Labour law amendments leave parties disillusioned

via Labour law amendments leave parties disillusioned – The Zimbabwe Independent September 11, 2015 by Kudzai Kuwaza

THE recent amendment of the Labour Act which was hastily rubber-stamped by parliament last month with the aim of halting the wanton dismissal of workers, among other things, has instead left both labour and business disillusioned, while posing a serious threat to corporate viability currently at its lowest ebb.

The amendments were introduced mainly to outlaw the clause which allowed employers to terminate contracts with workers on three months’ notice without retrenchment packages, in line with a July 17 Supreme Court ruling. The ruling precipitated the loss of nearly 30 000 jobs as companies and state entities moved to rationalise operations and cut costs in an environment characterised by a crippling liquidity crunch, low capacity utilisation, falling productivity and deflation.

The most controversial aspect of the amendments is the retrospective clause, premised on “social justice”, mandating employers to compensate workers they dismissed using the Supreme Court ruling through a package of two weeks’ pay for every year served, similar to what would be paid retrenched workers.
This has angered struggling businesses that argue that such a move would not only deter investment, but would lead to massive company closures instead of protecting the worker as envisaged. Some employers are even considering court action to appeal against clauses they say have devastating implications for industry.

Instructively, the amendments, which were presented to parliament by Labour minister Prisca Mupfumira, were also condemned by the parliamentary legal committee led by Mazowe South MP Fortune Chasi, but this failed to deter government.

“The clause provides for the retrospective application of Section 12 of the Act to every employee whose services were terminated on three months’ notice on or after July 17,” the committee notes of the amendments.

“The committee unanimously agreed that the clause violates Section 3(2)(e) of the constitution regarding the separation of powers in that the judgment made by the judiciary was correct at law and in seeking to nullify that by an insertion of the retrospective clause, parliament will have violated the principle of separation of powers.
“Additionally, since the employers acted from the correct position at law, and having vested rights in terms of the Act, applying the retrospective provisions in the clause would be punitive on the employer and violates Section 56 of the constitution relating to equal protection of the law.”

However government is not backing down on the retrospective application of the law, if the uncompromising sentiments of the legal advisor in the Labour ministry, Precious Sibiya, are anything to go by.

“Employers decided to go it alone without tripartite resolutions to the issue despite the grave consequences of their actions,” Sibiya told employers at an Employers Confederation of Zimbabwe (Emcoz) consultative meeting held last week. “This (retrospective application) will encourage employers and employees to go back to the drawing board because as government we encourage mutual dialogue.”

She added that government could not afford to ignore the huge number of workers that have lost their jobs through the application of the Supreme Court ruling.

This is despite the amendments leaving a bitter taste for employers who complain their contributions were not included in the amendments, while government accuses business of failing to attend urgent meetings to discuss the matter.

You would expect worker representative body, the Zimbabwe Congress of Trade Unions (ZCTU), would be mollified by the protection the amendment offers workers, but ZCTU secretary-general Japhet Moyo was having none of it, dismissing the Act as “a bad Act which has many gaps”.

This appears to be in sync with Labour law guru Rodgers Matsikidze’s view that although the law was “cosmetically crafted to sound as if the workers would go home with something”, it promotes a culture of high labour turnover and breaks loyalty of workers to their employers.

“Workers can no longer enjoy the benefits of staying longer at one workplace as they end up going home with just two weeks’ salary for every year served,” he said.

For business, maybe the most contentious aspect of the Act’s weaknesses is the clause that entitles employees fired over disciplinary issues to compensation similar to that of workers who are retrenched. This was pointed out by employers at an Emcoz meeting last week.

Government has acknowledged that the Act has loopholes as it was hurriedly passed to stop job losses, and the offending clauses would be amended. Assurances and government’s invitation to business and labour to a tripartite negotiating forum to effect further amendments have been scant consolation for employers who feel the damage has already been done.

“The explanations by government have the feeling of a graveyard speech, the damage has been done,” an employer who preferred anonymity said.

For economist John Robertson, the friction over the amendments is linked to the lack of investment.
“The issue of retrenchment packages is necessary because workers have no jobs to go to once they lose their current ones,” Robertson said.

“The lack of alternative employment is because there is no investment that creates employment because of the government’s very hostile policies.”

He said despite repeated assurances by government officials who include Finance minister Patrick Chinamasa that there are working on business reforms to attract investment in the productive sectors to create employment, little has been done.

“Chinamasa talked about reforms last year, he talked about reforms this year and he will probably talk about reforms again next year, but they still have not done anything,” Robertson said.

Economists have repeatedly pointed to the need for urgent political, economic and policy reforms to attract investment.

But while employers consider the labour law amendments a raw deal, former Zimbabwe National Chamber of Commerce president Oswell Binha warned that workers’ welfare would actually worsen due to the amendments.

“The worker is worse off after the amendments,” Binha noted. “Business can afford to meet the bare retrenchment minimum.”