Conditions for Severance pay
Receiving a severance payment and compensation requires proving the existence of the following conditions of severance payment. Therefore aWorker will have a right to receive severance pay from employer, provided the worker has completed his/her probationary period and Where
- The worker’s contract is terminated for economic reason,
- The worker’s resignation is deemed constructive dismissal,
- The employer, informed of the danger, does not act to prevent the threat to the security and health of the worker,
- The workers contract is terminated due to partial or complete disability(certified by a medical examiner),
- The worker’s is not entitlement to a pension fund and his/her contract of employment is terminated up on attainment of retirement age,
- The worker has given service to the employer for a minimum of five years and his/her contract is terminated because of his/her sickness or death, or termination by his/her initiative provided that he/she has no contractual obligation related to training to the employer and
- The contract is terminated by the worker because of HIV/ AIDS.
Severance pay computation
The severance pay is calculated as follows
- For first year of service: – Severance pay is 30 times the average daily wage at the last week of service.
- For service of less than one year: – Severance pay must be calculated in proportion to the period of service.
- 3. F0r service more than one year: – In the case of worker who has served more than one year payment is increased by one third of the said sum for every additional year of service; provided that the total amount does not exceed 12 months wages.
- Bankruptcy and general reduction of work force: – Where a contract of employment is terminated for the reason that the enterprise ceases Operation due to bankruptcy or general reduction of workforce, the worker is entitled to a sum equal to 60 times his /her average daily wage of the last week of service.
- Constructive dismissal:- In case of constructive dismissal, the worker is entitled to compensation in addition to severance pay which must be 30 times his/her daily average wage of the last week of services.
Liability of the worker to pay compensation
A worker who terminates his/her contract of employment with out giving appropriate notice shall be liable to pay compensation to the employer but the compensation shall not exceed 30 days wages of the worker.
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Any pertinent information on the subject can be available from an Ethiopian Employment Lawyer, Ethiopian Labour Relationships Lawyer.