Last week, Kingstone Donga and Don Nyamande secured a place in Zimbabwean labour relations history when they lost a case against their former employer, Zuva Petroleum. They were citing grounds of unfair dismissal and contract termination.
The legal precedent that followed this decision is what has mattered to a lot of employed Zimbabweans. The Supreme Court of Zimbabwe has upheld a decision that says that companies can now terminate workers’ contracts at any time, without offering them packages by giving them three months notice.
This has grave consequences for anyone under formal employment who has been covered by a very accommodative Labour Act. What’s also significant is the time this precedent has been set.
The majority of business enterprises in Zimbabwe, including companies in previously robust industries like telecoms, technology and financial services, have been under significant financial strain and in most cases the labour cost has been cited as one of the largest cost centres. Terminating workers contracts hasn’t been an option because of huge burdens that come with severance packages.
With this ruling, workers in these companies are left exposed. There are industries like telecoms where companies like Econet are on a massive cost-cutting exercise. This has been from salary cuts to payments made to suppliers. This might turn into a shedding of “staff that isn’t pivotal”. The same can be said for Telecel which is also trying to figure out its way out of a cost and operational maze.
Companies have various ways of dealing with issues around labour costs and depending on what sort of contract someone signs when they join an organisation, some employees might be safe in all of this.
However, as operating conditions get tougher, there’s no telling who’ll be left naked in all of this. According to the Herald, the government is working to address the exposure that has been created, and there are always workers’ unions to deal with any unfair dismissals. But all this might be too late considering the reports that some employers have already started responding to this.