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Contract of Employment: Issue of Fact or Law?

Determining the existence of a contract of employment under Article 4 (1) requires resolving legal and factual questions as appropriate. The fulfilment of basic elements of the contract is determined through evidence or legal interpretation. Take, salary for instance. Salary could be an issue of fact or law. As salary is one of the basic requirements for valid contract of employment, absence of salary means in effect absence of the contract. Whether payment constitutes salary could be established by producing payroll of the employer. This avoids the need for any interpretation or definition of salary. Here, salary appears as an issue of fact established by documentary evidence.

However, not all payments are salary. The factual presence of payment may not be at issue. Once the fact is clear, the next task will be checking the facts fit into the definition of salary. Hence, when definition is involved salary becomes an issue of law.

In C/F/No. 56025 (Degu W/Michael General Contractor VS, Ato Samuel Dadi (et al 3 persons) unpublished, 2003 E.C.) the cassation bench failed in its ultimate duty as the final interpreter of law. The bench treated existence of employment purely as a matter of fact. It affirmed the decision of lower courts for lack of jurisdiction, since issue of fact is not reviewable by the bench. Here it is important to see how the trial court managed to solve the very existence of the contract. The court relied on two witnesses who testified that ‘they know’ respondent has been employed and working under the direction of the employer. It also heard witnesses from the employer side. In reaching decision, it weighed the oral testimony of both parties and concluded, by preponderance of evidence test, applicant has proved the existence of contractual employment relationship with respondent.

It is the court not witness who ‘know’ whether someone is working for another under his direction. Control or direction is a matter of law to be determined by the court by applying a certain legal criteria or definition.

The same error was repeated by the bench in C/F/No. 48865 (Tikur Abay Transport S.C. vs. Hussein Endris, unpublished, 2002 E.C.). In this file, applicant denied the existence of employment contract with respondent. In its cassation application it stated respondent was independent contractor who works only when work is available on piece rate basis.

On the other hand, respondent stated he was provided with identity card describing him as ‘worker’ and Djibouti port entry document by applicant. Additionally, he was employed as ‘heavy truck assistant’ and applicant told him the reason for dismissal was absence from work. His argument is that the facts seen as whole establish existence of employment contract.

Now, since the parties have stated their version of the story, it is for the cassation first to verify whether the alleged facts have been proved by evidence in the lower courts and then proceed to determine existence of employment relationship based the proved facts. This involves the task of legal interpretation.

Unlike C/F/No. 56025, the bench tried to interpret the law rather than treating it purely as a matter of fact, although issue of fact was also used to support its reasoning. The relevant part of the bench’s ruling reads as follows.

As regards formation of employment contract article 5 [of the labour proclamation] dictates it shall not be subject to any special form Unless otherwise provided by law. In the case at hand, even though applicant denied the existence of employment contract and alleges respondent is an independent contractor, the lower court, taking into account the evidences presented before it, has concluded there exists an employment contract. Since the law does not specify any special form, we could not find any reason to conclude that lower court’s decision was erroneous. Additionally, it is to be read from article 80/3/a/ of F.D.R.E. Constitution that this bench lacks jurisdiction on matters of evidence.

Unfortunately, it was a wrong interpretation because the bench framed irrelevant legal issue. The basic issue in the case was whether respondent qualifies as a worker as defined in the proclamation. To solve this issue, the existence of employment contract between applicant and respondent need to be determined based on the definition of employment contract as provided in article 4.  

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