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Matthias Ruziwa hr Issues
Labour laws should seek to marry the needs of the employees against conditions of employment that are sufficiently attractive to encourage persons with the necessary resources to invest in the productive sector. On August 14 2015, a Labour Amendment Bill HB7/2015 was gazetted to align labour laws with Section 65 of the Constitution which provide for Labour Rights as well as to promote productivity and competitiveness of local industry. In this article, an attempt will be made to establish whether or not it has sought to find that equilibrium.

As reported in the Herald edition of August 17 2015, trade unions welcomed the Labour Bill terms whilst on the other hand the Confederation of Zimbabwe Industries president was quoted by last Sunday Mail edition as saying “Businesses face collapse as a result of provisions of the Labour Amendment Bill should they be adopted at law”.

Whereas the Bill contains a couple of proposals, it is intended here to deal with a review of only a few fundamental areas in the proposals.

1) Amendment of Section 12 – “Duration, particulars and termination of employment contract”

HB7 /2015 proposes a new subsection (3a). “A contract of employment that specifies its duration or date of termination, including a contract for casual work or seasonal work or for the performance of some specific service, shall, despite such specification, be deemed to be a contract of employment without limitation of time upon the expiry of such period of continuous service as is –

a) Fixed by the appropriate employment council ;or

b) Prescribed by the Minister, if there is no employment council for the undertaking concerned, or where the employment council fixes no such period; and thereupon the employee concerned shall be afforded the same benefits as are in this Act or any collective bargaining agreement provided for those employees who engaged without limit of time.”

Comment – The consequence of this amendment, to combat the abuse of fixed term contracts of employment where the employer entity is a going concern is appropriate.

Current labour laws give a wide array of contracts of employment that the employer can choose from when engaging workers. These include “fixed term contracts”.

The amendment appears conducive to enterprise viability and decision making.

The Bill is providing for the honouring of fixed term contracts in respective sectors whilst on the other hand if an employee exceeds the fixed period set by the employment council and if not, by the Minister, that employee becomes permanent and shall be entitled to the benefits of employees on permanent status.

The benefits in terms of the Act or respective collective bargaining may include longer notice periods on termination, pensions, retrenchment packages, etc.

A new subsection (4a) states that “No employer shall terminate a contract of employment 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”

Comment – This amendment clearly sets the ways under which a contract of employment may be terminated.

The first three have been envisaged under Section 5 of the Labour (National Employment Code of Conduct) Regulations, 2006 – SI 15 of 2006 published on 27th January 2006.

The amendment takes into account international practice.

It appears to me that the amendment is designed to protect the interests of both employees and employers where it will be flexible to choose from a wide array of appropriate options regarding employment termination.

A new subsection (4b) also states that “Where an employee is given notice of termination of contract in terms of subsection (4a) and such employee is employed under the terms of a contract without limit of time, the provisions of Section 12C shall apply with regard to compensation for loss of employment”.

Comment – The amendment seek to protect the employee against the much more powerful employer who under the current situation can dismiss the employee on three months contract based on common law right without any benefits regardless of years of service given to the employer; See Zuva Petroleum (Pvt) Ltd v Don Nyamande and Kingston Donga, SC 43 /2015. Common law is built up over the years and is based on custom and practice in the law.

The proposal here is that an employee who will be dismissed on three months’ notice will be entitled to retrenchment benefits in line with the provisions of Section 12C of the Act.

According to Labour bodies, the common law right currently enjoyed by the employers resulted in the dismissal of over 20000 workers since 17th July 2017 and in my view this was a strong indication that businesses are struggling in a very difficult economic environment.

Clause 18 of the HB7 /2015 proposes that Section 12 of this Act applies to every employee, whose services were terminated on three months’ notice on or after the 17th July, 2015.

What this simply means is that the employees who lost their jobs on three months’ notice will be entitled to minimum retrenchment benefits including one month’s salary for every two years of service.

This is certainly a reprieve for the terminated employees.

Nevertheless, if the proposal sails through as it is, it may lead to serious erosion of the numbers in employment and will sorely test survival and viability of businesses already struggling.

It is more likely that employers will legally challenge the operationalisation of the law in retrospect.

2) New Section substituted for Section 12C of Cap 28:01 “Retrenchment”

Subsection (2) states that “Unless better terms are agreed between the employer and employees concerned or their representatives, a package(hereinafter called “the minimum package”) of not less than one month’s salary or wages for every two years of service as an employee ( or the equivalent lesser proportion of one month’s salary or wages for a lesser period of service) shall be paid by the employer as compensation for loss of employment ( whether the loss of employment is occasioned by retrenchment or by virtue of termination of employment pursuant to Section 12(4a) (a),(b),or (c), no later than date when the notice of termination of employment takes effect.”

Comment – According to a study carried out by the Zimbabwe Economic Policy Analysis and Research Unit (ZEPARU) (2014) entitled “Cost Driver Analysis of the Zimbabwean Economy”, “Redundancy dismissals are lengthy and prohibitively expensive.

Severance payments average 69,2 weeks of wages, nearly three times as high as the neighbouring country average of 25,4 weeks.

The financial implications of retrenching for Zimbabwean companies are not allowing them to reduce their excess labour to regain competitiveness, essentially leaving them in an uncompetitive trap”. Ideally employers would have preferred one week’s salary for every year served, but it is commendable here that the Bill has introduced significant improvement on the setting of a minimum retrenchment package as compared to past practice.

However, there is still room for improvement before or after amendment of the Act.

While the amendment sees retrenchment benefits negotiated in advance by works councils and employment councils, it is more likely that the main responsibility will lie in the hands of employment councils who will resolve retrenchment disputes and offer acceptable solutions to their constituencies.

3) Amendment of Section 74 Cap 28:01 “ Scope of Collective Bargaining Agreements”

The Bill seeks to amend the Section as follows after paragraph (m); “(n) the following measures to foster the viability of undertakings and high levels of employment, where applicable, namely measures –

(i) To promote high levels of productivity; and

(ii) To promote economic competitiveness; and

(iii) To promote economic environmental sustainability; and

(iv) To mitigate the cost of living”

According to the study carried out by the Zimbabwe Economic Policy Analysis and Research Unit (ZEPARU) (2014) entitled “Cost Driver Analysis of the Zimbabwean Economy”, Minimum wage levels indicate higher labour costs in Zimbabwe when compared to Zambia, Botswana, and Mozambique, and a labour cost advantage in relation to South Africa.

However, the trend observed in the last five years reveals large increases that do not appear to be justified by increased economic growth or productivity, at a time when the economy faces increased regional competition from devaluation in neighbouring countries.

To remain competitive, wage increases in a given economy need to be aligned with productivity levels; however the current labour code and practices translate into salary increases expected and upheld by law for all employees regardless of their performance and productivity.

In my view this proposal is appropriate as it seeks to link wages to productivity and economic competitiveness.

This proposal is perfectly in line with the ILO’s Minimum Wage-Fixing Machinery Recommendation, 1928, the Minimum Wage Fixing Machinery (Agriculture) Recommendation, 1951, and the Equal Remuneration Recommendation, 1951, which set out the criteria to be used in setting minimum wages including the requirements of economic development, levels of productivity and the desirability of attaining and maintaining a high level of employment.

The proposed amendments to the Labour Act are sufficiently adequate to both the employers and labour.

However, there is need for closer scrutiny by both parties and from my analysis it appears that the proposals will drastically change the face of the labour law.

According to The Herald edition of 15th August 2015, Parliament is expected to pass the Labour amendment Bill this week, after President R.G Mugabe summoned parliamentarians from their recess to consider amendments to the Labour Act.

Once presented in, and passed by both Houses of Parliament; and assented to and signed by the President in accordance with the Constitution, an Act of Parliament comes into operation at the beginning of the day of which it is published in the Gazette, or at the beginning of any other day that may be specified in the Act or some other enactment.

It is my hope and trust that the Legislators will pass a Bill that seeks to strike a win-win situation between workers and employers to promote industrial competitiveness and fair labour standards.

◆ Matthias Ruziwa is an experienced and progressing strategic human resource practitioner. He is also an independent arbitrator practising in the Midlands city of Kwekwe. Opinions expressed herein are solely those of the author

You can contact Matthias at the following email address: [email protected] /whatsapp 0773 470 368