Labour ruling leaves workers exposed

Alex T Magaisa
For three decades, workers in Zimbabwe enjoyed heavy protection of the law. Employers, on the other hand, complained over labour laws that made it cumbersome and expensive to fire workers. Investors cited the cost of labour as a key disincentive to investment. Employers and investors said tough labour laws clogged the workplace with deadwood as it was hard and costly to fire workers.

A government that started off espousing a Marxist-Leninist ethos, protection of the worker was a central tenet, culminating in strong labour legislation and a robust infrastructure for dispute resolution. Workers were never satisfied, but they were protected more than in comparable jurisdictions.

But all this changed on account of one short judgment delivered on Friday, July 17, 2015 by the Supreme Court of Zimbabwe (hereafter, “the Court”).

An employer has a right to terminate an employment contract on notice in terms of an employment contract or in terms of the Labour Relations Act, the court held, in a landmark judgment that is set to revolutionise relations between capital and labour in Zimbabwe.

Ideologically, for Neo-liberalism, it’s a major victory but for the Left, it’s a devastating blow. But this is not just an ideological battle. This is about human lives and common standards of fairness, decency and social justice. The Supreme Court judgment essentially says all this does not matter.

In the case of Nyamande & ors v Zuva Petroleum (2015), workers whose contracts had been terminated on notice challenged their dismissal, arguing that it was not fair. Zuva Petroleum, the employer argued that it was entitled at law to terminate their employment on notice in terms of their contracts. It had given them notice and the termination was lawful, Zuva argued. The employees argued that the Labour Relations Act had abolished the employer’s common law right to terminate an employment contract on notice. The court agreed with the employer.

At common law, the employer and the employee have a right to terminate the employment contract on notice. When an employee wants to leave his job, he simply needs to give notice to his employer that he will leave in three months’ time, if that is what the contract prescribes. Likewise, the employer can give notice to the employee that in three months’ time, his services will no longer be required. It is this common law right that the Supreme Court said still subsists despite the existence of the Labour Relations Act. The court said the legislation had not changed this common law position.

The decision has shocked the labour fraternity, given its implications. What the employees were arguing in the Zuva case, seems to have been the commonly accepted wisdom for nearly three decades. It was not easy to fire workers, hence the employers’ and investors’ unhappiness at the strictness of labour laws in Zimbabwe. Yet, in this judgment, the court has effectively said this common understanding was wrong. Instead, the court’s judgment says, the employer can wake up and decide to terminate a worker’s contract simply by giving him notice as per contract. The implication is that no reason for terminating employment is needed other than giving the notice in terms of the contract.

The practical implications of this judgment are frightening for all employees across the country. It means employers now have a very easy, quick and cheap way to get rid of employees. Capital will celebrate this judgment, loosening, as it does the power of labour in the workplace. But even die-hard neo-liberals will be probably be shocked that the Zimbabwean worker is so vulnerable. Not even in advanced capitalist societies like the United Kingdom is the worker left so open and vulnerable to the whims of an employer. They have a robust set of rules and procedures which protect employees against unfair dismissal, even upon termination of employment on notice.

But more shocking is the fact that the reasoning of the Supreme Court is so dry, mechanistic utterly devoid of context. The law of labour relations is predicated on the understanding that the relationship between employer and employee is inherently unequal; that the scale invariably weighs heavily on the side of the employer and that therefore, the employee needs protection. Indeed, part of the preamble to the Labour Act states provides the following contextual background:

“An Act to declare and define the fundamental rights of employees; to give effect to the international obligations of the Republic of Zimbabwe as a member state of the International Labour Organisation and as a member of or party to any other international organisation or agreement governing conditions of employment which Zimbabwe would have ratified; to define unfair labour practices; to regulate conditions of employment and other related matters . . .”

There can be no doubt what the Labour Act sought to do — it was principally to protect workers. S. 2A of the Labour Act, added later to give weight to this ethos, states the purpose of the law as, “to advance social justice and democracy in the workplace” and cites a number of ways to do so, some of which include “giving effect to the fundamental rights of employees” and “the promotion of fair labour standards”.

Part of this includes ensuring job protection and to that effect, the law provided mechanisms to ensure that if the employee is to lose his job then certain procedures must be followed. This is why the law absolutely prohibits unfair dismissal, stating in s. 12B (1) that “Every employee has the right not to be unfairly dismissed”. This is also why it sets out in elaborate terms the retrenchment procedures that must be followed when an employer wishes to make an employee redundant. It is to ensure fairness in these procedures when an employee loses his job.

Yet all this may now have been rendered useless. Rendered useless because should an employer decide that they no longer want an employee or a group of employees, all they have to do now is to give them notice in terms of the employment contract. There is no need to follow the retrenchment procedures. And presumably, no need to give reasons. Which begs, the question, why in the first place would the legislature have gone to all those lengths to set out rules against unfair dismissal and retrenchment procedures, if it did not intend that they should be used?

What the court has said, in effect, is that the employer can simply ignore those elaborate and strict redundancy procedures and get rid of employees by giving them notice to terminate employment. It makes moribund the entire package of rules designed to protect workers against unfair dismissal and redundancy. In fact, almost the entire Labour Relations Act now reads like a useless piece of legislation in light of the judgment. That, surely, cannot be what the legislature intended when it enacted the Labour Act?

More shocking is the fact that there was unanimity among the judges of the Supreme Court in such an important matter. Not a single judge offered a dissenting opinion or different reasoning.

Yet still, there is a danger of overstating and oversimplifying the effect and importance of this judgment. To be fair, the court had reached similar decisions in a few previous cases, such as Colcom Foods Ltd v Kabasa SC12/04. But the position was not as emphatic and clear-cut as the court has now pronounced in the Zuva case. However, in coming to its conclusion, the court proceeded on a fundamental error, which now gives the inaccurate impression that all an employer needs to do to get rid of an unwanted employee is to give them notice in terms of the contract. The court’s error was to treat termination of employment on notice as a method of severing an employment relationship which is exclusive from dismissal. In other words, in its reasoning, termination of employment on notice is just one other way of ending a contract alongside but exclusive of dismissal, retrenchment and the end of a fixed-term contract. This, with respect, is flawed reasoning.

True, these are all methods of ending an employment contract but contrary to the court’s reasoning, they are not mutually exclusive. Rather, they all constitute or amount to dismissal in the broader sense of the term. When an employer terminates your employment on notice, he is, in fact, dismissing you from your employment. There are different methods of dismissing an employee and that is just one of them. An employee can also be dismissed following disciplinary procedures or it can be summary dismissal in cases of gross misconduct. An employee can also be dismissed on the basis of incompetence. In each case, the employee must be given a chance to defend himself, as natural justice requires. Likewise, an employer can decide to dismiss an employee on the basis of redundancy, where his services are no longer required, in which case legal procedures must be followed.

These are all lawful grounds upon which an employee can be dismissed from his employment. But the reasons are given and relevant steps must be followed as prescribed by law.

Similarly, therefore, termination of employment on notice must also follow procedure. The contract will usually have the terms which must be followed but it is arguable that an employee has a legitimate expectation to know why his or her employment is being terminated. The validity and lawfulness of the notice of termination is critical and the doctrine of legitimate expectation to be told reasons for termination must be read into an employment contract, which by nature is a unique contract. What the court failed to appreciate or make clear is that termination of employment on notice can also constitute or amount to dismissal, the fairness of which can be subject to challenge. That this is the case is evident in s. 12B (3) which states as follows,

“An employee is deemed to have been unfairly dismissed — (a) if the employee terminated the contract of employment with or without notice because the employer deliberately made continued employment intolerable for the employee”

This provision refers to what is often referred to as “constructive dismissal”, whereby although not actually dismissed, circumstances demonstrate that an employee was in effect dismissed by the employer. The provision shows that it is possible for there to be a case of unfair dismissal where there has in fact been termination of employment on notice. In its judgment, the Supreme Court gave the impression that termination of employment on notice and unfair dismissal were mutually exclusive, which is inaccurate and misleading.

The truth is that employers need to exercise caution when they terminate employment on notice because there is still scope for them to be challenged on grounds of unfair dismissal. If, for example, an employer issues notices of termination of employment to a group of pregnant female employees, the women would surely have an arguable case that they are being targeted and discriminated against because they are pregnant. They can argue that this discrimination, albeit presented under the veil of termination on notice in terms of a contract, in effect, amounts to unfair dismissal.

There is a constitutional dimension to all this, which I am surprised was not mentioned at all in the Zuva case. The constitution protects labour rights and prohibits discrimination, among other rights. In the above example of pregnant women, a case can be made against the employer for discrimination on the grounds of pregnancy, apart from sex and gender (S. 56 of the constitution).

Further, S. 65(1) of the constitution provides for “a right to fair and safe labour practices and standards”. This can be interpreted broadly — indeed in a broader way than is currently provided for in the Labour Act. It cannot be a fair labour practice to fire an employee on a whim, without giving valid reasons, using the mechanistic avenue of termination on notice as per contract. It is important to note that the constitution applies horizontally, both to the state and to private actors alike, binding them to its obligations as provided for in s. 2 (2) which states that,

“The obligations imposed by this Constitution are binding on every person, natural or juristic, including the State and all executive, legislative and judicial institutions and agencies of government at every level, and must be fulfilled by them”.

This is reinforced by s. 45(2) which states that,

“This Chapter binds natural and juristic persons to the extent that it is applicable to them, taking into account the nature of the right or freedom concerned and any duty imposed by it”.

All of this means the rights and obligations provided for in the constitution are binding on private companies and organisations and this includes the obligation to observe the “right to fair and safe labour practices and standards”.

As I have stated, even if it accepted that termination on notice is permitted by the law, it must still conform to fair labour practices and standards, failing which it is open to challenge. The disappointment is that the court did not deal with these broader jurisprudential issues at all in coming to a judgment of such major implications, but instead, confined itself to a purely mechanistic exercise devoid of context and purpose.

While the court made reference to the common law and rigidly applied it in its reasoning, it failed to appreciate its broader role in the development of the common law. S. 176 of the constitution provides that the Supreme Court has “inherent power . . . to develop the common law or the customary law, taking into account the interests of justice and the provisions of this Constitution”. It is arguable that the court could have at the very least considered its role in developing the common-law on this issue. It might have dismissed it, but jurisprudentially, they ought to have made an effort to consider its development especially given the legislative context and the purpose of laws protecting employees. Perhaps it’s not a role that the courts are used to as yet, but they must recognise that they do have power to develop the common law. The provision was included in the constitution precisely to give them the power to act in cases such as this one.

So what should be done?

The Supreme Court has ruled. There might be scope to challenge, in a future case, the constitutionality of termination on notice without giving reasons. However, the courts have taken a route that is so patently in favour of employers and capital — a decidedly neo-liberal approach towards labour relations. The more effective recourse now has to lie in the court of politics — through the government and Parliament. Is this neo-liberal approach to labour relations the course that the government wants to take? The ruling party promised two million jobs in its 2013 election manifesto. But with this judgment, actually, more jobs will be lost. It would be interesting to see the government’s reaction to this. Their preferred partner, China pays scant regard to workers’ rights. Perhaps the government will take a cue and celebrate this judgment, too.

But the government can easily cure the loophole which now exposes workers to the whims of employers, by amending the law to make clear the protection that employees must be given even in cases where employment is terminated on notice.

The contractual relationship between an employer and an employee is like no other contract. It is in class of its own. Inherent in it is inequality in the bargaining positions of the two parties, which is why the law generally seeks to protect the rights of the employee. In other jurisdictions, including those that are advanced capitalist societies, it is accepted that the employer can terminate employment on notice but there are two critical aspects designed to protect employees:

The employer must act reasonably and second, the employer must have a fair reason for the termination.

Thus, failure to follow correct steps can be a reason for unfair dismissal. In other words, the way that the employer goes about the termination can be subject to challenge. Redundancy is a fair reason for dismissal but that too, can be challenged if there are reasons to suggest that it is unfair. In other words, it is accepted as a fair labour practice and standard that the employer must have a good reason to terminate an employment relationship. In short, the notion that the court missed in its judgment is that termination on notice can amount to an “unfair dismissal” and for this reason can be challenged. This is what the law must reflect.

The implication of all this is that while employers might celebrate the Supreme Court judgment, rampant use of termination on notice might lead to even more litigation and more problems than they imagine. alexmagaisa.com