Tort liability and employment law have a long and intertwined history. The "control test," initially used by English courts to determine employee status, originated in tort law. Employers can be held liable for damages caused by their employees to third parties and property, provided an employment relationship exists and the employee acted under the employer's control or direction. The evolution of tort liability has often mirrored developments in employment law. A crucial element in establishing employer liability is whether the individual who caused the damage was indeed an employee. This determination rests on the definition of "employee" as established by employment law. Civil courts adjudicating tort claims must interpret the Employment and Labor Law to ascertain the existence of an employment contract between the employer and the injured party. The court cannot apply a different standard for employee identification than the one defined in the Employment ...
SOS Children’s Village -v.- Kebede Kumsa et al- outsourcing- agency employment- Cassation File No. 38435 V.8
SOS Children’s Village -v.- Kebede Kumsa et al
Federal
Supreme Court
Cassation File No. 38435 (February 24, 2009)
Holding of the
Court:
Outsourcing certain tasks and the termination of job positions can
be a legal ground to terminate contract of employment.
Labour Proclamation No.377/2003, Article 28
______________
Cassation File No. 38435
Yekatit 17, 2001 E.C. (February 24, 2009)
Federal Supreme Court Cassation Division
Justices: Abdulkadir Mohammed, Hagos Woldu, Hirut Mellese,
Belachew Anshiso, Sultan Abatemam
Petitioner: SOS Children’s Village Respondents: Kebede Kumsa et al
The Court has examined the case and rendered the following
judgment.
Judgment
This case was initiated by the present respondents before the
Federal First Instance Court. The respondents (plaintiffs at the lower court)
stated that the petitioner unlawfully terminated their contract of employment
on the pretext that the service has been outsourced to be provided by another
company. They requested the court to award reinstatement, and alternatively
they claimed for compensation and other benefits associated with unlawful
termination.
The petitioner (defendant at the lower court) in its reply to the
suit contended that the security service of the enterprise has been outsourced
to a third party (i.e. Trust PLC) on a contractual arrangement; and it stated
that the termination is lawful because their job positions were, as a result,
cancelled on justified grounds.
The Federal First Instance Court, after examining the facts of the
case in light of the law, held that the termination was unlawful and awarded
the respondents six months wage in the form of compensation. Although the
petitioner lodged an appeal to the Federal High Court against the decision of
the lower court, the appellate court affirmed the previous decision. The
petitioner then filed a petition to the Federal Supreme Court Cassation Bench contending
that the lower courts committed “fundamental error of law” that should be
rectified by the Cassation Bench. The Cassation Bench has examined the
petition.
It has been admitted by the respondents that their contract of
employment was terminated because their jobs were outsourced to a third party.
It is provided under Article 28 of the Labour Proclamation that an employer is
allowed to terminate a contract of employment with notice where ‘a decision has
been taken to alter the work methods or introduce new technology with a view to
raise productivity…’
From the files of the lower courts, the Cassation Division of the
Federal Supreme Court noted that the reason why the lower courts held the
termination unlawful was that the petitioner did not show the cancellation of
the job positions which were held by the employees and, in effect, the courts
considered Article 28 inapplicable to the case at hand.
The Cassation Bench, however, observed that where a certain job is
transferred to another company, the tasks of the employees (whose service is
outsourced) are to be handled by the new service provider. Hence, this implies
that the job positions of such employees are cancelled. The employer should
have provided notice to the employees, but it was found that this requirement
has not been complied with. Nevertheless, this cannot make the termination
unlawful; it will rather entitle the employees to compensation in lieu of
notice.
Although outsourcing may seem to infringe the rights of the
employees, it is a lawful act under the Labour Proclamation. Therefore, the
decision of the lower courts which held the termination unlawful and that
entitled the employees to the compensation stated above has fundamental error
of law.
Decree
1.The decision of the Federal First Instance Court is reversed
pursuant to Article 348(1) of the Civil Procedure Code.
2.It is held that the termination of employment is lawful.
3.Respondents shall be awarded payment in lieu the petitioner’s
failure to give notice, and the period of notice shall be proportionate to
their length of service as stipulated under Article 35 of Proclamation
No.377/2003.
4.As the payment claimed for unutilized leave was not objected by
the petitioner, it is affirmed.
...
Signature of five justices _________________________________________________
Source: Federal Supreme Court Cassation Division Decisions
Volume 8, pp. 169-170
Abridged translation: Mehari Redae
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