adminPaul Karanda Economic Focus
THE nation continues to work on possible solutions to the economy with the ZimAsset blue print being the guiding plan. If an organisation is already on short time or alternating shift or has adopted measures to avoid retrenchments it might need to be on such a work arrangement for the next three to four years as the economy works its way to recovery.
Different stakeholders have different interests and these need to be captured and made use of in the Labour Act review. The Law becomes critical in that it becomes the basis on which industrial disputes are handled. The spirit of the Labour Act, Chapter 28:01 section 12 D, is one that focuses on negotiating a settlement or consensus and wishes to preserve employment. In the prevailing economic situation this seems to be more relevant than ever. It is however important to debate this with all stakeholders reasonably on board to resolve how employment can be preserved.
Workers, workers’ committees and unions have argued for a straight retrenchment option at the instance that the employer senses changes in production, programmes, organisation or technology that are likely to entail the retrenchment of any group of five or more employees. Some have argued that if the first 12 months provision lapses the organisation must either revert to normal production or go straight into retrenchments.
This usually is coupled with arguments that the organisations’ position would have improved and that all would be well.
Unions have argued that the law only provides for a single 12 months period after which retrenchment must naturally then follow. This reading is argued to be informed by the Labour Act for it provides for a period not exceeding 12 months. In some cases the procedures to be followed are argued not to have been followed before the adoption of measures to avoid retrenchments.
It has been argued by some unions that the existing law review must provide for implementation of short time only after an agreement has been reached at works council. The reason obviously being that the Act does not provide for an agreement as mandatory.
The employers on the other hand are faced with a very challenging business environment.
The falling volumes have resulted in falling revenues, owing to a number of reasons ranging from cheap imports to changes in customer taste. The employers argue that they have to preserve their businesses and all the jobs that they carry. They argue that the Labour Act does not provide for an agreement with the workers for the organisation to adopt any measure to avoid retrenchment.
They argue the steps set out in the Act of, consultation with an open mind, dealing in good faith, informing the employees at the earliest possible time and giving seven days written notice should be met as the prerequisite to go on short time.
Legal arguments
The legal issues that are often debated depending on circumstances usually have to do with the following;
- Consultation
- Agreement
- Extension or short time renewal.
The basis for this provision in the Act originates from ILO Convention 158 of 1982 where in the convention indicates that the reason for dismissal must fall into one of three broad categories namely
- The misconduct of the employee or
- The employees’ incapacity or ability to do the work, or
- The employers’ operational requirements.
It is in the context of operational requirements where the employer is facing financial challenges and considering reducing the workforce that the convention relates to section 12 C of the Labour Act. Article 13 of ILO convention states that in that case, the employer is obliged to consult with the representatives about measures to avoid dismissal and, if dismissal cannot be avoided, about measures to minimise the number of dismissals and to mitigate the adverse effect of dismissals.
Given this background consultation is illustrated in the South African Law where it is defined as a process where the employer and other consulting parties must engage in a meaningful joint consensus — seeking process and attempt to reach consensus. It is noted that parties must embark on a joint problem solving exercise, always strive for consensus where possible and should not be a mere show or simply going through motions. Parties must engage in good faith.
In Atlantis Diesel Engines (Pty) Ltd vs National Union of Metalworkers of South Africa (1994) it was argued on behalf of the union that consultation should amount to a joint problem-solving exercise with the parties striving for consensus where possible. The court agreed that this indeed was the purpose of the consultation process. The court continued to distinguish between collective bargaining and consultation, in the consultation process if consensus cannot be achieved, the final decision remains with the employer whereas in collective bargaining the employee can embark upon strike action to force the employer to accede to their demands.
Where an organisation is already on short time and extension or renewal or another short time period is viewed necessary by management it has been argued that the legislation does not prohibit such extension or renewal. It is argued that if the law required the 12 months provision to be once off it would have stated so in as many words. It is also argued that the basis of short time is to serve the organisation and jobs and if there is a possibility of serving the organisation and the few remaining jobs in the current situation then by all means including back to back short time organisations must do so.
Some have argued that at the time the laws were made legislature could not have foreseen a situation where the economy would get to where it is now and therefore it was genuinely believed a year was adequate time for an organisation to recover.
The option of retrenchments has its own challenges for there are no set packages. The precedents make it overally too expensive for any organisation to embark on that route. The retrenchment packages are generally structured as severance pay, recognition for years of service, relocation allowance and sometimes notice pay.
In 2001 the ZCTU proposed retrenchment packages in their position paper on the harmonised labour bill as follows: 12 months severance pay, two months pay for recognition for years of service for each year of service including a pro rata thereof and three months pay as relocation allowance. Assuming one had worked for an organisation for a year it meant 17 months’ salary as minimum for a year of service. If an organisation had long-serving members of up to 25 years it meant 65 months’ salary. Some organisations argue that they do not have the financial resources to fund a retrenchment exercise. Retrenchment is still an employers’ decision to make at the end of the day.
Depending on the changes that will be made to our labour laws the issue of short time may be dealt with in a flexible working arrangement.
Short time would seem necessary in some organisations for them to recover or at least survive in this difficult economic situation. Employers and employees must work together to ensure that their organisations see the light of day.
NB: This is not legal advice
Paul Karanda is a Human Resources Practitioner based in Bulawayo. He writes in his own capacity.
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