9 December 2012

Ethiopia: Apex Justified in Laying Off Employees, to Pay Compensation

Employees at Apex bottling had stood outside the factory in protest on January 11, 2012, when the company posted a notice stating it can no longer operate the company.

Cassations bench heard the case of Ethio Ventures Limited Apex Bottling Plc Vs Employees Labour Union for a second time in 11 months and ruled again that the former was in the right when laying off 138 of its employees. It claimed difficulties in settling the 52 million Br excise tax levied on it for the 2002 to 2006 time period.

The company will still have to pay provident funds, severance payments, and notice period payments, according to the ruling on November 27, 2012.

Apex Bottling Plc dismissed its employees on January 11, 2012, citing that, on top of the tax that it was required to pay by the Ethiopian Revenue & Customs Authority (ERCA), it had become difficult for it to compete in the market.

The employees had contested the decision of the Company and taken their case to the City Labour Relations Board, which ordered the Company to reinstate them or to pay six months' salary to each employee.

Apex then appealed to the Federal High Court on February 11, 2012, and lost. It took its case to the Cassation Bench on August 2012, which upheld its decision to dismiss the employees but ordered Apex to pay the compensation, leaving the method of payment to be decided by the Ministry of Urban Development & Construction (MoUDC).

While the Cassation Bench was still looking at the case, however, the employees went back to the Board on June 1, 2012, which again stood by its original decision.

Apex argued that the Board could not review a case it had already heard, but the Board rejected the claim.

Apex took its case once again to the High Court, and the High Court stood by the original ruling in favour of the employees.

That led to the case going back to the Cassation Bench once again. And the Bench ruled in favour Apex one more time, arguing that the same case could not be seen twice.

Apex is yet to make all the required payments to the employees because the MoUDC has not yet decided on the payment procedure, says Hirut Melese, the Company's legal expert.

Tigist Tefera, chairperson of the union of employees, is disappointed, saying that the court did not consider how the employees' lives would be affected by the loss of their livelihood. In her opinion, if the company was really unable to pay its taxes it would have returned its business license, which it did not.

"We were contributing our income towards the pension plan and the construction of the millennium dam and the Court did not even consider returning some of that money to us," she said.

Haylemelekot Menbere, lawyer and legal advisor to foreign investors, disagrees on the decision of the Cassation Bench. The mere inability of paying the excise tax should not be grounds for allowing one company to dismiss 138 employees, he stated.

"Its capability should be seen in line with the capital it has and employees should not be forced to stay without any type of payment for 11 months" he said.

Apex Bottling had been in business for over a decade. It was established in 1999, by Ermiyas Amelga, founder of Zemen Bank, and twoUnited Statescitizens as shareholders.

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