HomeBusiness DigestBrett Chulu: Labour Act lamentations, business’ self-whipping act

Brett Chulu: Labour Act lamentations, business’ self-whipping act

PICTURE the four horsemen of the biblical apocalypse, depicting worsening successive periods of socio-political and religious turmoil. The major episodes spanning the history of post-independence labour laws could in a way be the “four horsemen of the business apocalypse”.

Ride on, first horseman.
The Labour Relations Act of 1985 came in on the strength of our nascent nation’s then avowed leftist (socialism) creed. In more accessible terms, the labour laws were deliberately crafted to be pro-employee. The current labour laws as codified in the Labour Act (chapter 28:01) still bear a deep socialist ideological imprint.
Behold another horseman from the left.
The 2002 amendment, tellingly introduced a new section, 2A–– reaffirming allegiance to leftist tutorials. Subsection (1) of section 2A reasserts: “The purpose of this Act is to advance social justice and democracy in the workplace…”. This overarching purpose is granulated into six sub-purposes propping the act’s left-leaning pillar. 
Lo and behold the third.
The 2005 amendment, abolished maximum wage provisions, withdrew ministerial powers to de-solemnise collective bargaining agreements that threatened consumers’ and the general public’s well-being, instituted the wall of separation between severance and retrenchment and completely decoupled public servants from the Labour Act. Business’ “labour pains” worsened.
Arguably, business currently is getting its bearings from what we would call constrained capitalism. Constrained capitalism manifests itself in the operation of free market forces. Occasionally,  the state “string-puppets” these forces.
Capitalism and socialism are strange bedfellows. Business’ discomfort with the left-leaning current Act is hardly surprising.
Business eagerly waits for the advent of the fourth horsemen to make the Act more business friendly. Will the fourth horseman be a knight in shining armour for business?
Section 13 of the Labour Act is likely to come under fire.
Section 13, dealing with wages and benefits upon termination of employment invites muffled curses from business. Retrenchment payouts fall under this section.
Under subsection (1), a retrenched employee is entitled to the wages and benefits up to the time of termination. In addition, the affected employee must be paid all benefits with respect to outstanding vacation, notice period, medical aid, social security and any pension. Subsection (6) allows an employee to claim over and above the mandatory wages and benefits if the employee can prove that they have suffered prejudice or loss as a result of the termination. Relocation and accommodation assistance could be claimed. All the foregoing payments are not regarded as retrenchment pay.
That is what subsection (1) paragraph (a) introduced in 2005 explicitly and emphatically makes clear. Put differently, the effective exit package consists of non-negotiable to statutory pay,  inconvenience and retrenchment pay. 
Subsection (1) raises a number of issues.
Presently, the definition of retrenchment pay does not have statutory entrenchment. This means the Act does not give guidelines to determine retrenchment pay.  Mandla Sibanda, an experienced Bulawayo-based arbitrator agrees that without local legal benchmarks, organisations look elsewhere for standards.
A generally accepted principle in determining retrenchment packages is that an employee has to be cushioned during the time they will be looking for alternative employment. Thus if an organisation expects an employee to have found alternative employment in six months, they will pay a retrenchment package equivalent to six months’ salary and benefits. Emerging thinking extends this reasoning to suggest that should an employee find alternative employment within this period, the previous company should reclaim the balance.
The soft-landing model is largely irrelevant in our current economic environment where most organisations have put a freeze on recruitment. This model fails to address the plight of unskilled employees for whom it is difficult to estimate the time period they are likely to secure alternative employment. Unlike the western world, our government does not provide unemployment benefits to cushion retrenchees in between finding new jobs. One might therefore argue that the seemingly excessive termination payments demanded in Zimbabwe are justified. Be the judge.
Business will most likely want an unambiguous legal delimitation of the concept of retrenchment pay so as to have straightforward benchmarks to ascertain the cost of retrenchment. Business might also push to decriminalise late payment of termination packages.and the associated financial penalties as is the case currently under subsections (3) and (5).
Much of business’ “labour” pains are false. In fact, they are pains from self-whipping.
Careful structuring of benefits can reduce entitlements which would form part of statutory exit pay.
If bonuses are performance-related as opposed to the 13th cheque, an organisation will be in a strong legal position not to accept bonuses creeping into severance packages. Holidays could be reclassified to fall under a recognition scheme. Such a switch effectively removes holidays from being a reasonable expectation which a retrenchee could legitimately claim as part of their severance package.  A company could replace company car benefits with a pay-for-mileage scheme. In a pay-for-mileage scheme company cars are privatised through ownership transfer. Instead of providing guaranteed fuel and other routine car expenses, the company pays the employee for the actual business miles at an agreed rate. By eliminating the car maintenance bill, a company can finance the pay-for-mileage scheme. Upon termination of employment, an employee cannot reasonably expect car benefits in their severance package.
In the absence of a legal “GPS” on retrenchment pay, Labour Officers are likely to employ common law principles. That means arbitrators may draw from business norms that appear to be generally accepted.  It is business that creates these practices either consciously or unconsciously.  Business should carefully consider its practices collectively so as not to set precedents that will return to haunt it. Calling a spade a spade, business’ unreflective practices are the whips arbitrators use to flog them.
Interestingly, two subsections that could have been used to decisively deal with the current brazen executive pay profligacy were deleted.
Under section 22 of the Labour Relations Act the responsible minister was empowered to set the ceiling for wages and benefits for any class of employees. Had this section remained in the statute books, the current minister could have invoked the provisions of this section to criminalise the excessive pay deemed to be paid to senior managers in state-controlled enterprises and local government. Breach of the maximum wages was a jailable offence. Was this piece of legislation draconian or pragmatic? Is business going to lobby for the reinstatement of this section?  This would provide the ultimate test of sincerity on the part of business for at law; ‘Prince’ and ‘Pauper’ are equal. Madhuku might disagree.
Subsection (2) of section 25 of the Labour Relations Act empowered the responsible minister to direct the parties to a collective bargaining  process to go back to the negotiating table should their collective bargaining agreement prove to be “inequitable to consumers or to the members of the public generally or to any part to the collective bargaining agreement”. The third horseman trampled this subsection. Arguably, the deleted section provided a restraint to unreasonable salary demands.  Will the fourth horseman effect a resurrection?
My prediction: the fourth horse will gallop neither too left nor too right.

l Share your views on this matter at brettchulu@consultant.com.

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