Cassation Case No. 41058

Cassation Case No. 41058

February 25, 2009

Judges:

Abdulqadir Mohammed

Hagos Weldu

Hirut Melesse

Belachew Anshiso

Sultan Abatemam

Applicant: Artistic Printing Enterprise, Hawassa Branch – Represented by Matias Girma (Attorney) – Present.

Respondent: Mr. Danse Mitiku – Not Present.

JUDGMENT

We have examined this case following the petition filed by the Applicant on October 23, 2008, and have heard the arguments after summoning the Respondent. The petition was admitted to the Cassation Bench to review the legality and appropriateness of the lower court’s decision, which ruled the dismissal of the Respondent unlawful and ordered the Applicant to pay service terminal benefits (severance pay) for six years of service. Accordingly, we have reviewed this point in light of the arguments, the contested decision, and the relevant laws.

From the nature of the proceedings in the lower courts, we have established that the Respondent was originally hired as a security guard for a building held as collateral by the Development Bank, with the agreement to serve until the bank sold the property. Subsequently, the Applicant purchased the building through an auction. Following the purchase, a contract was concluded between the Applicant and the Respondent, under which the Respondent served as a security guard for one year. The Applicant argued that the termination of the employment was conducted in accordance with the terms of this contract and, therefore, should not be deemed unlawful. In the petition to this Cassation Bench, the Applicant specifically seeks the reversal of the order to pay service terminal benefits for the five years the Respondent worked for the Development Bank; as such, no ruling shall be made regarding the legality of the termination itself. The Respondent’s core argument regarding the payment was not that the Applicant had employed him for the entire duration, but rather that by purchasing the building, the Applicant also assumed the Respondent’s pre-existing employment rights. The lower courts rendered their decisions by adopting this line of reasoning from the Respondent.

The issue at hand concerns a labor dispute between an employer and an employee and must be resolved pursuant to the Labour Proclamation No. 377/2003 (as amended) and the contract between the parties. As previously noted, the employment contract between the Applicant and the Respondent was for a fixed term of one year. This implies that the Respondent provided services to the Applicant for only one year. When the Applicant purchased the building, it did not automatically succeed to the rights or obligations of the Development Bank regarding its employees. There is no law or contractual provision that mandates a purchaser of a building to take over the previous owner’s employees. The Applicant hired the Respondent of its own volition for a period of one year; therefore, any legal obligation arising from the employment relationship only pertains to the period after the contract was signed. The lower court’s reasoning that the Applicant was legally bound to assume the Development Bank’s obligations lacks both legal and factual merit. In conclusion, since there is no legal basis for the Applicant to bear the liabilities of the Development Bank, we find that the contested decision contains a fundamental error of law.

DECISION

1. The decision of the Hawassa City First Instance Court in Case No. 13279 dated May 9, 2008, the decision of the SNNPR Hawassa City High Court in Case No. 05081 dated June 20, 2008, and the order of the Regional Supreme Court in Case No. 22826 dated October 2, 2008, are hereby MODIFIED pursuant to Article 348(1) of the Civil Procedure Code.

2. We hold that the Applicant is liable to pay the Respondent service terminal benefits only for the one (1) year period during which the Respondent was employed under the contract with the Applicant.

3. Regarding court costs and expenses, each party shall bear their own.

The file is hereby closed and returned to the records office.

*(Signature of five judges – illegible)*