Month: April 2023

By Dagnachew Tesfaye, Managing Partner at DMLF

Introduction

The Labour Proclamation No 1156/2019 recognizes the existence of  labour disputes.  The  labour disputants are the employer or employer’s association and worker or trade unions. The measures taken by the parties to a labour dispute  can go as far as taking the measure of  lock-out or strike. However, there are essential public services that are not subject to lock-out or strike. The primary means of resolving such labour disputes is conciliation. Thus in this short article, we try to see what a labour dispute consists of, the measures that can be taken by employer and employee in the form of lock-out or strike respectively, the exceptions in terms of essential undertakings that cannot undergo lock-out or strike and finally the conciliation procedure. A brief conclusion shall end the article.

Labour Disputes

Labour disputes can happen  between a worker and an employer or trade union and employers’ association. The subject of the dispute could be in respect of the application of law, collective agreement, work rules, employment contract. Any disagreement arising during collective bargaining or in connection with collective agreement is also a labour dispute. 

Lock-out and Strike

Lock-out and Strike are enforcement mechanisms for an employer or employees to push down their agenda to be heard, negotiated and accepted by the other party. Lock-out is a measure that is taken by the employer. The employer will lock down or close  the place of work with a view to persuading workers to accept certain labour conditions in connection with a labour dispute or to influence the outcome of the dispute.  Strike on the other hand is a means available for workers whereby these workers persuade the employer or employers’ association to accept their demand. So the workers through a strike  slow-down the  work by any number of workers in reducing their normal out-put on their normal rate of work or temporary halt work by any number of workers acting in concert in order to persuade their employer to accept certain labour conditions in connection with a labour dispute or to influence the outcome of the dispute. 

Essential Public Services

Essential public services cannot be a subject of a lock-out or strike. The reason is because such essential public services are required to be provided without interruption to the general public. The list of the essential public services include a) air transport services; b) electric power supply c) water supply d)city cleaning and sanitation services e) urban light rail transport service f) hospitals, clinics, dispensaries and pharmacies g) fire brigade services and h) telecommunication services. The list is exhaustive. Therefore, in Ethiopia in the above 8 sectors of the economy neither the employer or the employers’ association nor the workers or trade unions call for lock-out or strike respectively. 

Conciliation

When lock-out or strike happens, the labour law suggested conciliations as a means of resolving the dispute. The procedure of conciliation shall come into picture where the parties on their own effort could not bring a solution to their disputes. Conciliation is the  recommended method of resolving disputes between workers or trade unions on one side and employer or employers’ association on the other side. Conciliation requires the appointment of a third party conciliator by the disputant parties. If there is no agreement on the appointment of  a common third party, then the parties can request the concerned labour office or any other competent authority in conciliation, to appoint a conciliator. The task of the conciliator will be to bring the parties together and reach an amicable solution to their labour dispute.  

Conclusion

Labour disputes occur between employer and worker or their associations. Such a dispute can  grow up to the point of lock-out or strike. When such strike or lock-out happens, the recommended method of dispute resolution is conciliation between the disputing parties. There is an exhaustive list of essential public services that are excluded from exercising lock-out or strike no matter what. This is aimed at keeping continuity of essential public services. When it comes to essential public services, the parties in dispute should resolve their issues without going to lock-out or strike. 

For any labour related inquiries, you may contact us at info@dmethiolawyers.com.

By DMLF Team

Background

The Ethiopian Civil Code of 1960 from Articles 3019-3040 incorporates the legal basis for construction rules of contracts of work and labour relating to immovables. These are special laws that override general contract laws. The scope of the law relates to construction works in relation to buildings, repairs or installation of immovables. There are other construction related laws within the Civil Code. One of them relates to contracts of work and labour covered under Articles 2610-2631. These articles apply to construction of buildings where the cost of the building does not exceed 500 Ethiopian dollars. The other provisions of the Civil Code on construction relate to administrative contracts that range from Article 3131-3306. Article 3244 provides that a contract of public works is a contract whereby a person the contractor binds himself in favor of an administrative authority to construct, maintain or repair a public work in consideration of a price. This brief article is about Civil Code provisions from Article 3019-3040. An attempt shall be made to shed light on topics of  form of contract, experts, alterations, termination, dispute settlement, warranty and sub-contractors. A brief conclusion shall end the article.

Form of Contract

The construction work of an immovable property is required to base itself on a contractual agreement. Here, unlike the general contract provision of the Civil Code relating to immovables where such contracts need to be written and witnessed, this special  law does not provide for a special form of contract. Rather the law here identifies two essential aspects of the contract – to agree on the work to be done and  the price. 

The work to be done could be described by means of a plan, scheme or other document. If the description of the work on the immovable is in general terms, the interpretation of the work will be restrictive.

The other essential element of the agreement is the price. The price could be determined in lump sum or fixed in estimation. The law recognizes as well payment of price in stages of compilation of work. The remuneration of the contractor is separate from the price in which the agreement of the client and contractor should fix the remuneration. In the absence of a specific fixed remuneration, the contractor shall notify the client the wages corresponding to the contractor’s work.

The proof of evidence of a contract of immovables is where the contractor has undertaken work to the knowledge of the client or received an advance from the client.

Experts 

The idea of a consultant to the client is also introduced in the Civil Code. The client may require the amount appearing in the accounts of the contractor or the progress achieved in the work or quality of materials used and work completed be assessed by an expert. The fact that there is no specific expert appointed may not prohibit the client from seeking such services from experts.

Alteration

There are two types of alterations. One is when the client demands the alteration and the other is when the contractor requests alteration. When the client requires alteration, such demand could be taken as a right in two conditions. One is when the alteration needs to technically be made and two is when the alteration does not destroy the solidarity of the work already done. The alteration may result either in reduction of originally agreed price or the alteration may result in increase from the originally agreed price. The contractor is at liberty to disagree on the alteration where the altered work exceeds by 20% of the value at which the original work was or could have been estimated. 

Similarly, the alteration may be demanded by the contractor. In such a case, the contractor is required to serve notice to the client.

Warranty

The Civil Code introduced a warranty due by the contractor. The contractor is duty bound to guarantee during ten years from delivery the proper execution and solidity of the work done by the contractor. The contractor is responsible for loss or deterioration of the work that comes due to defects in execution or the soil on which the construction has been done. Such warranty cannot otherwise be agreed to be shortened or cannot relieve the contractor from warranty.

Termination

The right to terminate the contract for no fault of the contractor is given to the client. When such happens, the right of the contractor is to be paid to the extent of the work done, material value used and the whole remuneration agreed with the client. However, when the client terminates the contract due to the fault committed by the contractor or contractor not accepting alterations, the right of the contractor is limited to the part of the price and remuneration that corresponds to the work already carried out.

Dispute Settlement

The contract of work and labour on immovables indicates in different provisions how disputes be resolved between client and contractor. For instance, in cases where there is no agreement on the amount of remuneration, the client has the right to require such remuneration be fixed by arbitrators. When it comes to alteration and there arises dispute on reduced or increased price due to alteration, such dispute shall be settled by arbitrators appointed by the parties or failing such, by the court. 

Sub-contractors

The idea of principal contractor and subcontractors is also introduced in the Civil Code of 1960. The independent subcontractors or work men could be employed under a contract of work and labour relating to an immovable. For the work performed, these sub-contractors or the work men can claim against the person on whose behalf the work was done.

Conclusion

The Ethiopian Civil Code of 1960 covers those construction contracts on immovables where the agreement of the parties fails to cover. The provisions of Articles 3019-3040 still are enforced. Aside from construction contracts of public works which are handled under administrative law provisions, any other construction contract on immovables should follow these provisions.

For your construction contract issues you may contact us at info@dmethiolawyers.com

By Dagnachew Tesfaye, Managing Partner at DMLF

Background

The Federal Supreme Court of Ethiopia enacted a directive namely Directive on the Procedure for Cassation Division No 17/2023 (here after the Directive). The Directive will be effective as of April 27/2023. The Directive bases its content from the Federal Court Proclamation No 1234/2021(the Proclamation) Article 2(4) on definition of basic error of law, Article 27 on Application Procedure for Cassation and Article 28 Petition and Proceedings in Cassation Division. This brief article will attempt to cover the basic new additions introduced in the Directive. The article deals with formats and contents of an application, proceedings in cassation division, reply and counter reply, introduction of amicus curiae, condition requiring cassation division sitting with not less than seven judges, judgment writing incorporating  binding legal interpretation and handling of costs of litigation in cassation division. A short summary shall conclude the article.

Format and Content of an Application

The application presented for cassation by an applicant should be written in power geez in a font of 12, paper margin 1 inch, space between lines 1.5 in three pages not including the introductory part. This is an attempt to restrict applicants who write applications in a long and congested manner with several pages. The judges used to have a hard time reading as well as understanding the issue. 

The Directive introduced a new approach to limit the application to the standard format by allowing the applicant to attach an additional explanation. The applicant can attach additional explanation that has direct relevance to the issue at stake mentioned on the application. This is a new way of addressing concerns of some applicants that feel what is written in brief on the application is not enough to explain the basic error of law. Hence allowing additional explanation will enable the applicant to stick with the required format and content of presenting his/her formal cassation application. However, the cassation division is with liberty not to look into the additional explanation if the cassation division thinks the application sufficiently argues on the basic error of law of the case.

The Directive has incorporated at the end in the form of attachment formats in which cassation application, reply and counter reply has to follow. The registrar will make sure these formats are being adhered to. Such follow up and details will enable uniformity of applications, reply and counter reply. The Directive also gave the cassation division judges the power to demand the amendment of applications in line with the formats indicated in the Directive.

Proceedings in Cassation Division

Article 28(2) of the Proclamation provides that where the cassation division concludes upon examination of the application that there is no basic or fundamental error of law, the division shall order the dismissal of the application. The Directive added an obligation on the cassation division judges to write the reasons why the division dismissed the application on the file. This is one of the key aspects the Directive makes a positive impact in proceedings in cassation division. Earlier the usual way of dismissing a case has been by one line stating the case is dismissed. But now the judges have to jot down the reasons why the case is being dismissed.

When the cassation division concludes that the application has merit, the division will frame issues or issues. Then the division will order the application, summons and the framed issues to be served to the respondent to reply in writing. The question is: will the additional explanation, if any, will also be served to the respondent? The Directive is not clear on this point. The applicant will also be allowed to counter reply. 

The new introduction on the Directive is that the cassation division can alter or amend the already framed issue or issues. When such alteration or amendment happens, the Directive says, the Division has to hear the argument of the parties on these altered or amended issues. However the Directive doesn’t elaborate how such hearing will be conducted. Is the hearing conducted in writing or oral? If the hearing is in writing, will the respondent be given the chance to reply and then the applicant to counter reply? Or both parties will be asked to submit their argument on the framed issues in writing. These proceedings need to be clarified in the Directive. Nonetheless, the civil or criminal procedure codes are there to cover what has not been indicated in the Directive as well.

There were a number of cases whereby the three judges of the cassation division framed an issue and the respondent replied on those issues. But the five judges ruled on a different issue which was not framed previously. The respondent or the applicant were not mentioned in those cases as submitting their opinion on the changed issue. A case in point can be found in the following case: CASSATION DECISION ON ADMINISTRATIVE PROCEDURE PROCLAMATION 1183/2020 The Directive has now provided a solution for such changes in issues by the five judges. The parties to the case will be given the chance to be heard on the newly formed issues.

Reply and Counter Reply

The respondent has to reply in brief based on a) the basic error of law raised on the application and b) the issue framed by the cassation division. The applicant’s additional explanation,if any, are not mentioned as areas in which the reply has to cover. If there are preliminary objections, the reply should contain these objections together with the rest of the reply. If the respondent has additional explanation relevant to the issue at hand, the respondent is given the right to attach such additional explanations to the respondent’s reply.

The counter reply has to be based on the reply of the respondent and cannot contain new facts and arguments. The counter reply is restricted to the reply only and does not seem to extend to the additional explanation attached with the reply by the respondent.

Amicus Curiae

The Directive included amicus curiae- an imperial advisor to a court of law in a particular case. The cassation division may decide to receive the opinion of amicus curiae on particular cassation application and issue. Such advice shall be presented in writing. The Division may order the oral hearing of the advisors in open court as well. The questions remain as to who covers the cost for the advisors, the court or the litigants? Is the advice by the amicus curiae binding on the division or not? 

Cassation Division Sitting with not less than Seven Judges

Article 26(1) of the Proclamation stated that the cassation division presided by 5 judges may by its own initiation or the application filed by one of the litigating parties, direct the case to be heard by a cassation division of not less than 7 judges. The Directive made it clear that the reason the case will be seen by not less than 7 judges is because of the need to change or amend previously held legal binding interpretation.

Binding Legal Interpretation in a Judgment

The Directive contains a provision on Article 15(4) that states the  fact that cassation division is duty bound to write, in case where the Division gave binding legal interpretation, a short summary of the binding legal interpretation. This provision will make it easier for lower courts and any interested parties to be clear on what has been the binding legal interpretation of a certain law. This will  also avoid confusion as to what has been entered as a binding legal interpretation by the cassation division.

Costs

The normal course of decision regarding costs in cassation division has been for the litigating parties to cover their costs by themselves. These were decided to avoid cost litigation within the cassation division. This trend is changed by the Directive. The Directive gives the cassation division the right to decide on costs as appropriate including saying the usual i.e cover your own costs. However, the Directive added another procedure  whereby the cassation division allows one party to cover the costs of the other party: the cassation division can order the registrar to receive the parties costs and arguments and present for the cassation division to decide on the liquidated sum.

Conclusion

The Cassation Division Procedure Directive No 17/2023 has brought to the table new and improved ways of dealing with cassation division procedures. The objective is to enable the parties to restrict themselves on the basic or fundamental error of law and for the cassation division not to be burdened with unnecessary long arguments that distract  and waste time of the judges. The introduction of amicus curiae is a step forward in the right direction. Judgment writing that contains binding legal interpretation in a summary form is also a positive and outstanding introduction by the Directive.

If you have any questions you may forward them at info@dmethiolawyers.com

By DMLF Team

The right to non-discrimination on employment can be sourced from the FDRE Constitution Proclamation No 1/1995. Article 25 of the Constitution provides the right to equality for all persons. All persons are equal before the law and are entitled without any discrimination to the equal protection of the law. The law shall guarantee to all persons equal and effective protection without discrimination on grounds of race, nation, nationality, or other social origin, colour, sex, language, religion, political or other opinion, property, birth or other status. 

The  Labour Proclamation No 1156/2019 incorporates non-discrimination provisions on employment. Article 2(15) of the Labour Proclamation No 1156/2019 defines “Discrimination” as any distinction, exclusion or preference made on the basis of nation, race, color, sex, religion, political opinion, national extraction, social origin, HIV/AIDS status, disablement and others which has the effect of nullifying or impairing equality of opportunity or treatment in employment or occupation.

The Labour law as a general rule  made discrimination an unlawful activity when committed by the employer or a managerial employee. Article 14 of the Labour Proclamation provide that it shall be unlawful for an employer or a managerial employee to discriminate against female workers, in matters of remuneration, on the ground of their sex orientation or discriminate between workers on the basis of Nation, sex, religion, political outlook, HIV/AIDS disablement or disablement or any other grounds.

The consequences on discrimination can be found in the payment of severance pay as well as compensation for victims of discrimination. As a rule, an employer’s action to terminate based on  worker’s Nation, Sex, Religion, Political outlook, Marital status, Race, Color, Family responsibility, Pregnancy፣ Disablement or Social status is deemed to be an unlawful ground of termination.

Termination of employment due to discrimination is an unlawful activity and in violation of the law. As a result, a worker who has completed his probation period and who is not eligible for pension shall have the right to receive severance pay from the employer where his contract of employment is terminated by the initiation of the employer in violation of the law. 

In addition to severance pay, where a contract of employment is terminated because of those grounds of discrimination, the employer shall be obliged to reinstate the worker; provided, however, that the worker shall be compensated if he wishes to quit his employment up to six months salary.

To sum up, Ethiopia has made discrimination in employment by an employer or managerial employee based on nation, race, color, sex, religion, political opinion, national extraction, social origin, HIV/AIDS status, disablement and others unlawful. The victim employee shall be compensated. Severance pay and reinstatement or compensation could be ordered.

For your labour issues you may contact us at info@dmethiolawyers.com 

By Dagnachew Tesfaye, Managing Partner at DMLF

The formation of a share company can start either with five founders or through subscription of shares to the public. When the latter happens, there will be promoters involved in making sure the share company’s business objective is sold to the public. In this brief article we shall see who promoters are, benefits allocated to promoters, and liabilities of promoters.

Definition of Promoters

A promoter is defined as  a person who initiates the formation of a company by public subscription, invites persons to join the company by preparing a prospectus or generally acts with the view to realizing the formation of the company and is liable for damage sustained in connection with failure to establish the company, if the company is not formed. The promoters of a share company may be one or more natural or artificial persons. An expert who based on a contract concluded with a promoter, for consideration, conducts a study necessary for the formation of the company, renders professional support or similar service is not a promoter.  A promoter need not be a shareholder in the company.

Benefits Allocated to Promoters 

The promoters may, for a period not exceeding three years, receive a share in the profits, beginning from the date on which the company starts making profits, which may not exceed twenty percent of the net profits in the balance sheet. Specifics regarding the amount of the share in profits, the manner in which the years payment is to be effected are chosen and the like shall be provided for in the Memorandum of Association. The promoters may not receive, from the company, any other special benefit except that which is provided for as a share in profits. Nothing shall affect the benefits that may be due to promoters in their capacity as shareholders. The benefit to be provided in shares in the profits shall be paid in cash. The special benefit due to the promoters may not be paid by issuing shares.  

Persons not Competent to be Promoters 

A person that had been convicted of breach of trust, theft, robbery or any other similar criminal offense, in connection with his function as a promoter, director, manager, inspector, auditor or any other managerial positions in a business organization or in any other circumstance shall not act as a promoter of a share company formed by public subscription. 

Liability of Promoters 

Promoters shall be jointly and severally liable to persons with whom they contracted, shareholders, and third parties with respect to the following matters: a) commitments entered into for the formation of the company; b) full subscription of the capital of the company and deposit of the paid-up capital in the name and to the account of the company; c) valuation of contributions made in kind to the company in accordance with the provisions of the Commercial  Code; d) accuracy of statements made to the public in respect of the formation of the company; e) legality of the process followed in the formation of the company; f) verification by an Auditor of the formation procedure of the company; g) where the company is not formed, refund of paid up contributions with interest to subscribers who demand that in accordance with this Code; and h) all other matters connected with the formation process. 

Period of Limitation

Claims for damages against promoters  shall be barred after five years from the date when the aggrieved party knew  the damage and of the person liable. There shall be absolute limitation after ten years from the date when the act complained of took place. 

Take Over of Commitments from Promoters

The company shall take over from the promoters commitments entered into by such promoters during the formation of the company and expenses made by them in so far as such commitments and expenses were necessary for the formation of the company or if approved by the general meeting of the subscribers. Where the company is not established for whatever reason, the subscribers shall not be liable for the commitments and expenses made by the promoters.

Conclusion

The new Commercial Code has introduced in detail the benefits of promoters, the liability of promoters and who can be a promoter and who cannot be a promoter. Public subscription of shares now takes the active role of promoters. In this way business and investment in the form of a share company will be conducted in a predictable manner.

For your inquiries, you may contact us at info@dmethiolawyers.com