MALABA
DCJ:
INTRODUCTION
This
case raises for determination questions of the constitutionality of
civil legislation's retrospective effect.
The
applicants are companies duly incorporated in terms of the laws of
Zimbabwe. They made an application to the Court in terms of section
85(1)(a) of the Constitution of Zimbabwe Amendment (No. 20) Act (“the
Constitution”). They alleged that section 18 of the Labour
Amendment Act (No.5) 2015 (“the transitional provision”), as read
with section 12 of the Labour Act [Chapter
28:01]
(“the Act”), is unconstitutional. The main allegation was that
the transitional provision is unconstitutional because it gives
retrospective effect to a new obligation imposed on an employer who
terminates a contract of employment on notice to pay the employee
whose contract was terminated “the minimum retrenchment package”
of not less than one month's salary or wages for every two years of
service as an employee. The obligation was retrospectively imposed on
all employers who terminated employees' contracts on notice on or
after 17 July 2015. The applicants alleged in the alternative that
the transitional provision violated the following of their
fundamental rights: the right to equality (section 56(1)), the right
to fair labour practices (section 65(1)), and the right not to be
compulsorily deprived of property (section 71(3)).
The
Court holds, on the main ground on which the constitutionality of the
transitional provision is challenged, that there is no constitutional
provision which prohibits the use by the Legislature of the method of
retrospectivity to implement civil legislation. On the alternative
ground of the challenge to the constitutionality of the transitional
provision, the Court holds that the applicants failed to prove the
alleged infringement of any of the fundamental rights they relied
upon. The retrospective imposition of new financial obligations on
the applicants to pay compensation to the employees whose employment
they terminated on notice for loss of employment respects their
rights enshrined in sections 56(1), 65(1) and 71(3) of the
Constitution. The reasons for the decision now follow.
BACKGROUND
FACTS
The
applicants and many other employers were affected by the transitional
provision because they had terminated contracts of employment on
notice on the basis of existing law on different dates falling within
the period from 17 July 2015 and the effective date of the enactment
of section 12 of the Act. The terminations followed the judgment of
the Supreme Court in the case of Nyamande
and Anor
v Zuva
Petroleum (Pvt) Ltd
SC-43-15, 2015 (2) ZLR 186 (SC)
(“the
Zuva
Petroleum
judgment”).
The
appellants in the Zuva
Petroleum
judgment were employed by Zuva Petroleum (Pvt) Ltd (“the company”).
The company wrote letters to the appellants giving them notice of its
intention to terminate their employment at the end of three months.
Thereafter the company paid the appellants cash in lieu of notice and
terminated the employment relationship.
Aggrieved
by the company's action, the appellants approached a labour
officer, alleging that the termination of their contracts of
employment was unlawful. They accused the company of unfair labour
practice. The labour officer failed to resolve the dispute by
conciliation. He referred the dispute to an arbitrator, who
subsequently found that the termination of the contracts of
employment was unlawful because the appellants had not been dismissed
in terms of a code of conduct.
The
company appealed to the Labour Court on the ground that termination
of contracts of employment on notice was lawful, as it was provided
for in the contracts between the parties. The appellants had
contended before the Labour Court that the provisions under section
12B of the Labour Act on “unfair dismissal” had abolished the
right of employers to terminate employees' contracts on notice. The
Labour Court allowed the appeal by holding that the provisions of the
Act did not abolish the employer's common law right to terminate
employment on notice.
The
appellants appealed to the Supreme Court. On 17 July 2015 the Supreme
Court dismissed the appeal, thereby upholding an employer's right
at common law to terminate a contract of employment on notice as
provided for in the agreement between the parties.
The
reaction to the Zuva
Petroleum
judgment was a rush by employers, including the applicants, to
terminate employment relationships on notice. Termination of
employees' contracts on notice became a strategy adopted by
employers countrywide to get rid of employees to save costs in an
environment
of economic difficulties. Employees were only paid cash in lieu
of notice, regardless of the length of service rendered to the
employer. No further benefits accrued to the large numbers of
employees whose employment contracts were terminated after 17 July
2015.
As
large numbers of employees were left jobless and uncompensated for
the years that they had worked for their respective employers save
for their salaries paid in lieu
of notice, there was widespread public outcry. The actions of
employers revealed a national crisis characterised by lack of
protection for the employees who lost employment. Some of the
employees were sole breadwinners for their families. Termination of
sources of livelihood wrought severe financial hardships on
households. That gave the Legislature the rational basis for the
enactment of the legislation and for
giving
it retrospective effect.
LEGISLATIVE
AMENDMENT
The
Legislature amended section 12 of the Act through section 4 of the
Labour Amendment Act (No.5) 2015. Section 12 of the Act provided for
the duration, particulars and termination of employment contracts. In
particular, section 12(4) of the Act regulated the notice periods to
be given in respect of different types of employment contracts.
Section 12(4) of the Act was amended by the insertion of subparas
(4a) and (4b), which provide as follows:
“(4a)
No employer shall terminate a contract of employment on notice unless
-
(a)
the termination is in terms of an employment code or, in the absence
of an employment code, in terms of the model code made under section
101(9); or
(b)
the employer and employee mutually agree in writing to the
termination of the contract; or
(c)
the employee was engaged for a period of fixed duration or for the
performance of some specific service; or
(d)
pursuant to retrenchment, in accordance with section 12C.
(4b)
Where an employee is given notice of termination of contract in terms
of subsection (4a) and such employee is employed under the terms of a
contract without limitation of time, the provisions of section 12C
shall apply with regard to compensation for loss of employment.”
Section
12C of the Act was repealed and substituted as follows:
“12C
Retrenchment and compensation for loss of employment on retrenchment
or in terms of section 12(4a)
(1)
An employer who wishes to retrench any one or more employees shall -
(a)
give written notice of his or her intention -
(i)
to the works council established for the undertaking; or
(ii)
if there is no works council established for the undertaking or if a
majority of the employees concerned agree to such a course, to the
employment council established for the undertaking or industry; or
(iii)
if there is no works council or employment council for the
undertaking concerned, to the Retrenchment Board, and in such event
any reference in this section to the performance of functions by a
works council or employment council shall be construed as a reference
to the Retrenchment Board or a person appointed by the Board to
perform such functions on its behalf; and
(b)
provide the works council, employment council or the Retrenchment
Board, as the case may be, with details of every employee whom the
employer wishes to retrench and of the reasons for the proposed
retrenchment; and
(c)
send a copy of the notice to the Retrenchment Board.
(2)
Unless better terms are agreed between the employer and employees
concerned or their representatives, a package (hereinafter called
'the minimum retrenchment package') of not less than one month's
salary or wages for every two years of service as an employee (or the
equivalent lesser proportion of one month's salary or wages for a
lesser period of service) shall be paid by the employer as
compensation for loss of employment (whether the loss of employment
is occasioned by retrenchment or by virtue of termination of
employment pursuant to section 12(4a)(a),(b) or (c)), no later than
the date when the notice of termination of employment takes effect.
(3)
Where an employer alleges financial incapacity and consequent
inability to pay the minimum retrenchment package timeously or at
all, the employer shall apply in writing to be exempted from paying
the full minimum retrenchment package or any part of it to -
(a)
the employment council established for the undertaking or industry;
or
(b)
if there is no employment council for the undertaking concerned, to
the Retrenchment Board:
which
shall respond to the request within fourteen days of receiving the
notice (failing which response the application is deemed to have been
granted).
(4)
In considering its response to a request for exemption in terms of
subsection (3) the employment council or Retrenchment Board –
(a)
shall, where the employer alleges complete inability to pay the
minimum retrenchment package, be entitled to demand and receive such
proof as it considers requisite to satisfy itself that the employer
is so unable, and if so unable on the date when the notice of
termination of employment takes effect, may propose to the employer a
scheme to pay the minimum retrenchment package by instalments over a
period of time;
(b)
shall, where the employer offers to pay the minimum retrenchment
package by instalments over a period of time, consider whether the
offer is a reasonable one, and may propose an alternative payment
schedule;
(c)
may inquire from the employer whether he or she has considered, or
may wish to consider, specifically or in general, the alternatives to
termination of employment provided for in section 12D.”
The
applicants were aggrieved by the fact that the new obligation on
employers terminating contracts of employment on notice, including
contracts without time limits, to pay compensation for loss of
employment calculated in terms of section 12C(2) was given
retrospective effect from 17 July 2015.
The
transitional provision
is
as follows:
“18
Transitional provision
Section
12 of the Act [Chapter
28:01]
as amended by this Act applies to every employee whose services were
terminated on three months' notice on or after the 17th
of July, 2015.”
The
contention by the applicants was that the Zuva
Petroleum
judgment confirmed that at common law an employer had a right to
terminate a contract of employment on notice without any obligation
to pay the employee any money other than what was due to him or her
in respect of the remaining three months of employment to which the
notice related. They argued that the transitional provision
retrospectively imposed on them a financial obligation which did not
exist at the time they lawfully terminated contracts of employment
with their employees on notice. The applicants contended that the
retrospectivity of the transitional provision is unconstitutional.
It
is common cause that the transitional provision gives retrospective
effect to the provisions of section 12 of the Act. As a result, it
imposed on the applicants the new obligation to pay compensation for
loss of employment to the employees whose contracts they terminated
on notice on or after 17 July 2015 as if the obligation was part of
the law on termination of contracts of employment on notice at the
time they exercised the right to terminate the employees'
contracts.
The
grounds on which the applicants challenged the constitutionality of
the transitional provision were summarised by Mr
Mpofu
in argument as follows –
(1)
Law cannot retrospectively impose financial obligations;
(2)
Law cannot alter existing positive legislation retrospectively;
(3)
The legislation has the effect of forcing the applicants to pay
workers without the benefit of labour; and
(4)
Retrospective application of section 12C(2) to the applicants through
the transitional provision produced inequality in the treatment of
the parties to the contract of employment.
The
contentions on which the applicants' case is based are central to
the debate concerning the extent to which the Constitution provides
substantive protection against retrospective legislation.
PRINCIPLE
OF RETROSPECTIVITY
Retrospectivity
involves the application of new rules to transactions that have
already been consummated. A retrospective statute is one which gives
to pre-enactment conduct a different legal effect from that which it
would have had without the passage of the statute. The most obvious
kind of retrospective statute is one which reaches back to attach new
legal rights and duties to already completed transactions.
A
retrospective law is therefore every statute which has the effect of
taking away or impairing vested rights acquired under existing law or
creating a new obligation, imposing a new duty, or attaching a new
disability in respect to transactions or considerations already past.
Retrospectivity is not about an application of a remedy. It is about
when a substantive right came into being. Whatever meaning is
attached to the term “retrospectivity”, it is the Constitution of
a country which provides for limits on legislative power to enact
retrospective laws. See Kameshwar Nath Chaturvedi “Legislative
Retrospectivity and Rule of Law”
Statute Law Review 34(3)(2013) at 207.
In
considering the question of the constitutionality of the transitional
provision, it is important to state that, with the exception of the
area of criminal law, there is no provision in the Constitution that
prohibits the enactment of retrospective civil legislation. Whilst
the Constitution offers meaningful constitutional restraint against
retrospectivity with regard to criminal legislation in terms of
practical limitation upon the exercise of legislative power, this
safeguard does not extend to civil legislation. In other words, there
is no constitutional requirement of civil legislation prospectivity.
Section
70(1)(k) of the Constitution expressly prohibits the enactment of
retrospective (ex
post facto)
criminal law by making an act or omission which was not an offence
when it was committed an offence. It provides that any person accused
of an offence has a right “not to be convicted of an act or
omission that was not an offence when it took place.”
The
rationale for the prohibition of ex
post facto
criminal law is that criminal law requires proof of personal
knowledge of the crime at the time the offence is alleged to have
been committed. A person must bear personal responsibility for
conduct he or she committed intentionally in the sense of knowing in
advance that the conduct is proscribed by law as an offence. The law
creating the offence must exist before the offence is committed.
Section 70(1)(k) of the Constitution is an absolute prohibition of ex
post facto
penal laws. It applies only to retrospective criminal legislation.
The
legislative authority vested in the Legislature by the people in
terms of section 117(2)(b) of the Constitution confers on it the
power to make laws on any subject and at its discretion for the
purposes of peace, order and good governance of Zimbabwe.
Retrospectivity is one of the methods by which the Legislature
chooses to implement civil legislation it enacts for the purposes of
peace, order and good governance. The words “peace, order and good
governance” are words of very wide import, giving wide discretion
to the Legislature to pass laws for such purpose. The words have, of
course, reference to the scope and not the merits of the legislation.
See Att.
Gen. for Saskatchewan v
Canadian
Pacific Rly. Co
[1953] AC 594 at 613-614; Bribery
Comr. v
Ranasinghe
[1965]
AC 172 at 196-197; Cobbs
& Co Ltd
v Kropp
[1967]
AC 141 at 154 (PC). There is no constitutional provision that
prohibits the Legislature from using retrospectivity as a method of
giving effect to civil legislation.
Retrospective
lawmaking has been part of instruments of governance of human affairs
for many centuries. The only constitutional limitation to the
exercise of that power is that the retrospective application of the
law must not infringe the fundamental human rights and freedoms
enshrined in Chapter
IV
of the Constitution. Concerns about the inexpediency and injustice of
the retrospectivity of legislation properly conveyed do not,
therefore, raise any doubt as to the power of the Legislature under
the Constitution to enact retrospective civil legislation. What this
means is that a statutory provision cannot be held unconstitutional
on the ground that it gives retrospective effect to a civil statute.
DUE
RESPECT FOR VESTED RIGHTS AS A FOUNDING PRINCIPLE
Section
3(2)(k) of the Constitution provides that it is a principle of good
governance which binds the State and all institutions and agencies of
government at every level that there be “due respect for vested
rights”. Does this section prohibit the enactment of provisions
like the transitional provision which give retrospective effect to
legislation so as to take away or impair vested rights?
The
argument by Mr
Mpofu
was that the applicants contracted to pay their employees
remuneration in the form of salaries and wages for work done or
services rendered. The applicants were not under any obligation to
pay the employees whose contracts were terminated on notice any
severance package based on length of service. Deduced from this
reasoning was the proposition that the applicants had acquired a
right not to pay any employee whose contract was terminated on notice
any money other than remuneration for work done or services rendered
during the notice period or in lieu
of the notice.
On
the basis of the theory of freedom of contract, Mr
Mpofu
argued that the applicants had a vested right under existing law not
to pay the employees whose contracts were terminated on notice
compensation for loss of employment. According to the argument, the
applicants had a right under existing positive legislation which the
Legislature was barred by the Constitution from altering
by
retrospective application of the amendment. The effect of the
argument was that the transitional provision
gives
retrospective effect to legislation that impairs the applicants'
vested rights
and
is therefore unconstitutional.
The
principle of due respect for vested rights under section 3(2)(k) of
the Constitution does not prohibit retrospective civil legislation
because it would have the effect of taking away or impairing vested
rights. It is one of the principles of good governance which bind the
State and all institutions and agencies of government at every level.
Section
3(2)(k) of the Constitution does not confer a fundamental right in
itself. It is not justiciable. In Minister
of Home Affairs v
National
Institute for Crime Prevention and Re-Integration of Offenders
(NICRO) and Ors 2005
(3) SA 280 (CC). Chaskalson
cj,
referring to the founding values enunciated in section 1 of the
Constitution of the Republic of South Africa, said:
“21.
The values enunciated in section 1 of the Constitution are of
fundamental importance. They inform and give substance to all the
provisions of the Constitution. They do not, however, give rise to
discrete and enforceable rights in themselves. This is clear not only
from the language of section 1 itself, but also from the way the
Constitution is structured and in particular the provisions of
Chapter
2
which contains the Bill of Rights.”
Only
specific constitutional norms can confer effective rights on
individuals or generally have autonomous legal effect. That is not to
say that the principle cannot be regarded as a source of legal
solutions. The principle has, of course, constitutional force.
Section 3(2)(k) of the Constitution is an objective principle
characteristic of the historical conception of the ways and attitude
of every democratic government.
The
principle must be read in conjunction with the substantive provisions
of the Constitution. Section 117(2)(b) of the Constitution, which
vests in the Legislature the authority to make laws for the good
governance of Zimbabwe, prescribes the context in which the principle
of due respect for vested rights would apply. It is only in relation
to the exercise of the powers vested in it by the Constitution that
the conduct of the Legislature, as an institution of government, may
be judicially reviewed for constitutionality.
Section
3(2)(k) of the Constitution is of interpretative value. It provides
the context in which the other constitutional provisions are to be
interpreted. The use of the word “due” to qualify the kind of
respect for vested rights suggests an approach that has regard to the
requirements of legality and of the acceptable limitation to a
fundamental human right prescribed under section 86(2) of the
Constitution. By way of example, the basic right to property is
conferred under section 71(2) of the Constitution. This section
relates to a specific area of protection. The principle under section
3(2)(k) of the Constitution would have to be considered when sections
71(2) and 71(3) of the Constitution are interpreted, as required by
section 46 of the Constitution. That means that the application of
the principle behind section 3(2)(k) of the Constitution would have
to take into account the limitation to the right to property provided
for under section 71(3) of the Constitution.
The
principle must therefore be recognised as playing a role in the
assessment of the constitutionality of legal rules and in the
interpretation of constitutional provisions protecting fundamental
human rights. As a principle of good governance, it is not simply
interpretative. Good governance means putting in place measures,
including legislative measures, that advance and protect public
interest. The Constitution requires that good governance be carried
out in terms of laws enacted by the institution vested with the power
to make the necessary laws in compliance with the fundamental
principle of governance under the rule of law. Section 3(2)(k) of the
Constitution requires that the principle be borne in mind by the
State and all institutions of government at every level when action
that has the potentiality of impairing vested rights is contemplated
or taken.
The
doctrine of “due respect for vested rights” has long been
recognised as the progenitor of the modern law of substantive
protection of the law or substantive due process. The modern jurist
has essentially long moved beyond being concerned with
retrospectivity. He or she treats retrospective application for
practical purposes no differently from any other legislative
determination in assessing whether there has been due observance of
the requirements of permissible limitation of the exercise of
legislative power prescribed by the Constitution. In other words, the
question is whether there has been a violation of substantive
protection of the law in the enactment of retrospective legislation
that impairs vested rights. The question is never, why has the
statute been retrospectively applied?
This
is not a case of retrospective impairment of rights. It is a case of
retrospective imposition of a new obligation with respect to
transactions already completed.
The
acts of terminating contracts of employment on notice had already
been completed. The transitional provision
did
not make the termination of employees on notice which was lawful when
it occurred unlawful conduct. It attached an important new legal
burden in the nature of the financial obligation on employers who
terminated employees' contracts on notice to pay them the minimum
retrenchment package based on length of service as compensation for
loss of employment. The obligation had not formed part of the
existing law.
Under
the existing law at the time the contracts of employment were
terminated on notice, the employers were at liberty not to pay
“terminated” employees compensation for loss of employment. They
had the right to do as they pleased without committing a legal wrong.
The Legislature spoke clearly in retrospectively imposing through the
transitional provision the financial obligation on employers who
terminated employees' contracts on notice on or after 17 July 2015.
The
retrospective effect of the statute was the imposition of a new
financial obligation and ipso
facto
creation of rights which did not exist at the time the employees'
contracts were terminated on notice at the initiative of the
employers. The transitional provision
is
an example of a retrospective civil legislation that confers new
legal consequences on acts that occurred before its enactment without
depriving persons of vested rights acquired under existing laws.
PRESUMPTION
AGAINST RETROSPECTIVITY
There
is a principle of construction of statutes which has been adhered to
with great strictness by the courts in deciding whether a statute is
or is not retrospective in effect. It is to the effect that laws by
which human action is to be regulated look forward not backwards. The
Legislature should be presumed to intend its legislation to operate
prospectively. It is an aspect of the rule of law and is the most
important practical constraint on retrospective civil legislation.
Statutes should be so construed as to prevent them from operating
retrospectively, unless the Legislature expresses the intention that
the statute operates retrospectively in sufficiently clear and
unambiguous language. In that case, the statute is effective
according to its terms. Clarity and unambiguity of legislation are
requirements of the principle of legality which is an aspect of the
rule of law.
A
number of reasons have been suggested as bases for the hostility to
retrospective legislation. The most fundamental reason why
retrospective legislation is said to be suspect stems from the
principle that a person should be able to plan his or her conduct
with reasonable certainty of the legal consequences. Closely allied
to this factor is mankind's
desire
for stability with respect to past transactions. To the extent that
statutory law should serve as a guide to individual conduct, the
purpose is thwarted by retrospective enactments. See Charles B
Hochman “The
Supreme Court and the Constitutionality of Retroactive Legislation”
73 Harv. L. Rev. 692 (1960) pp 692-693.
It
must be emphasised that the presumption against retrospectivity of a
statute applies in the absence of clear evidence of the intention of
the Legislature to have the civil legislation operate
retrospectively. The reason is that the objections to retrospective
statutes are neither totally absent from prospective legislation nor
are they totally persuasive. Where the statute expressly provides
that it operates retrospectively, the presumption is rebutted and
falls away. There is no question of interpretation. See Curtis
v
Johannesburg
Municipality 1906
TS 308 at 311;
Nkomo and Anor v
Attorney-General and Others
1993 (2) ZLR 422 (S); Zimbabwe
Phosphate Industries Ltd v
Elias Matora & Others
2005 (2) ZLR 233 (S).
The
authorities show that retrospectivity as a method of implementing
civil legislation is a proper tool of modern government, provided it
is used with appropriate restraints.
In
British
Columbia v
Imperial Tobacco Canada Ltd
[2005] 2 SCR 473 the Supreme Court of Canada held that:
“The
absence of a general requirement of legislative prospectivity exists
despite the fact that retrospective and retroactive legislation can
overturn settled expectations and is sometimes perceived as unjust:
see E. Edinger, 'Retrospectivity
in Law'
(1995), 29 U.B.C.L. Rev. 5, at p. 13. Those who perceive it as such
can perhaps take comfort in the rules of statutory interpretation in
that they require the legislature to indicate clearly any desired
retroactive or retrospective effect …”.
In
Gustavson
Drilling (1964) Ltd v
The Minister of National Revenue [1977]
1 SCR 271, cited by the respondents' counsel, the same Court held
at p 279 that:
“The
general rule is that statutes are not to be construed as having
retrospective operation unless such a construction is expressly or by
necessary implication required by the language of the Act. An
amending enactment may provide that it is to be operative with
respect to transactions occurring prior to its enactment. In those
instances, the statute operates retrospectively.”
P.
W. Hogg in Constitutional
Law of Canada
3ed (1992) at p1111 wrote:
“Apart
from s.11(g), Canadian constitutional law contains no prohibition of
retroactive (or ex
post facto)
laws. There is a presumption of statutory interpretation that a
statute should not be given retroactive effect, but, if the
retroactive effect is clearly expressed, then there is no room for
interpretation and the statute is effective according to its terms.
Retroactive statutes are in fact common. The power to enact
retroactive laws, if exercised with appropriate restraints, is a
proper tool of modern government. Section 11(g) diminishes this power
only by excluding the creation of retroactive criminal offences.
Other kinds of laws may still be made retroactive.”
Section
11(g) of the Canadian Charter of Rights is in substance similar to
section 70(1)(k) of the Constitution.
The
transitional provision expressly provided that section 12 of the Act
operated retrospectively. The constitutionality of the
retrospectivity of the transitional provision could not without more
be challenged. To put it simply, unlike criminal liability
retrospective civil liability is not unconstitutional. The
Legislature must be presumed to have applied its mind to the possible
effects of the use of retrospectivity to implement the legislation it
enacted and determined that the benefits of its employment outweighed
the potential for unfairness.
The
argument by Mr
Mpofu
that the transitional provision is invalid, because it had a
financial obligation imposed on the applicants retrospectively,
suggests that the nature of the obligation is a material and
determinant factor in the consideration of the question of the
constitutionality of the retrospective effect of the legislation.
The
correct principle is that there is no constitutional provision which
forbids the Legislature, in the exercise of its powers, to impose
financial obligations retrospectively by means of civil legislation.
The validity of the retrospective effect of legislation cannot be
measured in terms of the nature of the obligation imposed. In the
exercise of its power under section 117(2)(b) of the Constitution,
the Legislature can legislate any subject matter and order
retrospective application of civil legislation as long as doing so is
for the purposes of peace, order and good governance of Zimbabwe. The
Legislature is at liberty to decide whether the civil legislation
enacted is to have retrospective application.
The
fact that the transitional provision ensured that the retrospective
application of the law to the applicants had the effect of imposing a
financial burden in place of a benefit enjoyed under the existing law
is no valid ground for impugning its constitutionality. Every civil
legislation which is retrospectively applied would by nature have the
effect of changing the existing law. Tax laws invariably impose
financial obligations retrospectively on citizens.
RETROSPECTIVITY
AND FUNDAMENTAL HUMAN RIGHTS
Retrospectivity
is a ground for holding civil legislation invalid only if it
contravenes one of the provisions of the Constitution which enshrine
fundamental human rights and freedoms. One of the grounds on which
the alternative case was advanced by the applicants for the alleged
unconstitutionality of the transitional provision
was
that, in retrospectively imposing the new financial obligation on
employers who terminated employees' contracts on notice, the
Legislature impaired the employer's right to terminate the contract
of employment on notice without treating the employee in a similar
manner.
The
contention was that the law of contract provided equal protection to
the employer and employee engaged in a contract of employment by
giving them the freedom to terminate the relationship upon giving
each other the requisite notice. The allegation was that, in
violation of section 56(1) of the Constitution, the retrospective
application of section 12 of the Act by the transitional provision
denies
employers the protection provided to both parties by the law of
contract of the right to terminate the employment relationship on
notice.
Section
44(1) of the Constitution imposes on the Legislature an obligation to
respect, protect, promote and fulfil the fundamental human rights and
freedoms enshrined in Chapter
IV
when exercising the legislative powers in terms of section 117(2)(b)
of the Constitution.
RIGHT
TO EQUAL PROTECTION OF THE LAW
The
gist of the argument presented by Mr
Mpofu
was that the financial obligation imposed on the applicants violates
their right to equal protection of the law because it is imposed
retrospectively under the transitional provision. As with any law,
retrospective legislation enjoys a presumption of constitutionality.
The challenger bears the burden of proving that the retrospective
legislation violates the protection of the fundamental human right or
freedom guaranteed to him or her or it by the Constitution. If
infringement is established and the right or freedom is derogable,
the State has the burden of justifying the limitation of the
fundamental human right or freedom in terms of section 86(2) of the
Constitution.
Section
56(1) of the Constitution provides as follows:
“56
Equality and non-discrimination
(1)
All persons are equal before the law and have the right to equal
protection and benefit of the law.”
It
is common cause that the purpose behind the retrospective application
of the legislation was the protection of employees whose contracts
were terminated on notice from uncompensated loss of employment at
the initiative of the employers. The content of the purpose was the
provision of the mechanism and formula for the payment of
compensation to employees whose contracts were terminated on notice
for loss of employment and the imposition on employers who terminated
the employees' contracts on notice of the obligation to pay the
compensation calculated by reference to length of service. The
purpose was to ensure that the employment that was lost by
termination on notice at the initiative of the employer on or after
17 July 2015 was compensated.
There
is no doubt that the welfare of employees upon termination of
employment on notice is a matter of public interest deserving of
legislative protection. The law cannot be interpreted against the
employees unless the objective is shown to be unconstitutional or the
means chosen for its achievement are disproportionate to it. At no
time did Mr
Mpofu
suggest in the argument advanced to the Court that the purpose of the
retrospective application of the legislation to the applicants was
not legitimate.
The
raison
d'etre
of constitutional law is the human being. Section 56(1) of the
Constitution enshrines three separate but related fundamental human
rights. The rights are: the right to equality before the law; the
right to equal protection of the law; and the right to benefit of the
law.
The
contents of the rights must be available and claimable under any
measure which meets the standard of legality. Article 1 of the
Universal
Declaration of Rights
declares that: “all human beings are born free and equal in dignity
and rights”. Equality is a fundamental human right and a principle
of social justice. Every person is by virtue of being human entitled
to equal access to the remedies, protection and benefits provided
under the law. As all human beings are equal, they are entitled to
equal treatment as such under the law. This idea of equality of human
beings and equal treatment as such underlies all modern, democratic
and humanitarian legal systems.
Whilst
section 56(1) of the Constitution requires respect and protection of
human equality as a foundational value, it does not mean that
identically the same rules of law should be applicable to all persons
in every instance, regardless of differences of factual circumstances
and conditions. Section 56(1) of the Constitution does not protect a
right to identical treatment. The right to equality is violated when
the State makes an unjustified distinction between people or
situations. Section 56(1) of the Constitution is not about formal
equality, as formal equality is already part of the Constitution. The
fundamental principle of the rule of law to the effect that all State
power is bound by law and that everyone is bound by law means that
there is equal application of law since the very nature of law
demands universal application. Section 56(1) of the Constitution
speaks to substantive equality.
Human
beings may be equal yet act differently in different situations or
circumstances. Need may arise for the enactment of a law, the
specific object of which is the prohibition of the recurrence of
harmful acts to protect public interest. A Legislature empowered to
make laws on a wide range of subjects must of necessity have the
power of making special laws to attain particular objectives. Such a
law would have a specific objective and be aimed only at a section of
people who would commit the prohibited conduct. For the reason of the
specific objective and the nature of the prohibited acts, such a law
would be based upon a creation of a class of people to which it
applies. By exclusion, it would create a different class of people to
which it does not apply.
The
Legislature has undoubtedly a wide field of choice in determining and
classifying the subject matter of its laws. It must be presumed that
a Legislature understands and correctly appreciates the needs of its
own people. The power to classify or particularise objects of
legislation must, in the nature of things, be left to the law-making
authorities.
REASONABLE
DIFFERENTIATION AND EQUAL PROTECTION OF THE LAW
The
right to equal protection of the law enshrined in section 56(1) of
the Constitution does not prohibit the enactment of law based on
reasonable differentiation of groups of people for different
treatment in respect of the purpose of the legislation. Section 56(1)
of the Constitution leaves it to the courts to decide when a
classification of persons is prohibited under its provisions. The
doctrine of classification evolved by the courts is not a paraphrase
of section 56(1) of the Constitution. It is merely a judicial formula
for determining whether the legislative or executive action in
question is arbitrary and therefore a violation of the
right
of the claimant to equal protection of the law. See
E P Royappa v
State
of Tamil Nadu 1974
SCR 248.
If
unequal treatment of various groups of people addressed by the
retrospective legislation is to be upheld under section 56(1) of the
Constitution, there must be differences of such a type and weight
that they can justify the difference of treatment. Unequal treatment
and justification must be adequately related to each other.
The
purpose of the right to equal protection of the law enshrined in
section 56(1) of the Constitution is to ensure that those in similar
circumstances and conditions who are the subjects of the legislation
are treated equally, both in the privileges and in the liabilities
imposed. There should be, as between them, equal protection of the
law. The right does not require equal treatment of people who are in
different circumstances. The difference must exist, characterised by
objective factors relevant to the achievement of the legislative
purpose. The different treatment must correspond to the nature of the
difference.
No
legislation in any practical sense is possible without some kind of
classification. The very nature and purpose of every legislation
depend on the choice of some subject to the exclusion of the rest and
some arena for its operation. This selective quality is inherent and
implicit in every legislation. The constitutional guarantee of the
right to equal protection of the law cannot be understood and
construed in such a manner as to make legislation impossible for all
practical purposes. To what class or classes of persons or things a
statute should apply is, as a general rule, a legislative question.
The Legislature is the best judge of the needs of the particular
classes.
Given
that the criterion for the imposition of the financial obligation was
termination of an employee' contract on notice and that the object
of the obligation retrospectively imposed was payment of compensation
for loss of employment, there had to be a differentiation of
treatment between employers and employees. The effect of the
retrospective application of the statute had to be the classification
of people in employment relationships into employers who terminated
employees' contracts on notice on or after 17 July 2015 and the
employees whose contracts were terminated on notice.
As
long as the retrospective application of the change is rationally
related to a legitimate legislative purpose, the constraints of equal
protection of the law have been honoured even when the legislation
imposes a new obligation based on past acts.
It
readily becomes apparent that retrospectivity of the effect of an
obligation alone does not make it a source of infringement of the
fundamental right. The right to equal protection of the law enshrined
in section 56(1) of the Constitution does not
prohibit
legislative differentiation of people resulting from retrospective
imposition of a new obligation on members of one class for the
benefit of members of the other class, provided the classification is
in respect of a legitimate purpose and is based on reasonable and
objective criteria. In other words, such a retrospective
differentiation of treatment of persons who are the subjects of the
legislation can be undertaken by the Legislature without infringing
the right to equal protection of the law enshrined in section 56(1)
of the Constitution.
Differentiation
of treatment legitimately aimed at ameliorating the economic
conditions of a disadvantaged group like employees whose contracts
are terminated on notice without compensation for loss of employment
cannot be held to be in contravention of section 56(1) of the
Constitution simply because it is retrospectively imposed on the
employers who terminated the employees' contracts on notice.
Article
26 of the International
Covenant on Civil and Political Rights
(“ICCPR”)
recognises and protects the right to equal protection of the law by
providing as follows:
“All
persons are equal before the law and are entitled without any
discrimination to the equal protection of the law. In this respect,
the law shall prohibit any discrimination and guarantee to all
persons equal and effective protection against discrimination on any
ground such as race, colour, sex, language, religion, political or
other opinion, national or social origin, property, birth or other
status.”
Commenting
on non-discrimination as it relates to the right to equal protection
of the law, the United Nations Human Rights Committee on the ICCPR
in General Comment 18 adopted on 10 November 1989 stated as follows:
“13.
Finally, the Committee observes that not every differentiation of
treatment will constitute discrimination, if the criteria for such
differentiation are reasonable and objective and if the aim is to
achieve a purpose which is legitimate under the Covenant.”
Judge
Tanaka
of the International Court of Justice, giving a dissenting opinion in
the South-West
Africa Cases (Ethiopia v
South Africa; Liberia v
South Africa); Second Phase,
International Court of Justice (ICJ) 18 July 1966, said:
“To
treat different matters equally in a mechanical way would be as
unjust as to treat equal matters differently. We know that law serves
the concrete requirements of individual human beings and societies.
If individuals differ one from another and societies also, their
needs will be different, and accordingly, the content of law may not
be identical. Hence is derived the relativity of law to individual
circumstances. …
We
can say accordingly that the principle of equality before the law
does not mean the absolute equality, namely equal treatment of men
without regard to individual, concrete circumstances, but it means
the relative equality, namely the principle to treat equally what are
equal and unequally what are unequal. …
The
question is, in what case equal treatment or different treatment
should exist. If we attach importance to the fact that no man is
strictly equal to another and he may have some particularities, the
principle of equal treatment could be easily evaded by referring to
any factual and legal differences and the existence of this principle
would be virtually denied. A different treatment comes into question
only when and to the extent that it corresponds to the nature of the
difference. To treat unequal matters differently according to their
inequality is not only permitted but required. The issue is whether
the difference exists. Accordingly, not every different treatment can
be justified by the existence of differences, but only such as
corresponds to the differences themselves, namely, that which is
called for by the idea of justice – 'the principle to treat equal
equally and unequal according to its inequality, constitutes an
essential content of the idea of justice' (Goetz Hueck, Der
Grundsatz der Gleichmassigen Behandlung in Privatrecht,
1958, p. 106) [translation].
…
Briefly,
a different treatment is permitted when it can be justified by the
criterion of justice. One may replace justice by the concept of
reasonableness generally referred to by the Anglo-American school of
law. Justice or reasonableness as a criterion for the different
treatment logically excludes arbitrariness. The arbitrariness which
is prohibited, means the purely objective fact and not the subjective
condition of those concerned. Accordingly, the arbitrariness can be
asserted without regard to motive or purpose.
…
all
human beings are equal before the law and have equal opportunities
without regard to religion, race, language, sex, social groups, etc.
As persons they have the dignity to be treated as such. This is the
principle of equality which constitutes one of the fundamental human
rights and freedoms which are universal to all mankind. On the other
hand, human beings, being endowed with individuality, living in
different surroundings and circumstances are not all alike, and they
need in some aspects politically, legally and socially different
treatment. Hence the above-mentioned examples of different treatment
are derived. Equal treatment is a principle but its mechanical
application ignoring all concrete factors engenders injustice.
Accordingly, it requires different treatment, taken into
consideration, of concrete circumstances of individual cases. The
different treatment is permissible and required by the considerations
of justice; it does not mean a disregard of justice.
…
Different
treatment must not be given arbitrarily; it requires reasonableness,
or must be in conformity with justice, …”.
McCrudden
C and Prechal S, in an article entitled “The
Concepts of Equality and Non-Discrimination in Europe: A practical
approach”,
European Network of Legal Experts in the Field of Gender Equality,
November 2009, refer to the Aristotelian conception of equality
applied in Europe which has two dimensions: like cases should be
treated alike, and different cases should be treated differently. An
example of Cyprus is given where it is stated that the Supreme
Constitutional Court of that country accepts that the:
“…
right
to equality is subject to reasonable differentiations between
inherently different situations. On the other hand, arbitrary
unreasonable differentiations not justified by the intrinsic nature
of things, will contravene the equality principle.”
The
authors go on to write that:
“In
France, the Constitutional Council has held that the principle of
equality does not preclude legislation from laying down different
rules for categories of persons in different situations or
legislation from laying down different rules where the difference of
treatment is justified by general interest and where the difference
of treatment is compatible with the purpose of the legislation. In
Poland, too, the Constitutional Court has interpreted the
constitutional principle of equality to mean that all subjects
characterised by a certain feature or belonging to a certain category
must be treated equally, without any differentiation, neither in a
discriminatory manner, nor more favourably.”
The
acceptance of different treatment of people in different positions as
a means to achieve equality in India was made clear in the case of
V.M. Syed Mohammad and Company v
The State of Andhra
1954 AIR 314, [1954] SCR 1117 at p1120. The right to equal protection
of the law in India is provided for under Article 14 of its
Constitution,
which provides that the State shall not deny to any person equality
before the law or the equal protection of the laws within the
territory of India. In
V.M. Syed Mohammad and Company supra
a complaint was made to the effect that an impugned Act singled out
for taxation purchasers of certain specified commodities only but
left out purchasers of all other commodities. In interpreting the
right to equal protection of the law, the court stated as follows:
“It
is well settled that the guarantee of equal protection of laws does
not require that the same law should be made applicable to all
persons. Article 14, it has been said, does not forbid classification
for legislative purposes, provided that such classification is based
on some differentia having a reasonable relation to the object and
purpose of the law in question. As pointed out by the majority of the
Bench which decided Chiranjitlal
Chowdhury's case
([1950] S.C.R. 869), there is a strong presumption in favour of the
validity of legislative classification and it is for those who
challenge it as unconstitutional to allege and prove beyond all doubt
that the legislation arbitrarily discriminates between different
persons similarly circumstanced. There is no material on the record
before us to suggest that the purchasers of other commodities are
similarly situated as the purchasers of hides and skins.”
In
the same jurisdiction, the court in the case of Budhan
Choudhry v
The State of Bihari [1955]
1 SCR 1040 accepted that the creation of classes for purposes of
legislation is legal, which is the same as the treatment of different
people in different positions. The court said:
“It
is, therefore, not necessary to enter upon any lengthy discussion as
to the meaning, scope and effect of the article in question. It is
now well-established that while Article 14 forbids class legislation,
it does not forbid reasonable classification for the purposes of
legislation. In order, however, to pass the test of permissible
classification two conditions must be fulfilled, namely, (i) that the
classification must be founded on an intelligible differentia which
distinguishes persons or things that are grouped together from others
left out of the group and (ii) that that differentia must have a
rational relation to the object sought to be achieved by the statute
in question. The classification may be founded on different bases;
namely, geographical, or according to objects or occupations or the
like. What is necessary is that there must be a nexus between the
basis of classification and the object of the Act under
consideration.… It is also well established that the Legislature is
not bound to extend a legislation to all cases which it might
possibly reach. It may take into consideration practical exigencies,
it may recognise degrees of harm, and confine the legislation where
the need is greatest, and that a law which hits evil where it is most
felt will not be overthrown because there are other instances to
which it might have been applied; that the Legislature may proceed
cautiously step by step; …”.
In
America, the right to equal protection of the law is found in the
Fourteenth Amendment to the United States Constitution under section
1. Among other things, the section provides that no State in America
shall deny to any person within its jurisdiction the equal protection
of the laws.
As
far back as 1897 the United States Supreme Court in the case of
Gulf, Colorado & Santa Fe Ry. Co. v
Ellis 165
U.S. 150 (1897) held that equal protection of the laws means
subjection to equal laws applying alike to all in the same situation.
In 1910 the same court in Southern
Railway Co. v
Greene,
216 U.S. 400 (1910) made the point that while reasonable
classification is permitted, without doing violence to the equal
protection of the laws, such classification must be based upon some
real and substantial distinction, bearing a reasonable and just
relation to the things in respect to which such classification is
imposed. Classification cannot be arbitrarily made without any
substantial basis. Arbitrary selection cannot be justified by calling
it classification.
Currie
& de Waal: ”The
Bill of Rights Handbook”
6ed Juta
at
p218 explain that classification of people for purposes of
legislation does not violate the right to equal protection when it is
based on reasonable grounds. The learned authors state as follows:
“The
equality right does not prevent the State from making classifications
and from treating some people differently to others. This is because
the
principle of equality does not require everyone to be treated the
same, but simply that people in the same position from a moral point
of view should be treated the same. Laws may therefore classify
people and treat them differently to other people for a variety of
legitimate reasons.
Indeed, laws almost inevitably differentiate between persons. It
is impossible to regulate the affairs of the inhabitants in a country
without differentiation and without classifications that treat people
differently and that impact on people differently. Not every
differentiation can therefore amount to unequal treatment.
If it did, the courts could be called on to review almost the entire
legislative programme.” (my emphasis)
In
Prinsloo
v Van der Linde
1997 (3) SA 1012 (CC) the Constitutional Court of South Africa
explained that mere differentiation without a rational relationship
to the legislative purpose and not based on objective criteria would
constitute a violation of the right to equal protection of the law.
The court said at pp 1024G-1025B:
“In
regard to mere differentiation the constitutional State is expected
to act in a rational manner. It should not regulate in an arbitrary
manner or manifest 'naked preferences' that serve no legitimate
governmental purpose, for that would be inconsistent with the rule of
law and the fundamental premises of a constitutional State. The
purpose of this aspect of equality is, therefore, to ensure that the
State is bound to function in a rational manner ….
Accordingly,
before it can be said that mere differentiation infringes section 8
[IC] (now section 9(1) of the South African Constitution) it must be
established that there is no rational relationship between the
differentiation in question and the government purpose which is
proffered to validate it. In the absence of such rational
relationship the differentiation would infringe section 8.”
From
the case law and commentaries from
other
jurisdictions, it can be concluded that for justice to be done,
classes may be created retrospectively by a law
which
appears to favour one class over another. The classification must
have a rational relation to the purpose sought to be achieved by the
legislation. The classification must be based on reasonable grounds
that are related to the matters marking the differences in the
circumstances of the people classified. In other words, when a law
retrospectively creates a classification, its purpose must clearly
and logically be beneficial. Good reason must exist for the
instrumentality of the retrospective classification. Once
classification is done for the legitimate purpose of legislation and
is based on reasonable and objective criteria, the law cannot be said
to violate one's right to equal protection of the law.
The
transitional provision created two classes. The first class was that
of employees whose contracts of employment were terminated on notice
after the Zuva
Petroleum
judgment. They were to benefit from the payment of the minimum
retrenchment packages under section 12 of the Act. The second class
was that of the employers upon whom the obligation to pay the
retrenchment packages to the employees whose contracts were
terminated on notice was imposed.
The
Legislature was free to classify employers who terminated employees'
contracts on notice. It was free to choose to impose the financial
obligation on them. The Legislature was also free to classify
employees whose contracts were terminated on notice and grant them
the benefit of compensation for loss of employment. The Legislature
reacted to the direct adverse impact on the economic lives of
employees whose contracts were terminated on notice at the initiative
of employers who exercised their right to terminate the contracts of
employment on notice.
The
applicants, who belong to a class of persons obliged to pay minimum
retrenchment packages, cannot allege unequal protection of the law
against employees who are in a different class from theirs. The
employees whose contracts were terminated on notice are not
comparable to employers who terminated their contracts on notice for
the purpose of the legislation retrospectively applied to the
parties. The employer cannot in the circumstances claim equality with
the employee whose employment he or she or it
terminated
on notice.
Although
the applicants suffered a disadvantage by having the financial
obligation imposed on them retrospectively, they did not share
relevant characteristics with the employees whose contracts they
terminated on notice for the purposes of the legislation. The
applicants were not similarly situated as the employees whose
contracts they terminated on notice for the purposes of the
retrospective imposition of the financial obligation to pay the
employees whose contracts were terminated the minimum retrenchment
package. Equality means sameness in treatment of people who are
similarly situated or placed. Only when people in a similar
circumstance are treated differently can it be alleged that the right
to equal protection of the law has been violated. That was not the
position in the present case.
The
applicants were treated differently from the employees whose
contracts they terminated on notice because of the consequences of
their actions of terminating the employees' contracts on notice
without paying them compensation for loss of employment. The right to
terminate employees' contracts on notice exercised on or after 17
July 2015 was retained by the retrospective application of the
legislation imposing the new financial obligation on the employers
who terminated employees' contracts on notice. It became a
statutory right, exercisable where it has been specifically provided
for in the situations prescribed under section 12(4a) of the Act.
The
retrospective application of the law ensured that both parties were
treated fairly, in that whilst allowing the employer and employee to
terminate the employment relationship on notice there was a balanced
distribution of the benefits and burdens resulting from the
termination of employment at the initiative of the employer. The
Court has to view the effect of retrospective application of section
12 of the Act holistically, taking into account all the relevant
circumstances that faced the Legislature at the time it enacted the
legislation.
The
applicants were treated in the same manner for the purposes of the
retrospective application of the statute as all the employers who
terminated employees' contracts on notice on the authority of the
Zuva
Petroleum
judgment. In the
Chiranjitlal
Chowdhury
case supra
the Supreme Court of India held that if a law deals equally with all
of a certain well-defined class it is not obnoxious. The law is not
open to the charge of a denial of equal protection on the ground that
it has no application to other persons, for the class for whom the
law has been made is different from other persons. By promulgating
the transitional provision, all that the Legislature did was to
adjust the distribution of the benefits and the burdens of
termination of employment on notice.
The
retrospective application of the law changed the past legal
consequences of the conduct of terminating a contract of employment
on notice without changing the past conduct itself. The financial
obligation was retrospectively imposed on the employers who
terminated their employees' contracts on notice solely for the
purpose of providing a means for the achievement of the legitimate
purpose of protecting employees whose contracts were terminated on
notice from the economic hardships of loss of employment caused by
the employers. Retrospective entitlement to the minimum retrenchment
package
was
a right exclusively designed for the protection of employees whose
contracts were terminated on notice on or after 17 July 2015.
The
retrospective application of section 12C(2) of the Act was concerned
with the detrimental consequences of the exercise of the right to
terminate contracts of employment on notice by the employers. The
less comparable the situations are, the more inequality is justified
and allowed. It is for the Legislature not the Court to decide who is
comparable and in what regard. The employers would naturally not
suffer the damage of loss of employment. They would not need
compensation for loss of employment for the simple reason that they
are not employees.
The
subject matter of the legislation required that employers and
employees be treated differently. The retrospective distinction
between employers and employees in the circumstances was relevant.
The imposition of burdens on some and benefits on others is an
integral aspect of the process of governance. It will frequently be
true that retrospective application of a new statute would vindicate
its purpose more fully. Landgraf
v USI
Film Products
511 US 244 (1994) at 285-286.
All
that the legislation did was to impose a retrospective obligation to
conduct that was past, justifiably so, to achieve fairness and
justice. The Legislature took the view that the circumstances of the
cases of the terminations of contracts of employment on notice on or
after 17 July 2015 revealed unfair results in the nature of the
distribution of the benefits and burdens of the terminations between
the employers and employees.
The
impact of the legislation given retrospective effect on the
employment relationship defined the line of interaction between
private and public interest in termination of contracts of employment
on notice at the initiative of the employer. The legitimate
legislative purpose of protecting employees, whose contracts were
terminated on notice from the harm of loss of employment for no fault
of their own, ensured that the public interest in the fundamental
values of fairness and justice which underlay the employment
relationships ought to have been taken into account by employers in
terminating employment on notice. Acting in accordance with the
fundamental principles of fairness and justice, the employers would
have realised that long service employees deserved more than a
mere
three months' notice pay. Long-serving employees would have become
what they were in society because of their work. Being identified by
the work they did would have become a matter of dignity for them
deserving of due respect. Moreover, the longer their period of
service, the more they would have contributed to the enhancement and
wellbeing of their employer's business.
Trampling
on
the
workers' economic interests in the termination of employment on
notice beyond the mere token payments equivalent to three months'
salaries or wages related to the notice period was bound to trigger
socio-economic consequences with retrospective effect. There is no
doubt that employers who terminated employees' contracts on notice
in the circumstances caused that which created the compelling social
need for the enactment of the legislation with retrospective effect.
The employers did not need to be told that the law required that
labour matters must be handled fairly and justly. The Legislature
must have been aware of the fact that employers who terminated
employees' contracts on notice following the Zuva
Petroleum
judgment did so because they believed it was cheap and easy to
dispose of employees that way.
In
fact, the Zuva
judgment was misinterpreted to mean that an employer could terminate
the employment contracts of any number of employees at will. There
were other provisions in the Act which prohibited the wholesale
termination of employment. For example, section 12C of the Act,
before it was amended, provided that the termination of employment of
five or more people amounted to retrenchment and that retrenchment
legislation was to apply.
The
need for retrospectivity of the legislation was particularly
compelling in this case because the harmful consequences of the
very
conduct in respect to which it is claimed a vested right arose is one
of those which motivated the Legislature to act. The cause of the
amendment to section 12 of the Act was the social, political and
economic impact of the termination of contracts of employment on
notice at the initiative of employers without compensation to
employees for loss of employment on or after 17 July 2015. The
amendment was a direct result of those past events.
The
Legislature had the substantive power to act retrospectively. The
public interest in the effectiveness of the legislative scheme
clearly permitted the elimination of pre-existing evils which pointed
to
the
very need for the legislation. The continued existence of the social
evils of termination of employment on notice at the initiative of the
employer without compensation to the employee for loss of employment
would impair the effectiveness of the statutory scheme. See Benner
v Canada
(Secretary of State)
[1997] 1 SCR 358.
Ms
Munyoro
was on strong ground when she argued that the Legislature had to
relate the retrospective application of the financial obligation to
the mischief that gave rise to the need for enactment of the
legislation. The unprecedented termination of large numbers of
employees by employers on notice on the authority of a judgment they
took to be a windfall had no substantial equity in it. The statute
was not conceived and passed in a vacuum. It had a rational basis in
the objective circumstances which would have caused any reasonable
Legislature to enact such a law to remedy the situation.
The
welfare and fairness in the treatment of the employees whose
contracts were terminated on notice following the Zuva
Petroleum
judgment were matters of public concern. Fairness and justice could
only be extended to the employees whose contracts were terminated on
notice following the Zuva
Petroleum
judgment through the retrospective application of the legislation
which imposed on any employer who terminated a contract of employment
on notice an obligation to pay the employee whose contract was
terminated on notice the minimum retrenchment package calculated by
reference to the length of service.
The
interest in the retrospective application of the principle of payment
of what was due to each employee whose contract was terminated on
notice in the form of compensation for loss of employment according
to his or her length of service was the vindication of fairness and
justice the employers ought to have observed in terminating
employees' contracts on notice. Ultimately the question for
determination is whether the retrospective imposition of the
financial obligation on employers who terminated employees'
contracts on notice without payment of compensation for loss of
employment based on length of service was an unfair or irrational
exercise of legislative power. Consideration of all the circumstances
of the case shows that it was not.
A
system that allows an employer to just wake up one bad day and decide
for undisclosed reasons to terminate a contract of employment by
giving notice of intention to do so without any regard to the need to
compensate the employee for loss of employment is fundamentally
unfair.
Without
retrospective effect, the achievement of the legislative purpose
would have been affected to a significant degree. Not giving
retrospective effect to the legislation would have defeated the
legislative purpose. Reasonable exercise of legislative powers of the
State cannot be hampered by pre-enactment occurrences. The applicants
failed to show that their rights enshrined in section 56(1) of the
Constitution were violated by the retrospective application of
section 12C(2) of the Act.
There
was no violation of the equal protection of the right to terminate a
contract of employment on notice enjoyed by the employer and employee
as parties to the contract of employment. By its very nature, the
financial obligation imposed on the employer to pay the employee
whose contract was terminated on notice compensation for loss of
employment could not be imposed on the employee. The employers who
terminated their employees' contracts on notice had to be treated
differently from their employees for the purposes of the
retrospective application of the legislation.
A
reasonable classification, which by definition is a differentiation
of treatment of persons based on objective criteria (none of the
prohibited grounds of discrimination) and ensures for the legitimate
purpose behind the statute that members of the class to which the
legislation applies are treated the same, protects the right to equal
protection of the law.
UNFAIR
LABOUR PRACTICE
The
applicants also argued that the operation of the transitional
provision infringed their right to fair labour practices protected by
section 65(1) of the Constitution. It was their view that the ex
post facto
imposition of the financial obligation upon them to pay the employees
whose contracts they had terminated on notice the minimum
retrenchment package meant that the employees were being paid when
they had not worked. In essence they argued that paying people who
had not worked was not a fair labour practice.
Section
65(1) of the Constitution provides as follows:
“65
Labour Rights
Every
person has the right to fair and safe labour practices and standards
and to be paid a fair and reasonable wage.”
Section
65(1) of the Constitution guarantees in a wholesome fashion the right
to fair labour practices. The right to fair labour practices is
conferred on “every person”. It is a labour right claimable by a
person in an employment relationship. The word “person” is
defined in section 332 of the Constitution to mean an individual or a
body of persons, whether incorporated or unincorporated.
In
the founding affidavit the applicants state:
“…
Sight
cannot be lost of the fact that this kind of conduct constitutes an
unfair labour practice as defined in section 65 of the Constitution
of Zimbabwe.
The whole process lacks elements of basic fairness.”
(my
emphasis)
Section
2, as read with Part III, of the Act gives effect to section 65(1) of
the Constitution. Section 2 of the Act defines “unfair labour
practice” as an unfair labour practice specified in Part III, or
declared to be so in terms of any other provision of the Act. The Act
codifies what the Legislature considered to be actions or omissions
which if committed by the employer, a trade union, a workers'
committee and in certain circumstances other persons against an
employee would amount to unfair labour practices.
In
Boniface
Magurure and 63 Ors v Cargo Carriers International Hauliers (Pvt) Ltd
t/a Sabot CCZ-15-16
the Court held that the Act only defines those labour practices which
if proved would amount to unfair labour practices in violation of the
constitutional right to fair labour practices. These are acts
committed as a matter of practice by an employer or employee contrary
to what is required by the law to be done. For a person to allege an
unfair labour practice as a violation of the right enshrined in
section 65(1) of the Constitution, the conduct complained of must
constitute one of the acts or omissions listed by the Act as unfair
labour practices.
The
general requirements that must be satisfied before conduct, positive
or otherwise, can be held to fall within the definition of unfair
labour practice are that -
(i)
The “act or omission” must constitute a “labour
practice”.
An “act” or “omission” may refer to either a single act or a
single inaction which may or may not have lasting consequences and
having occurred during the subsistence of the employment
relationship, that is, in the period between the conclusion of the
contract of employment and its termination. The word “practice”
suggests that the employer must have actually done something or
declined to do something.
(ii)
The unfair labour practice can arise only if the employer does
something or refrains from doing something (“act or omission”).
In Zimbabwe the employer must have actually done something listed in
Part III of the Act, which act or omission the employee claims the
employer should have done or should have refrained from doing.
(iii)
The
unfair labour practice must be between an employer and an employee.
In Zimbabwe, however, the unfair labour practice may be between the
employee and a trade union, a workers' committee or any other
person for sexual conduct amounting to an unfair labour practice.
(iv)
The unfair labour practice must involve one of the practices
specified, for our purposes listed in Part III of the Act or declared
to be so in terms of any other provision of the Act; and
(v)
The act or omission complained of must be unfair.
See
John Grogan: “Employment
Rights”
1ed Juta pp93-97.
John
Grogan supra
states at p98 that:
“Considerations
of fairness normally arise in situations where one person has power
to dispense or deny favours to others. The fair labour practice is
concerned with the kind of favours employers are able to bestow on
employees – positions, benefits and sanctions for ill-discipline.
Relief for unfair labour practices is designed to ensure that
employers do not abuse their power to bestow or withhold favours and
benefits, or impose discipline in an unfair manner. In this sense,
the right to fair labour practices is a check on employer
unilateralism.”
In
the founding affidavit the applicants said:
“32.
The effect of the amendment is to have implications on (the)
applicants' right to the protection of the law as set out in
section 56(1) of the Constitution. This is because the law opens up
(the) applicants to a monetary claim in the absence of a sound legal
or commercial basis. It
also constitutes an unfair labour practice in violation of section
65(1) of the Constitution in that it requires an employer to pay from
monies that are not in existence.
… ”. (my emphasis)
What
is complained of by the applicants as unfair labour practice is the
retrospective imposition by the Legislature on employers who
terminated their employees' contracts on notice of the obligation
to pay them a minimum retrenchment package. The employees would be
receiving payment of minimum retrenchment packages as a matter of
right in terms of section 12C of the Act. That cannot be called an
unfair labour practice. The fact that an employer has no money with
which to discharge the obligation to the employee whose contract was
terminated on notice does not
make
the obligation invalid.
Section
12C(2) of the Act is consistent with international best practices.
The International Labour Organisation (“ILO”) Convention 158
(“the Convention”)
contains
principles which have been accepted at international level on how
employees whose contracts of employment have been terminated on
notice at the initiative of employers must be treated under national
law.
Article
12(1) of the Convention provides:
“12(1) A
worker whose employment has been terminated shall be entitled, in
accordance with national law and practice, to –
(a)
a severance allowance or other separation benefits, the amount of
which shall be based, inter
alia,
on length of service and the level of wages and paid directly by the
employer …”.
Section
12C(2) of the Act gives effect to the purpose of Article 12(1) of the
Convention of ensuring that workers whose employment has been
terminated on notice at the initiative of the employer are afforded
some form of income protection to mitigate the adverse effects of
termination of employment.
It
is a recognised principle of labour relations reflective of social
justice that when employment is terminated for reasons other than
misconduct, compensation for long service rendered is paid. Payment
of a severance package based on length of service to an employee
whose contract was terminated for a reason other than misconduct has
always been viewed as a means of ensuring that the employee has a
soft and safe landing after losing employment.
The
adoption of principles of Article 12(1)(a) of the Convention is an
important factor which serves to show that the decision to
retrospectively apply the financial obligation on employers who had
terminated employees' contracts on notice on or after 17 July 2015
to pay them the minimum retrenchment package based on length of
service was not based on arbitrariness. It was based on
internationally acceptable legal standards.
The
provisions of Article 12(1)(a) of the Convention are relevant in
testing the constitutionality of the retrospective application of
section 12 of the Act to the applicants. An examination of the
provisions of section 12C(2) of the Act shows that they closely
reflect the requirements of Article 12(1)(a) of the Convention. The
Convention contains universally accepted norms. It constitutes a
touchstone against which the notion of fairness may be gauged. This
is not to suggest that the notion of fairness is exclusive of
employers' legitimate commercial interests. It indicates that a
central purpose of modern employment law is to guarantee the
protection of workers even at the time of termination of employment
on notice at the initiative of the employer.
The
applicants were aware at the time they terminated employees'
contracts on notice that the law required an employer who terminated
employees' contracts for reasons of retrenchment to pay them
severance packages calculated on the basis of length of service. The
retrospective financial obligation imposed on the applicants and the
other employers similarly situated was measured in terms of a formula
substantially similar to that relating to the calculation of
severance packages. The imposition of the financial obligation on
employers who terminated employees' contracts on notice to pay the
minimum retrenchment package based on the length of service was not
disproportionate to the applicants' experience.
The
applicants want to ignore the fact that the principle behind Article
12(1)(a) of the Convention, the law governing retrenchments of
employees, with which they are familiar, and the retrospective
application of the financial obligation on them under the
transitional provision, is that the length of service designates
value independent of remunerated services.
Section
65(1) of the Constitution is not applicable. It is not the conduct of
the employer or the employee which is under attack. It is the law
itself, the validity of which is under attack because it
retrospectively imposed the financial obligation on employers who
terminated their employees' contracts on notice to pay them minimum
retrenchment packages calculated by reference to length of service.
The
Legislature, as an arm of Government responsible for making laws, is
clearly not envisaged by the Act as part of those who can commit an
unfair labour practice. Unfair labour practice is conduct which is
prohibited by law. It can only be committed by the employer in
respect of the employee and his or her interests or by the employee
in respect of the employer and his or her or its interests.
Payment
of a severance package based on length of service to an employee
whose contract was terminated for reasons other than misconduct
cannot constitute an unfair labour practice within the meaning of
section 65(1) of the Constitution. The applicants' allegation is
clearly without legal basis. There was no violation of the right to
fair labour practices.
COMPULSORY
DEPRIVATION OF PROPERTY
The
applicants alleged that the transitional provision infringes their
right to property enshrined in section 71(2) and protected under
section 71(3) of the Constitution. Section 71(2) and 71(3) provide as
follows:
“71
Property Rights
(1)…
(2)
Subject
to
section
72,
every
person
has
the
right,
in
any
part
of
Zimbabwe,
to
acquire,
hold,
occupy,
use,
transfer,
hypothecate,
lease
or
dispose
of
all
forms
of
property,
either
individually
or
in
association
with
others.
(3)
Subject
to
this
section
and
to
section
72,
no
person
may
be
compulsorily
deprived
of
their
property
except
where
the
following
conditions
are
satisfied
-
(a)
the
deprivation
is
in
terms
of
a
law
of
general
application;
(b)
the
deprivation
is
necessary
for
any
of
the
following
reasons
-
(i)
in
the
interests
of
defence,
public
safety,
public
order,
public
morality,
public
health
or
town
and
country
planning;
or
(ii)
in
order
to
develop
or
use
that
or
any
other
property
for
a
purpose
beneficial
to
the
community;”.
The
applicants' case was that, by operation of the transitional
provision, they were made to incur a financial obligation which they
were not required to fulfil at the time they terminated the
employment relationships with former employees on notice. They argued
that, as a result of the retrospective imposition of the obligation
to pay the employees whose
contracts were terminated
the minimum retrenchment package, they were being compulsorily
deprived of private property in the form of money in violation of
section 71(3) of the Constitution.
The
retrospective imposition of the financial obligation on employers who
terminated employees' contracts on notice on or after 17 July 2015
to pay the minimum retrenchment package based on length of service
has already been held to be constitutional. The question is whether
the action constitutes compulsory deprivation of property within the
meaning of section 71(3) of the Constitution.
There
is a distinction between compulsory deprivation and compulsory
acquisition of private property by the State. Deprivation does not
necessarily amount to acquisition or taking away of property by the
State. It may be confined to the imposition of restrictions on the
use, enjoyment or exploitation of the private property.
In
that case, deprivation must be by a law of general application and be
for the purpose of one of the public interests listed in section
73(1)(b) of the Constitution. Where the compulsory deprivation
involves the acquisition or taking away or dispossession of private
property, there is expropriation.
It
cannot be disputed that acquisition means and implies the acquiring
of the entire title of the expropriated owner, whatever the nature or
extent of that title might be. The whole bundle of rights which were
vested in the original holder would pass on acquisition to the
acquirer, leaving nothing in the former. Expropriation requires the
payment of a fair and adequate compensation. In that case, all the
requirements of validity of the law prescribed under section 71(3) of
the Constitution must be met.
Whichever
way one looks at the facts of this case, section 71(3) of the
Constitution is not applicable, whether in the broad sense of
compulsory deprivation or the narrow meaning of expropriation. There
was no retrospective compulsory deprivation of vested rights in
property. The retrospective imposition of the financial obligation on
employers who terminated their employees' contracts on notice to
pay them the minimum retrenchment package as compensation for loss of
employment cannot be passed as compulsory deprivation of employers of
private property in the form of money by the State. There is
obviously no taking of money from the employers by the State.
The
objective of the retrospective imposition of the financial obligation
on employers who terminated employees' contracts on notice to pay a
minimum retrenchment package was not the taking of the employers'
money. There was a pre-determined liability by the employer to the
employee whose
contract was terminated for
damages caused by the loss of employment as a result of termination
on notice. Compulsory deprivation of property prohibited under
section 71(3) of the Constitution would not be premised on a
pre-determined liability for a debt owed by one person to another. It
is clear from the provisions of section 71(3) of the Constitution
that the right to property is protected against compulsory
deprivation by the State.
The
mechanism by which the retrospective application of the financial
obligation on the applicants on account of their having terminated
employees' contracts on notice during the relevant period is unlike
an act of deprivation of the applicants of specific and identified
property. It would be incongruous to call the effect of the
retrospective application of the obligation to pay compensation to
employees whose
contracts were
terminated on notice deprivation of property within the meaning of
section 71(3) of the Constitution.
The
transitional provision gives retrospective effect to legislation that
simply imposes an obligation on an employer, the content of which is
payment of the minimum retrenchment package to the employee whose
contract was
terminated on notice as compensation for the loss of employment. The
retrospective application of the obligation did not target a specific
property interest, nor did it depend upon any particular property for
the operation of the statutory mechanism. The Government took nothing
for its own use. It imposed an obligation on employers which was
within its legislative powers to impose. The money was to be paid to
employees whose
contracts were
terminated on notice.
The
retrospective application of section 12C(2) of the Act placed the
responsibility of bearing the burden of loss of employment by the
employee whose
contract was
terminated on notice fairly on those who would have caused the loss.
It is not a burden that should in fairness and justice have been
borne by the public as a whole. The employers who terminated
employees' contracts on notice would have benefitted from the
fruits of their labour.
The
financial obligation imposed on the employers is owed to the
employees whose
contracts were
terminated on notice. No specific amount of money is represented by
the obligation. The law provides a formula which the parties must use
to arrive at the specific amount of money to be paid.
An
employer who terminated an employee's contract on notice is placed
under an obligation retrospectively to assess the value of the
entitlement of the employee to compensation for loss of employment
based on length of service. The payment to the employee by the
employer is made after calculation of what is due and payable as
damages for loss of employment at the initiative of the employer. The
money the employer would have had to pay to the employee whose
contract of employment was terminated on notice is a measure of the
damages for loss of employment caused by the employer.
It
would be absurd to say that Government should pay the employer
compensation for the money paid to the employee for loss of
employment, which payment it would be bound to pay if there was
expropriation. The employer may even not pay the money if he or she
or it successfully pleads financial incapacity and consequent
inability to pay the minimum retrenchment package to the employment
council established for the undertaking or, if there is no employment
council for the undertaking concerned, the Retrenchment Board, and
gets an exemption from the obligation to pay the full minimum
retrenchment package or any part of it.
Payment
by money was simply the means which the Legislature employed to
fulfil its purpose. Nothing in section 71 of the Constitution
prohibits the Legislature from employing monetary means in this way.
Selection of the most effective means for the achievement of a
legislative purpose is a prerogative of the Legislature. Section 71
of the Constitution was altogether irrelevant for the purposes of the
applicants' case.
DISPOSITION
In
the result, the application is dismissed with costs.
ZIYAMBI
JCC: I agree
GWAUNZA
JCC: I agree
GARWE
JCC: I agree
HLATSHWAYO
JCC: I agree
PATEL
JCC: I agree
GUVAVA
JCC: I agree
MAVANGIRA
JCC: I agree
UCHENA
JCC : I agree
Gill,
Godlonton & Gerrans, applicants'
legal practitioners
Civil
Division, Attorney-General's Office, respondents'
legal practitioners
