adminLabour matters Davies Ndumiso Sibanda
THE current wave of employment contracts termination on notice has rendered all other methods of contract termination useless as employers are using termination on notice even in cases where termination on notice is not applicable. As mentioned in my earlier article, termination on notice is not available to all cases of contract extinguishing.
Where the legislation has provided for express means of terminating a contract of employment, the employer has no choice but to follow set procedures.
We find guidance in the matter PG Industries (Pvt) LTD vs Mabhena SC 63/02 where the Supreme Court ruled that where the employer is restructuring, then what he is doing is retrenchment and he has to follow retrenchment procedures as in this instance, the window for termination on notice is not available.
I am of the view that even where the employer terminated a contract without giving reasons, the courts are likely to inquire what the employer did and if there is solid evidence that the employer was doing retrenchment then he will be ordered to follow retrenchment procedures.
The challenge will however remain for the worker where the employer proves financial inability to pay salaries as the business is financially challenged.
In such cases, the termination on notice window might remain open for the employer.
I foresee vigorous arguments over viability of businesses versus restructuring.
Another interesting judgment on termination on notice is by the Labour Court Judge Justice Maxwell who ruled on the common law right to terminate the employment contract on notice in the case of Similo Mkandla and Another vs Canape Investments, LC/REV/11/76/14 where the two had been terminated on notice and the judge said the common law window for terminating a contract of employment on notice was not available as what the employer did was retrenchment.
If this case is appealed to the Supreme Court there is a probability that the retrenchment route could be confirmed.
While the retrenchment route is available, there is a chance that it could be just about going through the process and once the award is given the employer can claim they cannot afford it and therefore follow the termination on notice route. This is possible given the case Freda Rebecca Gold Mine Holdings LTD vs Nhliziyo and 180 others where the Supreme Court ruled that the retrenchment award is not the end of the process as it simply says to the employer if you can afford these packages please go ahead and retrench. This in my reading of the law means that where the employer cannot afford the retrenchment award, he can either appeal the quantum of the award to the labour court while the business continues to bleed financially or the employer may cut his losses by terminating contracts on notice.
In my view, unless the Constitutional Court rule otherwise on pending cases, the Retrenchment Board has been rendered irrelevant in cases of retrenchment disputes as it will now be just a bus stop, however it remains relevant where parties agree on retrenchment packages.
One of the interesting things is that a large number of letters terminating workers on notice are not consistent with the law as the letters clearly place the employer’s action into a specific termination procedure for example one letter reads “You are hereby being terminated on notice. The employer is exercising his right in terms of common law and section 12(4) of the Labour Act. As you are aware of the several warnings given on your performance, there seems to be no improvement and therefore we are terminating your contract. Please leave today and surrender all company assets. You shall be paid for the three months while you are at home.”
In my view, this is a clear case where provisions of section 12B of the Labour Act apply and the common law window is not available.
In another case, the employer cited declining profits and re-organisation as reasons for termination, a thing that places the termination on the retrenchment route.
Employers need to seek expert advice on how to write letters with a low risk of comeback. Otherwise the exercise of terminating contracts of employment on notice could prove costly later.
In conclusion, I reiterate what I said in my earlier article that terminating contracts of employment on notice remains legally risky as many legal issues related to terminating contracts on notice were never argued in the Zuva case and are only getting to the Labour Court on review and the Constitutional Court now.
Only after the Constitutional Court has dealt with the matters will we get the settled position and the termination on notice window is not available for all cases as there are some cases that do not qualify for termination on notice.
Davies Ndumiso Sibanda can be contacted on: E: [email protected] C: 0772 375 235
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