The Sunday Mail
Jurists are in agreement that labour law is that branch of the law regulating the voluntary relationships arising from the workplace and whose enforcement is guaranteed by the State.
Tapiwa Kasuso
It is concerned with the world of work and people’s engagement in it. Without doubt, work is important to any human society. It is fundamental to the definition of self and provides status, esteem and meaning to anyone fortunate to be engaged in it.
At a social, political and economic level, work remains the principal means through which economic activity is conducted.
The grandeur of work was summarised by Adam Smith thus, “It was not by gold or by silver but by labour that all the wealth of the world was purchased.”
Given the central role of work, the nature and extent of regulation of the labour market in general, and of work in particular, is inevitably a contentious political issue.
This is so in an environment like ours where Government seeks to provide decent work for all under Zim-Asset; but where assertions are made that in comparative terms, the Zimbabwean labour market is overly rigid and expensive, and that labour legislation inhibits economic development and job creation.
Recently, Finance Minister Patrick Chinamasa proposed a raft of changes to labour legislation to achieve a “low wage, high productivity paradigm”, prompting debate between employer organisations and trade unionists.
A contentious issue has been on the law of dismissal and termination of the contract of employment.
On one hand employers acknowledge that economic challenges, the liquidity crunch, viability problems and other socio-economic phenomena have conspired to hamstring business to the point of threatening their very existence.
It is argued that the current framework on termination is inflexible, cumbersome, unfair and deters investors, thereby subverting the fundamental objective of promoting rapid economic growth.
On the other hand, trade unions argue that the framework is inadequate and gives too much discretion to the courts who in reality have reduced the right of employees to protection against unfair dismissal under the Labour Act (Chapter 28:01) into a meaningless and ineffective one.
They have called for further reforms to give real meaning to this right and make it consistent with the principles of the new Constitution and international labour standards under the International Labour Organisation’s auspices.
To fully appreciate these contrasting positions, it is necessary that the jurisprudential basis of our labour legislation be revisited.
Finding the balance
A meaningful study of labour law is incomplete without at least a rudimentary understanding of the 2013 Constitution.
On May 22, 2013 Zimbabwe adopted a new Constitution with an expanded Bill of Rights. The most important section thereof relevant to labour law is Section 65.
Section 65(1) provides for every person’s right to fair and safe labour practices and standards. It provides both employers and employees with a minimum floor of rights.
Though the Labour Act must be interpreted in a manner that ensures the attainment of its purposes in Section 2A(1)(a)(f), it must also be interpreted in compliance with the Constitution. Our Constitutional Court has not yet had an opportunity to interpret Section 65(1).
In the circumstances, reliance has to be placed on the interpretation of Section 23(1) of the South African Constitution which is equivalent to our Section 65(1), given by the South African Constitutional Court.
In Nehawu v University of Cape Town (2003) 24 ILJ 95 (CC), the South African Constitutional Court held that fairness entails balancing the employers commercial interests and the legitimate workplace interests of employees since the right to fair labour practices is available to everyone including employers.
Employers have an interest in flexibility: namely, employment flexibility — freedom to change employment levels quickly and cheaply; wage flexibility — freedom to determine wage levels without restraint; and functional flexibility — freedom to alter work processes, terms and conditions of employment quickly and cheaply.
Employees have an interest in security: namely, labour market security, employment security, job security and representation security.
A balance must be struck between these two inherently competing interests and achieve equilibrium — “flexicurity”.
This concept of fairness permeates pre-employment, employment and termination of employment.
Of relevance to this discussion is the termination of employment stage, where there is need to balance the employer’s interest in employment flexibility and the employee’s interest in job security.
So, does our labour legislation balance these two competing interests?
Termination of the employment contract can either be for operational requirements, capacity or conduct.
Retrenchment
For operational requirements, the contract is terminated because of the employer’s constraints and has nothing to do with the employee’s conduct or capacity. In other words, the employee is not at fault.
It is commonly referred to as retrenchment.
Section 2 of the Labour Act defines retrenchment as terminating “an employee’s employment for the purposes of reducing expenditure or costs, adapting to technological change, closing down or reorganising the undertaking in which the employee is or was employed, or for similar reasons and includes the termination of employment on account of the closure of the enterprise in which the employee is employed”.
Retrenchment here is governed by Section 12C and 12D of the Labour Act, read with the Labour Relations (Retrenchment) Regulations of 2003.
These provisions are informed by the ILO Termination of Employment at the Initiative of the Employer Convention 158 of 1982 (C 158 of 1982), which sets minimum requirements of substantive and procedural fairness of a retrenchment to qualify as a “fair dismissal”.
These include, that retrenchment must be for a valid reason which pertains operational requirements, full consultation of workers and payment of severance allowances and benefits.
Though our retrenchment laws are generally in line with international labour standards there are two disquieting aspects which tend to tilt the scale in favour of employees to the detriment of employers.
These relate to the rigid, lengthy and cumbersome retrenchment process and the aspect of the retrenchment package payable. It has been argued by the Finance Minister that our retrenchment laws over-protect employees and stifle business.
If an employer intends to retrench five or more employees, he/she must, in terms of Section 12D of the Labour Act, implement special measures to avoid retrenchment such as short time work or a shift system.
It is only after such special measures have failed that the employer can issue a written notice of intention to retrench to the appropriate authority, which can be the works/employment council.
This would be followed by negotiations on whether or not employees should be retrenched and the retrenchment package payable. The works/employment council has no authority to make a binding decision.
Its role is mediation.
If negotiations fail the matter is referred to the Retrenchment Board and finally to the Labour Minister, who will make appropriate recommendations.
Throughout, the potential retrenchees remain employees and are entitled to their salary and benefits.
The contract of employment is only terminated when the employer accept the minister’s recommendations and issues a notice of termination in terms of Section 12C(5) of the Labour Act.
The employer can accept or decline the minister’s recommendations and challenge it in the Labour Court.
Clearly, these proceedings are cumbersome given the intricate web of procedures involved.
It is also costly to the employer who remains with an obligation to pay the employees pending finalisation of retrenchment.
The exercise does not take into account the employer’s capacity to pay wages and may in the end defeat the whole purpose of retrenchment.
Furthermore, there is need for a single statute regulating retrenchment to avoid confusion.
Package
As for the retrenchment package, the Labour Act does not provide a formula as to how it must be calculated.
Currently, reliance is placed on the formula developed in Continental Fashions v Mupfumiri and Others 1997 (2) ZLR 2005 (S).
In this case it was held that a retrenchment package must include:
(a) Severance allowance for recognition of loss of job, which is a lump sum to help an employee with immediate costs following loss of regular employment;
(b) Severance allowance for recognition in pay for each year of service;
(c) Relocation allowance;
(d) Statutory payments in terms of Section 13 of the Labour Act; and
(e) Miscellaneous benefits – any benefits which the employee enjoyed which can be sold to him at book value.
This formula is flawed and has resulted in high retrenchment packages which businesses are failing to sustain.
The purpose of retrenchment is to avoid the collapse and liquidation of a company. The survival of the company is the immediate motivating consideration and the purpose of the exercise is to save the company, to save the jobs of the remaining workers.
This must be balanced with the need to mitigate the consequences attendant to the employee being retrenched.
However, sight must not be lost of the fact that the ability of the employer to pay the retrenchment package is the ultimate criterion.
Thus, in recognition of the employer’s interest in achieving employment flexibility and contribute to economic development, labour legislation must provide a formula for calculating retrenchment packages or minimum entitlements.
In South Africa the statutory formula for the payment of severance pay is provided for in Section 41 of the Basic Conditions of Employment Act (1998). An employee is entitled to a minimum of one week’s remuneration of every completed and continuous year of service with that employer and the amount is not crested.
Incapacity
A contract of employment can also be terminated for reasons relating to capacity.
An employee is incapacitated in when there is inability to do the job. Such incapacity is usually a result of ill-health, or occasioned by a loss of physical or mental faculties necessary to work.
Section 14 of the Labour Act entitles an employee to sick leave. In total, an employee in any one year of service is entitled to 180 days of sick leave. The first 90 days the employee will be on full pay. The additional 90 days are on half pay and are available if the employee provides a certificate signed by a registered medical practitioner showing that in his opinion it is probable that the employee will be able to resume duty after such further period of sick leave.
During this period one remains an employee, there is no interruption of continuity of employment.
It is after exhaustion of the 180 days that the employer can proceed to terminate the contract of employment.
However, as held in Zimasco v Marikano SC6/14, before termination the employee must be afforded the right to be heard.
What is clear from labour legislation is that an employee is entitled to six months sick leave in any given year. During this period he/she is entitled to his/her full salary for the first three months and half salary for the remaining three months.
Without doubt, the sick leave period is too long and over-protective.
The employee is paid despite the fact that he is not rendering services. The employer’s capacity to pay are not taken into account.
There is need to balance the employers commercial interest in retaining productive employees and the job security of a sick employee.
This should entail guaranteeing paid sick leave but for a shorter period.
In South Africa, the sick leave cycle is a period of 36 months continuous employment. During every sick leave cycle, an employee is entitled to six weeks paid sick leave (Section 22, Basic Conditions of Employment Act).
In Namibia an employee is entitled to six weeks leave in a period of 36 months.
Misconduct
Another form of termination of the employment contract is termination for conduct.
Under these circumstances the contract of employment is terminated because the employee is at fault, ie he/she is in breach of fundamental duties such as the duty of subordination, duty of competency, duty to provide service and duty of good faith.
This is usually referred to as a dismissal.
Article 4 and 7 of ILO C 158 of 1982 recognises that the employment contract shall not be terminated unless there is a valid reason connected with capacity or conduct of the worker or operational requirements of the business.
It further provides that the employment contract of a worker shall not be terminated for reasons related to the workers conduct or performance before he/she is provided an opportunity to defend himself/herself against the allegations.
Zimbabwe reflects these principles in Section 12B(1) of the Labour Act, which guarantees the right against unfair dismissal.
Section 12B(2) of the Labour Act then provides that in the event of an employee committing an act of misconduct his/her contract of employment can only be terminated through an employment code or in its absence, the employer shall comply with the model code made in terms of Section 101(9).
These provisions are in line with international labour standards, which demand that a dismissal be substantively and procedurally fair.
The employer’s interest in employment flexiblity and the ability to remedy an inappropriate recruitment and the employee’s interest in job security are balanced.
Though our law on unfair dismissal is in line with international labour standards, problems arise where courts make a finding of unfair dismissal and an order of reinstatement of the employee is made.
Any order of reinstatement must, in terms of Section 89(2)(c)(iii) of the Labour Act, be accompanied by an alternative order for payment of damages in lieu of reinstatement.
This is inspired by Article 10 of C158 of 1982 which provides that, “If the bodies referred to in Article 8 of their Convention find that termination is unjustified and if they are not empowered or do not find itpracticable, in accordance with national law and practice, to declare invalid and/or propose reinstatement of the worker, they shall be empowered to order payment of adequate compensation or such relief as may be deemed appropriate.”
In calculating damages in lieu of reinstatement, the wronged party must get adequate compensation without being unduly harsh on the employer. Damages must consider the state of the economy and the employer’s capacity to pay.
The interests of both parties must be properly taken into account.
Tapiwa Givemore Kasuso is a lecturer in the Faculty of Law at Midlands State University, Gweru. He is a registered legal practitioner and independent arbitrator
The usual writer Tichawana Nyahuma will be back next week.
