Quite predictably, last week’s landmark judgment by the Supreme Court on employment relations has spawned a spree of terminations of jobs on the Zimbabwean labour market.
Employers who felt burdened by employees they could not get rid of have taken advantage of the licence offered by the Supreme Court to sack vast numbers of employees.
Among them are companies like Econet, Steward Bank, TN (Pelhams), Zimoco, Sino-Zim and many more. In their letters of termination of employment, they all cite the authority of the Supreme Court judgment as the basis of their action.
The response, also predictable, has been a public outcry, particularly among workers, who have gone so far as to call for President Robert Mugabe to invoke executive powers under the oft-criticised Presidential Powers (Temporary Measures) Act, in order to redress what they view as an injustice.
The matter has been raised in parliament and government has promised to respond swiftly with legislative measures to plug the loophole created by the Supreme Court judgment.
Purpose of article
It is arguable that what we are seeing are retrenchments disguised as terminations of employment contracts at common law. Are employers breaching the law? Well, one view is that they are only acting in accordance with the licence offered by the Supreme Court. Another view is that employers may be acting overzealously and in the process are in breach of the law. The purpose of this article is to interrogate this question.
Can the actions of the employers that are terminating employment contracts en masse be challenged? I believe they can be challenged, but the success of such a challenge will depend on whether the courts are prepared to depart from the literalist and narrow interpretation which was, with respect, incorrectly adopted by the Supreme Court in the landmark case.
This article will demonstrate the limiting effects of the literal method of interpretation adopted by the Supreme Court in interpreting the Labour Act, which has given false confidence to employers to act as they are doing. It will also demonstrate how the actions of employers post-judgment might be challenged in a court of law.
Section 12C and retrenchments
I must start by addressing the suggestion that has been made by lawyers and others, to the effect that the employers’ actions in the aftermath of the landmark judgment are wrong and can be challenged on the basis of Section 12C of the Labour Act.
The section makes provision for the procedure on retrenchment of employees. It applies to: “An employer who wishes to retrench five or more employees within a period of six months …”
In other words, where an employer decides to “retrench” more than four employees, within a period of six months, he must follow the retrenchment procedure outlined in Section 12C and the relevant regulations.
It is on this basis that lawyers and other experts have argued that employers that have sent bulk letters to scores of their employees terminating their contracts on notice at Common Law are breaching the Labour Act, because they are not following the procedure set out in Section 12C.
This is a persuasive argument, but unfortunately, it is not supported by the reasoning adopted by the Supreme Court in the landmark labour judgment and I will now explain why this is so.
The Supreme Court was at pains to make neat distinctions between the different methods of terminating employment under the law. They cited dismissal, retrenchment and termination on notice under the Common Law as some of these methods and emphasised that they were all different and independent of each other.
The Supreme Court emphasised that the Labour Act had not varied the Common Law regarding termination of employment contracts on notice. In the absence of any specific statutory provision, the Common Law applied without dilution and the rights of employers to terminate contracts under the Common Law were equal to those of the employee — both could terminate employment on notice without the burden of giving a reason.
In adopting the literal method of interpreting the Labour Act, the implication is that the court also distinguished retrenchment which is a statutory procedure from termination on notice at Common Law. Termination on notice does not require a reason to be given. This, indeed, is why, if you read the letters of termination issued by the companies, none of them give an actual reason for termination. They simply cite the contract, the law (Section 12(4)) and the period of notice. All this is in accordance with the Supreme Court judgment, which said the employer’s right to terminate at Common Law was not limited by the Labour Act.
Now let us look at Section 12C, which some commentators argue must apply to these cases of mass terminations of employment contracts. The section, as we have seen, applies where “an employer wishes to retrench five or more employees within a period of six months”. It is vital to note that “retrenchment” is a legally defined term and for this we must to go to the definition section of the Labour Act where “retrench” is defined as: “in relation to an employee, means terminate the employee’s employment for the purpose of reducing expenditure or costs, adapting to technological change, re-organising the undertaking in which the employee is employed, or for similar reasons, and includes the termination of employment on account of the closure of the enterprise in which the employee is employed”.
What you immediately notice in this definition is that retrenchment is a process that is predicated by a cause — a reason. It says “terminate the employee’s employment for the purpose of …” I emphasise these last words to specify the point of difference between termination on notice at Common Law and retrenchment: the former does not require a reason to be valid, but retrenchment requires a reason for it to qualify as retrenchment. As such, using the literal method, the definition of “retrench” under the Act cannot be read to include terminating an employment contract on notice under the Common Law, which requires no reason to be stated.
As you can see, in making this argument, discounting the application of Section 12C to the mass terminations of employment contracts, I am simply using the literal method of interpreting the Labour Act, consistent with the approach taken by the Supreme Court in the landmark case. The point is to demonstrate the distinction between retrenchment and termination on notice under the Common Law. A literal interpretation tells us that the two methods are not the same and, therefore, to read Section 12C as limiting the employer’s right to terminate under the Common Law would blur this distinction. As Chief Justice Godfrey Chidyausiku reminded us in the Zuva Petroleum case: “It is also well-established principle of statutory interpretation that a statute cannot effect an alteration of the Common Law without saying so explicitly”.
There is nothing explicit in Section 12C that tells us that it affects the Common Law of terminating employment contracts on notice because such terminations require no reason. Section 12C only applies to retrenchments, whose essential distinguishing characteristic is a reason for the action. This means just like Section 12B, Section 12C would not be read as altering the Common Law without saying so explicitly.
This is also the reasoning adopted by the employers, which is why, if you read their letters closely, they are emphasising that this is termination at Common Law and that “this is not a dismissal”. They might as well have added that this is not a retrenchment, but I suspect they did not want to let out the real motive behind the terminations, which is retrenchment to reduce expenditure or costs.
The reason is that once they had to say that, it would be using the language of “retrenchment” defined in the Labour Act and would demonstrate that they were, in fact, using termination on notice under the Common Law in order to circumvent the retrenchment procedure they would be required to follow under Section 12C. They want to avoid that.
However, it is arguable that their denial that “this is not a dismissal” is ill-advised. They did not have to specify such a denial because there is no requirement for them to do that at Common Law.
The best letters, consistent with the Supreme Court judgment, are those that make no reference at all to a denial that “this is not a dismissal”. Those who have used these words will probably say that they were trying to explain to the employees, but really, there was no need because all it ever does is reveal in reverse the true reason for the terminations. If the Common Law does not require them to cite reasons for termination, they did not have to deny any reason. They might find these words very inconvenient in a court of law.
The effect of all this is that while it is understandable that people are citing Section 12C as a reason for the illegality of these mass sackings, that reasoning is not supported by the literalist interpretation that the Supreme Court adopted in the Zuva Petroleum case.
If the court asks the employer whether they are retrenching, they will obviously say no, they are terminating employment on notice under the Common Law. This would be consistent with the Supreme Court ruling.
Does it matter that they are terminating the employment of one person or 50 people? Actually, no, because, going by the reasoning of the Supreme Court, since employers and employees have equal rights at Common Law, if 50 employees can issue notices of termination to an employer in one day, the employer also has equal rights to send notices of termination to 50 employees on the same day.
Is the employer’s right to terminate employment contracts at Common Law qualified by Section 12C of the Labour Act? Not according to the Supreme Court’s literal method of interpretation, which would mean that the employer is not “retrenching” and Section 12C applies specifically to where an employer is “retrenching”. The Supreme Court’s reasoning is that termination on notice at Common Law is not dismissal or retrenchment and there is no limit at Common Law as to the number of contracts that an employer can terminate under its authority.
As you can see, the problem is with the literal method of interpretation of the Labour Act which the Supreme Court used. It was too literal and devoid of context and overlooked the entire purpose of the Labour Act.
It made provisions like Section 12B and Section 12C look redundant, when in fact, they were designed to cover precisely the situations as we are witnessing now, where employers are in fact retrenching or dismissing employees without admitting that they are.
They are saying they are terminating employment contracts at Common Law and this right is unlimited. In doing this they are only following a path set by the Supreme Court, absurd as it is since it leads to the redundancy of retrenchment provisions like Section 12C and even unfair dismissal provisions like Section 12B. Which employer will use them when they can easily deploy termination under the Common Law?
This might also explain why, despite Section 12(4) has existed for many years, it is only now that employers have gained confidence to make use of it on such a wide scale. It is because the Supreme Court gave them the belief that mass terminations using the Common Law would not be regarded as retrenchments under Section 12C.
But then herein lies the absurdity? Why would the legislature have enacted provisions like Section 12B and Section 12C if they were not going to bind anyone since employers could simply end contracts using termination on notice at Common Law.
Surely, as the court itself said in the judgment: “The presumption is that the legislature must have intended its enactments to have meaning.”
Is there a way around this? How can we find meaning and apply Section 12C, for example?
There are various approaches, but I would suggest that a court looking at this needs to adopt a purposive interpretation of the Labour Act. Purposive interpretation is a method of interpretation of statutes by which the court looks at the purpose behind the statute. In doing so, the court looks at a provision within the context of the statute as a whole.
In this regard, the Labour Act sets out its purpose in Section 2A which states that, “The purpose of this Act is to advance social justice and democracy in the workplace …”. It goes on to specify ways by which this purpose is achieved and they include, “giving effect to the fundamental rights of employees provided for under Part II” and “the promotion of fair labour standards” and “the promotion of the participation by employees in decisions affecting their interests in the workplace” as well as “securing the just, effective and expeditious resolution of disputes and unfair labour practices”. The preamble also sets out some guidance including its purpose being “to declare and define the fundamental rights of employees”.
What this purposive method of interpretation would allow is to look at Section 12B and Section 12C within the context of this overall purpose of the statute. If the Supreme Court had taken this broad approach, they would have realised that their statement that Section 12B “does not concern itself with termination of employment by ways other than dismissal” (Page 10) is, with respect, incorrect because in fact Section 12B(3)(a) deals with a situation where termination of employment on notice is deemed to be dismissal.
In other words, that provision contemplates that termination on notice under the Common Law can amount to unfair dismissal, blurring therefore, the distinction between termination on notice under the Common Law and dismissal under Section 12B which the court tried to make.
In this particular event, it would allow the court to view mass terminations of employment contracts, purportedly under the Common Law, as in fact, disguised retrenchments or amounting to retrenchment, which therefore, must be done in accordance with Section 12C or as unfair dismissals contravening Section 12B.
However, to do that, a court dealing with such a case would have to depart from the literal method of interpretation used by the Supreme Court in the Zuva case.
Otherwise, as I have argued above, if the court uses the same literal method of interpretation employed by the Supreme Court, it will simply come to the conclusion that the mass terminations under the Common Law are not retrenchments as defined under the Labour Act and that, therefore, Section 12C does not apply to them, even though purposively looking at it, these are precisely the situations that Section 12C was designed to apply to.
The argument that would win the case for employees is that the mass terminations under the Common Law, in fact, amount to retrenchment, which must be carried out in accordance with Section 12C of the Labour Act.
There is an arguable case against what employers have done, but it needs a court that is willing to adopt purposive interpretation of the Labour Act.
Dr Magaisa is a lawyer and lecturer at Kent State University in the UK. — email@example.com