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Legal effect of absence of termination notice: Summary of Cassation decisions

Legal effect of absence of termination notice: Summary of Cassation decisions



An employment contract irrespective of its duration may be legally terminated with notice provided one of the grounds in article 28 of the labour proclamation is present. Merely giving notice in the absence of a valid ground does not make the termination lawful. This being the case, what will be the legal effect of termination with a valid ground (Article 28) but without notice? The common understanding is that the legal effect of absence of notice of termination is only payment in lieu of notice, but does not make the termination unlawful. The cassation bench has also affirmed such common understanding in its decision. (Altabe College Vs. Seid Mohammed Cassation File Number 39580 Ginbot 18-2001 E.C.) As a result a worker will not be entitled to reinstatement or compensation and severance pay.

However, a question may be raised when one reads article 41 of the labour proclamation. Article 41 of labour proclamation No.377/96:

“Where an employer or a worker fails to comply with the requirements laid down in this Proclamation or other relevant law regarding termination, the termination shall be unlawful.”

The law regards termination as unlawful when the requirements set forth by the law are not adhered to. The presence of a valid ground is one of the requirements, but not the only requirement. There are also other procedural requirements. For instance, in case of termination without notice the employer is obliged to give written notice (i.e. dismissal notice) specifying the reasons for and the date of termination. Similarly in order to terminate employment contract upon notice, the law requires that notice be given in writing specifying the reasons for the termination of the contract and the date on which the termination shall take effect. Termination notice should be given personally to the worker or affixed on the notice board when worker could not be found or refuses to accept. There are also procedural requirements to be followed during reduction of workers. The collective agreement may also provide additional requirements like right to be heard prior to termination of employment contract.

Now the question to be raised is; will the absence of one this requirements make termination unlawful even when there is a valid ground of termination?

Effect of absence of termination notice: wages in lieu of notice

Article 28 of the labour proclamation lists down valid grounds an employment contract could be terminated upon prior notice of termination. The current position of the casation bench is that once one of those grounds is present the failure to comply with the requirement of notice does not make the termination unlawful. However, the employer will be liable to pay wages in lieu of notice i.e. wages for the time of the notice period. For example, if the employer has an obligation to give two months of notice period and fails to give notice, he will pay wages for two months to the worker.

In two cassation cases in which altabe college was an applicant (Altabe College Vs. Seid Mohammed Cassation File No. 39580 Date: Ginbot 18-2003 E.C and Altabe College Vs. Daniel tadesse Cassation File No.39579 Megabit 15-2001 E.C.) employment contract of respondents was terminated because the government refused to hire teachers from a private college. The cassation bench found that this is a valid ground to terminate employment contract with notice according to article 28(1) (d) of the labour proclamation. In both cases applicant didn’t give notice before termination.

The bench reasoned the absence of notice by itself does not make the termination unlawful. However, respondent is liable to pay wages in lieu of notice for not complying with the notice requirement.

Contradictory decision: Ethio-Djibouti Railway Vs. Ato. Minale Zerihun (Cassation File No. 50205)

According to the employment contract of applicant and respondent, the latter was employed as an attorney for a fixed period of time. Following his dismissal by his employer, respondent instituted a labour action in the Federal First Instance Court claiming back pay and reinstatement. Respondent challenged the claim arguing that applicant was employed for a definite period of time in order to reduce work load related to court cases in which respondent is a party.

The court rejected respondent’s argument and ruled that the nature of applicant’s work is continuous, hence he is considered to be employed for an indefinite period of time. As a result it found the termination of employment contract unlawful and decided that respondent should be reinstated with back pay.

On appeal the Federal High Court recognized respondent’s right to terminate the employment contract. The court’s conclusion is solely based on the written employment contract of the parties. The contract states that the employer can dismiss the worker by simply giving a fifteen days prior notice. The appellate court didn’t investigate whether the written employment contract fulfills the requirements of one of the grounds in article 9 of the labour proclamation.

The recognition by the court of the right of the employer to terminate the employment contract means in effect that there is a valid ground of termination. However, this didn’t make the measure of termination by the employer lawful. The legal effect of failure to comply with the procedural requirement (in this case giving fifteen days prior notice) has to be established. The basic issue to be solved in this case is, whether non-compliance with the contractual requirement of giving prior notice before dismissal automatically makes the termination unlawful?

The decision of the appellate court indicates that the absence fifteen days prior notice as per the contract makes the termination unlawful. As a result it ordered respondent to pay compensation and other payments to applicant. The payments the court mentioned in its decision are all payable as result of unlawful termination.

Disagreed by the decision of the High Court, respondent submitted a petition to the Cassation Bench. Respondent argued that once the appellate court recognized the right of the employer to terminate the contract, it is a fundamental error of law to decide that termination of employment contract is unlawful. However, this argument was rejected by the cassation bench and the decision of the appellate court was affirmed. The bench in its reasoning stated that non-compliance with the contractual requirement of notice makes the measure of termination unlawful.

Determining the period of notice: Minimum statutory notice period

Article 35 (1) of the labour proclamation provides for the minimum statutory notice of termination. Accordingly the period of notice is:

(a) one month in the case of a worker who has completed his probation and has a period of service not exceeding one year;

(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.

On the other hand, the period of notice for contracts concluded for definite period or piece work shall be agreed upon by the parties in the their contract (Article 35(2). The use of the word ‘shall’ is confusing here. Is it giving the parties contractual freedom to shorten the minimum statutory notice or is it saying there has to be a contractual notice period. The Amharic version also does not avoid this confusion. It states “ተዋዋይ ወገኖች በውሉ በተስማሙት መሰረት ይሆናል”

There is no problem when there is a contractually agreed notice period. It will be applicable instead of the statutory notice. [Matador Addis Tyre Share Company Vs. Ato Alias Bekele et al 14 respondents CFN 37201 Tahesas 30-2001 E.C. Volume 8]

The question is what if no such agreement exists? The cassation bench applied the minimum statutory notice period in the absence of contractual notice period. [Commercial Bank of Ethiopia Vs. Ato Haile G/silasie CFN 22275 Hamle 10-1999 E.C. Volume 6] This avoids the confusion created by unwise use of words in the labour proclamation. Therefore article 35(2) should be interpreted as allowing parties to shorten the minimum statutory notice in case of contracts concluded for definite period or piece work. Where no such agreement exist the statutory period notice provided in article 35 (1) equally applies to all types of employment contracts.

Mode of giving notice፡ the effect of oral notice

Article 34 of the labour proclamation is clear as to the procedure to be followed by an employer when terminating employment contract with notice. One of the requirements is that notice has to given in writing and the written notice has to specify the reasons for the termination of the contract and the date on which termination shall take effect. Thus oral notice is invalid and is considered as if notice has not been given.

Another requirement for a valid notice is that the written notice should be given to the worker in person. Where it is not possible to find the worker or he refuses to receive the notice, notice has to be affixed on the notice board in the work place of the worker for 10 consecutive days.

The writing requirement is important at least for two reasons. One it avoids any uncertainty related proof of notice. Two: the worker when receiving notice in writing will be certain as to the intention of employer and will prepare himself accordingly.

When the law requires notice to be in writing is there any possibility oral notice could be valid? The issue of validity of oral notice may be raised in the following two instances

  1. Employer argues he has given notice orally, but this is denied by the worker
  2. Employer argues he has given oral notice and it is not denied by the worker but, its validity is challenged

When the issue is one of evidence, notice required by law to be in writing cannot be proved by oral evidence. Therefore any claim for oral notice should be automatically rejected and considered as if notice has not been given. When oral notice is admitted by the worker, the issue now becomes one of validity. In other words, courts have to determine whether a notice given orally complies with the legal requirement of notice.

In Ethio-Nippon textile S.C. Vs. Teagestu Mamo et al 86 respondents [CFN 42906 Hamle 21-2001 E.C. Volume 8) applicant company was privatized and its ownership transferred from the government to a private investor. As soon as applicant took over ownership, it informed all respondents in a meeting that the government has decided to terminate their employment contract by pension. Each one of them filled a form in order to facilitate the payment of pension immediately upon termination. Applicant sent the form with supporting documents and photographs of respondents to the Council of Ministers. After a year the final decision of the Council of Ministers arrived. Until this time they were employees of the company and there was no change to their employment contract.

When their employment contract was terminated following the decisions of the Council of Ministers, they brought a labour action claiming wages for notice period. In their statement of claim, respondents insisted that they were not given notice of termination.

Both Misreka Shewa Zone Lome Wereda First Instance court and Misreka Shewa Zone High Court gave decision in favour of respondents. The cassation bench reversed the decisions of the lower courts.

In its reasoning the bench emphasized the purpose of notice is to enable the worker make necessary preparation after getting prior knowledge of termination of his employment contract. Respondents were given on year prior notice of termination which is more than maximum statutory notice period of three months. Respondents also were waiting for the final day of termination after filling the relevant pension forms.

One of the grounds lower courts rejected applicant’s argument was that notice has not been given individually to respondents in person. However, such reasoning failed to convince the cassation bench. In this regard the bench stated that the main point to be considered is whether respondents were clearly aware of termination of their employment contract.

Notice when not necessary: construction workers

Article 30(1) of the labour proclamation states that the procedures laid down in case of reduction of workers shall not apply to the reduction of workers due to normal decrease in the volume of a construction work as a result of its successive completion unless the reduction affects workers employed for parts of the work before the work for which they are employed is completed.

The cassation bench interpreted this provision as relieving the employer from the requirement of notice while terminating employment contract of workers employed in construction projects. [Reva engineering Vs. Endal tadese et al 10 respondents CFN 29419 Miaziya 14-2000 E.C. Volume 6 See also Sunshine Construction Vs. Tagel Mekonnen et al CFN 42368 Hamle 16-2001 E.C.]

Therefore, an employer has no obligation to give notice while terminating employment contract of construction workers.

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