A delicate balancing exercise

A WHATSAPP group called Labour Solutions Centre has been created and I am a member. The group administrator asked me to comment on an animal called Special Economic Zones (SEZs) vis-a-vis our labour laws. After commenting on the aforementioned, I thought of coming up with this article for the benefit of the members of the general public.

Zimbabwe Economics Society Column,Cephas Mavhondo

SEZs are a way to encourage exports and foreign exchange earnings while addressing the massive unemployment rate, broadening the economic base and attracting development and new technologies.

SEZs are a way to encourage exports and foreign exchange earnings while addressing the massive unemployment rate, broadening the economic base and attracting development and new technologies.

Zimbabwe is currently in the process of passing into law what is named the Special Economic Zones Act. This process is at bill stage under reference number HB 15/2015. A number of questions are being asked. In the realm of labour, the biggest question is, is the bill not an attack on labour rights of the employees? The other question is if the answer to the first question, is in the affirmative, what can be done to make sure that the resultant law is a good law? I attempted to answer these and other questions in this article.

In essence, if the Bill is passed into law, there will be the Zimbabwe Special Economic Zones Authority (which will be a body corporate), Special Economic Zones Board (which shall be responsible for controlling and managing the Special Economic Zones Authority) and Special Economic Zones (that is, as defined in the Bill, any part of Zimbabwe declared in terms of section 20(1) of the Bill to be a special economic zone).

It is important to note that Section 2 of the Bill defines ‘special economic zones’ as ‘any part of Zimbabwe declared in terms of section 20(1) (of the Bill) to be a special economic zone’. This definition only tells us that these zones are areas declared as special economic zones. It does not also clearly highlight to us what is economically special about these areas or zones.

SEZs can be generally defined as geographical zones which enjoy special regulatory and institutional incentives which distinguish them from the rest of the country. They normally provide an array of incentives for businesses which incentives range from tax incentives to regulatory incentives. SEZs are therefore designated geographical regions where enterprises can be established operating under special regulations; the zones are intended to enhance competitiveness and job creation and promote foreign direct investment in a country. SEZs are a way to encourage exports and foreign exchange earnings while addressing the massive unemployment rate, broadening the economic base and attracting development and new technologies.

The bill is almost a mirror effect of the repealed law (Export Processing Zones Act (Chapter 14:07)).

It is clear that in terms of Section 56 (1) of the Bill ‘licensed investors’ operating in Special Economic Zones will be exempted from the provisions of two key legislations; Indigenisation and Economic Empowerment Act and Labour Act. It is worth noting that, unlike the repealed law, Section 56 (1) of the bill does not expressly cover the employees of the licensed investors. However, given the nature of the employer–employee relationship which is reciprocal, the exemption of the employer from the application of the proposed law means that the employee is also exempted. This is also confirmed by the fact that the bill proposes that the SEZ Authority, in consultation with the minister responsible for administration of the Labour Act may provide rules for conditions of service, termination of contract, dismissal from service and disciplinary hearing in SEZs.

The Zimbabwe Congress of Trade Unions (ZCTU) has argued that exempting companies that will operate in SEZs from the Labour Act is ill-advised and will lead to workers being subjected to unfair treatment.

To allay any fears of abuse of labour rights in SEZs, I am of the view that the word “may” in Section 56(2) of the Bill must be changed to “shall”. In line with that view, Section 56(2) of the Bill ought to be clear that the rules in question shall apply in SEZs. This has the effect of making it mandatory that the SEZs Authority makes the necessary rules and the application of the rules in SEZs becomes mandatory.

If the suggested changes are not made, by virtue of the use of the word ‘may’ in Section 56 (1) of the Bill, the authority in question remains with a discretion whether to make the rules or not. This is not desirable for the employers and employees as it may take long before an election to make the rules is made. It will be worse, if the election is not to make the rules. If the rules are not made, it means the laws of the jungle will apply between the employer and employee in SEZs. On that basis, there is a possibility that the establishment of SEZs may lead to labour rights violations such as minimum wages, or standard working hours, or the right to strike, or to form trade unions.

Another point to note is that the exclusion of the application of the Labour Act in SEZs may be or may not be constitutional. This is so because Section 86 of the Constitution of Zimbabwe authorizes the limitation of constitutional rights and freedoms. However, the limitation must be only in terms of a law of general application ( that is a law that applies to everybody and not only to certain subjects) and to the extent that the limitation is fair, reasonable, necessary and justifiable in a democratic society based on openness, justice, human dignity, equality and freedom, taking into account all relevant factors. There is a list of certain rights that the aforesaid section 86 makes immune from limitation but labour rights are not part of the list.

This means labour rights provided for in Section 65 of the Constitution can be limited in terms of section 86 as long as the limitation is in terms of a law of general application and to the extent that the limitation is fair, reasonable, necessary and justifiable in a democratic society based on openness, justice, human dignity, equality and freedom, taking into account all relevant factors. The only question I will leave open for another day is: Is the proposed limitation (section 56 of the Bill) in terms of a law of general application (that is a law that applies to everybody and not only to certain subjects) and to the extent that the limitation is fair, reasonable, necessary and justifiable in a democratic society based on openness, justice, human dignity, equality and freedom, taking into account all relevant factors?

In a nut shell, the creation of SEZs and limiting labour rights in SEZs is a very delicate balancing exercise which requires serious considerations and the involvement of all the concerned stakeholders for the betterment of our country.

Mavhondo is a labour lawyer and partner at Mhishi Legal Practice, Harare. These new perspectives articles are coordinated by Lovemore Kadenge, president of the Zimbabwe Economics Society (ZES) email kadenge.zes@gmail.com, cell +263 772 382 852

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