Pro­ce­dure to be fol­lowed in re­trench­ment

Chronicle (Zimbabwe) - - Business -

Labour col­umn Davies Ndu­miso Sibanda

MANY em­ploy­ers think that they can uni­lat­er­ally tell em­ploy­ees to go home through pay­ing them three months’ salary as no­tice pay, this has re­sulted in a lot of lit­i­ga­tion with the em­ploy­ers los­ing cases. The law on re­trench­ment does not give the em­ployer the right to uni­lat­er­ally ter­mi­nate the con­tracts of em­ploy­ment but the law says where the em­ployer can no-longer af­ford to keep an em­ployee for what­ever rea­son, he should fol­low re­trench­ment pro­ce­dure as set out in the Labour Act.

There is mis­con­cep­tion that all re­trench­ments are now three months’ no­tice which can be worked or not worked at the dis­cre­tion of the em­ployer and 1 months’ salary for ev­ery two years worked re­trench­ment pack­age.

This min­i­mum re­trench­ment pack­age is only ap­pli­ca­ble in cases where the or­gan­i­sa­tion is fi­nan­cially em­bar­rassed and the pack­age will not be avail­able to an em­ployer who is re­trench­ing for rea­sons that are not re­lated to hard­ships.

The mis­take that many em­ploy­ers make is to call work­ers to a meet­ing and re­trench them with­out fol­low­ing laid down pro­ce­dure and usu­ally after work­ers have fin­ished the money, they come back to claim un­fair dis­missal.

This be­comes even more com­plex where the sepa­ra­tion agree­ment was poorly drafted and the em­ployer clearly stated that it was re­trench­ment rather than mu­tual sepa­ra­tion, the work­ers will have no valid claim against the em­ployer but in cases where the em­ployer stated it was re­trench­ment and never fol­lowed pro­ce­dure, work­ers are likely to claim un­fair dis­missal.

Em­ploy­ers are ad­vised to make a de­ci­sion whether they are re­trench­ing or mu­tu­ally sep­a­rat­ing with the work­ers as there are times where ei­ther of the op­tion is a bet­ter op­tion.

For ex­am­ple, where the re­trench­ment pack­age por­tion at­tracts a large amount of tax it is bet­ter to go the re­trench­ment route to ben­e­fit work­ers on the tax free por­tion, but where the tax is neg­li­gi­ble, it is much cheaper to go for mu­tual sepa­ra­tion where the re­trench­ment ad­min­is­tra­tive costs are high.

In conclusion, em­ploy­ers need to seek ex­pert ad­vise be­fore en­gag­ing in any ter­mi­na­tion re­lated to re­trench­ment or mu­tual sepa­ra­tion and make sure that the agree­ment is legally crafted to avoid prob­lems into the fu­ture.

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