THE EASE OF DOING BUSINESS IN ZIMBAWE: EMPLOYER REPRESENTATION IN THE LABOUR COURT

BY CEPHAS MAVHONDO

 

Zimbabwe is said to be ranked low in the ease of doing business index. I do not wish to look into the strengths and weaknesses of this index. In any event, I am writing this article as a labour lawyer and not as an economist. The ease of doing business index is an index created by the World Bank Group. Higher rankings (a low numerical value) indicate better, usually simpler, regulations for businesses and stronger protections of property rights. The research funded by the World Bank to justify their work shows that the economic growth impact of improving these regulations is strong. According to Wikipedia, Singapore is currently (2016 Report) ranked at number 1 while Eritrea is at the bottom number 189. Where is Zimbabwe? Zimbabwe is there at number 171.

Linking the ease of doing business with labour laws, among other factors that the index takes into account, is a conception that the easier it is to deal with employment disputes, the stronger the economic growth of a nation. This idea is commonly called labour market flexibility. In my view labour market flexibility should not mean regulations that are more favourable to the business owners only. It should mean regulations that are, in as far the business owners and workers are concerned, balanced, fair and focused on improving the national economy at large.  The moment the regulations favour business owners more than the workers, the workers will be disgruntled and end up protesting legally or illegally.

The Parliament and the President of Zimbabwe recently enacted what is called the General Laws Amendment Act, 2016 (Act 3 of 2016), (hereinafter called ‘Act 3 of 2016’). Act 3 of 2016 was published in the Government Gazette on 1^st July 2016. In terms of section 9 of Part CXIV of Act 3 of 2016, it is now expressly stated, inter alia, that certain company officials can now represent their companies in any proceedings before the Labour Court. Another landmark achievement by the employers! Probably, this is a way to improve the country’s capacity to attract foreign direct investment (FDI). This surely appears to be a welcome development for companies as before Act 3 of 2016, the Labour Act   [Chapter 28:01] (herein after called “the Act”) was silent as to whether or not companies could be represented and appear by their company officials in Labour Court proceedings. This was a grey area in the Act. However, the trend in the Labour Court was to lean towards allowing any person who is a company official to represent and appear on behalf of the company as long as he is so authorised. This is the same position in the Magistrates Court by virtue of that court’s rules. It is however not the position in the superior courts which only allow a company to be represented and appear by its company official in very exceptional circumstances. In most cases only registered legal practitioners are allowed to appear on behalf of companies in the superior courts. One may ponder whether or not this position in the superior courts is constitutional.

 

Before the advent of Act 3 of 2016, the law in terms of section 92 of the Act was that a party to a matter before the Labour Court might appear in person or be represented and appear by a legal practitioner registered in terms of the Legal Practitioners Act [Chapter 27:07]; or an official or employee of a registered trade union or employers’ organization of which the party is a member. There was a lacuna in the Act as it was silent as to whether or not companies could be represented and appear by their company officials in Labour Court proceedings.

 

This issue of company representation was dealt with before in some other courts. Mc Nally JA, in the Supreme Court case of Agramac (Pvt) Ltd v Chisvo and Another 1991 (2) ZLR 185 stated that a company, being a fictitious person, and incapable of appearing in court in person can only be represented in the High Court or Supreme Court by a legal practitioner. However, the court found that,  by virtue of the provisions of the Magistrates Court Rules, 1980, a director or officer of a company can institute or defend and carry on to completion any legal proceedings in the Magistrate’s Court.

 

In the case of Zimbabwe Banking Corporation Limited vs Pindi Electrical (Pvt) Ltd and Others HH-146-98, Mubako J took a contrary view to that adopted by the Supreme Court in the Agramac case. It was stated that the rule that a company director or officer could only act in the Magistrate’s Court was outdated. In arriving at that decision, the judge relied on section 9 (2) (c) of the Legal Practitioners Act (Chapter 27:07). This provision permits a company or partnership to self-act in any court through its director, or officer in its sole employment, and such director or officer must not charge a fee for his work.

 

Clearly the Legal Practitioners Act permits any director or officer to represent a company in legal proceedings be it in the Magistrate’s Court, in the Labour Court, High Court or Supreme Court. Section 9 of the Legal Practitioners Act clearly gives directors a right to sue or defend on behalf of their companies to the completion of the case. A company can however, at its sole discretion, employ the services of a legal practitioner or company legal advisor to assist if it deems it necessary.

 

In a more recent case of Lee’s Import and Export P/L v Zimbank 1999(2) ZLR 36 (SC), it was held that the common law rule of practice that companies can only be represented by legal practitioners in the High Court still stands. It is only in very exceptional cases of alter egos that the court, using its discretion to regulate its proceedings, may allow the alter ego to represent the company in the High Court. In interpreting proviso to section 9 (2) of the Legal Practitioners Act, the court held that the effect of the proviso was to simply allow authority to be given to a director or officer of a company to do what is reserved for legal practitioners only. The court went on to say that the authority can be provided in the rules of court. Hence , the court went on, the Magistrates Court Rules by authorizing a director or officer of a company to do what is reserved for lawyers, are  covered by the proviso and  are not inconsistent with section 9 (2) of the Legal Practitioners Act.

 

Following Lee’s case, the authority of certain company officials to appear on behalf of a company has been provided in the amendment to section 92 of the Act just like how such authority was provided in the Magistrates Court Rules. Section 92 of the Act as amended is therefore covered by the proviso to section 9 of the Legal Practitioners Act and is not inconsistent with section 9 (2) of the Legal Practitioners Act. Act 3 of 2016 has amended Section 92 of the Act by adding another list of persons that can represent and appear on behalf of an employer in the Labour Court namely; “A company director, company secretary, company legal advisor or person in charge of human resources or personnel management on behalf of an employer.” The implication of this amendment is that it is now clearer as to who has the legal right to represent and appear on behalf of an employer company in the Labour Court. As a company is an artificial person with no physical existence, it needs the services of human beings to act on its behalf.

 

It is clear from the above that a company, being a separate legal person from its shareholders, cannot be represented in a legal suit by a person who has not been authorised to do so. It means a company resolution must be present where necessary. This is a well-established legal principle, which the courts cannot ignore. The general rule is that directors of a company can only act validly when assembled at a board meeting to act on such a way. A copy of the resolution giving authority may be sufficient evidence to confirm company authorization. If court papers fail to comply with these procedural requirement the litigation may be rendered irregular to the detriment of the company’s interests. It must be emphasized that cognizance must always be taken of the need to prove that one is acting legally or with due authority by making sure that a copy of the company resolution is available before any action is taken, so as not to fall foul of the law. In the case of African Banking Corporation of Zimbabwe Limited t/a BancABC v PWC Motors (Pvt) Ltd & 3 others HH-123-13,  MATHONSI J held as follows;

 

 “I am aware that there is authority for demanding that a company official must produce proof of authority to represent the company in the form of a company resolution.  However, it occurs to me that that form of proof is not necessary in every case as each case must be considered on its merits: Mall (Cape) (Pvt) Ltd v Merino Ko-Opraisie BPK 1957 (2) SA 345 (C).  All the court is required to do is satisfy itself that enough evidence has been placed before it to show that it is indeed the applicant which is litigating and not the unauthorized person.

 

 To my mind the attachment of a resolution has been blown out of proportion and taken to ridiculous levels.  Where the deponent of an affidavit states that he has the authority of the company to represent it, there is no reason for the court to disbelieve him unless it is shown evidence to the contrary [but] where no such contrary evidence is produced the omission of a company resolution cannot be fatal to the application …”

 

The constitutionality of the common law position that a company must always be represented by a legal practitioner in the superior courts was tested in Lee’s case. The Court held that, applying the alter ego doctrine and organic theory together with the purposive interpretation of the Constitution, this common law practice offended against section 18 (9) (right to fair trial) of the Constitution then certainly to the extent that it denies the duly authorized organ or alter ego of the company the right to appear in the person of the company. In other words the fundamental right to a fair hearing includes the right of a corporate body to appear through its alter ego. Given a clear distinction between a hearing and a trial, a reading of section 69 and 86 of the current Constitution of Zimbabwe reveals that the position in Lees’ case still holds good.

 

In conclusion, it is now crystal clear that a company can now appear in the Labour Court through certain company officials as long as the official in question is duly authorized by way of a company resolution.  This amendment brings into picture the government of Zimbabwe’s drive on the ease of doing business in the country. This is so because it serves the company legal costs especially in simple cases where the services of a legal practitioners are not necessary. I do not see anything unfavorable to the workers over this amendment. It is balanced, fair and focused. However, where the dispute is complicated, the company has an option to use the services of a legal practitioner.

 

 

 

 

 

 

SPECIAL ECONOMIC ZONES

 

THE LABOUR LAW PERSPECTIVES ON THE SPECIAL ECONOMIC ZONES (SEZs) BILL, (HB 15/2015): A DELICATE BALANCING EXERCISE

BY CEPHAS MAVHONDO*

 

A certain WhatsApp group was created and is called Labour Solutions Centre. I am a member thereof. The Group Administrator asked me to comment on an animal called Special Economic Zones visa vis our labour laws. After commenting on the aforementioned animal, I thought of coming up with this article for the benefit of the general members of the public.

 

 Zimbabwe is currently in the process of passing into law what is named Special Economic Zones Act. This process is at Bill stage and the Bill number is HB 15/2015. A number of questions are being asked. In the realm of labour, the biggest question is;- ‘Is the bill not an attack on labour rights of the employees?’ The other question is ‘If the answer to the first question, is in the affirmative, what can be done to make sure that the resultant law is a good law? I attempted to answer these and other questions in this article.

 

 

The preamble to the Bill states that:

“AN ACT to provide for the establishment of the Zimbabwe Special Economic Zones Authority and to provide for the functions thereof; to provide for the constitution and functions of the Special Economic Zones Board; to provide for the establishment of Special Economic Zones and the administration, control, regulatory measures and incentives in connection therewith; and to provide for matters incidental to or connected with the foregoing”

 

In essence, if the Bill is passed into law, there will be the Zimbabwe Special Economic Zones Authority (which will be a body corporate), Special Economic Zones Board (which shall be responsible for controlling and managing the Special Economic Zones Authority) and Special Economic Zones (that is, as defined in the Bill, any part of Zimbabwe declared in terms of section 20(1) of the Bill to be a special economic zone).

 

It is important to note that section 2 of the Bill defines ‘special economic zones’ as ‘any part of Zimbabwe declared in terms of section 20(1) (of the Bill) to be a special economic zone’. This definition only tells us that these zones are areas declared as special economic zones. It does not also clearly highlight to us what is economically special about these areas or zones.

 

SEZs can be generally defined as geographical zones which enjoy special regulatory and institutional incentives which distinguish them from the rest of the country. They normally provide an array of incentives for businesses which incentives range from tax incentives to regulatory incentives. SEZs are therefore designated geographical regions where enterprises can be established operating under special regulations; the zones are intended to enhance competitiveness and job creation and promote foreign direct investment in a country. SEZs are a way to encourage exports and foreign exchange earnings while addressing the massive unemployment rate, broadening the economic base and attracting development and new technologies. 

Special Economic Zones may be sector-specific or multi-product and the following categories of SEZs have been defined as per the South African SEZ Act No. 16 of 2014:

• "Industrial Development Zone" means a purpose built industrial estate that leverages domestic and foreign fixed direct investment in value-added and export-oriented manufacturing industries and services;
• "Free Port" means a duty free area adjacent to a port of entry where imported goods may be unloaded for value-adding activities within the Special Economic Zone for storage, repackaging or processing, subject to customs import procedures;
• "Free Trade Zone" means a duty free area offering storage and distribution facilities for value-adding activities within the Special Economic Zone for subsequent export;
• "Sector Development Zone" means a zone focused on the development of a specific sector or industry through the facilitation of general or specific industrial infrastructure, incentives, technical and business services primarily for the export market

Now that I have addressed what are SEZs, I think it is important to look at their history in Zimbabwe. At first, SEZs were established under the Income Tax Act; they were then called Export Processing Zones [EPZs]. Exporters who operated within them were given tax exemptions but otherwise they enjoyed, no special exemptions from the ordinary laws of Zimbabwe. Later on, in 1995, the Export Processing Zones Act (Chapter 14:07) (herein after called ‘the repealed law’) was promulgated and it established a parastatal authority responsible for establishing export processing zones, attracting investment to the zones and issuing licenses for businesses to operate within the zones. Section 56 of the repealed law stated, in almost the same manner the proposed section 56 of the Bill is drafted, that the Labour Relations Act [now the Labour Act] would not apply within export processing zones; but this section was repealed in December 2005. In 2007 the Export Processing Zones Act was repealed by the Zimbabwe Investment Authority Act, though industries that were licensed to operate in the zones continued to enjoy certain tax advantages.

It is believed that what may have reduced the effectiveness of the repealed law was that, any premises or place could be declared an export processing zone; even single rooms could be so declared. Virtually any manufacturing business which was export-oriented to at least some degree could get a license under the repealed law and many did. They did not have to move to a special zone to get the tax benefits accorded to them under the repealed law, but could remain where they were. Hence the repealed law did not lead to the establishment of separate zones where export businesses were concentrated: exporters were dispersed as before, but enjoyed tax exemptions. Nevertheless, the repealed law did encourage economic development as it is believed that projects in export processing zones had created more jobs in 2004.

The Bill is almost a mirror effect of the repealed law (Export Processing Zones Act (Chapter 14:07)).  Section 56 of the repealed law stated that:

“56 Chapter 28:01 not to apply

(1) The Labour Relations Act [Chapter 28:01] shall not apply in relation to licensed investors operating and employees employed in an export processing zone.

(2) The Authority may, in consultation with the Minister responsible for the administration of the Labour Relations Act [Chapter 28:01] provide rules for conditions of service, termination of service, dismissal from service and disciplinary proceedings that apply in export processing zones”.

 Section 56 of the Bill provides that;

1)    The Labour Act (Chapter 28:01) and the Indigenization and Economic Empowerment Act (Chapter 14:33) shall not apply in relation to licensed investors operating in a special economic zone.

 

2)    The Authority may, in consultation with the Minister responsible for the administration of the Labour Act (Chapter 28:01), provide rules for conditions of service, termination of service, dismissal from service and disciplinary proceedings that apply within every special economic zone.

 

It is clear that in terms of section 56 (1) of the Bill ‘licensed investors’ operating in Special Economic Zones will be exempted from the provisions of two key legislations; Indigenisation and Economic Empowerment Act and Labour Act.  It is worth noting that, unlike the repealed law, section 56 (1) of the Bill does not expressly cover the employees of the licensed investors. However, given the nature of the employer–employee relationship which is reciprocal, the exemption of the employer from the application of the proposed law means that the employee is also exempted.  This is also confirmed by the fact that the Bill proposes that the SEZ Authority, in consultation with the Minister responsible for administration of the Labour Act may provide rules for conditions of service, termination of contract, dismissal from service and disciplinary hearing in SEZs.

The Zimbabwe Congress of Trade Unions (ZCTU) has argued that exempting companies that will operate in SEZs from the Labour Act is ill-advised and will lead to workers being subjected to unfair treatment.

To alley any fears of abuse of labour rights in SEZs, I am of the view that the word “may” in section 56(2) of the Bill must be changed to “shall”. In line with that view, section 56(2) of the Bill ought to be clear that the rules in question shall apply in SEZs. This has the effect of making it mandatory that the SEZs Authority makes the necessary rules and the application of the rules in SEZs becomes mandatory.

If the suggested changes are not made, by virtue of the use of the word ‘may’ in section 56 (1) of the Bill, the Authority remains with a discretion whether to make the rules or not. This is really not good for the employers and employees as it may take long before an election to make the rules is made. It will be worse, if the election is not to make the rules. If the rules are not made, it means the laws of the jungle will apply between the employer and employee in SEZs. On that basis there is a possibility that the establishment of SEZs may lead to labour rights violations such as minimum wages, or standard working hours, or the right to strike, or to form trade unions.

Another point to note is that the exclusion of the application of the Labour Act in SEZs may be or may not be constitutional.  This is so because  section 86 of the Constitution of Zimbabwe authorizes the limitation of constitutional rights and freedoms. However, the limitation must be only in terms of a law of general application ( that is a law that applies to everybody and not only to certain subjects) and to the extent that the limitation is fair, reasonable, necessary and justifiable in a democratic society based on openness, justice, human dignity, equality and freedom, taking into account all relevant factors. There is a list of certain rights that the aforesaid section 86 makes immune from limitation but labour rights are not part of the list. This means labour rights provided for in section 65 of the Constitution can be limited in terms of section 86 as long as the limitation is in terms of a law of general application and to the extent that the limitation is fair, reasonable, necessary and justifiable in a democratic society based on openness, justice, human dignity, equality and freedom, taking into account all relevant factors. The only question I will leave open for another day is: Is the proposed limitation (section 56 of the Bill) in terms of a law of general application (that is a law that applies to everybody and not only to certain subjects) and to the extent that the limitation is fair, reasonable, necessary and justifiable in a democratic society based on openness, justice, human dignity, equality and freedom, taking into account all relevant factors?

Sections 65 of the Constitution which provides for labour rights states that;

65 Labour rights

(1) Every person has the right to fair and safe labour practices and standards and to be paid a fair and reasonable wage.

(2) Except for members of the security services, every person has the right to form and join trade unions and employee or employers’ organizations of their choice, and to participate in the lawful activities of those unions and organizations.

(3) Except for members of the security services, every employee has the right to participate in collective job action, including the right to strike, sit in, withdraw their labour and to take other similar concerted action, but a law may restrict the exercise of this right in order to maintain essential services.

(4) Every employee is entitled to just, equitable and satisfactory conditions of work.

(5) Except for members of the security services, every employee, employer, trade union, and employee or employer’s organisation has the right to—

(a) engage in collective bargaining;

(b) organize; and

(c) form and join federations of such unions and organizations.

(6) Women and men have a right to equal remuneration for similar work.

(7) Women employees have a right to fully paid maternity leave for a period of at least three months.

It is also important to look at the perceived advantages and disadvantages of SEZs especially in relation to the development of labour law.

 

As an advantage, labour conditions may be regulated less rigidly in SEZs through amendments of the labour laws. This may encourage businesses within SEZs to increase employment since the costs of shedding unproductive labour will be reduced. Also there may be development of labour laws since they will be repealed to match the needs of Special Economic Zone hence rapid economic growth in the country. Also this will eventually lead to the establishment of courts and other tribunals capable of enforcing rights of workers at the work place in the zones. The regulatory regime may be clear and secure. Investors will be able to settle their legal disputes quickly and fairly, and will be confident that the Government will protect their rights, particularly their property rights, and will not change the rules arbitrarily.

 

As a disadvantage, there may be a tendency for labour conditions to be regulated less rigidly to suit the demands of SEZs. As noted earlier, our SEZs Bill stated specifically that the Labour Act would not apply within Special Economic Zones. This may also lead to the unjustified exploitation of workers and unsafe conditions of work in the zones.

 

In a nut shell, the creation of SEZs and limiting labour rights in SEZs is a very delicate balancing exercise which requires serious considerations and the involvement of all the concerned stakeholders for the betterment of our country.

* Cephas Mavhondo is a labour lawyer and partner at Mhishi Legal Practice, Harare. For any feedback: cephasmavhondo@gmail.com. This article expresses the views of the writer. It is meant to goad a discussion on issues raised and it does not constitute legal advice to any reader thereof and the writer will not be responsible for any action or omission done based on this paper. For more information visit www.labourwatchzim.blogspot.com

 

Zimbabwe @35: An Introspection

  Social media visa vis employee misconduct.

(This article was also published in the Law Society of Zimbabwe Zim Juris, August 2015 Issue)

  

Section 61 of the Constitution of Zimbabwe guarantees freedom of expression and freedom of the media excluding, incitement to violence, advocacy of hatred or hate speech, malicious injury to a person’s reputation or dignity and  malicious or unwarranted breach of a person’s right to privacy. Facebook walls and whatsapp groups are examples of social media channels facilitating enjoyment of this constitutional right.

In light of the current technological changes, every organisation using social media or general electronic communication should have a social media policy or electronic communication policy (ECP) in place. While ECP in the workplace may have distinct advantages for an employer, the real or perceived rights of the employee may potentially conflict with those of the employer. In light of this, how our courts will deal with issues arising out of social media usage is still, to a large extent, uncertain.

In South Africa and other jurisdictions, posting of offensive comments on online social media sites by employees had been recognised as a fair reason for employee dismissal. In the case of Sedick and Another v Krisray (Pty) Ltd (2011) 8 BALR 879 The Commission for Conciliation, Mediation and Arbitration (CCMA), two employees were dismissed for bringing the company's name into disrepute by publishing derogatory comments about the owner of the company on Facebook. The employees claimed that their right to privacy was breached by the employer by accessing their profiles on Facebook. They further argued that the comments they made did not identify any person or organization and could therefore not have damaged the reputation of the company.

 

In terms of the South African Regulation of Interception of Communications and Provision of Communication-related Information Act 70 of 2002,(RICA) “any person . . . may intercept any communication if he or she is a party to the communication, unless such communication is intercepted by such person for purposes of committing an offence”. According to the Commissioner, the internet is a public domain and Facebook users have the option to restrict access to their profiles as well as the information that they publish. The dismissed employees did not block access to their profiles and as such any person could have accessed the information that they have published. The admissibility of the employer’s evidence was accordingly not an issue.

 

The commissioner found that former or current employees of the company, that accessed the profiles of the two employees, would have had no difficulty in identifying the person they referred to in their communications. The dismissal of the two employees was therefore found to be fair.

 

In Smith v Partners in Sexual Health (non-profit) (2011) 32 ILJ 1470 (CCMA), an organisation’s chief executive officer accessed an employee’s private Gmail e-mail account while she was on leave and found e-mails between her and former employees, as well as persons outside the organisation, which made reference to internal matters. The employee was charged with a number of offences, including bringing the employer’s name into disrepute.

 

In her defence, the employee contended that the e-mails were accessed in violation of her right to privacy and in contravention of RICA. The CCMA found that the intentional access contravened RICA and the evidence obtained through this access was inadmissible on the basis of an infringement of the constitutional right to privacy. The CCMA held the dismissal procedurally and substantively unfair.

 

CCMA has thus accepted that what an employee says on his Facebook profile may be fair reason for dismissal. In our Zimbabwean context, this approach may equally apply as long as it is brought within the context of our existing laws in general and labour laws in particular. Section 12B of the Labour Act (Chapter 28:01) provides that an employee can only be fairly dismissed if the dismissal is in terms of the employment code or in the absence of an employment code, in terms of the national code.

 

It is thus crucial to ensure that our employment codes contain the offences relating to use of electronic communications. The current Communications and Allied Services Sector National Employment Council Code of Conduct is commendable as it creates and defines an offence described as ‘unbecoming or objectionable behaviour’.Thus with employment codes properly drafted to capture misconduct of this nature, it will be easy for the employer and employee to resolve any dispute as to whether or not a particular conduct related to use of social media is a misconduct.

 

SI15 /2006, which is the model code of conduct in Zimbabwe, does not expressly provide for any misconduct that deals with the use of electronic communications. It is only the misconduct stated in section 4(a) (Any act of misconduct or omission inconsistent with employment contract) of that code that may be relied on to found a charge dealing with a misconduct arising from use of electronic communication.

 

Thus an employee, who publishes disparaging comments against his employer on his Facebook wall, can be charged with this misconduct if such publication is viewed as inconsistent with his conditions of contract. Such a charge may not be as clear as one would want as it appears the employer will be overstretching section 4(a).It is therefore crucial to have ECP in place to avoid an impasse in the disciplinary process due to lack of clarity on what conduct constitutes a misconduct.

 

With regards the interception of communication, the employer may rely on section 3 of Interception of Communication Act (Chapter 11:20). In terms of this law, the employer is allowed to intercept the employee’s communication if the employer is a party to the communication or the employee consents to the interception. 

 

In conclusion, our law should not remain behind and has to be aligned with the current developments in electronic communications, though the legal issue(s) that I have raised herein may be dealt with in terms of the normal rules of fairness and equity.

 

 

 

COMMENTS ON THE ZIMBABWE LABOUR AMENDMENT ACT, 5/2015*

BY CEPHAS MAVHONDO

INTRODUCTION

1.    The Labour Amendment Act Number 5/2015 was gazetted as law in August 2015 and brings a lot of amendments to the Labour Act (Chapter 28:01) hereinafter called “the Act”.

 

2.    In brief, Act 5/2015 introduced the following:

a)    A definition of “forced labour”.

b)    Further regulation on employment of young persons.

c)    More protection to employees on fixed term contract

d)    More regulation on termination of employment on notice.

e)    A new provision with regards regulation on retrenchment process.

f)     Further regulation on trade union registration.

g)    Further regulation on the registration and management of employment councils including a new provision with regards auditing of accounts.

h)   Further regulation of collective bargaining agreements.

i)     A new provision governing grounds for review in the Labour Court.

j)     More regulation on the powers of Labour Officers.

k)    More regulation on investigation of trade union and employer’s organizations.

l)     A transitional provision giving a retrospective effect to the application of the amendments to Section 12 of the Act.

3.    It may not be possible to carry out an analysis of the whole Amendment Act at one go.  As such it may be crucial, for a start, to focus on the hot issues, namely amendments to Section 12, 12C and 12D of the Labour Act (fixed term contracts, termination on notice, retrenchment and retrospective effect of Section 12).

FIXED TERM CONTRACTS (Amendment to section 12 of the Act)

 

4.    For purposes of this article, before the amendment, Section 12 of the Act provided as follows:

 

12 Duration, particulars and termination of employment contract

(1) Every person who is employed by or working for any other person and receiving or entitled to receive any remuneration in respect of such employment or work shall be deemed to be under a contract of employment with that other person, whether such contract is reduced to writing or not.

 

(2) An employer shall, upon engagement of an employee, inform the employee in writing of the following particulars—

(a) the name and address of the employer;

(b) the period of time, if limited, for which the employee is engaged;

(c) the terms of probation, if any;

(d) the terms of any employment code;

(e) particulars of the employee’s remuneration, its manner of calculation and the intervals at which it will be paid;

(f) particulars of the benefits receivable in the event of sickness or pregnancy;

(g) hours of work;

(h) particulars of any bonus or incentive production scheme;

(i) particulars of vacation leave and vacation pay;

(j) particulars of any other benefits provided under the contract of employment.

(3) A contract of employment that does not specify its duration or date of termination, other than a contract

for casual work or seasonal work or for the performance of some specific service, shall be deemed to be a contract without limit of time:

Provided that a casual worker shall be deemed to have become an employee on a contract of employment

without limit of time on the day that his period of engagement with a particular employer exceeds a total of six weeks in any four consecutive months.

(new subsection 3(a) is inserted here by section 4 of Act 5 of 2015)

(4) 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 of the contract of

employment 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;

(b) two months in the case of a contract for a period of one year or more but less than two years;

(c) one month in the case of a contract for a period of six months or more but less than one year;

(d) two weeks in the case of a contract for a period of three months or more but less than six months;

(e) one day in the case of a contract for a period of less than three months or in the case of casual work or seasonal work.

[Subsection substituted by section 6 of Act 7 of 2005]

(new subsections 4(a) and 4(b) are inserted here  by section 4 of Act 5 of 2015)

(5) A contract of employment may provide in writing for a single, non-renewable probationary period of not more than—

(a) one day in the case of casual work or seasonal work; or

(b) three months in any other case;

during which notice of termination of the contract to be given by either party may be one week in the case of casual work or seasonal work or two weeks in any other case.

[Subsection amended by section 6 of Act 7 of 2005]

(6) Whenever an employee has been provided with accommodation directly or indirectly by his employer,

the employee shall not be required to vacate the accommodation before the expiry of a period of one month after the period of notice specified in terms of subsection (4) or (5).

(7) Notwithstanding subsection (4) or (5), the parties to any contract of employment may, by mutual agreement, waive the right to notice:

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).

[Section substituted by section 10 of Act 17 of 2002]

 

4.1  Section 12 of the Act is amended by insertion of new subsection 3(a) such that all fixed term contracts are to be deemed permanent upon expiry of a period fixed by an appropriate employment council or prescribed by the Minister, despite the fixed term agreed between the parties. For example if an employment council prescribes that any fixed contract exceeding 2 years becomes permanent upon lapsing of 2 years, then if an employee signed a fixed term contract of  3 years, his contract becomes permanent after 2 years. This amendment appears to be meant to curb casualization of employees on fixed term contracts- that is continued renewal of fixed term contracts with a view to keeping the employees non-permanent. The Labour Court in the case of  Lifestyle Zimbabwe Furnishers v Admire Mawapo and 295 Others LC/H/02/2012  stated that

“When we talk of casualization of labour we are not referring to employee being on casual employment as such. The issue is that of not placing employees on permanent employment when the work of permanent employment is available. The employer either places the employee on short fixed term contract or on casual contract……”

 

4.2  Now such employees on fixed term contract, upon becoming permanent in terms of the new law, are accorded the same benefits that permanent employees are entitled to. This is a welcome development for employees on fixed term contracts as they can now enjoy the benefits that were previously a preserve of permanent employees e.g; longer notice of termination of employment, job security (that is no more casualization of labour), retrenchment packages and pensions.

 

4.3  For the employers, this means that it is no longer an option to favour even the genuine fixed term contracts.  This may pose a challenge to some employers especially those that, by nature of their services, require fixed term contracts for employees.  For instance non-governmental organizations with seasonal jobs that depend say on availability of funds or existence of social crisis.

 

4.4  However, everything depends on the period to be fixed/prescribed as marking the time from which such temporary employees become permanent.  If the period is too long, then the employers may not have much of a problem but if it is too short, the employers may have some challenges.

TERMINATION ON NOTICE (Amendment to section 12 of the Act)

 

5.    Section 12 is further amended by the insertion of new subsections 4 (a) and 4 (b) such that no employer shall terminate a contract of employment on notice unless one of the following grounds is established;

a)    The termination must be in terms of an employment code or the model code;or

b)    The employer and employee must have mutually agreed in writing to the termination;or

c)    The employee must have been engaged for a fixed duration or for performance of a specific service;or

d)    Pursuant to retrenchment.

5.1  Compensation for loss of employment for employees whose permanent contracts are terminated on notice, is, to a certain extent, dealt with in the same way compensation for loss of employment due to retrenchment is done. Before dealing with  compensation, it is crucial to highlight a few things. These are:

a)    The common law right to terminate a contract of employment on notice has not been abolished.  It has just been subjected to further regulation such that there must be a basis for termination.

 

b)    The nature of terminal benefits that a permanent employee is paid on termination on notice is, to a certain extent, similar to that a retrenched employee gets.

 

c)    Section 12 (compensation provision only) is given a retrospective effect from 17 July 2015.

 

d)    The basis of termination on notice can be interpreted to mean that:-

 

·         If termination is in terms of an employment code, the code must provide either that the employer can terminate the contract on notice, with or without a reason, or that the employer can terminate the contract on notice upon an agreement with the employee. The current model code (SI 15/06) does not provide for termination on notice per se. It provides for mutual termination.  It is therefore presumed that the legislature’s intention is, should the Minister deem it necessary,  the model code will be amended so that termination on notice is provided for.

 

·         One of the grounds is that the employer and employee must have mutually agreed to terminate on notice.  This can be interpreted to mean that the clause in an employment contract to the effect that the contract can be terminated on notice is sufficient.  In other words, a contract signed before the celebrated Supreme Court judgment in Zuva case (delivered on 17 July 2015) remain applicable in as far as termination on notice is concerned. From a different angle, mutual termination can also mean that, even in the absence of such clause in an employment contract, the employer and employee can discuss the possibility of terminating an existing contract on notice and if the employee agrees, the employer can then terminate on notice. A caveat in both instances is that the period of termination on notice must be subject to the Labour Act.

 

·         The other ground is if the contract of employment is a fixed one or for performance of specific service then it can be terminated on notice.  This has been the case at common law hence this ground is just a restatement of the common law.  For fixed term contracts, notice to terminate the contract is not a legal requirement unless the parties agreed to the contrary, because such a contract automatically terminates on the expiry of the contract period.

 

·         The other ground is pursuant to retrenchment.  This has been the position in terms of the previous retrenchment statutory provisions as the law required that the employer gives three months’ notice to the employee when retrenching. The notice would normally be given as cash in lieu of notice.

 

RETRENCHMENT (Amendment to section 12 C and 12 D of the Act)

 

6.    The new section 12 C of the Act now applies to the retrenchment of one or more employees. Previously the greater part of the Act was only applicable to the retrenchment of five or more employees. With this change, the Retrenchment Regulations (SI 186/2003) applicable to the retrenchment of less than five employees, may no longer be relevant, they need to be repealed.

 

6.1  The rest of the provisions on retrenchment procedure in the Act have been retained e.g. giving of notice to workers’ council or employment council or Retrenchment Board.

 

6.2  What is of significance is that to a certain extent compensation for loss of employment due to termination on notice is now in the same bracket with compensation for loss of employment due to retrenchment. The Act now sets a minimum retrenchment package of not less than one month’s salary or wages for every two years of service (two weeks salary for every year served). The compensation is payable no later than the date when the termination notice takes effect. This suggest that the employee must paid this package on or before the last day of the third month.  (See new section 12C (2) of the Act)

 

6.3  An employer alleging incapacity to pay the package timeously or at all must apply for exemption (not to pay the full minimum package or any part of it) to employment council or Retrenchment Board which must respond within 14 days of being given notice (failing response the exempt shall be deemed granted). See new section 12C (3) .This is a welcome development for the employers as it is likely to give employers some breathing space like paying in instalments.

 

6.4  Section 12(D) is amended also such that negotiating and implementing special measures to avoid retrenchment is now subject to the employment council and retrenchment board approval.

RETROSPECTIVITY OF SECTION 12

 

7.    A number of issues have been raised in various circles about the retrospective application of section 12 of the Act. The following are some of them:

a)    Is parliament empowered to legislate retrospectively?

b)    Is the retrospective provision of the Act Constitutional?

c)    What is the extend of the retrospectivity of the provision in question?

 

7.1  Generally ,  in the absence of an express provision to the contrary, a statue should  be considered as affecting future  matters only ( thus a statute, if possible,  should be interpreted  in  such  a way that it does not take away rights actually vested at the time of its promulgation).

 

7.2  There is a strong presumption in our law of statutory interpretation that retrospective operation is not to be given to an enactment so as to remove existing rights or obligations, unless such language is clear or implied in the statute.

 

7.3  Our courts have held that, care must always be taken to ensure that retrospectivity is confined to the exact extent which the section of the Act provides.

 

7.4  The cases of Barclays Bank vs Nyahuma SC 86/04 and Zimbabwe Phosphate Industries v Matora and Others SC 44/05 are some of the authorities for the above principles in our law.

 

7.5  The question is thus does the retrospective application of Section 12 of the Act not offending any provision of the Constitution? In my view our Constitution does not expressly or impliedly prohibit retrospective application of the law. In other words retrospective application of the law is generally not unconstitutional .

 

7.6  Some believe that the retrospective application of section 12 violates section 3(2) (e) (separation of powers principle) of the Constitution. The argument is that Zuva judgment is correct at law and the retrospective application nullifies the judgment thereby violating separation of powers principle. I have seen letters coming from trade unions alleging that termination on notice done to its members following Zuva judgment was rendered null and void by the retrospective application of Section 12.This, in my view is not the correct interpretation of the Act. The correct interpretation in my view is that the extent of the retrospective application of section 12 is limited to the statutory benefits/ compensation provision of section 12. In other words those employees whose employment contracts were terminated based on Zuva judgment are entitled to compensation as provided for in the Act. The terminations themselves are not invalidated by the amendment/retrospectivity (provided they are procedurally valid) and the Zuva Supreme Court judgment remains valid. Explanatory memorandum to the Bill (HB 7/15) which was passed into law as Act 5/2015 is clear that the retrospective application of the amendments was meant to affect the statutory benefit/compensation provisions of the Act. This interpretation is in line with section 15B (2) (e) of the Interpretation Act (Chapter 1:01) which allows use of the explanatory memorandums to a Bill in interpreting the ultimate Act.

 

7.7  Another argument is that , the provision violates section 56 (equal protection of the law) of the Constitution, as  employers who terminated contracts on notice acted based on the  correct position of the law then and  had vested rights (to terminate contracts on notice) in terms of the Act. This in my view is again not correct. The principles of retrospective application of the law as enunciated above are clear with regards vested rights.  If the law  expressly or impliedly states that it will have retrospective effect, then that law shall have that effect whether vested rights are affected or not. The Amendment is very clear. It expressly states that section 12 shall have retrospective effect. AS such I do not see one being able to successfully challenge in court the retrospective application of section 12 of the Act.

 

7.8  In conclusion, where there are serious grey areas in interpreting the new law, the Courts will be able to interpret and dispense justice.

END!

* This paper expresses the views of the writer. It is meant to goad a discussion on issues raised and it does not constitute legal advice to any reader thereof and the writer will not be responsible for any action or omission done based on this paper. For any feedback, the author is directly  reachable on 0772 456 954 and cmavhondo@mhishilaw.co.zw.