Elegant Legal Resources

22/03/2024

AGREED RETRENCHMENT PACKAGE
Below are my reflections on the meaning of an ‘Agreed Retrenchment Package’ as provided in the new Section 12C which repealed section 12(4a) of the principal Act.
Section 12C (3) provides that:
“An employer who intends to retrench any one or more employees or has negotiated with his or her employees a retrenchment package better than the minimum retrenchment package (hereafter called the “agreed retrenchment package”) shall…”
The wording of this section envisages two situations for an employer:
 a situation where an employer intends to retrench any one or more employees; or
 a situation where an employer has negotiated with his or her employees a retrenchment package better than a minimum retrenchment package [the ‘agreed retrenchment package’], presumably without the employer having or being required to give notice of intention of his intention to retrench.
How is the ‘Agreed Retrenchment Package’ arrived at?
According to this subsection an ‘agreed retrenchment package’ is a package above the ‘minimum retrenchment package’ but the section does not explain how the ‘agreed retrenchment package’ is arrived at, which is quite unhelpful.
Generally, a retrenchment agreement is secured by a process of negotiation/consultation between representatives of the employer and the employees to be retrenched or their representatives on the proposed retrenchments. See for example case of Mugabe and Others v Zvimba Rural District Council-SC 29/06
The agreement will be on the need for the retrenchment, as described in the annexure detailing the reasons for retrenching the listed employees and the terms and conditions of the retrenchment which cover the size of package and payment terms etc.
Each party must be able to tender documentary evidence as proof of agreement having been reached on the need to retrench and the terms and conditions of the retrenchment which include size of package and its payment.
Existence of a signed document detailing among other things, the size of package and date of retrenchment is prima facie evidence of the existence of an agreement on the retrenchment package between the parties, as contemplated under section 12C(3) of the Act.
While the drafters refer to a retrenchment package that is better than the ‘minimum retrenchment’ as an ‘agreed retrenchment package’ it is my humble view that, notwithstanding its size, every retrenchment package is a result of negotiation and agreement including the undefined and so-called ‘minimum retrenchment package’ between the employer and the employees concerned or their representatives.
An employer cannot impose on the employees a retrenchment package.
It is my humble submission that even a ‘minimum retrenchment package’ [which is not specified in the amendment Act], must also be negotiated and agreed between the employer and the employee(s) to be retrenched or their representatives, and employees concerned may reject the offer to be paid the ’minimum retrenchment package’, even if it was defined/specified, if they believe that the employer has capacity to pay more.
Important: What is referred to as ‘agreed retrenchment package’ is section 12C (3) is referred in other subsections as ‘enhanced retrenchment package’. See definition of ‘Capacity to pay’ under section 12C(1).
Key Takeaways
 Every retrenchment must be predicated on the employer terminating employment on any one or more of the retrenchment grounds specified in the Act (Interpretation section 2) as read together with section 12C (1), and an employer cannot negotiate and agree on a retrenchment package with the affected employees or their representatives without making his intention to retrench known, and his intention can only be known by issuing a notice to retrench as provided under section 12C (3)(a).
 Any other agreement between an employer and employee(s) to terminate employment and to pay a package/terminal benefits can only be appropriately pigeonholed and rightfully be described as mutual termination and not a retrenchment.
 A retrenchment agreement is between the employer and the affected employees or their representatives and no one else.
Please note that while a retrenchment agreement is between an employer and the affected employees or their representatives, an employer who has negotiated and agreed on a retrenchment package with the employees concerned or their representatives must notify the Retrenchment Board and the Board shall issue to the employer a certificate (hereinafter called a “notification certificate”) if it is satisfied that the agreed retrenchment package is indeed better than the minimum retrenchment package. It stands to reason that the Retrenchment Board will not issue the ‘notification certificate’ if it is not satisfied that the agreed retrenchment package is indeed better than the ‘minimum retrenchment package’.
Having made these reflections it is suggested that there is urgent need for further refinement, by way of legislative amendment to the wording and formulation of the current section 12C to address these glaring omissions and shortcomings noted in this piece and elsewhere in section 12C and not discussed in this piece in order to make it more user-friendly.
Until next time
I Machingambi

For more on this subscribe to our Labour and Employment Law for Practitioners Handbook 2023 by visiting our online shop at www.elr.co.zw
If you are still unsure Elegant Legal Resources will be your knowledge partner helping you manage retrenchments and other workplace changes correctly and you can contact the author on WhatsApp number 0772 979 612.

Coming soon is a simple, plain-English and free Tax Law Bulletin weekly e-letter. The purpose is to keep our valued readers completely up to date with developments in the fast-changing world of tax law, and offer you practical and actionable tips on the law.

12/02/2024

CRITERIA FOR MERIT INCREASES OR PAYMENT OF DISCRETIONARY BONUSES
One of the proposals listed under section 25A (5) relates to setting or establishment of criteria for merit increases or payment of discretionary bonuses. The employer cannot implement such a proposal unilaterally.
Merit increases and discretionary bonuses fall under that rubric of variable remuneration [bonuses and incentives] and are often paid to employees to encourage them to perform and behave in a way consistent with the organisational strategic goals and targets.
It also allows the employer to attract, motivate and retain key employees by providing competitive remuneration packages.
A decision to give an employee an amount of variable remuneration is the employer’s but the law requires that the employer consults the works council when introducing and implementing such a scheme.
While the Act is silent on areas to consult, it is proposed that the consultation should cover both the designing and implementation of the remuneration scheme including determination of the following:
 Who is eligible;
 Whether to use short-term incentives or long-term incentives;
 What vesting period will apply;
 The ratio of variable remuneration to fixed remuneration;
 The criteria to be used to determine whether an employee will be granted the variable remuneration;
 The form the scheme will take, e.g. cash or benefits;
 Whether there will be provision for performance-based adjustments; and
 How to treat incentives upon termination of employment.
Until next time
I Machingambi
Did you find this article useful and helpful? If so, please share this article with a friend or fellow practitioner who may also benefit.

09/02/2024

RETRENCHMENT AND NOTICE PERIODS UNDER NEW SECTION 12C
Termination of employment for operational reasons [Retrenchment] may only be considered in situations such as bankruptcy of enterprise, closure of business, restructuring, introduction of new technology or work methods, increasing profitability or cutting losses and reduced availability of work or such other operational reasons.
The law affords employees protection from such termination and strict requirements have been set down such as adhering to stipulated notice periods and failure to comply with these requirements can result in the employer being slapped with a certificate of non-compliance by the Retrenchment Board!
An employer wishing to retrench one or more employees or has negotiated and agreed with his employees on a retrenchment package is required to observe the following notice periods:
 Give 14 days’ written notice to Works Council and to the NEC if most employees agree or if there is no Works Council.
 A copy of such notice must be served on the Retrenchment Board.
Employer is required to notify the Retrenchment Board within 14 days from date of retrenchment, of the following:
 the retrenchment and particulars of any agreed retrenchment package.
Retrenchment date is the date on which an employment contract is terminated for the purpose of retrenchment and is preceded by the notice to retrench and it cannot be later than the date on which the employer lodges written notice of retrenchment with the Retrenchment Board.
If no retrenchment date is specified in the written notice of retrenchment issued in terms of subsection (3)(a) then the retrenchment date shall be presumed to be the date on which the employer lodges written notice of retrenchment with the Retrenchment Board in terms of subsection (5).
The Retrenchment Board must issue a notification certificate signifying satisfaction with the agreed package within 14 days from the date when the employer notifies the Retrenchment Board of its intention to retrench.
If agreement is secured on the retrenchment package and date(s) of payment the employer must notify the Retrenchment Board no later than the end of the notice period.
The Retrenchment Board is required to issue a notification certificate [a certificate that signifies the board’s satisfaction that the agreed package is better than the minimum retrenchment package]
The notice shall be issued by the board on its retrenchment notice board or virtually for seven consecutive days.
Failure by an employer to notify the Retrenchment Board of the minimum or agreed package on the 21st day after the employee or employees are retrenched, the employees or their representatives may enforce payment of their package as per section 12C (6) and (7) of the Labour Act.
The employer will be given an opportunity to be heard before the board and if the board is satisfied that compliance has not been made, the board must issue a certificate of non-compliance and stating the extent of non-compliance.
The issuance of this certificate will allow employees to proceed with the enforcement of the retrenchment package.
Until next time
I Machingambi
Did you find this article useful and helpful? If so, please share this article with a friend or fellow practitioner who may also benefit.

25/01/2024

CAN YOU SUSPEND AN EMPLOYEE WHILE HE IS ON LEAVE?
There's nothing at law that prevents an employer from suspending an employee who is on leave as long as the employee can be contacted and he can be advised of the decision to suspend him as well as the reasons thereof.
The employee must also be informed about the terms of the suspension which may include restricted access to the workplace.
However the better approach would be to wait for the employee to return from leave simply because when an employee is on leave he is away from the workplace and this is precisely the reason for suspension, that is to keep the employee away from the workplace.
However if the employer is of the view that there is a reasonable chance that the employee will interfere with witnesses and evidence at the workplace while on leave then a suspension will be sensible under those sort of circumstances.

23/12/2023

From all of us at Elegant Resources we would like to wish you all a happy holiday season-wherever you are and however you choose to celebrate it.
We thank you for joining us and we hope you found our daily posts useful in complying with the law.
Like many of you we will be taking a break for the holiday season from the 24th of December 2023 to 5th January 2024.
Our daily posts will return on the week commencing 8 January 2024.
We hope to bring you more important posts next year.
Until then, stay safe and blessed.

23/12/2023

ANNUAL LEAVE CYCLE
An annual leave cycle refers to the period of 12 months’ employment with the same employer and the cycle starts either when the employee starts working for the employer or on completion of that employee’s previous leave cycle.
In the absence of a ‘qualifying service’ and for purposes of calculating any period of vacation leave, vacation leave is calculated in a leave cycle of 12 months, starting from the employee’s first date of employment, even if an employee is on probation.
The vacation leave year shall be on a calendar year. On the 31st of December of an employee’s first year of service the proportion of the leave earned from date of engagement to the end of the calendar year shall be credited to the employee. Put simply, the entitlement is pro-rated. From the 1st of January following, the employee’s leave shall accrue monthly up to the maximum annual entitlement in arrears.
For example, in terms of the Labour Act an employee’s vacation leave shall accrue monthly at a rate of two and half (2.5) days per month up to a maximum annual entitlement of thirty (30) calendar days.
The leave accumulates progressively during the year and any unused vacation leave will roll over from year to year subject to the maximum allowable.
Please note that leave of absence presupposes the continued existence of a contract of employment. Accordingly, vacation leave continues to accumulate even when an employee is on paid or unpaid:
 vacation leave;
 maternity leave;
 sick leave; and
 special leave
As long as the employment contract is extant or subsisting an employee continues to accrue vacation leave irrespective of whether he or she has taken another form of paid leave and not coming to work.
Until next time
I Machingambi
For more on this subscribe to our Labour and Employment Law for Practitioners Handbook 2023 by visiting our online shop at www.elr.co.zw
If you are still unsure Elegant Legal Resources will be your knowledge partner helping you manage attendance and timekeeping issues correctly and you can contact the author on WhatsApp number 0772 979 612.

At Elegant Legal Resources we are committed to giving a service that will transform the way practitioners and businesses access legal advice that will assist them in fulfilling their compliance obligationsIn the process of creating our content we follow an essentially “middle of the road approach....