Fortune News | Jun 25,2022
Hundreds of employees working for Tekleberhan Ambaye Construction Plc (TACON) and its subsidiary, Edna Mall, should be paid compensation for "unlawful" terminations of employment, a Judge at the Federal First Instance Court ruled.
The Judge has ordered that close to 200 of these employees should be recompensed for annual leaves not taken, unpaid monthly salaries, and a three-month severance payment. The ruling was made in April 2022, four months after Edna Mall employees took the case to court, challenging their employer in absentia. The employees have lost their jobs after the property on Cameroon Street, across from Bole Medhanialem Cathedral, was auctioned by the state-owned Commercial Bank of Ethiopia (CBE), which held it against a loan advanced to TACON.
CBE's management sealed several parts of the Mall, including movie theatres, an amusement centre, and administrative offices in early December last year. The measure left close to 300 Edna Mall employees out of a job. Employees claim the Mall's management did not give them advance notice before the closure of the building, which was acquired by East Steel Plc, a Chinese industrialist.
Incorporated in 2014 with 279 million Br in equity, East Steel operates in the Eastern Industry Zone in Dukem, 35Km southeast of Addis Abeba. It took possession of the landmark property after offering 810 million Br during an auction held in July 2021 – over three times the floor price.
The following year, 185 aggrieved workers organised under seven groups took their misgivings to the Federal First Instance Court, second Bole District Bench. Abate Abebe, a father of two, was one of these employees aggrieved from a sudden job loss.
Abate worked at Edna Mall as a security personnel for seven years, earning a gross salary of 3,500 Br. Judges awarded him 22,000 Br in compensation. However, he says he is not "contented" with the ruling.
“I remain unemployed,” he told Fortune. “I should be compensated for the losses I've been having until now.”
More displeasure might be in store of employees like Abate. The ruling does not necessarily mean workers will be compensated right away, according to Wabi Haji, a lawyer representing the employees.
“The defendants are not responding to court summons," said the plaintiff's lawyer. "The compensation must come from the money kept under the defendants' accounts."
Before passing the ruling, Judge Eyerusalem Fantabel ordered the CBE to freeze funds under the accounts opened by the defendants.
Signed by Gadesa Teshome, acting foreclosure manager at the CBE, a submission filed before the court a month ago, however, says that there is no fund under the accounts of the defendants. Proceedings from the property transfer to East Steel, which is yet to be completed, remain outstanding, disclosed Tigist Gebregziabher, acting director of litigation and foreclosure at the Bank.
"The Bank could not comply with the account seizure ordered by the court," said Tigist.
Wabi, however, plans to petition the court for funds seizure under the defendants' accounts when the transfer of the property is completed.
Officials of the Addis Abeba Revenues Bureau are also attempting to recoup 87.4 million Br they claim in tax arrears from Edna Mall, piled up over four years. Two months ago, the Bureau sent a notice addressed to a company registered under Tekleberhan, claiming 67.2 million Br owed to the city in profit tax, while unpaid value-added tax (VAT) accounts for the balance. The Bureau says it has arrived at the figure after assessing the property's financial records for the four years beginning in 2016.
However, it could not determine the tax amount for the fiscal year 2020/21 because the company did not submit a financial report.
Similar disputes among creditors, tax authorities, and employees are not unusual. Legal experts observe settling the issues is a matter of priority, dictating who is entitled to compensation first following the foreclosure of a property.
Ethiopia’s civil code grants hierarchy to creditors on properties under foreclosure, argues Yehualashet Tamiru, a legal consultant and researcher.
“The amended tax law also prioritises secured creditors, followed by tax authorities,” he said. “Unless the case is related to company liquidation and the tax arrears are in the form of unpaid value-added tax, this is the proper course.”
The expert says unsecured creditors and employees owed compensation are lower down in the pecking order.
Representatives of Edna Mall and TACON were unavailable for comment.
PUBLISHED ON May 07,2022 [ VOL 23 , NO 1149]
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