Labour Amendment Bill: Retrenchment

Introduction

The legislature seeks to amend the whole of section 12C of the Act which provides for the retrenchment and compensation for loss of employment. A review of the provisions shows sweeping changes to the law on retrenchment in Zimbabwe. In summary, we note that the Bill is introducing a dispute resolution mechanism regarding non-payments of retrenchment packages, enforcement mechanism for the retrenchment package as well as personal liability for those who engage in fraudulent actions that have a bearing on the whole process, among other significant changes. The provisions and what they entail are discussed below.

Retrenchment Package

The Bill refers to two types of retrenchment packages, a minimum retrenchment package as per the 2015 amendments^[1] as well as an enhanced retrenchment package^[2], which is negotiated and agreed between an employer and employees.

Payment of the Package

The bill proposes that the retrenchment package should be paid within 60 days unless the affected employees agree otherwise.^[3] For the minimum retrenchment package, the 60 days are calculated from the time the retrenchment takes effect (which is 14 days from the date of notification). However, if the employees satisfy the Retrenchment Board that the employer has the capacity to pay an enhanced package, the 60 days are computed from the time the Retrenchment Board advises the parties of its decision.^[4]

Procedure for Retrenchment

The retrenchment procedure can be outlined as follows:

Notice of Retrenchment

The notice of retrenchment is 14 days, and this should be given to the Works Council or the NEC (in the absence of the Works Council) and the Retrenchment Board as well as the employee or employees affected by the exercise. ^[5]

The Bill further states that if the retrenchment agreement is not there, the works council, employment council and retrenchment board should be provided with the details of every employee to be retrenched and the reasons for the retrenchment.^[6]

Negotiations for a Retrenchment Package

The bill provides:

“Where negotiations for a retrenchment package better than the minimum retrenchment package are undertaken after the notice given to the Retrenchment Board under subsection (3)(a)(ii) and an agreement is secured (including the date or dates when it shall be paid to the employees), any payments required to be made in terms of the retrenchment package must be made on the day or days so agreed and the signed retrenchment package shall be notified in writing in accordance with subsection (5)(a) to the Retrenchment Board no later than the end of the notice period or seven days thereafter”.

In our view, this provision which is meant to govern the negotiations for a retrenchment package is crafted in non-peremptory terms resulting in a situation where negotiations for a better retrenchment package are not obligatory. We believe that this is regrettable as in many of the times this leaves employees at the mercy of the minimum retrenchment package even in circumstances where the employer can afford an enhanced package.

Notice of the Actual Retrenchment

Once the employee is retrenched, there is an obligation on the employer to notify the Retrenchment Board once again. This notification will contain the fact that the individual or individuals have been retrenched as well as the details of the agreed package. The Retrenchment Board will issue a certificate called the “notification certificate” which will confirm that the retrenchment package is better than the minimum stipulated packages.^[7]

When there is no agreed package, the board will also issue the same notification to the effect that the minimum package is being paid or it is to be paid.^[8]

The retrenchment board is required to post such notice on a public notice board for a period of not less than seven consecutive days. The proposed law further provides that the certificate shall be prima facie proof of the notification made to the Retrenchment Board.

Enforcement of a Retrenchment Package

There Bill further proposes a dispute resolution mechanism in the event of non-payment of the retrenchment package within the period stipulated in the retrenchment agreement.^[9] The first stage in the dispute resolution is provided as follows:

“If it is alleged by any employee or employees or their representatives that any agreed retrenchment package or minimum retrenchment package has not been paid within the time or times stipulated or agreed, such employee, employees or their representatives must, before proceeding to enforce the package in terms of subsection (7), satisfy the Retrenchment Board to that effect in the form of an affidavit in which the extent of non-compliance shall be clearly set forth, whereupon the Retrenchment Board shall notify the employer of the allegation in writing and afford him or her an opportunity to make representations to the Board in writing in rebuttal of the allegation, and if no such representations are received or the Board is satisfied that compliance has not been made with the minimum or agreed package , the Board shall issue a certificate (hereinafter called a “non-compliance certificate”) to that effect in which the extent of non-compliance shall be clearly set forth”.

In modest terms, an allegation that there has been non-compliance with a retrenchment agreement is entertained by the Retrenchment Board first before approaching the Labour Court. The effect of the “non-compliance certificate” is that the retrenchment package agreed by the parties becomes binding. It’s only after the “non-compliance certificate” has been issued that a party can approach the Labour Court for the enforcement of the retrenchment package. The order given by the Labour Court will also have to be submitted for registration with a relevant Court.

We submit that the procedure being proposed is cumbersome. This is in consideration of the fact that the retrenchment package would have been agreed or the employer would have committed to pay the package the result of which would have resulted in a “notification certificate” from the retrenchment board. The fact that a notification certificate has been issued means the retrenchment package has been agreed upon and that it is binding. In any case, what’s more binding than the initial agreement to retrench? Requiring an aggrieved employee to get a non-compliance certificate in these circumstances is unjustified. It creates an unnecessary process in the enforcement of retrenchment packages.

Lack of capacity to pay the package

An employer has an option of applying to the retrenchment board or the employment council, notifying either of these bodies of the incapacity to pay the minimum retrenchment package. The retrenchment board or the employment council is required to call a hearing of the parties where this lack of capacity is dealt with.^[10] If the retrenchment board or NEC does not deal with the issue within 30 days the employee can approach the Labour Court for a resolution.^[11]

Allegation of capacity to pay an enhanced retrenchment package

The Bill provides that employees can allege and provide proof of the fact that the employer has the capacity to pay an enhanced retrenchment package. This should be done within 60 days of an employee’s receipt of the notice to retrench. The employer is obliged to provide audited financial statements and to respond by way of an affidavit.^[12]

The NEC or the retrenchment board will move to call parties to a hearing and seek to resolve the dispute within 30 days. If this does not happen, the aggrieved party may approach the Labour Court for a resolution of the dispute.^[13]

Personal Liability for the Retrenchment Package

A new section 12CC is being proposed whose effect is to make an owner of a company, a director or a partner of a company personally liable for the payment of a minimum retrenchment package if it is proved that:

“(a) the employer deliberately stripped the assets of the business or otherwise degraded it in contemplation of retrenchment;

(b) the business of the employer was or is being carried on—

(i) recklessly; or

(ii) with gross negligence; or

(iii) with intent to defraud any person or for a fraudulent purpose;”^{^[14]}

The section provides for the procedure to be followed in the event of such an allegation. In summary, this involves the employment council or retrenchment board making such a finding which is then taken to the Labour Court. The entire process also involves giving all those involved the opportunity to be heard.

Conclusion

Some provisions in the Bill are progressive. However, we submit that a less cumbersome process for retrenchment dispute resolution is advisable. The Bill should also provide for a serious obligation on the part of the parties to negotiate a retrenchment package before the employer resorts to paying the minimum retrenchment package. The liability of persons who deliberately engage in fraudulent, reckless, or grossly negligent conduct in contemplation of retrenchment is a welcome development in our law. It seeks to protect employees who tend to be vulnerable in retrenchment processes.

[1] Proposed Section 12C (1) of the Act.

[2] Proposed Section 12C (1) of the Act.

[3] Proposed Section 12C(2)(a) of the Act.

[4] Proposed Section 12C(2)(b) of the Act.

[5] Proposed Section 12C(3)(a) & (b) of the Act.

[6] Proposed Section 12C (3) (b) of the Act.

[7] Proposed Section 12C (5) (a) of the Act.

[8] Proposed Section 12C (5) (b) of the Act.

[9] Proposed Section 12C (6) of the Act.

[10] Proposed Section 12C (9) (a) of the Act.

[11] Proposed Section 12C (12) of the Act.

[12] Proposed Sections 12C (13) – (16) of the Act.

[13] Proposed Sections 12C (13) – (16) of the Act.

[14] Proposed Section 12CC (1) of the Act

2,416 Views

Labour Amendment Bill: Powers of Labour Officers

Introduction

The Labour Amendment Bill is proposing changes to the powers of labour officers in resolving disputes and complaints of unfair labour practices. The 2015 amendments to the Labour Act brought about a system where all disputes before labour officers would go through conciliation whereupon if parties do not agree the Labour Officer would proceed to issue a draft ruling. The draft ruling would be of no force until confirmed by the Labour Court.^[1] We believe this resulted in a situation where cases dealt with by Labour Officers clogged the Labour Courts through the confirmation proceedings. We trust, to deal with this situation the legislature is proposing the system that was there before the 2015 amendments. Since this is not a new system we shall not proceed in greater detail. This section will highlight the major points.

Conciliation

Conciliation as a dispute resolution mechanism was introduced by Act 7 of 2005. It survived the 2015 amendments. The Bill is proposing that conciliation remains in the dispute resolution process. It is the first method used to resolve labour disputes. One can go through Isoquant Investments (Pvt) Ltd t/a Zimoco v Darikwa (CCZ 6 of 2020) and get a full appreciation of what this process entails. What is important to note is that conciliation produces either a certificate of settlement or a certificate of no settlement.

Certificate of settlement

When this is issued and signed by parties, it means the dispute has been resolved. Through this Bill, a layer of protection is being added to disputes resolved through conciliation. The Bill now provides:

“(2) If the dispute or unfair labour practice is settled by conciliation, the labour officer shall record the settlement in writing, which shall be registrable with the relevant court for enforcement upon default. The certificate of settlement to enable enforcement shall be issued by the labour officer and it shall have the effect for purposes of enforcement, of a civil judgment of the appropriate court”.^{^[2]}

A certificate of settlement will be registrable with a relevant court depending on the monetary jurisdiction of the court and the monetary value of the settlement. This is a welcome development as it empowers Labour Officers to come up with binding settlements unlike the previous generation of laws that did not support the enforcement of a certificate of settlement. In our view, this encourages speedy resolution of labour disputes.

Certificate of No Settlement

The procedure here is that, if a dispute is conciliated for 30 days, a labour officer is compelled to issue a certificate of no settlement unless if the conciliation is extended. Once the labour officer issues a certificate of no settlement, the dispute will have to be referred for arbitration.^[3] The Bill envisages two types of arbitration, compulsory arbitration which involves referring the dispute to an Arbitrator under the Ministry of Labour or the NEC, as the case may be, and also voluntary arbitration in which case parties choose the arbitrator they want to make use of.^[4] Whichever form of arbitration the parties find themselves in, the effect at the end of the day is the same.

Arbitration and effect thereof

The major advantage of the proposed dispute resolution mechanism is the capacity to produce binding arbitral awards as compared to the draft rulings provided for under the amendments effected in 2015. An arbitral award can be registered with an appropriate court and can be enforced as an order of that court. This speeds up the resolution of disputes and relieves the Labour Courts as most cases may end up being resolved at the arbitration level.

Once a dispute has been referred for arbitration, the Arbitration Act (Chapter 7:15) kicks in.^[5] Here, the process is more or less like a court process in that parties are allowed to make submissions whereupon the arbitrator can issue a binding determination.^[6] The winning party can register the award for purposes of enforcement whereas the aggrieved party can appeal to the Labour Court. The arbitrator will have the same powers as the Labour Court in dealing with the matter.^[7]

Further, once a dispute has been referred for compulsory arbitration, no person shall engage in collective job action in connection with such a dispute.

Costs associated with such arbitration will be shared between the parties and it is the role of the Labour Officer or the Labour Court to determine the costs to be borne by the disputants.

Appeals

A party aggrieved with an arbitral award can appeal to the Labour Court only on a question of law. What constitutes a question of law is now settled in this jurisdiction. The court in Hlahla v OK Zimbabwe (SC 64/2004) made use of the dictum in Muzuva v United Bottlers (Pvt) Ltd 1994 (1) ZLR 217 (S) at 220 D-G where it was noted:

“the term question of law is used in three distinct though related senses. First, it means a question which the law itself has authoritatively answered to the exclusion of the right of the court to answer the question as it thinks fit in accordance with what is considered to be the truth and justice of the matter. Second, it means a question as to what the law is. Thus, an appeal on a question of law means an appeal in which the question for argument and determination is what the true rule of law is on a certain matter. And third, any question which is within the province of the judge instead of the jury is called a question of law. This division of judicial function arises in this country in a criminal trial presided over by a judge and assessors.”

The law is thus clear in terms of what constitutes a question of law when one is contemplating an appeal against an arbitral award. In the Hlahla matter pointed out above, the court reviewed the grounds of appeal lodged by the appellant and concluded that no question of law was raised and struck the matter off the roll with costs.

Conclusion

We note that the Bill is proposing a system of dispute resolution that existed before the amendments of 2015. We believe the system was more effective and will continue to work well in our jurisdiction. We applaud the legislature for ensuring that the certificate of settlement is enforceable in the same manner as arbitral awards. We believe the system will result in quicker resolution of disputes as there will be no need for further confirmation by the Labour Court.

[1] See Isoquant Investments (Pvt) Ltd t/a Zimoco v Darikwa (CCZ 6 of 2020) which argued “A “draft ruling” does not determine the dispute between the parties. Whether made against an employer or employee, it does not confer any right until it is confirmed by the Labour Court. It is not clear why a procedure providing access to the Labour Court should by construction be made available to one party in a dispute of right which has not been resolved and not to the other party”.

[2] Proposed Section 93 (2) of the Labour Act

[3] See proposed Section 93(3) to Section 93(7) of the Labour Act.

[4] See proposed Section 93(3) to Section 93(7) of the Labour Act.

[5] See proposed Section 98(1) to Section 98(8) of the Labour Act.

[6] See proposed Section 98(1) to Section 98(8) of the Labour Act.

[7] See proposed Section 98(1) to Section 98(8) of the Labour Act.

2,381 Views

Labour Amendment Bill: Designated Agents of Employment Councils

Designated agents (DAs) of Employment Councils play a key role in the resolution of disputes and unfair labour practices in the industries they belong. The Labour Act in its current form excludes Labour Officers from dealing with disputes that are within the authority of Designated Agents. The proposed bill shows a legislature that intends on further controlling DAs in the exercise of the section 63 powers. It also seeks to expand the authority of Labour Officers.

The proposed section 63 (3b) now provides for concurrent authority between Labour Officers and Designated Agents.^[1] Where Labour Officers were previously precluded from entertaining disputes within the DAs authority, they can now deal with these provided this is done after the expiry of 30 days after the dispute arose and the matter has not been referred to a DA. The proposed provision reads:

“(3b) Subject to subsections (3c) and (3d) where a designated agent is authorised to redress any dispute or unfair labour practice in terms of subsection (3a), no labour officer shall have jurisdiction in the matter during the first thirty days after the date when the dispute or unfair labour practice arose, but a labour officer may assume such jurisdiction (and exercise in relation to that dispute or unfair labour practice the same powers that a designated agent has in terms of this section) after the expiry of that period if proceedings before a designated agent to determine that dispute or unfair labour practice have not earlier commenced.”^{^[2]}

Further, the proposed legislation empowers the Registrar to withdraw the appointment of a DA after an interested party or a labour officer has complained of the conduct of the DA. The grounds of such a withdrawal are crafted as “failure on the part of the designated agent to exercise his or her mandate effectively or to comply with the provisions of this Act”. The provisions also prescribe that if the complaint is because the DA is slow in acting, the Registrar may direct that the matter be heard by another Designated Agent or may refer it to a Labour Officer.^[3]

We view these provisions as a serious attempt by the legislature to positively control the quality of dispute resolution outcomes as well as speedy resolution of labour disputes. The legislature should, perhaps, define terms such as failure to “exercise his or her mandate” and “unduly dilatory” to reduce interpretation problems at the point of implementing the respective provisions. The same provisions should also apply to labour officers and arbitrators in as far as they provide for a sanction for failure to adequately exercise a mandate as well as being unduly dilatory.

[1] Proposed Section 63 (3b)

[2] Proposed Section 63 (3b)

[3] Proposed Section 63 (3c)

2,483 Views

Labour Amendment Bill: Codes of Conduct

Introduction

If you have been following the recent Supreme Court judgements that ruled on the jurisdiction of Labour Officers regarding completed disciplinary hearings, you would have anticipated some changes that would deal with this area of our labour law. For those who may not be aware, around three separate judgements issued by the Supreme Court announced that Labour Officers cannot hear appeal cases coming from completed disciplinary processes in terms of Statutory instrument 5 of 2006[1]. In one judgement, the Minister of Labour was directed to make amendments to the Labour Act to cure the lacuna. The bill indicates the changes that will address some of the concerns that were raised by the Supreme Court. It also comes up with other critical changes worth noting. We believe that these are positive changes.

Jurisdiction of Labour Officers

We have already mentioned that the jurisdiction of Labour Officers to entertain disputes emanating from the disciplinary hearing processes was attacked in various judgements. In one of the judgements the Supreme Court ruled:

“It is inconceivable that a Labour Officer can assume jurisdiction over a completed matter by another tribunal without being clothed with appellate or review jurisdiction. In the absence of specific statutory provisions, it is only appellate or review jurisdiction that authorizes higher court or tribunal to intervene in the conduct or verdict of a subordinate court or tribunal”.[2]

The Bill seeks to add the following proviso to section 101 (5) of the Act:

“Provided that at the conclusion of such proceedings and notwithstanding anything to the contrary in an employment code, at the instance of any party aggrieved by those proceedings may appeal to a labour officer within 30 days of the conclusion of the proceedings whereupon the labour officer shall attempt to conciliate the dispute in terms of section 93 or exercise any other power provided for in that section”[3]

The new provision is clearly meant to give labour officers jurisdiction to entertain appeals something that wasn’t provided for before. Further, we take particular note of the words “notwithstanding anything to the contrary in an employment code” used in this section. We submit that the legislature is doing away with other appeal structures that may be provided in a code of conduct. What we mean is that certain codes require one to appeal to the National Employment Council and others require one to approach the Labour Court directly. This will no longer be the case. Exclusive jurisdiction to hear appeals from completed disciplinary hearings now lies with the Labour Officers, whereupon anyone aggrieved by the decision of the Labour Officer will now appeal to the Labour Court.

The Bill further provides that when a Labour Officer is dealing with an appeal, he or she “shall attempt to conciliate the dispute in terms of section 93 or exercise any other power provided for in that section”. We note that the said Section 93 is being amended through the current Bill. In terms of these amendments’ disputes will be conciliated upon failure of which they will proceed to arbitration. This is a welcome development as it seeks to cure the shortcomings that came with the 2015 amendments. The current system results in draft rulings that are of no force until confirmed by the Labour Court[4]. In our view, by reverting to the old system, the legislature will deal with the current clogging of the Labour Court system through confirmation proceedings.

Expiry of codes of conduct

The Bill provides that a code of conduct expires after five years. The relevant section provides:

“If after the lapse of the five years a registered employment code of conduct has not been reviewed within three months of the lapse of the five-year period, the employment code of conduct shall be deemed deregistered.”[5]

There will now be an obligation on the part of every employer or NEC to review a code of conduct and to reregister it. This is a new development in our labour law and will ensure that codes of conduct conform to the changing times.

As clearly stated in the provision above, if a code of conduct is not reviewed within “three months of the lapse of the five-year period” is deemed to be deregistered. A deregistered code is void. This means an establishment will have to revert to the NEC code if one is available and if none exists the national code outlined in SI 15 of 2006 will have to be followed. We also note that the provision does not come with any retrospective application which also follows that the five years mentioned in the provision will be counted from the time the law comes into effect.

Conclusion

We summarise those important changes that are coming to the regulation of the code of conduct. The legislature has seized the moment and has started dealing with the concerns raised by the Supreme Court regarding appeals emanating from disciplinary proceedings. Labour Officers will now have the capacity to deal with appeals. This is a welcome development but those cases already being handled will not be protected by the new provision and will remain voidable at the instance of an aggrieved party. The compulsory review of codes of conduct also constitutes another important development in our view. Changing times require that this important instrument be reviewed to ensure that it is still complying with the intention of the drafters.

[1] Tafadzwa M Sakarombe and Wonder Simuka v Montana Carswell Meats Private Limited (SC 44/20).

[2] Misheck Mabeza v (1) Sandvik Mining (2) Construction (Private) Limited (SC 91/19).

[3] Proposed subsection (5) of Section 101 of the Labour Act.

[4] See Isoquant Investments Private Limited T/A ZIMOCO v Memory Darikwa (CCZ 6/20).

[5] Proposed subsection 10 (12) of section 101.

1,608 Views

Labour Amendment Bill: Collective Job Action

Unlawful collective job action comes with consequences. The consequences range from dismissal, payment of damages, criminal prosecution which may lead to the payment of a fine and or imprisonment. The law in its current form provides that those found to have contravened lawful collective job action requirements “shall be guilty of an offence and liable to a fine not exceeding level fourteen or to imprisonment for a period not exceeding five years or to both such fine and such imprisonment”.[1]

The proposed law now proposes different criminal sanctions for those who are criminally liable for unlawful job action. The distinction is whether the unlawful collective job action relates to the essential service industry or non-essential service industry. If the collective job action relates to an essential service “a fine not exceeding Level 14 or imprisonment for a period not exceeding five years or both such fine and imprisonment”.[2] In a non-essential service industry the fine does not exceed level fourteen or in the case of failure to pay the fine, “imprisonment for a period not exceeding one year”.

Clearly, the legislature intends to prevent and discourage strikes in essential service industries. Considering the damage that has been caused by strikes in the health sector, one would postulate that the legislature saw the need to curtail unlawful job action within the essential services sector.

We note that traditionally very few industries were declared essential services but since the onset of COVID-19 almost all industries have been declared essential services. Seemingly, engaging in unlawful collective job action in this COVID era would attract the maximum penalty proposed in the provisions above.

Lastly, we note that the sanctions discussed above, also apply to anyone who “recommends, advises, encourages, threatens, incites, commands, aids or procures any collective action which is prohibited in terms of section 104(3), with the intention or realising that there is risk or possibility of bringing about such collective action”.[3]

[1] Section 109(1) of the Labour Act Chap 28.01.

[2] Proposed 109(1) of the Labour Act Chap 28.01.

[3] Proposed 109(2) of the Labour Act Chap 28.01.

1,727 Views

Labour Amendment Bill: Collective Labour Law

Introduction

The legislature saw the need to come up with a raft of changes to the collective bargaining landscape in Zimbabwe. Collective Labour Law is the law that’s created as a result of an agreement between employers and employees either at the company level or at the industry level. This is an area that has, in the past resulted, in disputes that have spilt to the Constitutional Court of Zimbabwe. One such dispute was NEC for the Communication and Allied Services Industry v Netone Cellular (Private) Limited and the Minister of Labour and Social Welfare (CCZ 17/19). In this dispute, Netone argued that it was not bound by a Collective Bargaining Agreement (CBA) whose negotiations it was not part of. The matter was initially heard by the High Court which declared certain parts of the CBA as unconstitutional in so far as they forced Netone to be part of the association against its will. The Bill addresses this issue beyond doubt.

Scope of CBAs

The Bill adds a new scope for the CBA. It says that in addition to the other elements of mutual interests that can be included in a CBA, parties can negotiate for conditions for paid educational leave at the employment council.[1] Paid educational leave is not provided anywhere else in the Labour Act and the legislature is giving parties to the employment relationship an opportunity to designate conditions within which one can be on paid educational leave. Presumably, this leave will apply to those employees who wish to further their studies. Currently, this area is regulated in company policies and those who do not have such policies may compel their employees to take vacation leave for educational purposes. We view this new change as a positive development in our law.

Under the scope of the CBA, the legislature has added a provision which states that if a CBA is negotiated by a statutory body or a state-controlled enterprise the Minister responsible for such an entity will be deemed to be part of the negotiations for the CBA. The Minister is also deemed to be on an equal footing with the employer. We do not fully appreciate why this has been inserted in the amendment. Perhaps the intention is to have a quasi-tripartite negotiating forum at the company level. We await to see how this will work in practice.

Registration of a CBA

It has always been a requirement for the Minister to stop the registration of a CBA that is contrary to the public interest or one which is inconsistent with the Act.[2] The Bill is proposing an additional layer to this requirement. The Minister will now be required to specify in writing the public interest issue at stake before directing the Registrar not to register a CBA until the parties have amended it. This will ensure that parties are fully aware of what they need to renegotiate on before resubmitting the CBA for registration.

Binding Nature of CBAs

The legislature is proposing provisions that give recognition to the constitutional right of every employee “to just, equitable and satisfactory conditions of work”.[3] In pushing for this right, the proposed law is buttressing the freedom of collective bargaining by persuading all interested persons, juristic or otherwise to obtain representation in the employment council. It is further provided:

“Accordingly, it shall not be a lawful excuse for those who did not avail themselves of the opportunity referred to in paragraph (b) to fail to abide by or claim not to be bound by a collective bargaining agreement freely negotiated for their industry.”[4]

Clearly, this provision is meant to deal with the excuse that was put forward in the Netone case discussed above. If this case had been a success, CBAs would have been rendered useless by the simple fact that a party that was not part of the negotiation is not bound by the CBA. To deal with this loophole, the legislature is making it clear that CBAs bind everyone in an industry whether they participated in the negotiations or not.

Conclusion

The legislature is proposing a legislation that will give effect to the labour rights enshrined in the Constitution as far as Collective Bargaining Agreements are concerned. The scope of CBAs has now been expanded to include negotiations around paid educational leave. We submit that this was in full recognition of the need for employees to self-develop. The binding nature of CBAs has also been made unambiguous. The fact that a person was not a party to the negotiations will not be a lawful excuse for refusing to abide by a CBA.

[1] Proposed Section 74(3)(o).

[2] Section 17(1) of the Labour Act 28.01.

[3] Section 65(4) of the Constitution of the Republic of Zimbabwe.

[4] Proposed Section 82(a1) (b).

1,471 Views

Labour Amendment Bill: Fixed Term Contracts

Introduction

A fixed-term contract of employment is a contract that has a start date and an end date. There was not much regulation to this type of contract. The major restriction has been that an employer cannot terminate a fixed-term contract and replace the employee. This would then constitute an unfair dismissal. Our perusal of the proposed Bill shows greater regulation for this type of contract. We believe the legislature wishes to deal with complaints of employees being put on perpetual fixed-term contracts. It also wants to restrict the termination of fixed-term contracts. This section looks at the provisions in the Bill and examines the consequences that will come with this amendment as far as fixed-term contracts are concerned.

The proposed amendment

The current Bill seeks to amend section 12 of the Act in respect to fixed terms contracts in the following manner;

“Section 12 (“Duration, particulars and termination of employment contract”) is amended—

(a) ………………..

(b) by the repeal of subsections (4a) and (4b) and the substitution of the following—

“(4a) A contract of employment may be terminated only, on the part of an employee, by his or her resignation or retirement, and in the following cases on the part of an employer—

(a) ……………………… or

(b) ……………………………………………………………

(c) in the case of a fixed term contract, upon the expiry of the period of the contract without the need to give notice under subsection (4):

Provided that—

(i) notwithstanding anything in such contract to contrary no fixed term contract shall be for less than twelve months except—

A in the case of employment that by its nature is casual or seasonal employment; or

B the contract is for the performance of some specific service which may be completed before that time;

(ii) any fixed term contract that purports to be for a period off less than twelve months shall be deemed to be a contract for an indefinite period.

(iii) if the majority of employees engaged by the same employer are on fixed term contracts, and at any time when an employee’s employment is terminated on the expiry of his or her fixed term contract, then the provisions of sections 12C and 12D shall apply to such termination as if it was retrenchment.

(d)……………………………………………………………………………………

(e) ………………………………………………………………………………..….

(f) for the breach of an express or implied term of contract, upon such breach being verified after due inquiry under an applicable employment code or in any other manner agreed in advance by the employer and employee concerned.”

The period of a fixed-term contract

The Bill provides that no fixed term contract shall be for less than twelve months. What this essentially means is that employers who had employees in contracts of less than twelve months will have to make the necessary changes on the expiry of the current contracts but before the Bill becomes an Act of parliament. The provision is not cast in stone as it unequivocally accepts that fixed-term contracts of less than 12 months are permissible in setups where the work is of a casual or seasonal nature as well as in situations where the work is of a specific service e.g. the agricultural sector. It follows that an employer who alleges that the work is seasonal or is for the performance of a specific service shall have the burden of proving the same.

The Deeming Provision

In addition to the restriction that’s coming with the period of a fixed-term contract, there is a deeming provision which provides that if an employee were to be on the contract of less than twelve months such an employee shall be deemed to be on a permanent contract. This section reads:

“(ii) any fixed term contract that purports to be for a period of less than twelve months shall be deemed to be a contract for an indefinite period.”

This stance is not surprising. Following the 2015 amendments to the Act, National Employment Councils have been capping the maximum number of times a fixed-term contract can be renewed. The following are examples:

Commercial Sectors: 6 contracts
Funeral Industry: 3 years
Furniture Manufacturing Industry: 2 years
Plastics Manufacturing Industry: 10 years

From 2015, there has been a shift towards the protection of employees on fixed-term contracts.

The proposed amendments will do away with most of these provisions in contracts and collective bargaining agreements. Every contract that is of a fixed term nature and is of less than twelve months shall be deemed to be permanent. When this happens, it means for example, in certain industries where employers are not obliged to pay pension for their fixed-term contractors, they will be obliged to pay such. For all intents and purposes, an employee who is on a contract of less than twelve months shall be deemed to be on a permanent contract at the time this law is put into effect. This is one of the intense consequences that’s going to flow from this provision. The provision does not allow a grace period to allow employers to restructure their establishments.

Termination at the expiry of the fixed-term contract

The law in its current form provides that an employee on a fixed-term contract gets nothing at the expiry of that contract. There is not even a need to give such an employee notice of the impending end to the employment relationship. Presumably, to offer some form of protection for workers and to ensure that they at least get terminal benefits at the expiry of the contract the following provision is being put in place in terms of the proposed amendments:

“iii. if the majority of employees engaged by the same employer are on fixed term contracts, and at any time when an employee’s employment is terminated on the expiry of his or her fixed term contract, then the provisions of sections 12C and 12D shall apply to such termination as if it was retrenchment”.[1]

The Bill provides that sections 12C and 12D shall apply when a fixed-term contract expires. The consequence is that a retrenchment package becomes payable to an employee. This retrenchment package can be a minimum or the negotiated retrenchment package, which is higher than the minimum, in terms of the proposed amendment.

This provision however does not apply to every employee. The provision applies if the majority of the employees of one employer are on fixed-term contracts. The Bill does not define what a majority entails, but one would postulate that this provision applies when more than 50% of the employees of one employer are on fixed-term contracts. The intention is clear, the legislature wants to do away with what others would term as casualisation of labour, a phenomenon where employees are perpetually on fixed-term contracts or where an employer deliberately puts employees on fixed-term contracts without any reasonable cause.

One thing that exercised our minds is that the provision is seemingly discriminatory. Employees who are employed in setups that do not have the majority of the employees on fixed-term contracts are not given the same benefit as those who belong to setups that have the majority on fixed-term contracts. Equally so, it punishes employers who employ more employees on fixed-term contracts even when the nature of business and the setup may not allow everyone to be on a permanent basis. This is not what the Constitution of the land intended when it provided that every person has the right to equality before the law. Every employee has the right to fair labour practices. We respectfully submit that this provision may not survive constitutional scrutiny.

Furthermore, it is not clear how section 12 D of the Act will apply when a fixed-term contract is terminated. This is a source of controversy as section 12D provides for special measures to avoid retrenchment which measures are usually complied with before termination. The legislature needs to closely look at this provision in this regard.

Conclusion

In conclusion, the bottom line is that every employee, save for those on casual work or task contract, will, in the event that the Bill become law, be in a longer-term contract of at least twelve months. Fixed-term contracts of less than twelve months won’t exist when this law is passed. We are worried that the deeming provision does not allow employers to look into their systems and make the necessary changes before the provision comes into effect. By making everyone an employee on a permanent contract, employers may be prejudiced in situations where the work does not qualify as seasonal or task but at the same time, there is a need for flexibility in the management of contracts. We are also worried that the proposed Section 12 (4a) (c) (iii) is seemingly discriminatory as it affords more protection to employees who are employed by employers with many employees on fixed-term contracts compared to those employees employed by employers with fewer employees on fixed-term contracts.

[1] Proposed Section 12 (4a) (c) (iii) of the Act.

4,197 Views

COMMENTARY ON CERTAIN ASPECTS PROVIDED UNDER THE LABOUR AMENDMENT BILL, 2021

Cephas Mavhondo & Taurai Mrewa

Executive Summary

Various amendments to the Labour Act (Chapter 28:01) hereinafter called “the Act”, are being crafted and the relevant Bill was approved by the Cabinet.[1] We took the opportunity to go through the Bill and we saw interesting aspects of this proposed law. In this commentary, we will concentrate on aspects that we consider more controversial such as the changes that are going to affect fixed-term contracts, collective bargaining, powers of designated agents and labour officers, and retrenchment. These are aspects that affect the employer and the employee on a day-to-day basis. Besides outlining what the Bill is providing, in certain circumstances, we took the opportunity to respectfully highlight the strengths that are going to come with the Bill. We have also respectfully outlined what we consider to be the shortcomings in the Bill. We trust you will enjoy reading this commentary.

Click any of the topics below to read the full articles:

Fixed Term Contracts
Collective Labour Law
Collective Job Action
Codes of Conduct
Designated Agents of Employment Councils
Powers of Labour Officers
Retrenchment
Sexual Harassment and Violence
Labour Brokerage Arrangements
Other Important Provisions

About the Authors

Two Authors collaborated in this work and their profiles are as follows:

Cephas Mavhondo

Cephas is a registered Legal Practitioner, Conveyancer and Notary Public. As a practising lawyer, Cephas has developed a special interest in Labour Law, Civil Litigation and Estate Administration Law. He runs a personal online blog: labourwatchzimbabwe.blogspot.com/

Taurai Mrewa

Taurai Mrewa is an Admitted Attorney of the High Court of Zimbabwe. He is also an experienced Human Resources Professional with 11 years of experience. In 2020, he published an eBook entitled, The Basics of Labour Law in Zimbabwe which is available for FREE on his online blog: taumrewa.co.zw/

Important Notes

This commentary was written in the authors’ personal capacities and does not reflect the views of the organisation or persons that they represent.

Further, the contents do not constitute legal advice, are not intended to be a substitute for legal advice and should not be relied upon as such.

FULL ARTICLE CAN BE DOWNLOADED ON THIS LINK

2,142 Views

Deduction from Wages/Salaries Upon Failure by an Employee to Serve a Notice Period

1. Introduction

One recurring situation in labour relations is where an employee resigns and decides to leave employment without honouring or giving the employer the requisite notice. Without the consent of the employee in question, some employers simply proceed to deduct the notice from such an employee’s terminal benefits. Indeed, some contracts of employment and Collective Bargaining Agreements empower the employer to make such deductions if the employee decides to leave without serving the employer the obligatory notice. In this section, we explore, the legality of such deductions. We also give an overview of how this area of law is handled in other countries. Lastly, we look at the remedies available to an employer faced with such a predicament.

2. Notice of termination

Section 12 (4) of the Labour Act provides for the notice of termination of the contract of employment to be given by either party. The notice depends on the nature and length of the contract in question. For a contract without a limit of time or a contract for two years or more three months’ notice is prescribed, two months in the case of a contract for one year or more but less than two years and so on. Section 12 (4a) precludes an employer from terminating a contract of employment on notice unless certain conditions are met for instance in terms of a code of conduct, by mutual agreement, if it is a fixed-term contract or if an employer is engaging in a retrenchment exercise. Whilst the employer’s right to terminate on notice has been curtailed, the employee retains the full right to end an employment relationship on notice. As already noted above, circumstances may compel the employee to leave the place of work without serving the requisite notice. This is where some employers have resorted to deducting the notice period from either the accrued leave days, outstanding wages, pension etc. The major instruments used by the employers in such circumstances can be the CBA or the contract of employment. We submit in this article that this is misguided and a serious misunderstanding of the law.

3. Permissible deductions

The Labour Act is clear-cut in terms of deductions that can be taken from an employee’s salary or wages in the course of employment and on separation. In summary, such deductions include where an employee is absent from work on workdays, statutory deductions, advance payments made to the employee, and payments made in error.[1] The relevant section is crafted in peremptory terms leaving no room for any other form of permissible deductions. The section is also clear that these permissible deductions can be deducted in full on separation. As an example, if a payment was made in error, an employer can deduct the full amount if the employee were to leave employment. This would not apply to a deduction in lieu of the notice that the employee was supposed to serve on resignation. This would be so even when the contract of employment and the CBA provides for such deductions.

Section 17(3)(b) allows the Minister of Labour to make regulations providing for the deductions which may be made from the wages of employees. No such regulations have been made empowering an employer to deduct cash in lieu of the notice of termination of the contract.

4. Collective bargaining agreements and contracts

Certain CBAs empower employers to deduct wages upon a failure by an employee to serve the notice. One such CBA is the CBA for the Motor Industry[2] which provides:

“If an employee leaves his employment without giving notice or having given notice, and fails to work during that period of notice, the employer may deduct, from any wages or leave due to that employee, an amount equal to the wages he would have earned if he had worked the period of notice”.[3]

We submit that such a provision violates section 74 (5) of the Labour Act which precludes a CBA from having a provision that is contrary to what is provided in the Labour Act. The section unambiguously reads:

“A collective bargaining agreement shall not contain any provision which is inconsistent with this Act or any other enactment, and any collective bargaining agreement which contains any such provision shall, to the extent of such inconsistency, be construed with such modifications, qualifications, adaptations and exceptions as may be necessary to bring it into conformity with this Act or such other enactment”.

Whilst a CBA can contain a provision which is of mutual interest to the parties including deductions that can be made to employees’ wages and salaries[4] such matters should always comply with the provisions under section 74(5) of the Labour Act when read together with Section 12A (6) of the same Act. From the provisions discussed thus far, one aspect of the issue in question stands out, deducting wages in lieu of the notice that was supposed to have been served by an employee is not permitted by the labour laws of this country. One might ask, what is the law in other countries? This is reviewed below.

5. The law in other countries

In South Africa, the labour laws do not empower an employer to deduct cash in lieu of the notice upon an employee’s failure to serve the notice period. The Basic Conditions of Employment Act (BCEA) in South Africa has provisions that are close to the Labour Act in Zimbabwe. What is slightly different is that the BCEA can allow an employee to consent to certain deductions including a deduction in lieu of notice. This logically means that a South African employer will still have to pay the employee their full wages on termination even though the employee failed to serve the notice of termination of the employment contract.

Further, as a general rule in India, wages, and salary deductions for not serving the notice period are not permissible. The laws in India provide for a list of deductions that can be made to an employee’s wages and notably, deductions for failure to serve the requisite notice are not allowed.

The manner in which this issue is handled in different countries is equivalent to what happens in Zimbabwe. This is not surprising. Labour laws are meant for the protection of employees against a capitalist system. It is accepted that employers as the owners of the means of production are more powerful when compared to employees who only render a service. To balance this unequal distribution of power, labour laws are enacted.

Does this mean a Zimbabwean employer is without recourse if an employee leaves his or her employment without giving the required notice? NO. There is no doubt that the action of leaving employment without serving the notice can result in irreparable harm on the part of the employer. The importance of a smooth handover process in the management of a business cannot be underestimated. What follows is the recourse that can be taken by the employer.

6. Recourse on the part of the employer

Failure by an employee to serve the required notice constitutes a breach of contract. A breach of contract is a material non-compliance with the terms of a legally binding contract.[5]

A party who has suffered a breach of contract has the option of enforcing the contract and order specific performance and to also sue for damages. The damages can be based on actual loss or future loss. This procedure is not based on labour law but civil law and would entail the issuance of summons of an appropriate court. There is no doubt that this is a cumbersome process as compared to recovering the equivalent of the notice from the employee’s wages but until our labour laws are amended, this is the law that we have to abide by.

7. Conclusion

In this article, we highlighted that our labour laws do not allow an employer to deduct wages upon a failure by an employee to serve the requisite notice. Contracts and CBAs that empower employers to deduct wages may fail the lawfulness test as they are contrary to the provisions in the Act. We also demonstrated how our laws are structured in a manner not so different from other countries. This is so as a function of the need for the labour laws to protect the employees mindful of the unequal relationship that exists between the owners of the means of production, the employers, and the providers of service, the employees. The only viable option on the part of the employer is to issue out summons and recover damages from the employee but this is a long and costly process and as a result, very few employers are willing to go that route. Until our laws are changed, deduction of wages upon a failure by an employee’s failure to serve the requisite notice remain unlawful.

[1] Section 12A (6) of the Labour Act (Chapter 28.01).

[2] Statutory Instrument 84 of 1993.

[3] Section 13(3) of Statutory Instrument 84 of 1993.

[4] Section 74(3)(c) of the Labour Act.

[5] Leigh Ellis (Updated 8 October 2019), https://hallellis.co.uk/breach-contract-meaning/.

4,551 Views

ZIMBABWE UNITED PASSENGER COMPANY v BEAULAR MASHINGE SC 21/2021

“The clear position of the law appears to me to be that upon the setting aside of employment disciplinary proceedings as a nullity, both the procedural and the substantive rights of the parties are restored to the position immediately before the nullified process. In other words, where a dismissal is set aside as being a nullity, the employee is reinstated as such notwithstanding the further disciplinary proceedings that the court may order by way of remittal or otherwise.”

Category: Reinstatement as a Consequence of a Procedural Irregularity

Introduction

In this summary, we highlight an important decision in ZUPCO v Beaular Mashinge. It pertains to the consequence of a procedural irregularity in disciplinary hearings. The ratio, in this case, can be summarised to the effect that procedural shortcomings in a disciplinary hearing can warrant reinstatement of the affected employee. This is opposed to the argument that such a matter should be remitted back to the disciplinary tribunal for a resolution of the procedural defect.

Facts

The relevant facts are that a disciplinary hearing led to a deadlock and contrary to the provisions contained in the code of conduct, it was referred to a Division Operations Manager for finalisation. Oblivious to this flaw, the Division Operations Manager dismissed the employee. An application for review was lodged with the Labour Court which court accepted that there was a fatal flaw in the process that could only be remedied through reinstatement of the employee. Aggrieved by this decision, the employer appealed to the Supreme Court arguing that the appropriate remedy was supposed to be a remittal of the matter to the disciplinary tribunal for a determination. The Supreme Court did not agree.

The Law

The appellant employer argued that the Labour Court erred in ordering reinstatement of the employee without considering the merits of the matter. The court accepted that the appellant was “partially correct” in arguing that the appropriate remedy would have been to remit the back to the disciplinary tribunal. It however proceeded to point out that:

“…upon the setting aside of fatally defective disciplinary proceedings, the employment contract is restored, without necessarily or by implication negating the remedies and procedures available to each of the parties to terminate the contract in terms of the agreed terms”.

What this statement means is that once a procedure is fatally defective, the employment contract is reinstated but this does not do away with the employers right to discipline the employee for the same offence. As the court pointed out, this restoration has nothing to do with the merits of the matter.

The court remarked that if the employee had been on a suspension without pay reinstatement was not going to be viable as the employee would have to revert to that status. As a result of the above, the court dismissed the appeal.

Conclusion

The important lesson, in this case, is that an employee can be reinstated once there is a procedural defect that vitiates the disciplinary proceedings. An exception would be where the employee was on a suspension without pay which status the employee will revert to in the event of a procedural defect.

1,486 Views