Retrenched CEOs in the money

Ngoni Chanakira

AS long as there are no laid down procedures regarding retrenchment packages, companies will be forced to continue awarding large sums to employees, says Meikles Africa Ltd group human resour

ces consultant George Makings.


Zimbabwean firms are either retrenching or closing down completely citing the country’s unstable macro-economic environment characterised by soaring inflation, numerous shortages including foreign currency, electricity, fuel and dwindling export markets.


Last year at least 400 companies closed shop, leaving 350 000 jobless.

Makings, who has more than 20 years experience in labour relations, told business executives gathered for the annual Institute of Personnel Management of Zimbabwe (IPMZ) convention that retrenchments had for some time been a significant part of the labour scenario and it seemed that unless there was significant change fairly shortly, they would continue to be so.


Government introduced Labour Act 17 of 2002, which among other things, changed the relationship between employers and their employees – whether permanent or casual.


Section 12B of the Act also incorporated various grounds of dismissal originally laid down in SI 371 of 1985, the original Termination of Employment regulations, except for the grounds of intoxication.


The Act itself did not lay down how this process of dismissal would come about but in terms of SI 130 of 2003, a new set of Termination of Employment regulations had been promulgated that had repealed SI 371 of 1985.


“The process continues to be one of negotiating a mutually agreed package, failing which matters are referred to an adjudicating body who will either facilitate an attempt to reach an agreement, or act as an arbitrator to decide upon an appropriate package and recommend that package to the minister,” Makings said.


He said packages were not laid down and there was no minimum, but “thanks to the absurd minimums of six months pay for loss of jobs and two months pay for each year of service, recommended by the parliamentary portfolio committee, we are largely stuck in practice with these large packages”.


The recommendations have however not been adopted by parliament into law.


There have been several eyebrow-raising packages dished out to senior chief executive officers and parastatal bosses during the past 10 years.


Senior management at Coca Cola Central Africa Ltd each received at least $4 million in cash and their official luxury vehicles including Mercedes Benz when they were retrenched about three years ago.


Alvord Mabhena, general manager of the National Railways of Zimbabwe (NRZ), is also understood to have taken home at least $5 million in cash and his luxury vehicle as a package when he left the railways. During those days inflation stood at around 20% and a million-dollar figure was regarded as extremely generous.


Senior management at Lonrho Africa Zimbabwe Ltd (Lonrho) also received at least $4 million each and their company vehicles as packages when the conglomerate began winding down its Zimbabwe operations.


“These packages may be seen to be appropriate by recipients who are being retrenched, but they are a major disincentive to investment in labour-intensive businesses and are a major incentive to smaller businesses closing up illegally or trading into liquidation as the packages just cannot be afforded,” Makings said.


He said the new Act specifically excluded from the provisions of 12C of the Act retrenchments of four or less people. “These are governed by Statutory Instrument 132 of 2003,” he said. “The new retrenchment regulations make provision for such retrenchments to be done in-house, through works councils, or if no works council is present, by negotiation between the employer and the retrenchees. If no agreement can be reached the matter is referred to a labour officer. He can only conciliate, so it is difficult to see a positive role for him where parties have deadlocked.”


The human relations consultant said although not clear, it would seem that if the labour officer could not find a settlement acceptable to both parties, he should refer the matter to arbitration or to the labour court.


“The process has no fixed time-frame, as the formal five or more retrenchment does,” Makings said. “It also neglects to tell us what happens to the employees, while this long convoluted process is carried out. It was my understanding that the new dispensation for four or less retrenchees was intended to make the process easier, whereas in fact it probably makes it more difficult and time consuming.”


He urged employees to “seriously consider retrenching five or more people rather than four or less”.


“The process for five or more is much easier and time bound, whereas the route to be followed by four or less is uncertain and has an uncertain time that could be considerably longer than the two months under Section 12C,” Makings said.