July 2017 - Is Termination on Notice Still Available in our Law?
The landmark Supreme Court decision in Don Nyamande & Another vs Zuva Petroleum SC. 43/15 triggered panic in the Labour market resulting in the Government introducing a package of amendments to the Labour Act (Chapter 28.01) in the form of the Labour Amendment Act, 2015, published on 26 August 2015. One of the major objectives of the amendments was to ensure payment of compensation to those employees whose contracts were terminated on notice immediately following the Zuva judgment. However, it appears that the poorly crafted amendments have caused further confusion in the market and have created a legal minefield.
Subsections (4a) and (4b) of Section 12 of the Labour Act, which were introduced by the amendments, read as follows: -
(4a) No employer shall terminate a contract of employment unless –
a) The termination is in terms of an Employment Code or, in the absence of an Employment Code, in terms of the Model Code made under Section 101 (9); or
b) The employer and employee mutually agree in writing to the termination of the contract; or
c) The employee was engaged for a period of fixed duration or for the performance of some specific service; or
d) Pursuant to retrenchment, in accordance with Section 12C.
(4b) Where an employee is given notice of termination of contract in terms of subsection (4a) and such employee is employed under the terms of a contract without limitation of time, the provisions of Section 12C shall apply with regard to compensation for loss of employment
A reading of subsection (4a) would suggest that termination of employment contracts on notice is now limited to the following terminations:
- termination in terms of a registered Code of Conduct;
- mutual agreement between the parties to terminate the employment contract;
- fixed term contracts or contracts for the performance of a specific service; and
At face value, it would appear that it is no longer possible to terminate a permanent employment contract (contract without limit of time) on notice. However, a reading of subsection (4b) would suggest that termination on notice in respect of permanent contracts is still available through the back door, provided that the employer pays the minimum compensation package in terms of Section 12C of the Labour Act. Such compensation package comprises notice pay and two weeks’ pay for each year of completed service. The logic here goes as follows - why would the legislature provide for a minimum compensation package to be paid if a permanent contract is terminated on notice, if the intention was to totally outlaw termination on notice in respect of permanent contracts.
In his response to an application in the Constitutional Court of Zimbabwe we filed in the Constitutional Court in the matter between Greatermen’s Stores (1979) (Private) Limited t/a Thomas Meikles Stores & Another vs the Minister of Public Service, Labour & Social Welfare and Another CCZ86/15, the Attorney General & Principal Advisor to the Government of the Republic of Zimbabwe had this to say: -
“The regulation of the right to terminate an Employment Contract on notice is just one of the numerous items dealt with in the Amendment Act. With regard to that right, however, the Act seeks to permit the exercise of that right subject to payment by the employer of compensation to the employee for loss of employment. Such compensation is equated to compensation which will be payable generally in the course of a retrenchment exercise”.
The above sentiments by the Attorney General were an admission that it was never the legislature’s intention to totally outlaw terminations on notice in respect of permanent contracts.
The position has been made clearer by the Labour Court in the matter of Riozim Limited vs Moses Mawire LC/MS/APP/104/16 in which the Labour Court agreed that the right to terminate a permanent employment contract on notice is still available, and that what the Labour Amendment Act 2015 merely sought to do was to regulate the exercise of that right. In that matter Raymond Moyo appeared on behalf of Riozim Limited. Therefore, the right to terminate a permanent contract on notice is still available, subject to payment of the necessary compensation package in terms of Section 12C of the Labour Act.
CAN AN EMPLOYEE LEGALLY PLEAD VICTIMISATION IN A TERMINATION ON NOTICE?
The Zuva judgment gave employers the unusual opportunity to downsize their work force by terminating the contracts of excess employees on notice. However, some employers also took advantage of the judgment to get rid of “bad elements/apples”.
Many employers used the Zuva judgment to get rid of vocal unionists within the workforce and, obviously, those unionists claimed that they had been victimized for their unionism. The question, therefore, is whether an employee can challenge the termination on the basis of being victimised?
The right to terminate a contract on notice is provided for in terms of Section 12(4) and (4b) of the Labour Act. It is available to either the employer or the employee in no-fault situations. Other than the Zuva judgment, this principle has found support in other cases such as Chirasasa & Ors vs Nhamo NO and Anor 2003 (2) ZLR 206 and Colcom Foods Limited vs Kabasa SC. 70/02. In those decisions, the Courts have clarified that, in no-fault terminations, there is no need to state the reasons for the termination.
In the recent case of Letwin Sigauke NO vs Megapak Zimbabwe LC/H/296/17, in which Simon Sadomba represented Megapak, the Labour Officer, Letwin Sigauke, had found that although Megapak Zimbabwe was entitled to terminate the contracts of one Rodgers Madziwa & Goodluck Satande on notice, the very fact that the two were the only ones whose contracts had been terminated on notice and that at the time of the termination they were both Chairman and Vice Chairperson of the Workers Committee, showed that the employer had victimized the two because of their positions. On appeal the Labour Court overturned the Labour Officer’s decision and re-confirmed the position that in a no-fault termination, there is no need to particularize the reason for the termination, and that there is no scope for an employee to plead victimization for as long as the termination is a clear termination on notice in no fault situations. In the Zuva judgment, the Supreme Court also pointed out that: -
“The same proposition that where the relationship between the employer and employee has deteriorated to untenable levels through no fault of either party the relationship can be terminated was accepted in Winterton, Homes & Hill vs Patterson 1995 (2) ZLR 68 (S) ”.
Therefore, termination on notice is available to an employer, even in situations where the employer wants to get rid of perceived bad apples within the establishment.
WHAT COMPENSATION IS PAID TO AN EMPLOYEE WHOSE CONTRACT IS TERMINATED ON NOTICE?
On termination of employment by notice, three issues are worth noting;
Authored by Gill, Godlonton & Gerrans Partners, Raymond Moyo & Simon Sadomba
The affected employee is entitled to the minimum compensation package in terms of Section 12C (2) of the Labour Act as if he has been retrenched. This minimum package is made up of one (1) month’s pay for every two years of service, apportioned pro-rata, in addition to other statutory entitlements.
In the Riozim Limited v Moses Mawire (supra), in which Raymond Moyo was involved, an issue arose as to whether or not the affected employee should be consulted before the minimum package is paid out to the employee. The court was of the view that the employer should engage the affected employee first on whether the employer is able to pay a better package than the minimum and a record of the meetings/engagements with the affected employee should be kept. This accords with the principles of natural justice before implementing an administrative decision. We share that view.
The transitional provision that came with the Labour Amendment Act, 2015, provided that the compensation provision should apply retrospectively to all those employees whose services were terminated on notice after the 17th August 2015 following the Zuva judgment. Mordecai Mahlangu successfully challenged the constitutionality of this provision in the High Court of Zimbabwe in the matter between Zimind Publishers (Pvt) Limited v Minister, Public Service, Labour & Social Welfare & Another HH 170/17. Justice Matanda-Moyo presiding agreed with Mr Mahlangu and referred the issue to the Constitutional Court for finalization.