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 ...
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 Labour Act [Chapter 28:01]. The
terminations followed the judgment of the Supreme Court in the case
of Nyamande
and Anor v Zuva Petroleum (Pvt) Ltd
SC43-15, 2015 (2) ZLR 186 (SC)
(“the
Zuva
Petroleum judgment”).
The
appellants in Nyamande
and Anor v Zuva Petroleum (Pvt) Ltd
SC43-15, 2015 (2) ZLR 186 (SC) (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
Labour 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 Labour Act through section 4 of
the Labour Amendment Act (No.5) 2015. Section 12 of the Labour Act
provided for the duration, particulars, and termination of employment
contracts. In particular, section 12(4) of the Labour Act regulated
the notice periods to be given in respect of different types of
employment contracts. Section 12(4) of the Labour Act was amended by
the insertion of sub-paragraphs (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 Labour 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) of the Labour Act
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 b