Acts of deception and fraud committed by an employee are considered sufficient reasons for immediate termination due to the fundamental breach of trust inherent in the employer-employee relationship. The severity or magnitude of the fault is generally not considered in determining the lawfulness of dismissal under this provision. Two primary conditions must be met for a dismissal to be lawful under this ground: the alleged act must genuinely fall within the definition of deception or fraud, and it must have been committed “in the course of work”.
Courts are tasked with defining what constitutes deception or fraud. A key judicial definition states: “An act of deception or fraud is committed when, knowing that the fact is false, it is made to appear true to the other party by oral statement, conduct, or false declaration, causing them to engage in an undue act and suffer damage to their interest” [, citing
Muger Cement Enterprise v. Ato Dejene Yilma (File No. 37204)]. However, judicial application of this definition has shown some inconsistencies. For instance, in Hilton Hotel v. Ato Yonas Tilahu (File No. 50009, Vol. 9), the court bypassed defining whether bringing an outsider to eat in the cafeteria constituted deception/fraud, focusing instead on the severity of the fault. Similarly, in Ato Ayele Mengistu v. Ethiopian Grain Trading Enterprise (File No. 101040, Vol. 17), the Cassation Bench overturned lower court decisions by concluding that hiding maize in a warehouse constituted deception/fraud, even though the quantity and location made the act of “hiding” questionable. Conversely, in
Dashen Bank S.C. v. Ato Teferi Asalfew et al. (File No. 102994, Vol. 18), the court found clear acts of deception/fraud where store clerks concealed items and recorded them as distributed. These varying applications highlight the ongoing challenge in consistently defining and applying “deception/fraud” in diverse factual scenarios.
A significant aspect of this provision is that if the act meets the definition of deception or fraud, termination is lawful regardless of whether the perpetrator personally benefited from the act. This principle was affirmed in Qality Metal v. W/ro Etetu Nigussie (File No. 42650) and Ethiopian Electric Power Corporation v. Ato Mulugeta W/Giorgis (File No. 95522, Vol. 16), where attaching false educational credentials was deemed fraud even without proven personal benefit.
The phrase “in the course of his duties” is broadly interpreted to include acts committed at the workplace or outside if they affect the employer’s property or interest. Presenting false credentials for employment, even if done before the actual commencement of work, is considered an act committed “in the course of his duties” because the employee begins and continues work based on these credentials (e.g., Filwoha Service Organization v. Ato Bereket T/Mariam (File No. 39543, Vol. 8)). This broad interpretation reflects judicial attempts to expand the provision’s reach beyond its literal wording to cover misconduct that fundamentally impacts the employment relationship. However, this ambiguity creates uncertainty for both employers and employees, as employers may struggle to definitively classify certain acts as “deception/fraud” under the law, potentially leading to unlawful dismissals or, conversely, a reluctance to address clear misconduct.
Recent cases further illustrate the application of this ground:
- BMET Energy, Telecom Industry and Trade Plc. (Case No. 242043): Lower courts found the employer failed to prove intent for personal gain and that alleged stolen cables were found within company premises, thus not constituting deception. The Supreme Court upheld this, emphasizing its role is not to re-evaluate factual findings.
- Sodo Mehal Meserete Kirstos Church Youth and Children Development Project (Case No. 243339): The Supreme Court remanded the case due to the lower court’s procedural error in evaluating crucial documentary evidence (an alleged admission of fault), which was central to proving deception.
- Silver Spring Production and Promotion Plc. (Case No. 244055): The Supreme Court remanded the case, finding a fundamental error of law by lower courts for failing to properly investigate critical factual points (e.g., purpose of a social media account, use of company assets for competing work) relevant to alleged misconduct under Article 27(1)(ሐ) (መ) (ሸ).