A recent Supreme Court victory by about 200 former Air Zimbabwe (AirZim) employees in a class action lawsuit to the effect that they be reinstated after being sacked five years ago may have been an exercise in futility as it emerged the airline has no capacity to reinstate or compensate the group.
Put under judicial management in January 2012 for being technically insolvent, AirZim is saddled with a US$341 million debt, 92% of which is local.
An AirZim revival plan has failed to take off, largely due to the massive accumulating debt, which is supposed to have been taken over by the government. The process of debt assumption has taken a winding route due to legal complications.
Recently, the Supreme Court ordered AirZim to reinstate 200 former permanent employees whose contracts were terminated on three months’ notice five years ago, in an unprecedented landmark ruling that could trigger problems across industries, after companies made similar wholesale job cuts in July 2015 following a court ruling.
In its ruling, the Supreme Court said: “The finding in the draft ruling that the termination of employment was null and void meant that the termination of employment was wrongful and unlawful . . . the law is settled in this jurisdiction that the remedy for an unlawful termination is reinstatement, alternatively payment of damages. What the court a quo did was to confirm that the termination of employment was indeed unlawful . . . For the above reasons, I find that there is no merit in this appeal,” the December 7 Supreme Court judgment by Paddington Garwe, sitting with Susan Mavangira and Nicholas Mathonsi, read.
Asked about the judicial manager’s plans after the ruling and what the court decision meant for the business, Grant Thornton Zimbabwe director Tonderai Mukubvu said the airline has no capacity to either reinstate or compensate the affected group of former employees.
He said, at best the group may be put on unpaid leave together with other serving AirZim employees.
“I don’t think we have any intentions of challenging the Supreme Court ruling,” Mukubvu told businessdigest, adding the company was still mired in financial dire straits.
“The company is still under reconstruction and we still have several other employees that are on unpaid leave so they may join those that are on unpaid leave and then we take it up from there,” he said.
“The airline was put under reconstruction because it was insolvent; it had no capacity. This has not changed the fact that the airline is incapacitated and under a reconstruction process. We are still waiting for the government to assume the airline’s debt and so unless that happens, the airline does not have capacity to meet that particular obligation,” Mukubvu added.
He said, currently, the judicial manager is in discussions with the government over the implications of the court ruling and is proffering advice on possible solutions.
“It’s still very premature really to say much except that we are aware and we are looking into the matter,” Mukubvu said.
This week Cabinet resolved to assume the debt, as well as the extension of the AirZim reconstruction period to June 30, 2021. The reconstruction aims to provide for the payment of creditors and the return of the beleaguered airline to profitability.