Contracts and Dismissals

Written Employment Particulars

Individual employment contract may be oral or in writing. A contract of employment is deemed to have been concluded for an indefinite period except for the contracts of definite period or piecework. The employment contract must be stipulated clearly and must not be concluded for the performance of unlawful or immoral activities. It must not contain provisions that are less favourable for the worker than those provided by the law, collective agreement or work rules. If a contract of employment is not made in writing, the employer is required to provide a written statement of employment particulars within 15 days of the conclusion of the employment contract.

A written employment contract (or a statement of particulars in the absence of an employment contract) must specify the following: the name and address of the employer; the name, age, address and the work card number of the worker; type of employment; workplace; rate of wages as well method of their calculation; manner and interval of wage payment; and duration of the contract. It must be signed by both parties.

In case the employer does not comply with these provisions, the worker must not be deprived of his rights under this proclamation.

Source: §4-8 of the Labour Proclamation No. 1156/2019

Fixed Term Contracts

Ethiopian labour Law prohibits hiring fixed-term contract workers for tasks of a permanent nature. A contract of employment may be concluded for a definite period/fixed term or for piecework in the case of: the performance of specified piece work for which the employee is employed; the replacement of a worker who is temporarily absent due to leave or sickness or other causes; the performance of work in the event of abnormal pressure of work; 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; an irregular work which relates to permanent part of the work of an employer but performed on an irregular intervals; seasonal works which relate to the permanent part of the works of an employer but performed only for a specified period of the year but which are regularly repeated in the course of the years; an occasional work which does not form part of the permanent activity of the employer but which is done intermittently; the temporary placement of a worker who has suddenly and permanently vacated from a post having a contract of an indefinite period; the temporary placement of a worker to fill a vacant position in the period between the study of the organizational structure and its implementation.

The Labour Proclamation does not limit the maximum term (including renewals) of the fixed term contract except in the last two cases where it specifies that the contract may not exceed 45 consecutive days and has to be concluded once only. The maximum length of a fixed term contract, as determined under the Civil Code, is 5 years. If a worker keeps working after this period or if a contract is renewed beyond the initial period of 5 years, it becomes an indefinite contract.

The new Labour Proclamation also covers homework, where a worker is working from home in return for wages without any direct supervision or direction by the employer. The contract concluded between a home worker and employer is considered a fixed term contract or piece work contract.

Source: §9-10 and 46 of the Labour Proclamation No. 1156/2019; §2568 of the Civil Code, Proclamation No. 165 of 1960

Probation Period

In accordance with the Labour Proclamation, a probationary period is the initial period of execution of an employment contract to test the suitability of a worker to the assigned position. Probationary must be declared in writing, however, it may not exceed 60 working days. A worker reemployed by the same employer for the same job cannot be subjected to probation. Probationers have the same rights and obligations as other workers.

If a worker is found unfit for the job during probation, the employer terminates the employment contract without notice and without obligation to pay severance pay or compensation. A worker may also terminate the employment contract without notice.

Source: §11 of the Labour Proclamation No. 1156/2019

Employment Termination

The Labour Proclamation identifies three main types of termination of employment. These are:

1. Termination by Operation of Law: situations like completion of specified work, death of the worker, retirement, permanent cessation of the enterprise operations due to bankruptcy, or permanent incapacity of the worker.
2. Termination by Agreement: Both parties can agree to end the employment relationship.
3. Termination Initiated by Employer or Employee: Either party terminates the employment contract with or without notice, depending on the grounds (Article 32, Labour Proclamation No. 1156/2019)

In case of termination of employment initiated by the employer, grounds could include misconduct, poor performance, economic reasons or operational requirements.

An employer may terminate a contract of employment without prior notice if the worker commits any of the following acts, deemed serious enough to warrant summary dismissal:

• Repeated Tardiness or Absence:

  • Being late for work eight times in a six-month period, despite written warnings, unless justified by collective agreement, work rules, or the employment contract.
  • Absence from work for a total of five days in a six-month period, without justification under the Proclamation’s leave provisions, after receiving a written warning.

• Dishonesty or Fraud:

  • Engaging in deceitful or fraudulent conduct in carrying out duties.
  • Misappropriation of the employer’s property or funds with intent to unlawfully enrich oneself or a third party.

• Poor Performance:

  • Persistently delivering performance below agreed standards (quality/quantity) in the contract, collective agreement, or work rules, despite the worker’s potential and prior warnings.

• Workplace Violence or Disruption:

  • Being responsible for brawls or quarrels at work, considering the gravity of the incident.
  • Committing physical abuse against anyone in the workplace.
  • Committing sexual harassment or sexual violence at the workplace.

• Criminal Conduct:

  • Conviction for an offence that renders the worker incompatible with their post.
  • Absence from work due to a court sentence exceeding 30 days.

• Property Damage:

  • Causing intentional or grossly negligent damage to the employer’s property or work-related assets.

• Prohibited Acts (Cross-Reference to Article 14(2)):

  • Committing acts explicitly banned under Article 14(2), which lists worker obligations. These include:

    • Intentionally endangering life or property at work.
    • Removing employer property without authorization.
    • Using falsified documents.
    • Using illegal drugs or alcohol, impairing performance (except HIV/AIDS testing isn’t grounds unless legally mandated).
    • Refusing medical exams required by law or employer for good cause (excluding HIV/AIDS).
    • Ignoring safety/accident prevention rules or precautions.
    • Holding unauthorized meetings during work hours.

• Other Violations:

• Breaching conditions in a collective agreement explicitly listed as grounds for termination without notice.

Procedure and Limits (Article 27(2)–(4))

● Written Notification: The employer must inform the worker in writing of the termination reason and effective date, though prior notice isn’t required. ● Time Limit: The employer must act within 30 working days from the date they become aware of the misconduct (or when it ceases, if ongoing), or the right to terminate without notice lapses. ● Burden of Proof: If disputed, the employer must prove the misconduct occurred in labour disputes before a court or board.

Employers are barred from terminating a contract of employment based on the following grounds, unless they fall under exceptions explicitly allowed elsewhere in the Labour Proclamation:

1. Membership in a Trade Union or Participation in Union Activities:

   • Termination is prohibited due to a worker’s membership in a trade union or lawful participation in union activities outside working hours.
   • If union activities occur during working hours, they must be permitted by the employer or part of a collective agreement; otherwise, this protection applies.

2. Seeking or Holding Union Office:

   • Workers cannot be dismissed for seeking office as a union representative (e.g., running for a leadership role) or for acting or having acted in that capacity.

3. Filing Complaints or Participating in Legal Proceedings:

   • Termination is barred if based on a worker submitting a complaint or grievance against the employer, whether individually or collectively.
   • Also prohibited if the worker participates in judicial or administrative proceedings against the employer (e.g., testifying in a labour dispute).

4. Discrimination Based on Protected Characteristics:

   • Dismissal is unlawful if motivated by a worker’s race, colour, sex, religion, political opinion, national extraction, ethnic origin, marital status, disability, family responsibilities or social status.

5. Pregnancy, Maternity Leave, or Related Absences:

   • Termination is prohibited due to a worker’s pregnancy, absence during maternity leave, or temporary absence due to illness or injury (up to limits set in Article 85(2), which allows up to 6 months of sick leave before reassessment).

6. Temporary Illness or Injury:

   • Dismissal cannot occur due to temporary absence from work caused by illness or injury, provided it doesn’t exceed the sick leave entitlement (Article 85: 3 months at full pay, 3 months at half pay, unless prolonged beyond 6 months triggers reassignment or termination under Article 28(1)(c)).

The above prohibitions do not apply if dismissal is based on grounds of gross misconduct (e.g., tardiness, theft, violence) or for just cause (lawful reasons with notice, e.g., economic redundancy, permanent incapacity), provided the employer follows due process.

If a worker alleges dismissal on a prohibited ground, the employer must prove the termination was based on a lawful reason, adjudicated by the Labour Relations Board or courts.

A worker may terminate the employment contract without giving proper notice in the following cases:

• Employer commits an act punishable under criminal laws: If the employer has committed any act contrary to human dignity and morals or other acts punishable under the Criminal Law against the worker
• Harassment or Mistreatment by the Employer: if the worker has been a victim of sexual harassment or sexual violence by the employer or a managerial employee
• Unsafe or Harmful Working Conditions: If the working environment presents a serious danger to the employee's health and safety, and the employer does not take measures to correct it despite repeated warnings
• Employer’s Failure to Fulfill Contractual Obligations: If the employer has repeatedly failed to fulfill his basic obligations towards the worker as prescribed under this Proclamation, collective agreement, work rules or other relevant laws. This includes payment of full and timely wages and other dues.
  • The Labour Proclamation governs collective dismissals or reduction in workforce. Reduction in workforce refers to terminating the workforce of an enterprise for operational or organisational requirements. A collective dismissal or a reduction in workforce is said to occur when at least 10% of the employees are affected. In enterprises with 20-50 workers, collective dismissal occurs when at least five employees are terminated over a continuous period of 10 days. The employer must consult with a trade union or workers’ representatives with the aim to explore alternatives to dismissal and ensure that workers with higher skills and productivity are retained. The workers first affected by the reduction in workforce shall be those with the shortest length of service in the enterprise (seniority criterion) and those with fewer dependents (family status criterion). Vulnerable groups such as expectant mothers and mothers within four months of confinement, disabled employees, employees who have sustained an occupational injury and workers' representatives should be prioritised for retention.

According to the Labour Proclamation, an employer shall, upon the request of a worker whose employment is terminated, provide a certificate of service stating the type of work performed, the length of service, and the wages paid to the worker.

Source: §12(8) & 26-41 of the Labour Proclamation No. 1156/2019