9 September 2008

Zimbabwe: Retrenchment Must be Procedural


Harare — Following last weeks' discussion about labour law, a concerned reader wrote to me requesting advice and since many employees maybe sharing the same circumstances as this reader, I resolved to continue with the subject of labour law, but this time around, targeting the process of retrenchment. This is what the reader had to say; "Hie Mr Muza, hope you are fine? I follow and enjoy reading your column in The Financial Gaz ette and I was wondering if you could help me. I want to find out if an organisation can retrench employees without giving them gratuities.

"My friends in the accounts department have maintained that there is enough money to pay up everyone including staff members who have been with this organisation for more than 10 years.

"The Board of Trustees for this organisation is saying the money that is available is to be donated to a charity organisation of their choice. While this is a noble idea, I just wanted to find out whether, under Zimbabwean Labour Law, someone can work for 10 years in an organisation and be sent home with nothing.

"The organisation has vehicles, a flat, and lots of other properties that can be disposed of to pay staff. I also want to find out whether labour laws in Zimbabwe apply differently to people who work in the NGO sector. I want to know how I can take my case to the labour court if this is possible. Do I have to have a lawyer with me?".

The reader signs off as "Jobless Worker".

I shall attempt to answer "Jobless Worker's" questions in the order they came, and the paramount one is whether an employee can leave an organisation empty handed after serving it for a long period.

In the past, much depended on whether the employees' contract of employment is a permanent one or one of a fixed term.

The common law's position is that for a fixed term contract, an employee is upon retrenchment only entitled to his wages and benefits and nothing more, whereas for a permanent contract compensation in lieu of notice must be paid.

However, the Labour Relations Act does not make any distinction on the basis of the nature of contract, hence the current legal position is that upon retrenchment, employees must be compensated.

A complex set of laws ranging from insolvency, labour and company law is key to answering the question.

From the facts supplied by the reader, it would appear that the organisation is shading off employees because of operational constraints. In other words, this is an organisation experiencing insolvency and therefore in need of liquidation. I will make the assumption that the employer did not approach the retrenchment board seeking approval of the intended laying off of staff.

If this is the case, then the employer committed a blunder. Any retrenchment must follow laid down procedures, but it is outside the scope of this article to go into detail about retrenchment procedures.

However, only where proper procedures are followed when retrenching employees can the interests of those affected be safeguarded.

Perhaps, "Jobless Worker's" plight is rooted in his employer's failure to take the necessary legal steps. I therefore, urge all employees to desist from the usual habit of side-stepping the Labour Relations Act through adoption of unfair procedures deemed less costly, at the expense of employee's welfare when retrenching.

The definition of "retrench" given in the Act is quite broad and includes "closure" of the business. It is therefore, wide enough to cover instances of insolvency and liquidation. Thus, on liquidation of an organisation, employees are secured creditors and must be paid, ahead of other creditors.

Depending on availability of valuable assets, employees cannot be cast away just like that without compensating them. Given that "Jobless Worker's" employer has "vehicles, flats and lots of other pro-perties", it would be gr-ossly unfair not to pay him his ret-renchment package.

This inquisitive reader also wanted to know whether labour law distinguishes between employees serving in companies, and those serving in non-governmental organisations.

A simple look at the definition of an "employer" given in the Act may help to answer the question. Employer is defined to mean "any person whatsoever who employs or provides work for another person and remunerates, or expressly or tacitly undertakes to remunerate him......."

I need not explain any further.

The question about prosecuting a matter in the labour court is rather a simple one, but I am unable to exhaustively deal with it due to time and space constraints.

Furthermore, this is a complex area founded in procedural law that legally lay persons may not find easy to comprehend because of its complexity.

I shall however, attempt and albeit briefly to explain the procedures that one should follow when instituting litigation in this court.

The process starts at the labour department where one must file a grievance, whereafter a date for a conciliation hearing will be allocated. Both the employer and the employee will have to appear before a labour officer who will attempt to facilitate dialogue with the aim of settling the matter expeditiously.

In the event of conciliation failing, the matter may be referred for arbitration within the same labour department. Only wherean arbitrator errs and misinterprets legal issues on the matter will it be referred to the labour court.

Thus an appeal cannot lie to the court on matters of fact, but only on matters of law. There are deadlines involved as provided by court rules and these must strictly be adhered to or else a litigant may suffer the peril of his matter being dismissed through default.

The Labour Relations Act allows individuals to prosecute their own matters or to be assisted by a trade union representative of their own choice. I hope the above satisfies "Jobless Worker's" quest for labour law understanding.

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