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.