Supreme Court Termination of Employment Ruling: Storm in Tea Cup?

I have been inundated with social media posts of people raising an alarm that the regulations governing Employer/Employee relationship have been thrown into disarray by the Zimbabwe Supreme Court judgment. The Supreme Court’s 4 judges in a case of Zuva Petroleum vs Don Nyamande & Kingston Donga arrived at the decision that, “the common law position placing employees and employers on an equal footing was still operational”. As a result of this Zuva Petroleum had a right to terminate employment and pay the two employees an amount equal to 3 months’ salary. The two employees had hitherto been offered voluntary retrenchment packages which they turned down, it was at the stage of compulsory retrenchment that the employer abandoned the process and paid the employees 3 months’ salary.

There was an immediate outcry with The Herald newspaper headline saying, “Shock ruling onjob termination…judgment a threat to job security, say labour experts”. Newsday was less animated just stating “Ex-Zuva Petroleum managers lose case”. Alex Magaisa weighed in with his blog post titled, “How the Supreme Court judgmenthas left the employee exposed”. I am no labour lawyer and legal expert but retrenchment is some close to my heart after having represented employees in one grueling case armed with only my Labour Relations knowledge from IPMZ studies.
So when I saw the outcry my immediate reaction was shock and despair that the regime in Zimbabwe is now loosening the law so they can throw employees onto the curb easily, what with government struggling with its mammoth wage bill. But I decided to dig up my archived statutes the Labour Relations Act, 2005 and Statutory Instrument 186 of 2003 governing retrenchments.

Zuva Petroleum vs Two Employees

Firstly we need to look at the judgment passed, after having gone through the Labour Act I can refer to paragraph (a) of subsection 4 of section 12 which reads thus:

“except where a longer period of notice has been provided for under a contract of employment or in any relevant enactment, and subject to subsections (5), (6) and (7), notice of termination to be given by either party shall be – (a)three months in the case of a contract without limit of time or a contract for a period of two years or more;”

 Subsection 7 of section 12 which goes on to read “Provided that where the termination is at the initiative of the employer, the employee shall have a right to payment for a period corresponding to the appropriate period of notice required in terms of subsection (4) or (5)”.

In the case of the two employees 3 months’ pay was payable and the above sections is where the judgment of the Supreme Court emanate. It is worthy of note that the employer (Zuva Petroleum) had 2 options regarding letting the employees go, Retrenchment according to Statutory Instrument 186 of 2003; subsection 2 of section 3 or via the Labour Act as set out above, the employer opted for the cheaper option of 3 months’ salary.

Labour Act & SI 186

What Does Judgment Means for All Workers?

I have read many opinions that spell doom for the employees in the Zimbabwean workspace, the biggest outcry being that workers will be worse off, are at the mercy of the employers and can be kicked onto the curb without much payment, imagine working for 10 years and get out with 3 months’ pay? The threat is real and despairing. But it’s not all gloom and doom, the losers will likely be employees at management level, these are few. Any employer who wishes to retrench managers numbering less than 4 people can do so in terms of the Labour Act as Zuva Petroleum did. Why 4 you may ask? According to the retrenchment regulations (subsection 1 of section 3, SI 186, 2003), employers cannot terminate employment of 5 or more employees by paying them notice of termination, it states “An employer who wishes to retrench five or more employees shall do so in terms of section 12C of the Act”. What if an employer retrenches 4 employees in January, 4 in February etc? Well the law has a limit of 6 months i.e. if 4 employees go and next month another 4 it becomes 8 within 6 months and the law would require that the employees (all 8) must be laid off in terms of section 12C, this means an employer who had paid 3 months’ pay see employees come back & claim more money in terms of the retrenchment law of 12C. It becomes cost ineffective to wait every 6 months to let go of another 4 employees. This is why I mentioned that Management is in a worse off position since they are not as many as low level workers. Laying off 4 managers by giving them 3 months’ salary represents a huge saving for the company.

Conclusion

From how I see it, employees need not panic unless it is small organizations with few employees, a company wishing to terminate employment for 50 employees at a rate of 8 per year would need 6 years and 3 months to complete which is uneconomical. So in this case the lowly paid workers have comfort in their numbers. Zimbabwe’s economic meltdown saw mostly shop floor workers leaving employment; managers are paid well & have stayed put. Few people in management positions left their jobs because the perks are still good & most have long service going into decades, companies feared terminating their employment because the retrenchment costs would be huge. Now the floodgates have been opened, it will be dog eat dog, Zuva Petroleum was a test case. Zimbabwe government desperate to cut employment costs in the public sector might welcome this ruling, severing employment of top officials and replacing them with cheaper promotions of young blood. There is a need to close the loophole, blaming the Supreme Court is rather lame, courts interpret the laws, they don’t make them. I was hoping to prove the Supreme Court judgment wrong but looking at the statutes, it is parliaments who need to take action but I am not expecting them to move with speed.