The judgment of the Supreme Court of Zimbabwe in Nyamande and another v Zuva Petroleum SC 43/15, handed down on 17 July 2015, has led to the termination of more than 6000 jobs in the last week. The judgment establishes that an employment contract can be terminated by either party after giving notice. Section 12B of the Labour Act (hereinafter the Act), which deals with dismissals, does not mention such a right.
Section 12B specifies the processes that should be followed in order to dismiss an employee. It defines unfair dismissal and codifies the right of every employee against unfair dismissal. It also creates the rebuttable presumption that an employee has been unfairly dismissed if the dismissal is not in the terms of an employment code, or if the employee has a legitimate expectation of being re-engaged but another person is appointed in her place. Employee codes are industry or sector specific rules of good practice either issued by the government or negotiated with the relevant trade unions.
The court held that the term ‘dismissal’, as used under section 12B, does not refer to every termination of employment. For instance, termination will not amount to dismissal if the employee dies or if the employee resigns because the employer-employee relationship has broken down but neither party is at fault. In such cases, the court held that an employer has a contractual right to issue a notice terminating the employee’s contract, even in the absence of fault on the part of the employee. Such a right is rooted in contract law and available independent of the provisions of the Act. Where there is misconduct or fault of some kind by the employee, the relevant employee code applies and only then does section 12B apply.
The manner in which the court completely sidesteps section 12B is shocking. If the interpretation given by the court holds good, then the protections afforded by the Act or any employment code are inapplicable where the contractual right has been exercised. The court bases this understanding of dismissals in the contractual right to cancel a contract. However, contract law rests on the traditional assumption of equal bargaining power between both contracting parties; such equality is necessarily absent in relationships of employment, leaving the employee vulnerable to exploitation. It is for this reason that the right not to be unfairly dismissed was codified through section 12B of the Act. The court has rendered this right almost impossible to realise.
The judgment also has interesting consequences for employers seeking to retrench workers. Retrenchment is regulated under section 12C of the Act which mandates procedural safeguards in such cases. Section 12C defines retrenchment to mean termination of an employee’s contract for “the purpose of reducing expenditure or costs, adapting to technological change… and includes the termination of employment on account of the closure” of the employing enterprise. Unless the notice explicitly states that operational efficiency is the basis for the termination, section 12C is inapplicable. In Nyamande, the court states that retrenchments falling outside the scope of section 12C are not covered under Section 12B. By classifying such retrenchments as terminations of the employment contract that do not amount to dismissal (for the purposes of Section 12B), the judgment heavily dilutes the protections available to retrenched workers.
If the Supreme Court’s interpretation of section 12B is correct, it would be surprising if this section didn’t violate constitutional rights under section 65 of the Constitution of Zimbabwe, which entrenches every person’s right to fair labour practices and standards
The effects of the judgment have spread like wildfire. Large companies including Econet and Telecel have issued notices terminating thousands of contracts over the last week, citing this judgment. There is no doubt that the court made its decision in the context of a fragile economic situation where enforcing strong labour rights would not be in the interests of attracting investors. Indeed, employers have been actively lobbying for more flexible labour laws.
The petitioners have appealed the matter to the Constitutional Court and it is expected to be heard in the next three weeks. The most obvious question that has been left open is this: what is to be done where the employee has committed no wrong but is dismissed because her employer is vindictive? It is hoped that the Constitutional Court will remain alive to the plight of such workers in reaching its decision.