STANDARD Chartered Bank of Zimbabwe (StanChart) is set to lay off 36 employees this month owing to reduced returns stemming from a decline in lending and transactional volumes.
In a notice to retrench submitted to the Retrenchment Board, StanChart said its operation was experiencing an unsustainable cost base with staff costs accounting for 40% of total costs. The lay-offs were necessitated by the need to achieve efficiencies in deployment of human capital and associated costs, the bank said.
“As management implements new structures at group level, there is need to ensure that the local franchise’s overall staff numbers align with the requirements of the new structure and the future direction of the bank. This is absolutely necessary in order to successfully reposition the bank for sustainable growth as opportunities arises,” reads part of the bank’s retrenchment notice of November 18 2015.
“Business performance has declined in the last 3 years due to the challenging macro-economic environment and business has recorded reduced returns due to decline in both lending and transactional volumes.”
The bank’s non-performing loan ratio to gross loans is pegged at 7, 3% with the bank’s cost to income ratio pegged at 78% driven by huge staff costs.
The employees set to be fired consist of 12 non managerial staff and 24 managers.
The Zimbabwe Banks and Allied Workers Union (Zibawu) contested retrenchment saying in terms of Section 12D(2) of the Labour Act, an employer was required to pursue other measures that avert retrenchment such as placing employees on short time work or instituting a system of shifts.
The union feels the bank has failed to show and explain the criteria used in selecting the specific individuals for retrenchment.
“Further to this, the applicant still has contract employees on its payroll who could equally be disposed of as means of reducing costs,” the union said.
During the negotiations meeting between the bank, workers council and Zibawu on December 15, 2015, it was resolved that if the employer wanted to proceed with retrenchments, there was need to negotiate for a fair exit package.
Zibawu submitted a request which included a service pay for three months’ for every year served, severance pay 3,5 months salary, relocation of 2,5 months, medical aid of 15 months cover, statutory three months’ notice months cover among some of the benefits.
In another meeting of December 24, 2015, the bank management representatives turned down employee demands and concluded the offer comprising of one month salary for a maximum of 12 years, 12 months medical cover , one month relocation allowance, outstanding cash in lieu of leave and statutory three months’ notice.
However, in a comprehensive letter to StanChart CEO Ralph Watungwa , Zibawu said giving one month salary to a cap of 12 years was prejudicing the listed employees, who had served up to 35 years.
“We are surprised that standard chartered bank which recently offered and paid two months’ salary for every year served to many employees has decided to offer one month salary for every year served with a cap of 12 years to just 12 non managerial employees,” Zibawu said.
Of the 12 non-managerial employees set to be retrenched, only three served for less than 12 years. If the amended labour act which says the employer should give the retrenched employee at least two weeks’ salary for every year served is anything to go by, it means six of these listed employees will be prejudiced as they served more than 24 years.
In his response to Zibawu, Watungwa said any retrenchment exercise that may be embarked upon by any organisation in Zimbabwe has to comply with the provisions of the Labour Act Chapter 28:01 Section 12C.