Cassation Case No. 106583

Date of Decision: February 16, 2007 (E.C.)

Litigating Parties:

Petitioner: Construction and Business Bank

Respondents: Ato Medhane Tadele (3 individuals)

Brief Statement of the Case:

The respondents resigned from their positions of their own volition. During the fiscal year in which they resigned, the bank recorded a profit and subsequently issued bonus payments to its employees. However, the Petitioner withheld payment from the respondents, asserting that “employees who have resigned are not entitled to bonus payments.”

Legal Interpretation (Rule):

The purpose of a bonus payment is not exclusively to incentivize future motivation; it is also a payment intended to allow the employee to benefit from the profits generated by the work they performed during their period of employment.

Reasoning:

Insofar as it is established that employees contributed to the profitability achieved while they were in service, the employer does not have the right to withhold payment in the absence of a legal directive or agreement that prohibits such payment. The “directive” invoked by the Petitioner was found to be a proposal prepared by a specific department rather than a policy ratified by the competent governing body; consequently, it was deemed inadmissible.

Ruling:

The decisions of the lower courts ordering the bank to effect the bonus payments to the respondents are hereby affirmed.