Severance pay and compensation

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

  1. The worker’s contract is terminated for economic  reason,
  2. The worker’s resignation is deemed constructive dismissal,
  3. The employer, informed of the danger, does not act to prevent the threat to the security and health of the worker,
  4. The workers contract is terminated due to partial or complete disability(certified by a medical examiner),
  5. The worker’s is not entitlement to a pension fund and his/her contract of employment is terminated up on attainment of retirement age,
  6. 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
  7. The contract is terminated by the worker because of HIV/ AIDS.

Severance pay computation

The severance pay is calculated as follows

  1. For first year of service: – Severance pay is 30 times the average daily wage at the last week of service.
  2. For service of less than one year: – Severance pay must be calculated in proportion to the period of service.
  3. 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.
  4. 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.
  5. 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.

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