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Companies apply for retrenchment package waiver

MORE than 20 companies have applied to the Retrenchment Board for exemption from paying retrenchment packages citing inability to pay and viability concerns, businessdigest has learnt.

Kudzai Kuwaza

The recently amended Labour Act, prompted by the need to outlaw a July 17 Supreme Court ruling, which allowed employers to dismiss workers on three months’ notice without paying a retrenchment package, allows employers to apply for exemption from paying retrenchment packages to laid off workers. Almost 30 000 workers lost their jobs as a result of the ruling.

Labour Minister Prisca Mupfumira
Labour Minister Prisca Mupfumira

“We have had 24 applications for exemptions to pay retrenchment packages including even the minimum package of two weeks’ pay for every year served,” a source revealed to businessdigest.

The board has so far processed 14 of the applications with approximately half of them being approved, while the remainder has been sent back to the applicants after they failed to provide adequate information as to why they cannot to pay the packages.

The other 10 applications will soon be processed by the board, sources said.

“The applications are from various companies across the broad spectrum of the economy which shows the difficult economic environment under which they are operating,” an insider revealed.

Before the July 17 ruling, more than 7 000 workers were retrenched last year. In the first quarter of this year, 1 011 workers from 67 companies have been laid off.

The development comes at a time employers are contesting certain clauses in the amendments which were hurriedly passed in parliament in August this year. Last month employers took this appeal to the High Court.

In a court application filed by Lunga Gonese Attorneys in which Labour minister Prisca Mupfumira is cited as a respondent, Emcoz executive director John Mufukare said the amendments are unconstitutional.

“This is an application for a declaration of the constitutional invalidity of certain provisions of the Labour Amendment Act No 5 of 2015,” Mufukare said in his founding affidavit.

“I am prepared to go further to aver that this limitation came about through an arbitrary process of legislating, a knee-jerk reaction by the state to what it perceived as a social ill. That the process of legislating the amendment Act was reactionary is evidenced in the lack of thinking, consultation and research required to guide government action and law-making.”

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