Labour Amendment Act No.11 of 2023 and the obtaining legal methods to the termination of contracts of employment
In our jurisprudence, we have different forms of contracts of employment and these include:
- Contract without limitation of time (permanent employment)
- Fixed-term contract which could be time-specific; specific performance or seasonal.
- Casual employment contract
Contract without limitation of time
This is commonly referred to as a permanent contract of employment and may also be referred to as an open-ended contract of employment. This employment contract does not provide for an expiration date and the employment contract remains valid until either the employer or the employee chooses to end the agreement.
However, this employment contract can ultimately expire when the employee reaches the given retirement age in terms of governing statutory instruments, regulations, and company policies as read together with the provisions in the individual’s employment contract
Commonly, this form of employment contract is the most secure one and is associated with additional benefits as compared to the non-permanent employment contract.
Contract without limitation of time and the legal methods of termination
(a) Retirement
- This is when the employee reaches the set-out retirement age. The retirement age could be found in the respective industrial
Collective Bargaining Agreement (CBA) and sometimes in the individual employment contract and/or the Human Resource Manual/Policy for the Company. - It is also critical to note that parties to the employment contract may accede to be bound by the retirement age stipulated in the applicable pension scheme and I give reference to the case of Athol Evans Hospital Home v Monica Maruta SC 66/05
- Therefore, it is implored for every organization to elaborately provide for the retirement age of its employees so as to avoid
disputes in the near future centered on what should be the legal retirement age.
(b) Resignation
- This is when an employee wilfully or voluntarily decides to leave employment (with or without notice).
- Therefore, it is a unilateral act by the employee which again at law is not subject to the employer’s objection.
- In other words, an employer cannot elect to deny an employee’s resignation.
(c) Mutual Termination
- Parties may mutually agree to part ways and the agreement is at law required to be put into writing.
- The need to put the agreement into writing has to be complied with and this will conveniently serve the employer party if
a dispute is subsequently raised in the future by the employee party.
(d) Dismissal through due process of the code of conduct
- This is done at the instance of the employer following a serious omission by the employee with regard to the provisions of the applicable code of conduct.
- The NEC’s code of conduct or a company’s approved code of conduct had to be religiously and judiciously exploited to then see an employee discharged from employment. In other words, there is need to observe both procedural and substantive justice in carrying out the disciplinary process.
(e) Retrenchment
- This form of termination of an employment contract is again at the instance of the employer. The Labour Act defines the term as provided hereunder: –
“retrench”, in relation to an employee, means terminating the employee’s employment for the purpose of reducing expenditure or costs, adapting to technological change, reorganising the undertaking in which the employee is employed, or for similar reasons, and includes the termination of employment on account of the closure of the enterprise in which the employee is employed.” - The process and procedure of retrenchment is provided for under section 12C of the Labour Act as duly amended by Labour Amendment Act No.11 of 2023.
- The retrenchment process has again turned to be cumbersome for the employers.
- The retrenchment board has been given back its powers as well more equally to the period prior to the Zuva Judgement of 2015.
- At least a minimum retrenchment package should be payable to the affected employees.
- However, the quantum of or the formular to compute the herein employee’s guaranteed minimum retrenchment package is not explicitly provided for in the Labour Act (as amended). It is therefore, most probable that through the Regulatory Powers of Minister as provided for under section 17 of the Labour Act, the Minister of Labour should accordingly work to quickly cure or rectify on such a gap
(f) Supervening impossibility (force majeure)
- This is when a contract becomes impossible to perform due to the happening of some unforeseen circumstances that were beyond the control or calculation of the parties involved. The acts of God that include death and other natural disasters.
(g) Novation
- This is the process by which the original contract is extinguished and replaced with another, under which a third party takes up rights and obligations duplicating those of one of the parties to the original contract. This means that the original party transfers both the benefits and burdens under the contract.
Fixed-term contract (which could be time specific; specific performance or seasonal)
Fixed-term contracts of employment do explicitly provide for their term or time of expiration or duration. Specific date of contract expiration can be expressly be provided for within a contract of employment and as such, that contract terminates automatically by natural effluxion of time.
On the other hand, a contract of employment for specific performance of a service automatically terminates when the requested service, work or task is accomplished. For instance, one can be contracted by a company concerned with construction of a specific bridge or dam, and the completion of such a project means the end of the respective employment contract.
The Labour Act defines the term “seasonal work” as work that is, owing to the nature of the industry, is performed only at certain times of the year. Cotton farming in Zimbabwe is seasonal and at the same the marketing period is also seasonal, the same as the marketing period for tobacco. The National Employment Council for the Cotton Industry stipulates its season as the period between 1st of June and 30th of September.
Termination of a Fixed term Contracts of Employment
- Natural effluxion of time, or alternatively by way of specific performance of service or task marks the termination of a fixed term contract.
- Mutual termination is universally applicable as far as termination of employment contract is concerned.
- Resignation is again a scenario that can see a contract of employment being terminated despite its form.
- Dismissal through the due process as espoused in the respective code of conduct.
- Supervening impossibility (force majeure)
- Novation
Termination on notice vis-a-vis the new Labour Amendment Act (No.11 of 2023)
The new Labour Amendment Act, No.11 of 2023 has repealed and substituted section 12 (4a) with a new insertion as presented hereunder.
12“(4a) A contract of employment may be terminated only, on the part of an employee, by his or her resignation or retirement, and in the following cases on the part of an employer—
(a) by mutual agreement in writing;
(b) for the breach of an express or implied term of contract, upon such breach being verified after due inquiry under an applicable employment code or in any other manner agreed in advance by the employer and employee concerned.”
In precise, the new legal position is that the termination of any form of contract of employment whatsoever, can no longer be terminated on notice. (Contract without limitation of time, fixed term contract or casual). The legislature has clearly stated it and this cannot be overemphasised. It is also imperative to note that the Labour Amendment Act No.5 of 2015 came mainly as a response by the legislature to further restrict the employer’s common law right to terminate contract of employment on notice as was pronounced in the case of Don Nyamande & Kingstone Donga v Zuva Petroleum (Pvt) Ltd. SC43/2014
The Zuva judgment clearly stated that section 12(4) of the Labour Act that provides for notice periods for varying forms of employment contracts never gave the right to the employer to terminate an employment contract on notice. However, it was clearly stated that section 12(4) of the Act was only there to then regulate the employer’s inherent common law right to terminate
employment on notice.
As it appears, the Labour Amendment Act No11 of 2023 has now come as a complete bar to an employer’s common law right to terminate any employment contract whatsoever on notice. Resultantly, an employer can now only terminate employment contract either by way of due retrenchment process or by way of dismissal through following of the due process opined in the respective employment code of conduct. Alternatively, termination of employment contract on notice has now been discarded from the basket of our legally recognisable forms of employment termination.
Employment contract can also be terminated by mutual agreement that is reduced into writing. Note that mutual termination is simply the agreement of both parties and a such this form of terminating an employment contract cannot be attributed as termination done by either the employer or the employee, but rather done by both parties.
An employee can resign from employment (with or without notice), legally resulting in the termination of an employment contract and this termination is at the instance of the employee.
Retirement of an employee happens in terms of the binding contract of employment as read together with the provisions or clauses in the respective industrial/company policies or regulations like Collective Bargaining Agreements (CBAs). In principle, retirement as a form of employment contract termination, it is subject of an employment policy or agreement made either at commencement of employment or during an employment period.
Employment policies can also make detailed provisions relating to when and how early retirement can be instituted by opted for by either party.
The legal effect/impact of section 12(4) of the Act after promulgation of Labour Amendment Act No.11 of 2023
It is my considered view that in the premise, this provision has more of been rendered defunct since termination of employment contract on notice by the employer has been barred by the legislature as elaborated above. To this regard, a consolidated Labour Act is most likely going to expunge it from Act.
The ambiguity surrounding the new section 12(4a) (b) of the Act on termination of employment by employer:
“…or in any other manner agreed in advance by the employer and employee concerned.”
- What then could this be any other manner that parties to an employment contract can agree in advance that could see a legal termination of employment contract besides the above stated (ie. dismissal through code of conduct, resignation, retirement, mutual termination, natural effluxion of time or specific performance, retrenchment, novation and/or supervening impossibility).
- Can this again mean that as at commencement of an employment contract parties to an employment contract can agree and put a clause allowing for a termination of an employment contract on notice by either party? If this is allowed (though very unlikely in my view), then it means that the termination of contract of employment on notice has been by default brought back again without much further restrictions as prior to the Labour Amendment Act No.5 of 2015, a position that would again revitalise section 12(4) of the Act. Employment security for all workers would thus be rendered very precarious if ever this provision allows for such insinuation
Prepared by
Faith Mupangani
Disclaimer: Faith Mupangani is a Designated Agent for the National Employment
Council for the Cotton Industry and he writes in that capacity. He can be contacted
on 0773150598, or email fmupangani@neccotton.co.zw