University lecturers in Ethiopia do not have a legal right to pension
It may be surprise news for most university lecturers in Ethiopia
to hear that they are not covered by the recent public pension law. The Public Servants’
Pension Proclamation No. 714/2011 generally provides pension coverage to
“public servants.” who are of Ethiopian nationals. University
lecturers, mainly those in the public universities qualify the definition of
public servants, hence should have been entitled to pension. The problem is not
all public servants have a legal right to pension according to the Public Servants’
Public servant is defined in article 2 sub 1 as
“a person permanently employed in any public office, and includes
government appointees, members of parliament, members of the defense force and
Does this definition consider an academic staff of a public
University as a public servant? Thanks to the wider definition of public office
in article 2 sub 5 we may safely conclude that an academic staff is a public
servant. Article 2 sub 5 defines a public office as “any government
office, institution or organ wholly or partly run by government budget, and
includes public institutions and enterprises run by their own income”
However, Even though university lecturers are public servants,
they are not still legally qualified to pension coverage. A public servant for
the purpose of pension coverage includes only those who are “permanently employed“
(article 2 sub1 of proclamation no 714/2011)
By way of conclusion, since university lecturers are not permanent
employees of the institution, they can not legally claim pension coverage based
on proclamation no 714/2011.
The fact that tenure employment is a privilege not a right has
been made clear by the higher education proclamation no 650/2009. According to
article 33 sub 1, tenured employment of academic staff constitutes a privilege
to be attained through meritorious continuous service and outstanding scholarly
teaching and/or research or institutional leadership achievements as an
incentive to encourage academics to continue to excel in their professions.
A tenured academic staff in addition to his entitlement to
pension, shall have job security, and may not be dismissed from his position
unless he has committed a serious breach of discipline as stipulated by the
senate statutes of the public institution.
The most surprising (may be confusing) fact is not the absence of
legally recognized right to pension for academic staffs of public university.
In practice, pension contribution is collected from all university
lecturers. To make it clear, even though they are not legally entitled to
pension, practically pension contribution is deducted from their salary every
One of the significant changes introduced by the new Ethiopian pension laws is the substantial increase in the amount of pension contribution by the beneficiary and the government/employer. Until June 2011, only the public sector was covered by the pension scheme. Starting from July 2011 those (employees and employers) in the private sector will start making a contribution following the first private organization employees pension law. So what is the amount to be contributed by employees, employers and the public organs (the government)? The following table summarizes the contributions to be made from each respective party according to the proclamation no.714 and 715.
In the previous (now repealed pension law) the amount of pension contribution by public servants including military and police officers was 4% of their gross salary. However, there was a significant variation in the contribution to be made by the government for public servants as compared to the contribution to military and police officers.
According to article 5 and 6 of the repealed Public Servants’ Pensions Proclamation No. 345/2003 the contribution of the government to public servants pension was 6% whereas it was 16% for military and police pension.
The same variation is also reflected in the new public servants proclamation no 714/2011. The 16% government contribution has now risen to 25%, almost 1/4th of the gross salary of military and police officers. On the contrary the government contributes only 7% for public servants.
Just refer to the following table for the specific percentage of contribution by each of the parties with the responsibility of pension contribution under the new pension laws.
- NA= Not Applicable
- In order to calculate 1st 2nd 3rd and 4th year the time to start is July 1 2011
- The percentage is calculated based on the gross salary of the employee i.e. before deduction of tax and other encumbrances. Salary does not include hardship allowance, transport allowance, house allowance or other related benefits attached with certain position.
Download pension contribution table
One of the controversies surrounding the new private organization employee’s pension proclamation has been the effect of resignation on entitlement to pension benefits. Based on the length of service of the employee, resignation could have three different effects.
1. When the length of service of the employee is greater than or equal to 10 years but less than 20 years of service, resignation results in reimbursement of the employee’s contribution excluding contribution made by his employer.
2. If the employee resigns after serving for less than 10 years, he will relinquish his right to reimbursement. He will just leave empty-handed.
3. If the length of service is greater than or equal to 20 years but less than 25 years the employee will be entitled to get full retirement pension but payment will be made upon attainment of retirement age.
4. If the length of service of the employee is greater than or equal to 25 years , resignation results in entitlement to full retirement pension which will start to be paid beginning five years prior to retirement age.
As indicated above, an employee who resigns after serving for less than 10 years is not entitled to claim his own contribution. Although this has become a point of controversy in light of the new private organizations pension proclamation, a similar limitation has existed for more than 40 years in case of government employees’ pension laws.
In this regard one of the oldest pension laws of the country ( Public servant’s pension decree No. 46/1961) reads:
“A public servant who voluntarily resigns prior to completing 10 years of service shall be entitled to no benefits hereunder” (Article 8(a) of Public servant’s pension decree No. 46/1961)
All subsequent pension legislations have adopted a similar position regarding the effect of resignation before 10 years of service. During this time no strong criticism has been heard against such statutes.
What follows is a brief analysis or criticism of the new law and previous statutes as regards their prohibition of reimbursement of employee’s contribution. I will also try to forward some advice to employees who want to quit their job but still get their own contribution by way of reimbursement even if they have served for less than 10 years.
The meaning of resignation
In order to deny an employee of his own contribution by way of reimbursement, two cumulative conditions have to be established. First, it has to be proved that the length of service year of the employee is less than 10 years. Additionally, the ground of termination of the employment contract should be one which could properly be categorized as resignation. Establishing the second condition requires legally defining ‘resignation’ and examining the specific circumstances to determine whether they fall under the elements of the definition. Both of the newly enacted pension laws i.e. Government employees’ pension proclamation No. 714/2011 and the private organization employees pension proclamation No. 715/2011 do not define the term resignation. Similarly although, resignation by the employee is one of the grounds of termination of employment contract in the labour proclamation No. 377/06, no where is the term defined.
Generally speaking, resignation refers to the acts or instances by which an employee willfully or upon his own consent quits his job. The presence of consent is very important to ascertain the existence of resignation. However, the presence of consent could not be taken as a sole test of resignation. In certain cases, a willful act by the employee may not be regarded as resignation. On the other hand, the act of quitting a job by the employee may not be taken as indicative of the presence of consent. It is possible that he may resign but without his consent.
To make things clear let me just raise two questions which are crucial for the clear understanding of the term resignation.
- If an employee makes an express written agreement with his employer for the termination of the employment contract, could this be taken as resignation for the purpose of the pension laws?
- If an employee leaves or quits her job due to undue influence or harassment by her employer, is that resignation for the purpose of the pension laws?
The above two questions make it clear that in order to deny an reimbursement to an employee whose length of service is less than 10 years, it is of primary importance to come up with a valid and clear definition of the term resignation.
In order to provide a logical answer to the above question and come up with a working definition of resignation in light of the Ethiopian pension laws, it will be helpful to refer to some of the relevant provisions of the labour proclamation.
As regards the first question, article 25 of the labour proclamation provides that the employee and the employer could reach at an agreement to put an end to their employment contract. For such an agreement to be considered as valid it has to be concluded in writing. Article 25 is found under section one of chapter two of the labour proclamation. Chapter two is a general provision which lists down all the grounds of termination of employment contract. According to 23 of the proclamation, a contract of employment shall only be terminated;
- Upon initiation by the employer or worker
- In accordance with the provisions of the law or a collective agreement or
- By the agreement of the two parties
Resignation as a ground of termination is categorized under ‘termination of employment contract by the initiation of the worker’
Therefore, this will lead us to the conclusion that a mutual agreement to terminate an employment contract, even though, is clearly a willful act of the employee to quit his job, is not a case of resignation. This means in effect a an employee who has a service year of less than 10 years could avoid the harsh effects of unilateral resignation, by making an arrangement with his employer for a mutual, bilateral agreement.
So my first advice for government employees and private organization employees covered by the pension laws is this:
- If you decide to quit your job and your service year is less than 10 years try to convince your employer to conclude a written agreement for the termination of the employment contract.
Sometimes, the employment contract may be terminated upon the initiation of the employee (his own unilateral act), but with a defective consent. This happens when an employee quits his or her job due to intolerable undue pressure of the employer. So the question raised above is: “when an employee quits his job because the employer through his conduct has engendered his health and dignity, is it resignation?” Resignation due to undue influence of the employer is what is known as constructive dismissal in labour law. It is a usually taken as one instance of dismissal by an employer.
The labour proclamation recognizes ‘constructive dismissal’, even though it does not specifically employ such term. The ordinary case of resignation is dealt in article 31. Accordingly, an employee could at any time resign from his job without any valid ground. He has to simply give a one month notice to his employer.
The employee may terminate his employment contract without notice, provided that one of the grounds in article 32 is fulfilled. Practically speaking article 32 is a typical case of constructive dismissal. Grounds under this article include:
- Employer’s act contrary to employee’s human dignity and morals or other acts punishable under the Penal Code
- Employer’s failure to act in case of imminent danger threatening the worker’s safety or health
- Repetitive failure by the employer to fulfill his basic obligations towards the worker
An employee who quits his job due to one of the above grounds is entitled;
A. A compensation equal to thirty times his daily wages of the last week of service
B. Severance pay even though his length of service is below the minimum threshold of five years
This, beyond doubt, indicates that constructive dismissal is recognized under Ethiopian labour law and is not synonymous with resignation. Therefore, resignation as indicated in the pension laws should not be interpreted as if it includes acts or instances of constructive dismissal.
Ethiopian law prohibits employee’s own contribution if he resigns and has a service year of less than 10 years. However, an employee having a service year of less than 10 years is still entitled to his contribution if;
- He terminates his employment contract by a written agreement with his employer
- If he quits his job due to undue pressure of his employer
There is also another 3rd mechanism. And this makes Ethiopian pension law hard to understand.
Both pension laws provide that an employee who has served for less than 20 years and whose employment contract is terminated for reasons or grounds not mentioned in the respective pension proclamations is entitled to reimbursement of his own contribution.
There are three main grounds of termination of employment mentioned by the pension proclamation. These are attaining retirement age, incapacity due illness or sickness (the specific term used by the proclamation is “health problems”) and incapacity due to employment injury. Resignation is also mentioned as one ground of termination with its own special effect as regards entitlement to reimbursement of the employee’s contribution or pension payment depending on the length of service. Therefore, any ground other than these will validly entitle an employee to his own contribution, if his length of service is less than 20 years.
Grounds not mentioned in the pension proclamations may be dismissal for misconduct, dismissal on operational grounds (reduction of workers), termination due to closure or bankruptcy of the undertaking etc…
Take the case of dismissal.
According to Ethiopian pension law, if you are dismissed for misconduct and your length of service is less than 10 years you will be entitled to reimbursement of your own pension contribution. But, if you simply resign after serving your employer for less than 10 years, you don’t get a penny.
What then would any reasonable employee do to get reimbursement if his/her length of service is less than 10 years?
Resign? Or get dismissed?
If you are absent for five consecutive days, you will be dismissed. If you commit any of the offences listed under article 27 of the labour proclamation, the effect is clearly your dismissal. It is bad that you are dismissed. But it is good if your length of service is less than 10 years, because you can now get reimbursement. On the contrary, if you simply leave your job peacefully, and have less than 10 years length of service you don’t get any reimbursement.