Understanding Notice Period and Severance Pay in Ethiopian Labor Law

Understanding Notice Period and Severance Pay in Ethiopian Labor Law

In the realm of employment law, the aspects of Notice Period & Severance Pay are crucial for both employers and employees. They ensure a fair transition when employment relationships are terminated. Ethiopian labor law, as outlined in the relevant labor proclamations, provides detailed provisions regarding these aspects. This article aims to provide an in-depth look into the procedures, periods, and obligations related to the termination of employment contracts, focusing on notice periods and severance payments.

NOTICE PERIOD TO TERMINATE A CONTRACT OF EMPLOYMENT

Procedure for Giving Notice

Under Ethiopian labor law, the procedure for giving notice to terminate a contract of employment is clearly defined:

1. Written Notice: Notice of termination must be in writing, specifying the reasons for termination and the effective date (Article 34(1)).
2. Delivery: The employer must deliver the notice in person to the worker. If the worker cannot be found or refuses to receive it, the notice should be posted on the workplace notice board for 10 consecutive days (Article 34(2)).
3. Worker’s Notice: The worker’s notice should be handed over to the employer or delivered to its registry office (Article 34(3)).
4. Suspension Periods: Any notice given during periods when the contract is suspended (as per Article 17) is invalid (Article 34(4)).

Notice Period

The notice period varies depending on the length of service:

1. Service not exceeding one year: One month (Article 35(1)(a)).
2. Service between one and nine years: Two months (Article 35(1)(b)).
3. Service exceeding nine years: Three months (Article 35(1)(c)).
4. Reduction of workforce: Two months (Article 35(1)(d)).
5. Definite period or piece work contracts: As agreed by the parties (Article 35(2)).

The period of notice begins from the first working day after the notice is duly given, and obligations from the contract remain intact during this period (Article 35(3)-(4)).

PAYMENT OF WAGES AND OTHER PAYMENTS ON TERMINATION

Period of Payment

When a contract of employment is terminated, wages and other payments due to the worker must be paid within seven working days from the date of termination. This period can be extended if the worker delays returning property or money owed to the employer (Article 36).

Amount in Dispute

If there is a dispute over the amount claimed by the worker, the employer must pay the undisputed amount within the specified time (Article 37).

Effects of Delay

If the employer fails to pay the due sum within the specified time, the labor division of a competent court may order a penalty payment of up to three months’ wages, except when the delay is beyond the employer’s control (Article 38).

SEVERANCE PAY AND COMPENSATION

Eligibility for Severance Pay

A worker who has completed probation and is not eligible for a pension has the right to severance pay under several conditions (Article 39):

1. Permanent cessation of operation due to bankruptcy or other causes.
2. Termination by the employer in violation of the law.
3. Reduction in workforce.
4. Resignation due to sexual harassment or violence by the employer or managerial employee.
5. Resignation due to maltreatment by the employer affecting dignity or constituting a criminal offense.
6. Resignation due to failure of the employer to address safety or health threats.
7. Termination due to partial or total disability certified by a medical board.
8. Termination after at least five years of service due to sickness, death, or at the worker’s initiative without contractual obligations related to training.
9. Termination due to HIV/AIDS.

Amount of Severance Pay

The severance pay calculation is based on the worker’s length of service:

1. First year of service: Thirty times the average daily wages of the last week (Article 40(1)).
2. Additional years of service: One-third of the initial severance pay amount for each additional year, up to a maximum of twelve months’ wages (Article 40(2)).
3. Special termination cases: An additional amount equal to the worker’s average daily wage of the last week multiplied by 60 for certain types of terminations (Article 40(4)).

COMPENSATION FOR TERMINATION WITHOUT NOTICE PERIOD

Workers who terminate their contracts under specific conditions are entitled to additional compensation (Article 41):

1. General Termination: Thirty times the daily wages of the last week (Article 41(1)).
2. Specific Grounds: Ninety times the daily wages for terminations based on specific grounds (Article 41(2)).

Understanding the provisions related to notice period and severance pay is vital for both employers and employees. Ethiopian labor law provides clear guidelines to ensure that terminations are handled fairly and transparently. Employers must adhere to these regulations to avoid legal repercussions, and employees should be aware of their rights to seek appropriate compensation and severance pay when their employment is terminated.

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