also a new method of work called outsourcing. So as to be effective, companies may decide to contract out
some of their peripheral activities to another company. So as to concentrate on their core business, they may
outsource a certain service in the sense that it will be provided by another employer. There was a practical case
associated with a hotel. The owners of the hotel realized that the core business of the hotel is to provide food,
beverage, bed and the like services. The guarding activity is known to be out of these services. So, they decided
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to give the guarding responsibility to be served by a company. Then, the guarding employees who already had
employment contract with the owners of the hotel were terminated. The employees took the case to a court of
law by invoking that the termination was invalid.

We’ve been talking about good causes relating to the organizational or operational requirements of
the undertaking. This issue is very much associated with privatization. It is remembered that under the military
regime, almost all measurement of production were under state ownership. As soon as the FDRE government
took power, the first measure it took was to withhold itself from economic activities. As a result of this, it has
engaged in massive privatization process. When the enterprises were under state ownership, they were
overstaffed. I.e. overstaffing was a major problem in those state owned enterprises.

While there is overstaffing, if we offer the state owned enterprises to the private sector, the new private owner
would not accept that enterprise in that condition. Because, overstaffing, by definition, would mean high cost of
production (labor cost). In such case, there should be a need to rationalize the labor force either prior to
privatization or it should be allowed for the private owner to terminate certain number of employees. Unless
allowed, there will be no buyer despite auction every time. Because, no one dares to take delivery of an
overstaffed enterprise. This part of the labor proclamation is very much important to the success and failure of
the privatization process.

So, so long as the employer is able to show that the cost of the employee is redundant with the new structural
arrangement, termination will be validly effected, of course, by providing notice. The way in which labor is
reduced at one time and increased at the other is known as labor market flexibility. Under article 9, we said that
the employment contract is, in principle, entered into for indefinite period. This is rigid labor market
arrangement intended to protect employment security to the employee. Though, even if the employee is
employed for indefinite period, there may be a situation where that security will be watered down because of his
disciplinary problem, incompetence, because of the organizational or structural or operational arrangement and
so on.

Therefore, we can say that we are making the labor market flexible even if we started with a rigid market
arrangement. We are also trying to take into account business concern. Not only from the angle of flexibility,
have we needed to consider article 28 in relation to article 24/4. According to article 24/4, when the undertaking
ceases operation permanently for due to bankruptcy or for any other cause, the contract of employment shall be
terminated even without being provided with benefit of notice. Under the above sub-article, the whole employee
may be terminated. But, under 28/2, not only that employee will be terminated with notice, but also it is not the
whole employee that will be terminated. Therefore, article 28/2 is a preventive measure. We prevent 24/4 by
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 applying 28/2 especially, 2/b. By sacrificing the employment securities of few employees, we are maintaining
the existence of the enterprise and employment security of substantial number of employees. Apart from being
preventive measure or creating favorable condition for privatization, article 28 is becoming modern way of
labor management.

Some writers call it as decentralization of production. Traditionally, everything was produced within premises
of a company in the form of an assembly line. This is called the fordist stile. But, under globalization,
production is becoming very much decentralized. Not only production process moves across territories, even
within the national production process, a lot of working methods such as sub-contracting outsourcing or serving
as a home worker will be coming into picture.

The very objective behind it is to be competitive and cost reduction. In the case of operational or structural
rearrangement, substantial number of employees may be affected at once. This is termed as group termination.
Group termination will have visible social consequence. Because, behind every employee, there will be
dependant family. Therefore, the law tries to put additional safety mechanisms in this regard. I.e. the employer
cannot individually terminate the contract. It is not the unilateral decision of the employer that makes the
termination valid. In the case of group termination, the law requires the employer to follow scertain procedures.
One is that the employer should consult with employees’ representatives. Because of the very social
consequence of the measure, it should be undertaken in consultation with the affected parties. Group
termination or reduction of work force is defined under article 29/1. it provides that:

1. In this Proclamation “reduction of work force” means reduction of the work force of an undertaking for any of
the reasons provided for in sub-article (2) of Article 28 affecting a number of workers representing at least ten
percent of the number of workers employed or, in the case of an undertaking where the number of workers
employed is between twenty and fifty, a reduction of workers affecting at least five employees over a
continuous period of not less than ten days.

2. The phrase “number of workers employed” referred to in sub-article (1) of this Article means the average
number of the workers employed by an employer concerned within the twelve months proceeding the date when
the employer took measures of reduction of workers.

3. Whenever a reduction of work force takes place according to sub-article (2) of Article 28, the employer in
consultation with trade union or representative shall give for workers having skills and higher rate of
productivity shall have priority of being retained in their posts and, in the case of equal skill and rate of
productivity, the workers to be affected first by the reduction shall be in the following order.

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 a. subject to the provisions of (b) — (c) of this sub-article, those having the shortest length of service in the
undertaking.

b. Those that have fewer dependants. c)

c. Those not covered under sub-article 3 (a) and (b) of this Article.

d. Those who are disabled by an employment injury in the undertaking.

e. Workers’ representatives.

f. Expectant mothers. If the termination affects ten% of the employees or in enterprises having 20-50
employees, if the termination affects five employees, then, it can be termed as group termination. In such a
case, if there is trade union, the consultation will be undertaken with the trade union. Because, it is
presumed that the trade union protects the interest of its members.

If there is no trade union in that enterprise, the employees will be required to select people as their
representatives to discuss on this issue. E.g. an employer wanted to reduce the labor force in the enterprise. To
this end, he called the employees’ representatives to consult on the reduction system. The representatives
refused to consult by alleging that since they are the employees’ representatives, they would not consult on how
to reduce the labor force. Then, the employer by himself went far and reduced the labor force. The
representatives proceeded against the employer invoking that the reduction is illegal and they took the case to
the labor relation board.

But, truly speaking, the law does not want the agreement of the representatives. It simply needs only
consultation which is softer than agreement. So long as an opportunity is given to the stake holders to consult
and if they did not make use of that opportunity, it will be up to them anyways. There are two levels. The first
level is to introduce the work method or the new technology. The second level is implementation for reduction.
The first level is a managerial issue. Whether to employ new work method or to introduce new technology is
left to the management.

At the first level, what is required is the arrival of the management at economically rational decision. Then, at
the level of reduction or damage mitigation, consultation is to be undertaken. In addition to consultation, there
are priorities of termination set by law. If it is group termination, productivity will be taken into account. I.e.
more productive employees need to be retained. Because, productivity is beneficial not only to the employee but
also the employer and the society as a whole. If the employees are equally productive, seniority will be taken
into account.
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The most senior will be retained and the most junior will be dismissed. The assumption is that the more senior
has attached his life with the enterprise than the junior one. If they are equally productive and if they are
employed at equal period, number of dependants they support will be taken into consideration. The employer
may not have sufficient evidence as to the number of dependants each employee has. So, the representatives of
both employees and employers will take the responsibility to check the actual number.

In general, in the case of termination with notice, even if the employer is at liberty to terminate the contract by
providing employees with notice, if the notice is going to affect significant number of employees, not only the
elements under 28/2 need to be proved, but also the procedural requirements under article 29 must be complied
with. The other ground for termination is resignation. This is termination at the initiation of the employee
(article 31&32).

Article 31 reads, without prejudice to Article 32 of this proclamation, any worker who has completed his
probation period, may, by giving thirty days prior notice to the employer, terminate his contract of employment.
Unlike in the probation period, if a permanent employee is to resign, one month prior notice should be given to
the employer. The purpose of this notice to enable the employer to look for a substitute employee. Under the
labor proclamation no 42 of 1993, the employee was expected to give 15 days prior notice. Employers are not
interested in this period of notice. Because, some employees are not easily substituted. So, like the employers
do for the employees, they should have given time prior notice to their employer depending on their seniority.

But, it is argued that to make an employee to stay on a duty he is not interested in for more than a month
amounts to be forced labor which is prohibited under article 18 of the FDRE constitution. To make an employee
to stay on a duty he is not interested in for more than a month is also not useful for the employer because the
employee may not bring fruitful production upon a duty he does not like to stay any more. An employee
notified the employer on May 1, 2012 that he will terminate his contract on June 1, 2012. He also added that his
benefits in connection with his termination should be maintained.

However, the employer wrote a letter to the employee that there is no need to wait until June 1 and that he has
been terminated starting from May2 2012. Does it seem to be valid? No, it is not valid; because, on the basis of
article 35/4, the obligations of the parties deriving from the contract of employment shall continue in force
during the period of notice. The employer should either tolerate the employee until June 1, 2012 or he may
terminate him on May 2 2012 provided that he has paid him in advance for the coming one month. Otherwise,
employment relationship will remain intact within the period of notice.

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The other ground for termination is resignation without notice. In fact, for resignation with notice, the employee
is not required to provide reason for termination. I.e. unlike the employer, he can resign or terminate with or
with no cause. Resignation without notice under article 32 is the mirror reflection of article 27. Article 32as to
termination without Notice provides that:

1. The following shall be good cause for a worker to terminate his contract of employment without notice.

a. If the employer has committed against him any act contrary to his human dignity and morals or other acts
punishable under the Penal Code.

b. if, in the case of imminent danger threatening the worker’s or health, the employer, having been made
aware of such danger, failed to act within the time limit in accordance with the early warning given by the
competent authority or appropriate trade union or the worker himself to avert the danger.

c. If the employer has repeatedly failed to fulfill his basic obligations towards the worker as prescribed under
this Proclamation, collective agreements, work rules or other relevant laws.

2. Where a worker terminate his contract of employment for the reasons referred to under sub article (1) of
this Article, he shall inform the employer in writing the reasons for termination and the date on which the
termination is to take effect. On the basis of article 27, the serious misbehavior of the employee may result
in termination at the initiation of the employer without notice. In the same way, the misbehavior of the
employer also denies him of notice by the resigning employee. The resignation under 32 is technically
termed as constructive dismissal.

This is because, even if the resignation is coming from the side of the employee, it is owing to the pressure
from the side of the employer that the employee is resigning. It is termed as constructive dismissal because the
mislead committed by the employer has caused the employee to resign indirectly. For this reason, the employer
is denied with notice or advance preparation. On the basis of article 12/3, respecting human dignity is one of
the obligation of the employer. Failing that, the employee may be compelled to resign without giving notice.
Even, he may require compensation at a later stage. Sexual harassment is usually seen to be causing
constructive dismissal. But, the limitation of this sub-article is that if an employee has a ground for resignation
without notice, he must act as soon as possible, within 15 days as of the time the mislead occurred.

But, if the employee remains in his employment for more than 15 days, the assumption is that the employee has
tolerated the misconduct. So, after such period of time, if the employee is in need of terminating the contract,
he cannot terminate on the basis of article 32 but on the basis of article 31. It is remembered that under article

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27, the employer should act within 30 days as of the time he came to know of the mislead. Failing that, he is
presumed to have waived his right of dismissal. The same logic shall apply to the employee. All these are the
grounds for termination under the labor proclamation. On the other hand, Article 78-86 under FCSP are the
counterpart provisions of those of the labor proclamation. Grounds for termination under the FCSP are more or
less similar to those of the labor proclamation. One of those grounds for termination is resignation treated
under 78 of the FCSP. It reads:

1. Without prejudice to the obligations provided in laws and contracts any civil servant may, by giving a one month
prior notice, resign at any time.

2. Any civil servant, who has terminated his service without giving a one month prior notice, provided in Sub-
Article /1/ of this Article, may be subjected to civil and criminal liability.

3. Where the service of the civil servant is indispensable and he could not be replaced easily, the Head of the
government institution may delay his release for a period not exceeding three months including the date of
application. Any civil servant, by giving one month prior notice may resign at any time. The principle of giving
notice is enshrined in the same way both under the labour proclamation and the federal civil service proclamation.
But, the phrase “Without prejudice to the obligations provided in laws and contracts” is a special qualification
included in the introductory part of article 78. if there is a provision in any law which requires the civil servant to
provide more than one month prior notice or if there is a provision in the contract that may provide additional period
of notice, that provision will be given precedence of applicability.

So, the one month prior notice is not deemed to be a maximum ceiling of notice period. If the contract that the civil
servant entered into provides for a longer period of notice, depending on the nature of service, it will be applicable. It is in
cases where there is no contractual arrangement or contrary provision provided by the relevant law that article 78 is made
applicable. For example, Addis Ababa University is a government organ financed by government annual budget. The
workers thereof are also under the category of civil servant.

The contract of academic staff, not only in the University under consideration but also in all public Universities, is to be
renewed every two years. One of the terms of the contract states that if academic staffs are in need of resigning, he is
required to provide six months prior notice. This period of notice is designed on the basis of semester arrangement. When
an instructor is assigned, the assumption is that he is going to complete that course for the entire semester.

On the contrary, if an instructor is allowed to resign with one month prior notice, then, the students will be subject to an
examination which is prepared and corrected by an instructor by which they were never taught. Under article 35 of the
labour proclamation, when a contract is concluded for a definite period, it is possible in the contract, to provide self made
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period of notice. Teachers of private high school or college are entering into a contract for indefinite period. So, the
contract in which they are undertaken cannot be for definite period and the notice period which they are required to give
cannot be contractually arranged. Even though the civil servant is required to resign by providing one month prior notice,
he may be subject to an exception. When the service of the civil servant is indispensable or cannot be easily replaced, the
government office has been given the power to extend his release to a maximum of three months including the date of
application. The assumption is that public interest is involved; so, for the benefit of the public, it is possible to detain the
civil servant for an additional period of two months.

Under the labor proclamation, non-compliance with the requirement of notice (31&35/2) results in civil liability under
article 45. Article 45 provides that 1/ a worker who terminates his contract of employment contrary to the
provisions of Article 31 or 35(2) shall be liable to pay compensation to the employer. 2. The compensation
payable by the worker in accordance with sub-article (1) of this Article shall not exceed thirty days wages of
the worker. If an employee fails to provide with one month notice, as a maximum compensation, one month
wage will be deducted from the payment that will be due to the employee. But, in the case of civil service, if
any civil servant has terminated his service without giving a one month prior notice, not only civil but also criminal
liability may follow.

In general, the difference between the resignation under the civil service proclamation and the resignation
under the labor proclamation is that in the case of the former, the period of notice could at least be longer if
the service of the civil servant is indispensable and he could not be replaced easily. Secondly, in the case of civil
service, the liability is not limited to civil liability (the wage that should have been paid during the period of notice). i.e. it goes
further to the extent of criminal liability. The other ground for termination is the case of illness under article 79 of the FCSP. It
reads:

1. Where a civil servant is unable to resume work with in the time specified under Article 42/2/ and /4/ of this
Proclamation, he shall, be deemed unfit for service and be discharged.

2. Without prejudice to the provisions of Article 53/2/ of this Proclamation, where a civil servant who has
sustained employment injury is medically determined to be permanently disabled, his service shall forthwith be
terminated.

3. If a civil servant who has completed his probation period does not agree on the transfer that could be undertaken
in accordance to Article 26/3/b/ of this Proclamation, his service shall be terminated. Under the labour
proclamation, it is allowed to have sick leave which may be as long as six months within the budget year (85). In
the case of sick leave under the labour proclamation, the first month is paid with 100% of wages of the employee,

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 the next two months with 50% of his wage, the next three months without pay. After the expiry of the
period of six months, if the employee does not report back, even if the code is silent, at least in terms of
interpretation, the employer is not expected to wait longer than the period of six months. I.e. he can
terminate the contract validly.

But, the period of sick leave under the civil service is a little bit longer. Article 42 provides that:

1. Any civil servant shall be entitled to sick leave where he is unable to work due to sickness.

2. The duration of sick leave to be granted to a permanent civil servant in accordance with Sub-Article (1) of this
Article shall not exceed eight months in a year or twelve months in four years, whether counted
consecutively or separately starting from the first day of his sickness.

3. Sick leave to be granted in accordance with Sub-Article (2) of this Article shall be with full pay for the first three
months, half pay for the next three months and without pay for the last two months.

4. A Civil Servant on probation shall be entitled to one month sick leave with pay.

5. Where any civil servant is absent from work due to sickness.

a. He shall, as soon as possible, notify the government institution unless prevented by force majeure.

b. He shall produce a medical certificate in case of absence for three consecutive days or for more than six days
within a budget year. The employee who alleges to be sick is entitled to a sick leave of 8 months. In such a case,
the employee is paid the first three months with 100%, the next three months with 50% and the last two months
with zero payment. It seems to be generous vis-a-vis the labour proclamation. After the expiry of the 8 months, if
the employee does not report back or if he continues with his illness, the employer will terminate the contract.
The reason, as a ground for termination, shall be transformed to being unfit to the government service.
Inefficiency is also another ground for termination (80).

Article 80 provides that:

1. The service of a civil servant who has completed his probation period may be terminated due to
inefficiency where his performance evaluation result is below satisfactory for two successive evaluation
periods despite exerting all his knowledge and ability to accomplish his work.

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 2. Notwithstanding the provisions of Sub-Article/1/ of this Article, a civil servant whose performance evaluation
result is above satisfactory for five successive years may not be dismissed on grounds of inefficiency unless
his performance result becomes below satisfactory for the following three successive evaluation periods.

3. The termination of service of a civil servant under Sub-Article/1/ and /2/ of this Article shall only be effected
for the achievement of the purpose of performance evaluation under Article 31 of this Proclamation where it is
deemed necessary.

In the case of the labour law regime, inefficiency, as a ground for termination with notice, is dealt with under article 28 of
the labour proclamation. In the civil service law regime, we have a requirement of performance evaluation every six
months. The immediate boss of each civil servant is expected to fill performance evaluation report every six months. The
maximum performance evaluation report is five. If an employee registers performance evaluation report below 2.5, it is
considered to be unsatisfactory. So, if an employee registers this lower performance for two consecutive evaluation
periods, then it becomes sufficient to be ground for termination.

Unlike that of the labor proclamation, inefficiency under the civil service proclamation is a ground for termination without
notice. The other ground for termination is force majeure (81). Article 81 reads:

1. A civil servant who has completed probation and is absent from work due to force majeure, shall inform the
situation within one month to the respective government institution.

2. The government institution that has received the reasons of absence of a civil servant in accordance with sub-
Article (1) of this Article shall, after verifying the validity of the reason, keep the post of the civil servant
vacant for six months. Provided, however, that the service of a civil servant may be terminated if he is unable
to resume work within the six months.

3. Without prejudice to the provision of Sub-Article (1) of this Article, when a civil servant who has completed
his probation is absent from his work for ten consecutive working days due to unknown reasons the
government institution may terminate the employment after calling him in two notices in ten days’ interval.

4. Notwithstanding the Provisions of Sub-Article (3) of this Article, a government institution may reinstate
the civil servant to his job if the civil servant applies for his job within six months after the termination of his
employment, produces sufficient evidence to prove that his reasons of absence was due to force majeure and there
exists a similar vacant position within the institution.

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 5. A civil servant who responded to the notices made in accordance with Sub-Article (3) of this Article within a
month from the first day of absence shall be placed on his job and the Head of the government institution shall
decide afterwards on the case after examining the reasons and the supporting evidence causing the absence.

6. The service of a civil servant who has not completed his probation shall be terminated without any additional
formality, where he is absent from work for one month due to force majeure.

People may be absent from job due to force majeure situation. For example, they may be imprisoned for
whatever reason. In such a case, the government office is also entitled to terminate the contract of employment
provided that the non-appearance is lasting for a very prolonged period. On the basis of article 27/1(j), court
conviction which may last for more than one month may automatically result in termination. It provides that
absence from work due to a sentence of imprisonment passed against him for more than thirty days may bring
about termination. But, in the case of the civil service, it does not presuppose court conviction; it would be a
police detention for that matter. From this point of view, we can understand that the government office appears
to be much more tolerant than that of the private sector.

The other ground for termination under the civil service proclamation is Nullification of Appointment (82). It
reads, any appointment obtained on the basis of false representation regarding educational qualification or work
experience or made by unauthorized person or in contravention of this Proclamation, regulations and directives issued
hereunder or any other law shall be nullified by the decision of the head of the government institution or the Agency. This
article strengthens the prominent maxim “no one shall benefit from his fault”. If any one has been employed using
falsified document, as far as the fact has been detected, he may be terminated at any time whether he served for long or
not. But, the labor proclamation is devoid of such provision. Another ground for termination can be structural
arrangement. This adjustment under the civil service proclamation is termed as Retrenchment (83). It reads:

1. Any civil servant shall be retrenched where.

a) His position is abolished. (In the case of the labour proclamation, 28/1(D).

b) The government office is closed in the case of the labour proclamation, 24/4). . Or

c) Redundancy of man power is created. (This is the issue of group termination)(In the case of the labour proclamation
29). And where it is not possible to reassign him in accordance with Article 30/1/ of this Proclamation or where he is
reluctant to accept a position of a lower grade.

2. Retrenchment of a civil servant in accordance with Sub-Article (1) (c) of this Article shall be made when it is proved
that his performance and qualification are lower when compared with other civil servants holding the same position.
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Structural arrangement, as a ground for termination, has been inserted not only in the labour proclamation, but also in the civil
service proclamation. In a government office, if we consider that there is an overstaffing the consequence of which is
inefficiency, then a type of structural arrangement called public service reform will follow. Termination may also follow for
disciplinary reasons (84). It provides that 1) the service of a civil servant shall be terminated where:

a. A disciplinary penalty under Sub-Article 1/f/ of Article 67 of this Proclamation is imposed on him. And

b. the penalty is not revoked on appeal made under Article 76 of this Proclamation. 2) Where the penalty
is mitigated or revoked on appeal the civil servant shall be entitled to without interest, the payment of his unpaid salary
withheld during the appeal. In the case of the labour proclamation, this issue is dealt with under article 27 as termination
without notice (summery dismissal).

Under the labour proclamation, we don’t have a clear procedure how disciplinary investigation is to be undertaken. Of
course, in principle, we need to arrange the right to be herd. But, when we come to the civil service, disciplinary
committee should be established. Pending investigation, the government office may also suspend the suspected
employee for a maximum of two months (70). Article 70 reads:

1. any civil servant will be suspended from duty if it is presumed that.

a. He may obstruct the investigation by concealing, damaging or destroying evidence related to the
alleged offence. Or

b. he may commit additional offence on the property of the government institution. Or

c. the alleged offence is so grave as to demoralize other civil servants or negatively affect the public trust
towards civil servants.

d. The disciplinary offence may lead to dismissal.

2. A civil servant can be suspended from duty and may not get his salary according to Sub-article (1) of this Article
only for a maximum period of not exceeding two months.

3. The decision given in accordance with Sub-article (2) of this Article shall be notified to the civil servant in
writing, with the grounds and duration of his suspension signed by the Head of the government institution.

4. Unless a decision of dismissal is rendered against a suspected civil servant, the salary withheld at the time of
suspension shall be paid to him without interest.

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 5. The suspension of a civil servant shall not deprive him of other rights and duties that are not affected by the
suspension. In the case of the labour proclamation, the duration for suspension is to be lasting for only one
month (27/4). After the investigation has been carried out, dismissal may/may not follow depending on the
outcome of the investigation. If the employer has not taken the measure within the period specified, the
employee shall proceed with working. But, the employer never escapes from liability.

Otherwise, alternative measures listed under 67 will be taken against the suspected employee. Article 67 provides that:

1. Depending on the gravity of the offence; one of the following penalties may be imposed on a civil servant for
breach of discipline:

a. Oral warning.

b. Written warning.

c. Fine up to one month’s salary.

d. Fine up to three moth’s salary.

e. Down grading up to the period of two years.

f. D i s m i s s a l .

2. The penalties specified under Sub-Article (1) (a)-(c) of this Article shall be classified as simple disciplinary
penalties.

3. The penalties specified under Sub-Article (1) (d) – (f) of this Article shall be classified as rigorous penalties.

4. A civil servant who is demoted in accordance with Article (1) (e) of this Article and upon the lapse of his
period of punishment, shall be reinstated.

a. To a similar available vacant post, without any promotion procedures.

b. In absence of a vacant post, he shall be reinstated to a similar post without any promotion procedures when
it becomes available at a later time.

5. After a disciplinary measure has been taken on a civil servant, such measure shall remain in his record.

a. For two years, where the penalty is simple.

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 b. For five years, where the penalty is rigorous. The other ground for termination under the civil service is
retirement (85) which, under the labour proclamation, the issue of article 34/3. The employment of a civil
servant, if the service he is rendering is not extended beyond retirement age in accordance with article
89, shall be terminated on the last date of the last month in which he attained the retirement age determined
by law. To this end, the civil servant shall be notified of his retirement in writing three months prior to his
retirement. All these provisions depict us that employment security is not an absolute security.

Effects of termination. Effects of termination may be divided into effects of lawful termination and effects of unlawful
termination. We’ve just seen that lawful terminations are dealt with in the above articles we discussed so far. In the case of
lawful termination, the law entitles the employee, depending on the nature of the ground of termination, with a certain
entitlements. This situation has been treated under 39 of the labour proclamation and the following. Article 39 reads:

1. A worker who has completed his probation.

a. When his contract of employment is terminated because the under taking ceases operation
permanently due to bankruptcy or for any other reason.

b. When his contract is terminated by the initiation of the employer.

c. When he is reduced as per this proclamation.

d. When he terminate his contract because his employer did things which hurts the workers human
honor and moral and the thing done by the employer is deemed as offence under penal code.

e. When he terminate his contract because the employer being informed of the danger that threats the
security and health of the worker did not.

f. When his contract of employment is terminated because of reason partial or total disability and is
certified by medical board.

2. Where a worker dies before receiving severance pay, the severance pay shall be paid to his dependents
mentioned under Article 110 (2).

3. The distribution of payment of severance pay to dependents in accordance with this article shall be
affected in the same manner as the payment of disablement benefit.

Under the civil code, in the case of lawful termination, the parties will be separated for hood. I.e. there was no
additional entitlement that was available to the terminated employee. It was only in the case of unlawful
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termination that the terminated employee was entitled to compensation. The maximum amount of compensation
to be given was the employee’s six month wage on the basis of the English version and three months wage on
the basis of the Amharic version. Under proclamation no 64 of 75, there was a concept of severance payment.
When the employment relation is terminated for whatever lawful reason, the employee was entitled to severance
payment. If the termination was unlawful, the employee was to be reinstated.

But, if the termination was lawful, the employee was entitled for severance payment. On the other hand,
severance payment is a certain amount of sum which may assist the terminated employee to cope with the
effects of termination. This entitlement was also incorporated into the labor proclamation no 42 of 1993. On the
basis of these proclamations, the terminated employee with one year service was paid his one month wage as a
severance payment. If the terminated employee had more than one year service, he would, as a severance
payment, be paid his one month wage + one third thereof for every additional year service. This severance
payment was, however, not free of tax. Of course, under the labor proclamation no 377 of 2003, the same rate
somehow goes on.

But, unlike the previous proclamations, the severance payment under proclamation no 377 of 2003 is ground
based entitlement. One of the grounds where the employee may be entitled to a severance payment is the
termination of the employment due to the cessation of the undertaking or bankruptcy thereof. The issue is that
when the enterprise go bankrupt, there may be no fund enabling the employer to reimburse the employee
severance payment. But, when we say that the enterprise go bankrupt, it does not mean that there is nothing in
the bank account.

It only means that the liability of the enterprise outweighs the asset thereof. In the case of bankruptcy, the labor
law has put priority provisions of its own (167). Pursuant to article 167, any claim of payment of a worker
arising from employment relationship shall have priority over other payments or debts. So, even if the enterprise
goes bankrupt, because of the right to have priority of claims, the employee will still get severance payment.
But, there seem to be contradictions among various legal and contractual provisions. For example, apart from
the labor proclamation, the tax law provides that any tax payment should be paid prior to any other debts. On
the other hand, banks enter into a contract of loan with enterprises that in the case of bankruptcy, their debt
should be given priority. Of course, the Supreme Court has rendered decision that the legal priority prevails
over the contractual priority.

But, in the case of the labor and tax proclamations, which of the two laws prevails over the other? To solve such
a problem one solution is that the source of authority should be taken into account. I.e. it must be found from
which the priority claim has come into existence. So, the priority claim that has come from any proclamation, if
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any, prevails over that of the regulation. But, in our case, both instruments are proclamations. If the instruments
are of equal hierarchy, we must see which instrument has been issued at a latter stage. In our case, tax
proclamation was issued in 2002 while the labor proclamation was issued in 2003. In such a case, the latter
prevails over the former. Safe and healthy working environment is becoming one of the fundamental rights in
the current word. Industrialization, even if it makes life easier and comfortable, has risks of its own in
connection with health, life and the likes. Even if the risk is said to be available to all, the most proximate and
potential victims of this risks are employees. So, there is a need to prevent or minimize such risks if they are
preventable. Unless they are preventable with at most care, there is a need to remedy at a later stage where they
have materialized.

Traditionally, risks involved in work or employment were associated with pure bad luck or any other
assumptions in order to exempt employers from being responsible. In the US legal system, there was a theory
called contributory negligence by which employers were escaping from liability. According to this theory, when
an employee sustained damage at work, the assumption was that the employee had his contribution to the
occurrence of the accident if the accident was to happen as a result of a man’s fault or negligence. So long as he
contributed something to the occurrence of such accident, he was made to be his own insurer regardless of the
degree of contribution to the occurrence of the damage. If the employee contributed to the occurrence of the
damage through his own negligence, there was zero compensation available to him. The other theory was
voluntary assumption of risks.

When an employee decides to work in a certain environment, it is deemed that he has already assumed a certain
risk. Of course, under this theory, the wage was made to include the risks. The wage was negotiated and
determined not only for the service that might be rendered, but also the risk that might be involved in it. So, it
was argued that the risk was paid in the form of wage. There was also another theory called follow-servant rule.
When certain damage occurs in a work place, it is either the employee’s negligence that has contributed to the
occurrence or it could be the negligence of other employee, a work mate. So, as long as he decided to work with
his workmate, he needs to accept the risk that would be associated with social production. The solution was that
if the employees felt uncomfortable to work in that dangerous work environment, they could peacefully leave
out. Hence, employers were not obligated to provide preventive tools or to compensate the employee in the
event of an accident. But, at a latter stage, especially, at the time of the industrial revolution, there were a lot of
accidents occurring now and then. Then, leaving the employment relationship to market was ignored and the
government was made to intervene in the sphere of employment relationship.

From then on wards, the assumption of employers’ liability was considered appropriate. In some legal systems,
laws were introduced to make employers liable at two levels, at the level of prevention and at the remedial
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level. Prevention refers to making the necessary preventive measures so as to avoid or minimize accident or
occupational diseases. Remedial refers to the actions taken post facto. If the employer do not succeed at the
level of prevention and the accident occurs, remedial or compensatory measures will be taken into account. In
our case, until the adoption of the civil code of 1960, employees were made their own insurer irrespective of the
justification for their being insurers of themselves. Of course, in 1944, there was a factories proclamation issued
immediately after independence. That proclamation gave power to the prevailing ministry of commerce and
industry to come up with rules in order to protect safety and health in factories. Because, at that time, it was
assumed that only factories were dangerous. And the other areas of activities were not taken into consideration.
But, the ministry did not discharge its obligation of coming up with rules.

In the civil code of 1960, employers’ liability for safe and healthy working conditions has been introduced.
Apart from statutory obligation, in 1991, Ethiopia ratified the ILO convention no 155 of 1981 on occupational
safety and health. The FDRE constitution, under sub-article 1 of article 42, also states that all persons have the
right to a clean and healthy environment including not only living environment but also working environment.
The current labor proclamation has also come up with a prescription by which employers will be responsible.
Needless to say, it is an issue of bilateral care. The base for such type of obligation is laid down under article
12/4. As per this sub-article, the employer is obligated to take all the necessary occupational safety and health
measures. The general formulation of article 12/4 has been elaborated under article 92-112. Article 92 provides
that an employer shall take the necessary measure to safeguard adequately the health and safety of the workers;
he shall in particular.

2. Comply with the occupational health and safety requirements provided for in this Proclamation.

3. take appropriate steps to ensure that workers are properly instructed and notified concerning the hazards
of their respective occupations and the precautions necessary to avoid accident and injury to health;
ensure that directives are given and also assign safety officer; establish an occupational, safety and
health committee of which the committee’s establishment, shall be determined by a directive issued by
the Minister.

4. Provide workers with personal protective equipment, clothing and materials instruct them of their use.

5. Register employment accident and occupational diseases and notify the labor inspection of same.

6. Arrange; according to the nature of the work, at his own expenses for the medical examination of newly
recruited workers and for those workers engaged in hazardous work, as may be necessary.

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 7. Ensure that the work place and premises do not cause danger to the health and safety of the workers.

8. Take appropriate pre-executions to insure that all the processes of work shall not be a source or cause of
physical, chemical, biological, ergonomically and psychological hazards to the health and safety of the
workers.

9. Obey the directives issued by the appropriate authority in accordance with this Proclamation. In the
case of the civil service proclamation, the vervative reproduction of the labor proclamation in this regard
has been enshrined under article 47-57. The principle seems to be more or less similar. However, we
need to agree to that the occupational safety and health is more at risk in industries than the civil service.
The job in the civil service is usually associated with pens and pencils. So, the issue of occupational
safety and health is more of a concern in the labor law regime than the civil service law regime. At the
level of prevention, the employer is required to provide with safety tools in the form of clothing’s,
gloves, goggles, boots and so on depending on the nature of the work. In addition to provision of these
safety tools, employers are obligated to train and instruct employees how and when to make use of those
safety tools. The employers are required to supervise as to whether the employees are making use of the
safety equipments appropriately and at the proper time and place. Article 93 reads, a worker shall:

10. Co-operate with the employer in the formulation and implementation of work rules to safeguard the
workers health and safety.

11. Inform forthwith to the employer any defect related to the appliances used and injury to health and
safety of the workers that he discovers in the undertaking.

12. Report to the employer any situation which he may have reason to believe could present a hazard and
which he cannot remedy on his own any accident or injury to health which arises in the course of or in
connection with work.

13. Make proper use of all safeguards, safety devices and other appliance furnished for the protection of his
health or safety and for the protection of the health and safety of others.

14. Obey all health and safety instructions issued by the employer or issued by the competent authority.

Once we impose an obligation on the employer, there is a corresponding duty to be discharged from the side of
the employee. Because, in this kind of situation, prevention or avoidance of risk requires bilateral care. So, the
employees are required to comply with safety rules. It is economically rational that the employer bears the cost
of accidents. The employer is in a better position to pass of the costs to consumers. Even if that cost may not be
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passed of to society, the employer is of a deeper pocket to incur the cost by him. In the meantime, behavioral
adjustment (compliance with safety rules) which incurs no cost is expected from the side of the employee. If an
employee fails to comply with such rules, the employer will be exonerated from being liable at the remedial
level. Despite the fact that the at most care has been taken from both sides, there may be no success in
preventing accidents and occupational diseases. So, we will have to move further to the remedial level from
which the employer is, in principle, liable to the accident or occupational diseases. The rationale therefor is still
that the employer can pass it off to other parties such as insurance companies. But, there are cases in which the
employer may not cover the loss.

If the employee intentionally causes the damage upon himself, he will be his own insurer (96/2). Because, the
employer shall not be liable for any injury intentionally caused by the injured worker himself. If the employee
inflicts danger upon him as a result of his non-obedience of express safety instructions or non-observance of the
provisions of accident prevention rule specifically issued by the employer; or because, he has reported to work
in a state of intoxication that prevents him from properly regulating his conduct or understanding, the law takes
a presumption that the employee did it intentionally. This presumption helps the employer be exonerated from
being liable. At the remedial level, the employer is expected to cover cost of hospitalization. But, the scope of
the cost of hospitalization is highly controversial. Assume that an employee was injured while working at work
place.

The injured was taken to black lion hospital to see a doctor. The medical board in such hospital stated that
abroad medication is the weigh out. Should the employer cover the cost for such non-national hospitalization?
There are two court decisions in connection with this issue. One of such decisions was rendered at the imperial
period by the prevailing Supreme Court. The civil code, under its article 2556/1, seems to have obligated the
employer to cover the cost of abroad hospitalization. The supreme court of 1964, by interpreting article 2556/1
very broadly, rendered decision that the injured employee had to be hospitalized abroad as far as it was certified
that he was unable to be treated domestically. The second decision was rendered by the cassation bench in May,
19 2002. The cassation bench has a stand that the legislator did not insert article 105 in the labor proclamation
believing that all employers are on an equal footing to cover the cost of abroad hospitalization for their
employees. The minimum labor condition is the minimum right given by the law.

An Employee, if he is of high bargaining power, can acquire rights beyond the minimum labor condition
through contract or collective agreement. So, if abroad hospitalization is taken to be minimum labor condition,
what is the maximum hospitalization to be acquired through contract or collective agreement? If the abroad
hospitalization is taken to the minimum labor condition, it means that we have left no room for the individual
contract and collective agreement. Hence, the cassation bench rendered decision that the employer is not
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required to cover the cost of abroad hospitalization. In labor law regime, in addition to individual relation, there
is also the so-called collective labor relation. By collective labor relation, we mean that employees in
collectivity will transact or relate with the employer as an individual or with the employers in collectivity.
Collective labor relation presupposes formation of association. The usual way of establishing collectivity is
through association of the employees and the employers technically called trade union or labor union and
employers associations respectively.

At the time of freedom of contract or free market philosophy, the employees were not allowed to form an
association. The reason behind it was that if they are allowed to form an association, they will propose a
monopoly price to labor against employers. This disallowment was termed as labor certain. The association was
taken to be against the free market philosophy. It was argued that Individual laborers should compete
individually. At times, it was considered as labor conspiracy. But, at a later stage, it was realized that labor
should not treated as a commodity and regulated with supply and demand rules. Because, behind each laborer,
there is a human dignity.

So, it was allowed for laborers to form an association. The Convention on freedom of association no 87 and
convention on the recognition of the right to collective bargaining no 98 are important instruments for collective
legal relation. Ethiopia became a member of ILO in 1923. But, despite her membership to the ILO, until 1963,
freedom of association was not allowed. It was with the coming into force of labor relation proclamation no
2010 of 1963 that freedom of association was permitted in the Ethiopian labor history.

The civil code of 1963 came into practice to deal with individual labor relation and did not address the issue of
union formation. The 1955 revised constitution had also a provision on freedom of association. It was declared
that every subject had the right to form an association. But, there was no implementing legislation; it remain
passive principle in the constitution. In 1963, the above two conventions were ratified by Ethiopia. These
conventions obligates member states to come up with a legal framework for the implementation of those
conventions. As a result, the proclamation no 210 of 1963 was adopted with a view to implementing freedom of
association.

In general, 1960 is an important period for individual labor relation while 1963 is an important period for
collective labor relation. The proclamation no 210 of 1963, under its article 20/1(C), set out the minimum
number of membership for the formation of trade union to be 50,. This provision was criticized in that it
required a higher number of membership for the formation of trade union. Because, at this juncture, in Ethiopia,
there were few enterprises that employed 50 and more employees. There was a special arrangement for this
under the prevailing proclamation. There were two mechanisms of forming associations. There are basic labor
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union and general labor union. Basic labor union is a union that will be established in a single enterprise having
50 and more employees. Employees of Smaller enterprises having less than 50 employees were not allowed to
form a basic union. These employees of various enterprises were, however, allowed to form general labor
union. This arrangement was difficult in practice. So long as the employees are from different enterprises, they
may not have an opportunity to meet. Because they have different employers, they are given different
instructions; they had different working conditions. Then, we had a labor proclamation No 64 of 1975. Under
this proclamation, the minimum threshold that was required to form an association was reduced to 20
employees. This proclamation was criticized in that it did not allow the formation of employers’ association. As
a result of the then socialist ideology, employers were denied of the right to form an association. Then, the labor
proclamation 42 of 1993 of the transitional government came up with a provision that allowed association for
both employees and employers.

This proclamation maintained the minimum threshold of the labor proclamation 64 to form an association.
Under proclamation 64, the principle was unitary or monopoly union principle. Employees in a certain
enterprise were allowed to form a single labor union. In an enterprise, it was one union that could be allowed to
function. This principle was transplanted to proclamation 42 of 1993. This was being criticized to be
undemocratic. Because, so long as the freedom of association is for employees, the way how to associate and
how many trade unions should be established in an enterprise should be left for the employees. One of the
reasons to ament the labor proclamation 42 of 1993 was this limitation which did not get along with the ILO
prescription.

Note must be taken that ILO never objects to setting minimum threshold to form an association in an enterprise.
Its objection is usually directed towards excessive threshold requirement for the formation of trade union in an
enterprise. Under labor proclamation 377 of 2003, the principle of plurality of unions was incorporated.
Provided that freedom of association is for employees, they can form more than one unions even in an
enterprise. This is criticized in that it undermines the unity among the employees. But, the employees must be
persuaded that even if the law allows it, the formation of fragmented unions in an enterprise is disadvantageous
for them because it undermines their unity.

On the other hand, as far as the formation of fragmented unions is allowed, there may be the opportunity for the
occurrence of inter-union rival positions. This persuasion can be analogized with article 39 of the constitution
which allows secession for the nations and nationalities. However, it is also argued that the existence of various
unions is helpful in that it restricts leaders of unions from being dictator. Each union will work very
democratically and transparently so as to gain a strong representative support better than its counterparts, other
unions, from the employees of the enterprise. One of the advantages of the current proclamation is that it tries to
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become more democratic by allowing diverse views at the level of unions. And again, with the introduction of
this proclamation, the minimum number of membership to form a labor union was reduced to ten (114). It
reads:

1. A trade union may be established in an undertaking where the number of workers is ten or more; provided
however that the number of members of the union shall not be less than ten.

2. Workers who work in undertakings which have less than ten workers may form a general trade union,
provided, however, that the number of the members of the union shall not be less than ten.

3. Trade unions may jointly form federations and federations may jointly form confederations.

4. Employers’ associations may jointly form employer’s federation and employers’ federations may jointly
form employers’ confederation.

5. No trade union or employers association may form a confederation without forming federations.

6. Any federation or confederation of trade unions or employers’ associations may join international
organizations of trade unions or employers.

7. No worker may belong to more than one trade union at any given time for the same employment. Where
this provision is not observed, the latest membership shall cancel any previous membership, and the
formalities of membership were simultaneous or it is impossible to determine which the latest is, they shall
all be without effect.

8. Notwithstanding sub-article 4 of this Article, any employer may join an established employer’s federation.
The area where we imply the possibility for the existence of the principle of plurality of unions is indicated
under 114/7 and 115/1(A). 115/1(A) reads as where there exist more than one trade union organizations at
a given enterprise, the trade union which is going to bargain a collective agreement and consult with
authorities, is the one which gets 50%+1 or more support by all employees of the enterprise.

The fact that the formation of plural unions is allowed does not mean that an employee can join more than one
union at the same time for the same employment. There may be more than one union; but, a single employee
remain to be a member for a single union at the same time. If an employee is found to be member for more than
one union, the latter decision is made to prevail over or to cancel the former decision. If the same employee is
found to be a member for more than one union on the same date, his membership will not be recognized at all.
According to 115/1(A), the most representative union will the exclusive bargaining agent. The collective

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agreement entered into between that trade union and the employer is to be binding upon all members and non-
members of the union. This is somehow exceptional to the general principle of the law of contract
(1675&1731/1).

The employer is not expected to negotiate with each and every trade union. Because, it would be
administratively expensive, and inconvenient for the management of the enterprise. Secondly, it will be difficult
to come up with uniform working standard. This is because each and every trade union will come up with its
own proposal that may be entirely different from one another. This open the room for the existence of
heterogeneous working conditions and working systems.

The collective agreement is made to be applicable upon third parties, non-members of the agreement. From this
point of view, we can understand that the way that collective agreement operates is sometimes against the basic
principle of the law of contract. The reason why this deviation is important is to maintain industrial peace and
stability and to address the legitimate business concern of the employer. On one hand, we have the democratic
approach and on the other we have the legitimate business concern of the employer. So, in order to reconcile
this conflict, collective agreement is made to affect non-members.

Sometimes, employers are unhappy when associations are formed in their premises. Because, at the end of the
day, they are going to demand benefit for the employees. So, for the non-formation of unions, employers may
intimidate employees; dismiss organizers; promote people who do not want to be organized and etc. Because of
this, trade unions have the tendency to form an association very secretly. After the formation, they go to the
civil and social affairs office to be registered and given a certificate therefor. Then, if the employer tends to
dismiss them, the employees institute an action against the employer by alleging that he has dismissed them
owing to their membership for a union. Because, in the case of such ground for termination, the employee has
the right to be reinstated even at the objection of the employer (43). After formation takes effect, registration is
mandatory by the above office. Registration may take effect into ways. Article 118 provides that

9. Every organization shall be registered by the Ministry in accordance with this Proclamation.

10. every organization shall, upon its establishment, submit to the Ministry for registration the following
documents:

a. Constitution of the organization.

b. A document containing the names; address and signatures of its leader.

c. In the case of a general union, the names of undertakings where members are working.
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 d. Where the organization is a federation or a confederation, the names, address and signatures of their
leaders and the member trade unions or employers’ associations.

e. Name and emblem of the organization.

11. The Ministry shall, after examining the documents and ascertaining that they are duly completed, issue a
certificate of registration within fifteen days of receiving the application. Where the Ministry does not
notify its decision within this period, the organization shall be deemed registered.

12. An organization which is not registered in accordance with the provisions of this Proclamation may not
perform activities set forth in this Proclamation.

13. a trade union or employers association registered by the Ministry in accordance with this Proclamation
shall have legal personality and in particular, have the capacity to undertake the following activities:

a. To enter into contract.

b. To sue and be sued.

c. To own, use and transfer property.

d. To represent members at any level. And

e. To perform any legal act necessary for the attainment of its purposes.

The first scenario is that if the registering organ accepts the documents as completed, it will register and issue a
certificate of registration. The second scenario is that the registering organ may examine the documents and it
may consider that there are still documents that are not submitted. In such a time, it may send back requests to
the association. The third scenario is that despite the submission of the application with documents attached,
there may be silence of the registering organ. If the registering organ is silent for more than 15 days without
registering or sending back requests for the fulfillment of the remaining documents, default registration shall
follow. Once it is registered, certificate of legal personality will be issued. Once such certificate is issued, it can
operate many lawful activities. One of such lawful activities is the operation of undertaking collective
bargaining with the employer. Collective bargaining is basically protection of the labor force by seating and
bargaining with an employer(s). If it is at enterprise level, the bargaining will be with a single employer. But, if
the bargaining is at an industrial level, the bargaining will be undertaken between the whole employers
association and the confederation of trade unions. Bargaining may be made with respect to various working

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conditions. Usually what is done is that the trade unions will initiate negotiation by submitting proposal for
negotiation. Under the current labor proclamation, availability for negotiation is within ten days (130):

1. A party wishing to conclude a collective bargaining may request the other party in writing. It shall also
prepare and submit draft necessary for the negotiation.

2. The requested party shall within ten days of receiving the request, appear for collective bargaining.

3. The parties shall before commencing collective bargaining draw up the rules of procedure.

4. Each party shall have the duty to bargain in good faith.

5. Issues on which the parties could not reach agreement by negotiations in good faith shall be submitted to
the competent labour disputes settlement tribunal.

6. Parties to a collective agreement that is enforce shall decide to amend or replace their collective
agreement within 3 months before the validity date expires. Each party, after having decided to amend
or replace the collective agreement, shall finalize it within 3 month as of the date of its expiry. If the
negotiation is not finalized with the said period of time the collective agreement whose validity date is
expired shall cease to be effective.

Failure to make oneself available within ten days or to negotiate in good faith may be considered to be unfair
labor practice. This may entail punishment in the form of fine which goes as high as 10,000 birr under the
amended labor proclamation 494. Article 185/2 reads, 2/ An employer, a trade union, a worker or representative
of employer which contravenes Sub-Article (2) or (4) of Article 130 of this Proclamation shall be liable to a fine
not exceeding Birr 10,000 birr. If they negotiate in good faith, the assumption is that it is highly probable that
they will reach at an agreement. The natural course, the expectation and the desire of the law is that collective
bargaining will lead to collective agreement. Once a collective agreement is reached, it will be signed by the
negotiating parties. Then, it will be registered by the public organ and it will be binding upon members and non-
members as though it is law. In the majority of the cases, the duration will be determined by the collective
agreement. Article 133 reads:

1. Any provision of a collective agreement which provides for conditions of work and benefits which are
less favorable than those provided for under this Proclamation or other laws shall be null and void.

2. Unless otherwise decided therein, a collective agreement shall have legal effect as from the date of
signature.

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3. unless expressly stipulated otherwise in a collective agreements, no party may challenge the collective
agreement before three years from the date of its validity, provided, however, that;

a) upon the occurrence of a major economic change, a challenge to the collective agreement may be
submitted to the Minister by either party before the expiry of the fixed time.

b) The Minister shall, upon receipt of a challenge to a collective agreement in accordance with this
sub-article 3(a), assign advisor with a view to enabling the two parties settle the matter by
agreement. If the two parties fail to settle the matter by agreement, Article 142 of this
Proclamation shall apply.

c) the parties may at any time change or modify their collective agreement, provided, however, that
without prejudice to the special conditions set forth in sub-article 3(a) and (b) of this Article, a
party may not be obliged without his consent to bargain a collective agreement to change or
modify it before the said time limit expires.

If the duration or the period of legal validity of the collective agreement is not determined in the collective
agreement, it will be considered as though it is valid for three years. The period of three years shall be counted
as of not registration but signature of the collective agreement. In this case, the law is serving as gap filling
instrument. The very purpose of formation of trade union is to arrive at a collective agreement. Formation of an
association is not an end by itself. The assumption is that collective agreement will result in benefits above the
minimum labor condition. If a term of collective agreement brings a benefit below that of the minimum labor
condition, only that part of the collective agreement will be null and void. On the other hand, article 134
provides that 1every collective agreement shall be applicable to all parties covered by it.

Where the collective agreement is more favorable to the workers in similar matters than those provided for by
law, the collective agreement shall prevail. However, where the law is more favorable to the workers than the
collective agreement the law shall be applicable. The formation of association or collective agreement does not
apply to the civil service. It is only the labor law regime relevant to this topic. Because, Ethiopian law does not
allow civil servants to associate.

If they are not allowed to be associated, they cannot have a collective agreement. The reason is that the
constitution has a provision not yet implemented. Article 42 /1(C) of the constitution speaks about the right to
form an association and the right to bargain collectively. It provides that government employees who enjoy the
right provided under paragraphs, a and b of this sub-article shall be determined by law. But, up to now, the law
to determine those rights is not issued. Because of this non-issuance of the law, the discussion on freedom of
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association and collective agreement is limited to the labor law employment regime. With a conviction that
labor is not a commodity, labor was allowed and tolerated to be organized. The first effort to be unionized was
to compensate inequality.

Compensation of inequality is to mean that when an individual employee enters into negotiation with an
individual employer, the individual employee is a weaker party. Therefore, in order to maintain the balance
between the two parties, it was argued that labor should be unionized. Hence, the limitation of the individual
bargaining will be somehow balanced when organized voice is directed against the employer. So, the first
justification for unionization was to create a sort of power balance between on the one hand and employees on
the other.

At a later stage, it was also considered as a human right. With the coming into force of the different human right
instrument, freedom of association was incorporated as one type of human right. Then, the conventions 87&98
on freedom of association and collective bargaining brought this fundamental right into the labor or
employment territory as a work place human right. The other theory is that it was considered as industrial
democracy. When employees in an enterprise are allowed to associate or express their voice, it is considered as
a democracy at the level of that enterprise. Because, we can consider the enterprise as a state, the employees as
subjects and the employer as a government.

Recently, there is another theory called stake holder theory. According to this theory, stake holders should have
a say on issues that directly affect them. On the other hand, in work place, employees have a stake on working
conditions. Therefore, they should have an opportunity to express their view as to how the enterprise should
operate. This theory seems to be following participatory approach. And it seems to have been recognized under
article 92/3 of the FDRE constitution. This sub-article as to environmental contents, states that people have the
right to full consultation and to the expression of views in the planning and implication of environmental
policies and protects that affects them directly.

Actually, it is not only to air their view but also it is considered for industrial peace, productivity and smooth
management relationship. Some writers argue that democratic states are prosperous; the same logic shall apply
to democratic enterprises. Employees of democratic enterprises will create a sense of belongingness in their job
and discharge their contractual obligation in a motivated manner and in a sense of urgency. ILO has identified
convention, 87, 98, 29 on abolishment of forced labor and slavery, 100 and 111 on elimination of
discrimination, 173(minimum age convention) and 99 on abolishment of worst form of exploitation of child
labor as 8 fundamental conventions of the 193 ILO conventions.

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Originally, their scope of application was limited to employment relation in the private sector. But, at a later
stage, with the adoption of convention 87, the prevailing application of those conventions was broadened. One
of its provisions states that workers and employers without any distinction whatsoever are entitled to form an
association. This means that workers whether they are employees of government or private sector or whether
they are temporary or permanent shall be no subject to distinction to form an association.

The only restriction convention 87 puts is as regards to the police and the armed force. Article 9 of the same
convention states that the extent to which the guarantees provided for in this convention shall ply to the armed
forces and the police forces shall be determined by nation laws or regulations. Once a collective agreement is
reached, it will have an effect upon both members and non-members of the union. Even, there will be a process
of accession. Article 132 reads, a collective agreement which has already been signed and registered may be
acceded to by others. There enterprise level bargaining, industrial level bargaining sectorial level bargaining and
sometimes regional level bargaining.

For example, the Akaki factory trade union may enter into a collective agreement with the Akaki factory share
company. Sectorial level bargaining will mean bargaining at the level of a sector. There are 9 sectors in
Ethiopia. Some of them are factory and leather sector, food and beverage sector agriculture and animal rearing
and etc. the textile and leather federation will cover the employees in textile and leather factories. So, it will
bargain with employers of leather and textile factories. Note must be taken that in Ethiopia, the only available is
enterprise level bargaining. If the Akaki textile factory has entered into collective agreement with Akaki textile
Share Company, the Combolcha textile factory will directly reproduce what has been reproduced by Akaki
textile trade union and the employer thereof thereby acceding to that collective agreement without going into
detailed negotiation. From this point of view, we can understand that one way of extending collective agreement
is through a process of accession.

In other countries such France, they have a process of extension. If a dominant factory has concluded a
collective agreement with a dominant association, the government will pick that collective agreement and make
law. Employment dispute settlement mechanism. Prior to the coming into force of the civil code, the dispute
resolution mechanism was dependent upon the mercy of the employer. In the civil code, employment dispute
was resolved as any civil dispute. When it is handled like a civil dispute, the employee can take his case to
regular court. And the procedure was to be regulated by the civil procedure code. Adverbial system was the
mechanism to resolve a dispute. Three after the coming into force of the civil code, there was a fine distinction
as to the resolution of dispute.

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The civil code was concerned with individual labor dispute. On the other hand, the dispute resolution
mechanism for individual labor dispute is different from that of collective labor dispute. This distinction was
created as of the coming into force of the labor proclamation no 210 of 1963 which for the first time allowed
unionization and collective agreement. There are various dispute settlement mechanisms. Some among them are
amicable settlement, judicial settlement, industrial settlement (labor matter) and so on.

In the case of amicable settlement, the parties will settle their dispute amicably through win-win solution. This
means that the disputants will appear winners from the transaction. Modalities of amicable settlement could be
dispute prevention (contract or collective agreement) negotiation (the best way of settling dispute), conciliation
sometimes arbitration and etc. dispute is inevitable as far as the conflicting interest of the employees and the
employer exists. The parties usually make co-operation at the level of production and confrontation at the level
of profit distribution. For such confrontation, the negotiated settlement is required. The trade union through its
representatives will seat and negotiate with the employer and resolve the dispute for once and for all. This is
beneficial in that when both parties consider themselves as winners, their future relationship will be unaffected.
When the parties are unable to resolve the dispute through negotiation, they may resort to a third party of their
own choice to come in between. This is what we call as conciliation. The conciliator is not going to impose his
terms on the parties. He simply assists them in arriving at an amicable settlement. The third aspect, arbitration,
is a grey area between amicable settlement and judicial settlement. In this case, the parties will appoint an
arbitrator(s). The arbitrator will act as a judge and after giving the opportunity to be herd, he will render
decision which is binding upon all parties. Judicial settlement is however, a winner-loser determination. This is
unadvisable because it affects the future relationship between the parties. Individual labor disputes are listed
illustratively under 138. It reads:

1/The labor division of the regional first instance court shall have jurisdiction to settle and determine the
following and other similar individual labour disputes;

a) Disciplinary measures including dismissal;

b) Claims related to the termination or cancellation of employment contracts;

c) Questions related to hours of work, remuneration, leave and rest day;

d) Questions related to the issuance of certificate of employment and release;

e) Claims related to employment injury;

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f) Unless otherwise provided for in this Proclamation, any criminal and petty offences under this
Proclamation.

2/ the labour division of the regional first instance court shall give decisions within 60 days from the date on
which the claim is lodged.

3/ The party who is not satisfied with the decision of the regional first instance court may, within 30 days
from the date on which the decision was delivered, appeal to the labour division of the regional court which
hears appeals from the regional first instance court. In the case of individual labor dispute, the jurisdiction is left
for regional first instance court labor division. Collective labor dispute is also listed illustratively under 142/1. it
provides that: The conciliator appointed by the Ministry shall endeavor to bring about a settlement on the
following, and other similar matters of collective labour disputes:

a. Wages and other benefits;

b. Establishment of new conditions of work:

c. The conclusion, amendment, duration and invalidation of collective agreements:

d. The interpretation of any provisions of this Proclamation, collective agreements or work rules;

e. Procedure of employment and promotion of workers;

f. matters affecting the workers in general and the existence of the undertaking;

g. Claims related to measures taken by the employer regarding promotion, transfer and training.

h. claims relating to the reduction of workers.

4. The conciliator shall endeavor to bring about a settlement by all reasonable means as may seem appropriate
to that end.

5. when the conciliator fail to give solution to case submitted to him within 30 days he shall report to the
ministry, and a copy to each pleading parties. Without prejudice to provision of this Article Sub Article 1(a)
on of the party may take his case to board. But if the dispute submitted pursuant to Article 136 (2) one of
the party may submitted his cases to the temporally instituted board. In the case of individual labor dispute,
the parties can negotiate or if they want, they appoint a conciliator by themselves. But, in the case of
collective labor dispute, if the parties can have a conciliator, it is good. If they do not have a conciliator,

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 they can approach to the government, the ministry of social and labor affairs or the regional bureau of social
and labor affairs to appoint them a conciliator. This shows that the government has more concern on labor
dispute for the fact that the impact of labor dispute is higher than the individual one. If the parties are not
ready to agree by the proposal of the conciliator, any of them can take the collective labor relation board.
Collective labor dispute is referred to a regular court. This is because the law does not want collective labor
dispute to be resolved in a winner-loser mechanism.

The labor relation board was introduced in the labor proclamation of 1963 and withdrawn with labor
proclamation of 1975. It was reintroduced in the labor proclamation of 1993 and continues in the current
proclamation with a minor modification. In the first historical labor proclamation, there was a labor relation
board introduced by the emperor. The final decision was left for the emperor. Two representatives of the trade
union, two representatives of the employer association and a chair man appointed by the emperor were
submitted for nomination for the labor relation board. So, in effect, it was a team of five persons of integrity and
knowledge on industrial relation. When parties bring their dispute to this labor relation board, they were highly
required to resolve their dispute amicably through a win-win solution. From this point of view, it can be said
that it was a quasi-judicial organ. Because, it had a nature of a conciliator ordinarily and at the end of the day, it
had a nature of a judge.

Under the labor proclamation 64 of 1975, every dispute was taken to court. It was resolved through winner-
loser solution and the courts were excessively pro-labor. Under the labor proclamation of 1993, freedom of
employer’s association was introduced. As a result, the labor relation, as an institution, was reintroduced. It was
composed of two representatives of the confederation of trade unions, two representatives of employers’
association and a chairman appointed by the emperor. It was similar with that of the labor proclamation of 1963
except with the absence of approval by the emperor. Article 150 provides that

1/ The permanent or the ad hoc Board shall endeavor to settle by agreement Labour disputes submitted to it,
and to this end it shall employ and make use of all such means of conciliation, as it deems appropriate.

2/ The permanent or the ad hoc Board may in appropriate circumstances consider not only the interest of the
parties immediately concerned but also the interest of the community of which they are apart and the national
interest and economy as well, and may in such circumstances grant a motion to intervene by the government as
amicus curiae.

3/ In reaching any decision, the Board shall take into account the substantial merits of the case, and need not
follow strictly the principles of substantive law followed by civil courts. Unlike that the labor relation board is

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doing in practice, amicable settlement requires significant time of consultation, dialogue and so on. Under the
current proclamation, the members of the board was enhanced to seven. The two additional members are those
with high knowledge of employer-employee relationship. This mainly done to mitigate the very judicial nature
of the board. Article 145 reads:

1. The permanent and ad hoc Board shall consist of a chairman, two qualified members who have the
knowledge and skill on labor relation, appointed by the Minister, four members of whom two represent the
trade unions and two represent employer’s associations, and two alternate members one from the workers
side and one from the employer’s side.

2. Employers’ representatives shall be appointed from the most representative of employers associations and
workers representatives shall be appointed from the most representative of trade unions.

3. The Minister shall assign a secretary and such other necessary staff to the Board.

4. Members and alternate members of the Board shall serve on part time basis without remuneration, provided,
however, that the Minister may fix standard fees for attendances at meetings of the Board.

5. Members and alternate members of the Board shall be appointed for a term of three (3) years; provided,
however, that in making the initial appointments, the terms of one (1), two (2) and three (3) years,
respectively, shall be specified so that in each subsequent year the terms of not more than one-third (1/3) of
the members and alternate members then serving shall expire in any one calendar year.

6. The Minister shall dismiss a member in case of negligence of duty or meifeasance in office and shall
arrange for the appointment of a substitute for the remaining, unexpired term.

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