WHEN Zimbabwe’s supreme court interpreted the law to mean that companies could dismiss workers with just three months’ notice, without offering any packages or even following any specific retrenchment procedures, the decision lit a fuse.
Job security throughout the country was suddenly a major issue among workers, with widespread concern about mass lay-offs. Rightly so, it would turn out.
As the constitutional court explained in a recent decision, reaction to the judgment was “a rush by employers” to end employment via three months’ notice. It became “a strategy adopted by employers countrywide to get rid of employees to save costs in an environment of economic difficulties.”
Thousands were left jobless and uncompensated for what was often many years’ work.
While employers used the decision to shed workers and reduce their labour bill, thousands were left jobless and uncompensated for what was often many years’ work.
The Economist Intelligence Unit for example, estimated that as many as 30 000 were dismissed in the wake of the judgment, including 45 % of Harare’s municipal workers. Some unions put the overall number of those terminated in the five weeks following the judgment as perhaps even 40 000.
An outcry followed at the lack of legal protection for those who lost their jobs and, as the constitutional court put it, a “national crisis” followed. In response the legislature hurriedly reconvened and passed new legislation laying down how retrenchment would be handled in the future. Among the new provisions was a “minimum retrenchment package” to be paid to workers who lost their jobs: not less than one month’s salary for every two years of service.
But the real sting for employers was the retrospective effect of these packages as they were potentially due to anyone let go from the 17 July 2015 supreme court judgment onwards.
For many employers who had given notice to their staff after that date, this was the stuff of nightmares. They had followed the dismissal route hoping to conserve their finances, secure in the knowledge that the supreme court had said such steps were legal. Yet now they were faced with paying packages – sometimes for quite significant amounts – that they had not considered in their decisions to terminate staff. Where were they to find the money? And was the new legislation, with its retrospective application, even lawful?
In September 2016 a group of employers argued a test case, saying that in imposing retrospective effect the new legislation was not constitutional.
The keenly-anticipated decision, crucially important to both sides, was recently delivered. It dealt a sharp blow to these employers, with corresponding good news for workers “purged” in the wake of the July 2015 decision: the legislation and its retrospective application were constitutionally sound, said the court.
The nine judges did not mince their words. “Trampling on the workers’ economic interests” via “mere token payments” of three months’ salary was bound to trigger socio-economic consequences of such a serious magnitude that the legislature would feel compelled to act by passing new law with retrospect application.
Employers “did not need to be told” that labour matters had to be handled “fairly and justly” but they took advantage of the situation as it was “cheap and easy to dispose of employees”.
Retrospectivity was “particularly compelling” in this case, because of the harmful consequences of the employers’ action. “The amendment was a direct result of those past events.”
The statute was not “conceived and passed in a vacuum” but was rational, based in circumstances that would have caused any “reasonable legislature” to act.
A system that allowed an employer to “wake up one bad day and decide to terminate a contract of employment without regard to the need to compensate for loss of employment was fundamentally unfair.” Not giving retrospective effect to the legislation would have defeated its purpose, said the court.
Published in the Financial Mail, 28 June 2018
Tags: constitutional court, Employment law, minimum retrenchment package, notice, retrenchment, retrospectivity, Zimbabwe