The Legality of Terminating Expat’s Employment Contract made for a Definite Period of Time

Case Summary

This post summarizes a Federal Supreme Courts Cassation Bench’s Decision File No. 200687 between Ayka Addis Garment Investment Group PLC v. Ibrahim Aydogedu concerning the validity of the termination of a foreign employee’s contract of employment for a definite period that had been getting renewed for several years.


Ibrahim Aydogedu, a foreign worker employed as a cook at Ayka Addis Garment Investment Group PLC, had been working there for eleven years under a contract period of employment, renewing his contract yearly until his employment was terminated on the grounds that his contract had expired. He brought a claim to the court alleging that termination was unlawful and to be compensated according to the law of the land.

On the other hand, the employer argued that the foreign employee had entered into the employment contract knowing it was intended only for a period of one year. Furthermore, as a foreign worker, his presence is only permitted until Ethiopian workers gain expertise and can perform the job, making it illegal for him to continue working as the employer is required by Investment Regulation No. 474/2020 Art. 19(1) to replace the expat employee with an Ethiopian.

The lower court determined that there was no specification as to why the employment contract was only made for a definite period (i.e., it did not meet the legal requirements for contract work. Further concluding that the employee’s job was continuous and that there is no law that compels foreign workers to only be employed for a definite period. Finally, it ruled the termination was unlawful and granted the employee compensation.

The employer filed an appeal with the Regional Supreme Court of Oromia, but the lower court’s verdict was upheld.

Appeal to the Federal Supreme Court Cassation Bench

It was contended by the employer that the parties’ employment contract makes it clear that either party can terminate the contract at any moment. The employee had been working for eleven years under a contract period of employment by renewing his contract and work permit. There was no formal agreement for a long-term employment relationship. And according to Ethiopia’s investment laws, foreign workers were only permitted to work there for as long as it took Ethiopian workers to obtain the necessary skills. Therefore, staying employed for a long period of time was against the law.

The employee argued that whether the employment was a contract or full-time should not be determined by the contract of employment but rather by the nature of the job and that the fact that the employer has hired another worker demonstrates that the nature of the work is continuous. He also claimed that he was not given a one-month notice prior to the termination and requested that the lower court’s decision be affirmed.

The Supreme Court Cassation Bench, however, reasoned that the lower courts fundamentally erred in interpreting as though the conditions of the labor proclamation (Proclamation No 33/2002) also applied to foreign workers and in concluding that the definite period of employment that kept getting renewed should be considered indeterminate. When it comes to foreign employees, the labor proclamation under Art. 176 states work permit shall be given for three years and shall be renewed every year. Thus, the duration of employment is contingent upon the continuance of the issuance and renewal of work permits at the request of the employer by the Ministry of Labor and Social Affairs. The court also noted that Investment Regulation No. 474/2020 Art(19,1) requires foreign employees to be substituted by Ethiopians within a set time frame by providing the needed on-the-job training and facilitating the transfer of knowledge.  Therefore, the court reversed the lower court’s decision and ruled that the dismissal was lawful.

In conclusion, as the court ruled that the termination was valid, no compensation is payable; nonetheless, the employer was ordered by the court to pay for the employee’s airline ticket home, per the terms of the employment contract they concluded.

Related Posts

Leave a Reply