Unpacking the implications of the Labour Amendment Bill HB 14A of 2021 on fixed-term contracts

By: Charlene Angeline Jackson

Key words: Labour Amendment Bill, termination, fixed term, contract of employment, notice period, job security

Introduction

On the 7th of June 2023, the Labour Amendment Bill HB 14A of 2021 (“the amendment Bill”) was passed by the National Assembly with the purpose of amending the Labour Act [Chapter 28:01] to align it with section 65 of the Constitution of Zimbabwe which provides that every person has the right to fair and safe labour practices and standards. Furthermore, the National Assembly aimed at aligning the Act with the International Labour Organisation (ILO) Conventions ratified by Zimbabwe which seek to find a balance between maintaining the employer's right to dismiss workers for valid reasons and ensuring that such dismissals are fair and are used as a last resort .

Prior to this amendment Bill, the Labour Act did not provide adequate regulation of a fixed term contract of employment. The amendment Bill, however, introduces amendments to the duration and termination of such contracts as a more effective measure of regulating them. This article addresses the provisions of the amendment Bill in relation to fixed term contracts and possible consequences for both the employers and employees.

Analysis of the Amendment Bill

Section 8 of the amendment Bill repeals section 12 (4a), (b), (c), (d) and ( e) of the principal Act which regulates the notice of termination of an employment contract, and makes the following changes:

“(4a) A contract of employment may be terminated only, on the part of an employee, by his or her resignation or retirement, and in the following cases on the part of an employer- (b) by mutual agreement in writing. (c) for the breach of an express or implied term of contract, upon such breach being verified after due inquiry under an applicable employment code or in any other manner agreed in advance by the employer and employee concerned.”.

Furthermore, clause 8 of the amendment Bill aims to unambiguously deal with the issue of the common law practice of termination on notice and issues of casualization by setting out that a fixed- term contract cannot be for a period that is less than 12 months, unless the employment is for seasonal or casual work or for the performance of a specific service. Clause 8 further provides that an employer who employs the majority of his or her employees on fixed term contracts will have to make use of retrenchment provisions in the event of termination of their contracts.

Advantages

1. The above amendments mean that employers will no longer be able to terminate fixed term contracts of their employees who have not committed disciplinary offences by simply giving them three months’ notice. This in turn provides employees with security in their workplace in line with section 65 of the Constitution which provides that every person has the right to fair and safe labour practices and standards.

2. Another important aspect of the amendment Bill is that where an employer has majority of its employees on fixed term contracts, termination of those contracts would be done using the retrenchment provision in section 12 C of the Labour Act. In other words, employees that fall in this category will be entitled to a retrenchment package which provides a cushion for their termination.

3. In addition, the removal of the three- month notice of termination clause offers more flexibility for both employers and employees in that it allows businesses to adapt more swiftly to our ever- changing economic conditions. By doing so, employers make the necessary adjustments without being burdened by lengthy notice periods. For employers, the amendment is an advantage in that it allows better management of the workforce, particularly in industries that require short-term or seasonal workers.

4. Moreover, the removal of the three-month termination notice clause empowers employees by granting them the freedom and flexibility to seek new and better job opportunities immediately after termination of their contract. This is an advantage in that employees will no longer be tied to a prolonged notice period of three months. For instance, where an employee’s employment contract is terminated by mutual agreement, they will now be able to commit to another job opportunity immediately, instead of serving a three months period.

5. Another advantage of the amendment Bill is that it will likely reduce unfair dismissals. This is because where there is breach of contract, termination would only occur after such breach is verified by due inquiry under an applicable employment code or in any other manner that has been agreed in advance by the employer and employee concerned. Consequently, there are fewer chances of employees having their employment contract terminated unfairly without due inquiry.

Disadvantages

1. On the contrary, removing the requirement for three months' notice of termination may prove to be a disadvantage to employees because when an employment contract is terminated (whether by mutual agreement or for breach of contract), one may face sudden unemployment with no adequate time left to secure alternative employment or make necessary financial arrangements. As a result, there will be an increased likelihood of financial instability and hardship for individuals and their families upon termination of their employment contract without notice.

2. The adverse impact of an employer with the majority of its employees on fixed-term contracts is that termination of contracts would be done using the retrenchment provision in section 12 C of the Labour Act. In other words, this will disadvantage the employers that fall in this category because they will be obliged to pay out a retrenchment package to the employees whose fixed-term contracts are terminated. This will most likely financially cripple the business (the employer), in an already challenging economy.

3. Another disadvantage of removing the three months' notice clause is that it undermines job security and stability which ultimately is contrary to section 65 of the Constitution. This is because notice of termination in terms of the Act allows employees to have a reasonable amount of time to search for alternative employment opportunities or negotiate severance packages. Without such protection, workers may find themselves in a more vulnerable position, especially considering that Zimbabwe’s job market is already a challenging one. This could potentially lead to increased unemployment rates.

Conclusion

In conclusion, the Labour Amendment Bill has the potential to benefit both employers and employees’ alike. Although its implications are yet to be seen once the changes are implemented in practice, it must be highlighted that it is a step in the right direction in terms of regulating fixed term contracts.

Bibliography

1. "Consolidated Labour Amendment Bill HB 14A of 2021." Parliament of Zimbabwe, 2021, Consolidated LABOUR Amendment Bill HB 14A of 2021.pdf (veritaszim.net)

2. Constitution of Zimbabwe 2013.

3. Labour Law Act [Chapter 28:01].