On Friday last week, the justices at the Supreme Court of Zimbabwe handed down a landmark labour ruling which basically said this:
- We’re taking you back to the common law interpretation of an employer-employee relationship.
- Under that common law understanding, the relationship is freely entered into by both parties, and therefore, both parties have the right to terminate that engagement by simply notifying the other that they would like to terminate the engagement.
- Also, there is more than one way to
skin a catterminate an employer-employee relationship. There is dismissal, there is retrenchment, and then there is the old-school method of simply saying “As of three month’s time, your services will no longer be required, here’s a letter, thank you.”
For those not familiar with Zimbabwean labour practices, one reason that this is a big deal is because everyone has been operating under the assumption that employers have only expensive options when it comes to reducing their wages-and-salaries line item:
- Dismissal for misconduct – which is a costly disciplinary-hearing and multiple-written-warning-issued-within-legislated-timelines affair, involving both labour union action and police intervention when the misconducting-himself employee seeks revenge by accusing other staff members and management of an array of criminal offences and abuses and “unauthorised salary deductions” that were made towards his medical aid coverage.
- Retrenchment – which is a costly labour consultation and justification process, involving both labour union action and police intervention when the being-retrenched employee seeks leverage by accusing other staff members and management of an array of criminal offences and abuses and “unauthorised salary deductions” that were made towards his medical aid coverage.
Now, apparently, there is a third option: “Just give notice of termination and let that be that.”
As an aside, following this case has meant that I have read the phrase “willy-nilly” more times than I would ever have expected. Here it is appearing in the formal ruling itself:
The applicants’ stance was simply that the respondent, the employer, cannot terminate their employment contracts on notice at law, but they can resign from employment willy nilly.
Here it is appearing in multiple news headlines and excerpts:
Judgement allows Zim workers to be sacked willy-nilly (Bulawayo24)
Public Service, Labour and Social Welfare Minister Prisca Mupfumira has said there is need to settle on corrective legal options to safeguard the workers from being sacked willy-nilly after the court ruling. (The Africa Report)
“Government needs to look at tightening the Act to make sure there is no willy-nilly termination of contracts.” (The Herald)
Getting back to the main point – as I see it, there isn’t actually a third option. This “ruling” is not setting a precedent – it’s about to be fictional.
- If you read the ruling itself, the main thrust seems to be that there is no Act of Parliament or Statutory Instrument to specifically prohibit termination by notice.
- So all that is needed to void this court ruling is a new Act of Parliament or a Statutory Instrument (or a Presidential Decree) to say that termination by notice is prohibited.
- If we’re placing bets, I’d expect that new Statutory Instrument to be promulgated by, oh, about Friday morning last week.
- Because the Zimbabwean legislature has historically been well cool with making new laws retroactive.
- And why not time travel.
It’s one of those “business risks” that you find on “Investing In Zimbabwe” brochures, right up there with “onerous indigenisation laws” and “weak property rights”. I mean, when what’s illegal has to be determined with reference to a future law that you don’t know about yet, but which will still hold you responsible for what you do today as though you had always known about that future law, then you’re breaking with the fabric of reality.
And that’s a risk.
Having said that, the outcome here does not really require the gift of prophecy. The Labour Unions have already made their appeals for a freshly crafted Presidential Decree. The Labour Minister is already talking about “corrective” legal options.
Employers need not get too excited.
In any event, even if there is no corrective legislation, it seems clear that the “termination by notice” option is only an option if it has not been prohibited by a collective bargaining agreement. So it won’t be long before the Trade Unions come back to the bargaining table to amend those agreements.
All in all: it will have been fun. But I wouldn’t suggest that any Zimbabwean employer be popping the champers just yet.
Rolling Alpha posts opinions on finance, economics, and the corporate life in general. Follow me on Twitter @RollingAlpha, and on Facebook at www.facebook.com/rollingalpha.