Labour Bill a tragedy of good intentions

via Labour Bill a tragedy of good intentions – The Zimbabwe Independent August 28, 2015

The recently fast tracked Labour Amendment Bill which sailed through both the National Assembly and Senate, awaiting Presidential assent to become law, is a tragedy of good intentions. Whilst the signs were crystal clear on the labour market horizon following the aftermath of the Zuva Petroleum judgement, the partners to the social contract took time to engage, playing hide and seek and trying by all means to outdo each other. They failed to find common ground to discuss and agree on the way forward to address what some are referring to as a “genocide of jobs”.

Nhamo Kwaramba

As confessed by the Industry and Commerce minister Mike Bimha and other parties concerned, it took too long to address the contentious issues in the Labour Act. It must be understood that the government, employers and employees have been involved in a cold war for some time. As is always the case, there was a lot of blame shifting with each party accusing the other and wanting to advance only its interests. That stifled progressive discussions and amendments on the Labour Act in line with current changes in the socio-economic and political environment.
Due to insurmountable economic challenges many companies face operational challenges resulting in failure to pay their workers. They had to go for months without paying salaries. The situation continued to deteriorate to an extent that they had to retrench.

Many companies failed to rationalise staff due to costs associated with termination of employment contracts. The labour laws on termination as understood by the generality of employers and employees were based on disciplinary measures, terms and conditions of employment contract especially for contract workers, death, resignation and retirement. In situations where an employer wishes to terminate an employee’s contract of employment other than the reasons mentioned above, the only available option was retrenchment.

The retrenchment process was not friendly and many companies who would have offered to retrench normally cancelled the offer citing high retrenchment packages which were more than the profit realised. In the end, companies kept employees to avoid paying retrenchment packages, leading to some employees not getting paid for months due to a poor economic environment affecting capacity and production in companies.

The Supreme Court judgment of July 17 on the Zuva case, in which employers can terminate job contracts on three months notice opened floodgates of dismissals as employers see the ruling as an opportunity for them to cut on labour costs. More than 20 000 employees are reported to have lost their jobs, with unemployment levels hovering around 93%.

To put the blame for these job losses squarely on employers is unfair. The government is to blame as well. Companies have for a long time expressed genuine wishes to reduce their labour force and cut down on costs, but could not do so due to unfriendly labour laws on retrenchment. The government would pretend as if they were listening but kept on dragging their feet. No wonder companies kept employees even when production was falling.

Many workers went for months without earning salaries as evidenced by state entities such as National Railways of Zimbabwe, Air Zimbabwe and Grain Marketing Board. They could not retrench because the costs were too high. Instead, they just kept workers hoping that they would get a job elsewhere, misbehave and get fired or resign. Such state of affairs is not good for the employer-employee relationship.

To punish the workers for circumstances beyond their control is wrongful and equally unlawful. There are workers who had worked for 20 or 40 years but had to leave on three months’ notice pay after the ruling. It was shocking and traumatising for many who woke up jobless after receiving letters from their employers quoting the ruling stating the following: “We have decided to exercise our right in terms of your contract of employment with us and/or in terms of common law, to terminate your contract of employment with us on notice.

“Our employment contract with you as read with Section 12(4) of the Labour Act, requires us to give you three months notice which we hereby do. Your notice shall take effect on the date of delivery of this notice to you or the address given as your domicilum citandi in your contract of employment or to such other address that you notified our Human Resources department in writing.

“We do not expect you to continue coming to work during this notice period. Your monthly salary for the three months notice shall be processed.”

Whilst employers justified the terminations as legal, the government and workers criticised the terminations. The government rushed to come up with the HB7/2015 Labour Amendment Bill which among other things has a retrospective effect, where all workers fired as from July 17 2015 are entitled to one month’s salary for every two years served on top of three months notice pay. Other areas of interest include Section 12 (4a), which prohibits employers from terminating an employment contract on notice unless such termination is in terms of an employment/model code.

However, it appears the government acted in a panic mode by rushing the process to save face from angry, disgruntled, poor and hopeless fired workers who had to adjust to their fate and reorganise for their future. The Bill did not cover all the essential elements for a win-win situation for both employers and employees. Both employers and workers are not happy with the Bill.

Labour minister Prisca Mupfumira seems to be singing a different tune, proposing that all parties to the Tripartite Negotiating Forum need to meet to deliberate further on the Bill and amendment of other sections. If followed, that would be commendable. Government needs to take a proactive approach to make necessary amendments to the Labour Act.

• Nhamo Kwaramba, is the principal executive consultant for Capacity Consultancy Group.
• These NEW PERSPECTIVES articles are coordinated by Lovemore Kadenge, President of the Zimbabwe Economics Society (ZES). Email: kadenge.zes@gmail.com, cell +263 772 382 852