COLCOM FOODS LIMITED v TARUVA SC107-20

“The authorities I have cited make it clear that a deadlock in negotiations over new terms of employment may entitle the employer to terminate on notice.”

Category: Deadlock Over New Terms and Conditions of Employment

Introduction

Colcom Foods Limited v Taruva dealt with the correct method of ending an employment relationship that has been affected by a deadlock over the negotiation of new employment terms. Whilst this case argues that termination on notice is permissible, this point should be understood against a background where section 12 of the Labour Act was amended in 2015.[1] In terms of these amendments, termination on notice, as far as it affects employees on permanent contracts, is now unlawful but the case provides profound insight into what an employer can and cannot lawfully do when faced with such a deadlock.

Facts

The dispute arose when the respondent employee was offered a lateral transfer at a time when negotiations for a retrenchment exercise were ongoing. On signing the contract, the respondent indicated that he was accepting the agreement under protest as he alleged that his terms of employment had been varied. At the same time, he lodged a claim with a labour officer under the Ministry of Labour citing unfair labour practice. He argued that the employer had repudiated his contract of employment and that the employer had also failed to pay his dues. The employee never reported for work at the new workstation despite being asked to do so. The employer accepted that he had repudiated the contract of employment and proceeded to terminate it on notice. Conciliation of the dispute failed. An arbitrator and the Labour Court found in favour of the respondent employee. It was the Labour Courts finding that the employer should have conducted a disciplinary hearing before proceeding to terminate the employment relationship on notice. Aggrieved by the Labour Courts finding, the employer lodged the appeal with the Supreme Court thus founding the current dispute.

The Law

It was the Supreme Court’s finding that the dispute pertained to the lawfulness of terminating the contract on notice under the circumstances outlined above. It noted that the Labour Act provided for dismissal and termination as legitimate methods for ending an employment relationship. It further found that termination does not amount to dismissal all the time. In this respect the court distinguished:

“Dismissal ordinarily arises from disciplinary proceedings while termination may be done on notice.”

It was also the court’s finding that in previous disputes where a deadlock arose regarding the new terms and conditions of employment the termination of the contract on notice was upheld by the courts as a lawful method of ending the employment relationship. Disciplinary action is not an option.[2] The court remarked:

“On the basis of that authority, it is clear that the court a quo was wrong in drawing the conclusion that the appellant should have conducted a disciplinary hearing following the respondent’s refusal to report for duty. There was no need to proceed in terms of a code of conduct.”

Based on the above findings, the court concluded that there was nothing wrong with the termination of the respondent employees’ contract.

Own comment

We have already mentioned that this case happened before the enactment of Act 5 of 2015. If an employer were to face similar circumstances, termination on notice would not be permissible.  The Act now specifically provides circumstances under which an employer can terminate on notice and these are in terms of an employment code, by mutual agreement, if the contract is of a fixed term nature and when the termination is according to a retrenchment exercise.

The Section 12 of the Labour Act, as amended in 2015 reads:

“(4a) No employer shall terminate a contract of employment on notice unless—

(a) the termination is in terms of an employment code or, in the absence of an employment code, in terms of the model code made under section 101(9); or

(b) the employer and employee mutually agree in writing to the termination of the contract; or

(c) the employee was engaged for a period of fixed duration or for the performance of some specific service; or

(d) pursuant to retrenchment, in accordance with section 12C.”

The words “No employer shall terminate a contract of employment on notice” are peremptory making termination on notice unlawful unless under the circumstances prescribed. We submit that if an employer were to face circumstances like in Colcom Foods Limited v Taruva the most viable option would be to pursue a retrenchment exercise. Unlike the situation before the 2015 amendments where retrenchment exercises would result in unending deadlocks, the Labour Act now provides for a minimum retrenchment package payable to an employee. This arrangement has seen retrenchment exercises becoming less cumbersome than was previously the case.


[1]              See Section 4 of Act 5 of 2015

[2]              See Chirasasa v Nhamo N.O. and Anor 2003 (2) ZLR 206 (S) and Colcom Foods Limited v Kabasa SC 12/04 cited by the Supreme Court

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