Retrenchment Process Simplified!

The term retrenchment refers to a reduction of workforce as a cost-cutting measure or due to redundancy.
In Zimbabwe the retrenchment process prior to 2015 used to be a tedious process which could drag for ages without certainty especially where terms of the retrenchment package are elusive between the parties.

In the case of Continental Fashions (Pvt) Ltd v Elliot Mupfuriri and Ors 1997(2) ZLR 405(S) the Supreme Court bemoaned the lack of certainty in then retrenchment packages and processes. It stated as follows;

“At the other end of the scale, it seems logical to suppose, must be a fixed and pre-determined severance package. The advantage of such a fixed package is that the company can say to its creditors –‘The choice is between liquidation and downsizing. If we go into liquidation, you will get x cents in the dollar. If we downsize, you will have the redundancy package which will be x dollars, but then we will survive and eventually pay you back everything .If the cost of redundancy is known then meaningful decisions be taken”

The legislature finally listened and introduced the new Section 12C of the Labour Act (Chapter 28:01) through Section 5 of the Labour Amendment Act Number 5 of 2015 which repealed the former Section 12C.

The new amendment sought to curtail the long process and also to fix a one size fits all retrenchment package where better terms cannot be agreed between the parties. Under the new regime, the employer who wishes to exercise the right to retrench is simply required to follow the road map laid by the law in terms of retrenching.

The basis process is laid down as follows;
1. An employer who wish to retrench one more employees should give written notice of its intention to the works council established for the undertaking, if there is none, to the employment council established for the undertaking or industry and if there is none to the Retrenchment Board.
2. Provide details of the employee/employees whom the employer wishes to retrenchment and of the reasons for the proposed retrenchment.
3. Send a copy to the retrenchment board and to the employee/s concerned.
4. Immediately after giving the notice, the employer should call the employee/s for a negotiation of retrenchment package.
5. Where parties cannot agree on a better package the employer shall proceed to pay the minimum retrenchment package of not less than one month salary or wages for every two years of service. Put different two weeks’ salary or wages for every year of service.
6. Where the employer alleges financial incapacity to pay the minimum package timeously or at all the employer shall apply in writing to be exempted from paying the full package or any part of it to the employment council established for the undertaking or if there is none to the retrenchment board.

It is crystal clear that the retrenchment process in terms of Section 12C is a self-regulating process which was meant to make it easier for parties to complete the retrenchment process without going through the rigors of via the retrenchment board for approval or the Minister of Labour as used to be the case under the old repealed section which made retrenchment a cumbersome process. This was underscored by the Labour Court as per Honourable Muchawa J in the case of Mandas Marikanda v Ticharwa Kagu and 4 Others LC/H/502/17.

It must be emphasized that the employer retains the discretion to make business decisions which the employer deems best for the business, the discretion includ

e the decision to re-arrange its staff and at the same time the employee equally has a right to be subjected to a lawfully and procedurally executed retrenchment process which religiously follow the procedures laid above and any deviation from the same would make any purported retrenchment subject to review in a court of law.In light of the above, it is imperative that either party involved in the process seek the services of a lawyer to guide them through the retrenchment process.

The contents of this article are for general information purposes only and do not constitute our legal or professional advice. We accept no responsibility for any loss or damage of whatsoever nature which may arise from reliance on any of the information published herein.

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