THE Supreme Court judgment in the case of Don Nyamande and Another v Zuva Petroleum (Private) Limited SC 43/15 handed down on July 17, 2015 has caused alarm and consternation amongst trade unions and certain sections of the public.
There are reports that there have been wholesale dismissals of employees on the basis of the judgment. The controversy generated largely arises from a misreading of the judgment that employers now have the right to terminate employment in all circumstances on simply giving three months’ notice.
That is not what the Supreme Court said. In that judgment the Supreme Court simply affirmed what it has pronounced in previous judgments that the right to terminate on notice is available to employers in certain circumstances. There is therefore nothing new that has been introduced by the judgment.
The issue that was decided in that case was whether or not the employer’s common law right to terminate an employment relationship on notice was still part of our law. It was argued on behalf of the employees that Section 12B of the Labour Act (Chapter 28:01) had abolished the right. The Supreme Court disagreed.
In the case of permanent employment the principle at common law is that the parties’ right to terminate on notice is unfettered.
Employers are not required to show good cause for terminating the employment or to inform the employee of the reasons for the termination or to follow any special procedure before termination. All the employer has to do is give notice.
The employers’ unfettered power to terminate contracts of employment on notice is underpinned by the doctrine of freedom contract, in terms of which the contracting parties are deemed to have entered into the agreement as equals and with open eyes. What this position obviously ignored was the discrepancy in the bargaining power between employers and employees and the fact that the employment relationship provided income to the family unit for the one party and provided a cost of production or service for the other.
As far as fixed-term contracts of employment are concerned the common law principle is that notice may not be given before the expiration of the term unless the contrary is agreed. Notice of expiry of the contract need not be given, unless the employee has grounds for believing that it will be renewed.
The issue of an employer’s right to terminate an employee’s contract of employment on notice has been problematic in Zimbabwe since Independence in 1980. In the case of S v Jovner 1982 (2) ZLR 252 (SC) the Supreme Court held that the now repealed Employment Act No. 13 of 1980 and the Employment(Conditions of Service) Regulations, SI 894/1981 (also now repealed) had not affected the common law right of an employer to terminate on notice.
The judgment in the S v Jovner was handed down on the 18th November 1982. That prompted the Government to immediately promulgate the Emergency Powers (Termination of Employment) Regulations, SI 714B/1982, just four days later. SI 714B/1982 introduced the requirement into our law that termination on notice required ministerial approval.
The Government of the day’s declared philosophy was socialism and the need to protect workers from the excesses of capitalism was paramount.
In the months following Independence a raft of legislation was introduced to curtail the common law powers of employers, who were at that time by and large white.
Since SI 714B/1982 the labour laws of the country have been amended at regular intervals. In 1985 the Employment Act, No. 13 of 1980, and all the regulations made thereunder were repealed. The Labour Relations Act, No. 16 of 1985, was enacted.
New termination of employment regulations were introduced in the form of the Labour Relations (General Conditions of Employment) (Termination of Employment) Regulations, SI 371/1985, which provided among other things that an employer could not terminate a contract of employment on notice without the approval of the Minister of Labour, Manpower Planning and Social Welfare.
That provision reproduced word for word Section 5 of SI 714B/1982.
In 1990 further subsidiary legislation was introduced in the form of the Labour Relations (General Conditions of Employment) (Termination of Employment) (Amendment) Regulations, SI 377/1990, which provided that the provision requiring ministerial approval would not apply to employees and employers governed by a registered code of conduct.
In the case of Chivinge v Mushayakarara & Anor 1998 (2) ZLR 495 (S) the issue that came up for determination was whether or not the employer’s right to terminate employment on notice which had severely been proscribed by the SI 714B/1982 and SI 371/1985 had been restored in full in respect of employees and employers governed by a code of conduct.
Following SIs 741B and 371 the Supreme Court had ruled in the cases of Art Corporation Ltd v Moyana1989 (1) ZLR 304 and Commercial Careers College (1980) (Pvt) Ltd v Jarvis 1989 (1) ZLR 344 that employers could not terminate contracts of employment on giving due notice without first obtaining ministerial approval.
Following the Chivinge case the matter of the employer’s right to terminate on notice came up again in the cases of Samuriwo v Zupco 1999 (1) ZLR 385 (H); Samuriwo v ZUPCO 2000 (1) ZLR 647 (S); Luke Chirasasa& 2 Ors v Roseline Nhamo N. O &AnorSC 135/2002; PG Industries (Private) Limited v Nkululeko Mabhena SC 44/2003; and Colcom Foods Limited v Christopher Kabasa SC 12/2004. In all these cases the issue has always been the extent to which, if any, the right has been limited or restricted by legislation, including legislation relating to retrenchment.
The position that has crystalised from the decisions of the Supreme Court as far as the termination of an employee’s contract of employment by his employer is concerned is that:
If the bases of termination are operational or re-organizational requirements of the employer’s business, the employer is obliged to follow and comply with the statutorily prescribed retrenchment procedure.
If the basis of the termination is an alleged act of misconduct on the part of the employee the relevant disciplinary procedure applicable to the employee and the employer should be followed. The procedure could be contained in a code of conduct.
If there is no code of conduct the procedure prescribed by the termination of employment regulations should be followed.
If the basis of the termination of employment is that the employee has become incapacitated by reason of ill health the employer is obliged to follow the termination procedure provided in Section 14 of the Labour Act [Chapter 28:01] as read with any relevant CBA/Code of Conduct provisions.
If the basis of the termination is that the employee has reached retirement age the employer is obliged to follow the relevant retirement procedures.
If the basis of the termination is not (a) to (d) above, where the contract of employment provides for termination on notice, the employer may lawfully terminate the employee’s contact upon giving the requisite notice.
Employers and employees may also agree in writing to a mutual termination of employment. The terms of such termination are up to the parties but may not contravene the provisions of the Labour Act.
What emerges from the Supreme Court decisions is that an employee’s contract of employment cannot be terminated on notice if the reason for termination is an act of misconduct or if the reason for termination falls within the definition of retrenchment.
For instance in the case of PG Industries (Private) Limited v Nkululeko Mabhena, cited above, the contact of employment provided that it was terminable by either party on a month’s notice. The employee’s employment was terminated on notice on the grounds that the employer was reorganizing its structures and that it was not happy with the employee’s performance.
The Supreme Court said that this termination was unlawful as terminating a contract of employment on the grounds of the reorganization of the business constituted a retrenchment and therefore that the employer was obliged to follow retrenchment procedures. The court also said that as far as the allegation of incompetence was concerned, the employer was obliged to follow the relevant disciplinary procedures.
In the decisions cited above the Supreme Court has been concerned with defining the employer’s right to terminate on notice in light of the existing legislative provisions. Those provisions have constantly been changing. The only provision in the Labour Act [Chapter 28:01] presently dealing with the issue of termination on notice is Section 12 (4) which provides that:
“(4) Except where a longer period of notice has been provided for under a contract of employment or in any relevant enactment, and subject to subsections (5), (6) and (7), notice of termination of the contract of employment to be given by either party shall be –
three months in the case of a contract without limit of time or a contract for a period of two years or more;
two months in the case of a contract for a period of one year or more but less than two years;
one month in the case of a contract for a period of six months or more but less than one year;
two weeks in the case of a contract for a period of three months or more but less than six months and
one day in the case of a contract for a period of less than three months or in the case of casual work or seasonal work.”
There is no other current legislative provision governing the termination of employment on notice. Section 12 (4) does not define the instances in which employment may be terminated on notice.
In the Don Nyamande and Another v Zuva Petroleum (Private) Limited matter it was not argued that the facts of the case were such that the employer did not enjoy the right to terminate on notice.
In other words, it was not argued on behalf of the employees that instead of resorting to termination on notice the employer should have followed the retrenchment provisions. The employees limited their case to the argument that the common law right to terminate on notice had been abolished by the provisions of the Section 12B of the Labour Act.
If the argument had been made that given the facts of the matter; the re-organisation of the employer’s operations, the employer was obliged to comply with the legislative provisions governing retrenchments, the court could well have arrived at a different conclusion.
Whilst the employer’s common law right to terminate a contract of employment on notice still exists same has severely been restricted by legislation. It is available in limited circumstances.
A termination on notice is only regular and proper if the reason for termination is not misconduct, re-organization of the undertaking, retirement or incapacity of the employee due to ill-health. In my view the judgment in Don Nyamande and Another-v-Zuva Petroleum (Private) Limited has not changed that position.
Mugandiwa is a partner at Wintertons Legal Practitioners and writes in his personal capacity. He can be contacted on email@example.com