LAW SOCIETY OF ZIMBABWE LABOUR LAW SEMINAR PRESENTED BY AGMOS MOYO B. L. (Hons.) LLB (Zim) PARTNER - KANTOR & IMMERMAN

WHAT IS RETRENCHMENT? Article 4 - ILO Convention 158 Termination of Employment 1982 Common Law Labour Act [Chapter 28:01] however provides a wider definition. In section 2 of the Labour Act, retrenchment is defined as follows: “….to terminate the employee’s employment for the purpose of reducing expenditure or costs, adapting to technological change, reorganising the undertaking in which the employee is employed, or for similar reasons, and includes the termination of employment on account of the closure of the enterprise in which the employee is employed” Includes situations of liquidation/winding up of a company

ALTERNATIVES TO RETRENCHMENT Section 5 (c) of the Labour (National Employment Code of Conduct) regulations, 2006 (SI 15 of 2006) allows mutual termination. See also the case of RETRENCHED EMPLOYEES OF NATIONAL BREWERIES LIMITED as represented by NATHAN MUDONDO v NATIONAL BREWERIES LIMITED AND ANOTHER SC 121-02. The process is governed by the provisions of the Labour Act [Chapter 28:01] in particular Section 12C as read with the Labour Relations (Retrenchment) Regulations of 2003 S.I. 186 0f 2003 (“the Regulations”) If more than 5 employees are to be retrenched, the procedure is outlined in section 12C of the Labour Act.

THE RETRENCHMENT PROCESS: Special Measure to Avoid Retrenchment

MEASURES TO AVOID RETRENCHMENT The measures are optional. The special measures cannot be taken for a period exceeding 12 months. The two options are: (1) Short Time Work; and (2) Shift Work. Employer has obligation to consult the employees /workers committee/works council or employment council and AGREE to the special measures. The measures do not interrupt continuity of employment (section 12D (7) of the Labour Act). Employees cannot look for employment lest they be deemed to be repudiating their employment contracts.

THE RETRENCHMENT PROCESS: The Process

A. Voluntary retrenchment No formal legal requirements. Inform the affected employees of the need to retrench and the plan to follow. State the terms of the proposed package. If there is no agreement then compulsory retrenchment must follow. Upon signing of the Voluntary Retrenchment Agreement, the employer must: Fill out the LRR1 Form; Send the documents to the Retrenchment Board for “rubber stamping”. Retrenchment Board will send back the LRR2 Form approving the retrenchment

B. COMPULSORY RETRENCHMENT

STEP 1 – WRITTEN NOTICE Written notice of Retrenchment to the Works Council or the NEC The Notice of Intention to Retrench must be in Form LRR1 and MUST provide the following: The name of the employees to be retrenched and the employee’s position; Reasons for the retrenchments; The employer’s proposed package.

STEP 2 - NEGOTIATIONS

The Works Council (must attempt to reach agreement between the employer and the employee to be retrenched through their representatives. NOTE that the Works Council DOES NOT itself negotiate the retrenchment but merely facilitates the retrenchment process. Works Council must: Set out proper meeting which must be attended by a quorum of the Works Council, the employer’s representatives and the employees’ representative(s); Keep proper minutes ; that the employee’s representatives are not and should not be also members of the Works Council. Attempt to secure agreement; Take into consideration the issues raised in Section 12C(ii) of the Labour Act which include- Complete its attempts WITHIN EXACTLY ONE MONTH from the date of the written notice of intention to retrench by the employer.

STEP 3 - AGREEMENT If agreement is reached the Works Council must formally notify the employer of the agreement in writing using Form LRR2, a copy of which must also be sent to the Retrenchment Board in terms of Section 3(4) of the Retrenchment Regulations for ‘approval’ which in fact is just rubber-stamping

ALTERNATIVE STEP 3 – NO AGREEMENT

If there is NO agreement secured by the Works Council within one month from the date of the notice of intention to retrench, the Works Council is obliged to refer the matter with all documents including Minutes, proposals and/or positions of the parties to the Retrenchment Board. Retrenchment Board must make recommendations to the Minister in writing on whether or not the proposed retrenchment should be permitted and if so, the terms thereof. If the Board fails to make any recommendation within the two weeks, the Minister should require that the Board send all the documents to him to enable him to give a decision. There is no longer any time limit within which the Minister of Labour is obliged to decide on the retrenchment package. This makes compulsory retrenchment a potentially long and unpredictable route to take.

STEP 4 – NOTICE OF TERMINATION

RETRENCHMENT PACKAGE

The Labour Act and the Regulations do not prescribe a package to be paid by the employer upon retrenchment. The issue is left to the parties to negotiate, failing agreement with process being referred to the Retrenchment Board as per the Regulations. The normal headings for packages in retrenchment matters are usually as follows Recognition in pay for each year of service (service pay); Severance Pay; Relocation Allowance; Statutory Notice; Discretionary Items e.g. motor vehicles, laptops, cell phones e.t.c. at book value where applicable;

You need to watch out for the following pitfalls: Failure to follow procedure in the Retrenchment Regulations. If you are not sure of any procedural aspects seek professional advice before you proceed; Incorrect Notices, Forms, Minutes; Vague Works Council Meeting Minutes; Unwillingness to negotiate in good faith

CASE CRITIQUE - ZUVA PEPTOLEUM P/L v DON NYAMANDE AND ANOTHER LC/H/195/2014

Section 12 (4) of the Labour Actdoes not provide for termination on notice. It simply provides for periods of notices of terminationIt does not provide however, that the notice so given be the reason for the termination; Decision in conflict with section 5 of SI 15 of 2006 which specifically provides for “termination”. SI 15 of 2006 is not just a code, it’s law; The reasoning by the court in the case also conflicts with the definition of “retrench” as stated in the Labour Act, which is wide so as to include the situation that the Court was faced with.