According to The Herald newspaper, the proposed amendments to the Labour Act will remove the common law right of an employer to unilaterally dismiss employees on notice.
Using the July 17 Supreme Court ruling, employers have the right to terminate an employment contract by just giving the employee a three month-notice period, without any retrenchment costs.
But under the proposed amendments to the Labour Act, employers will only be able to terminate a contract of employment on three grounds: for disciplinary reasons in terms of a code of conduct; if the employer and employee agree; or if the employee has been engaged on a fixed-term contract for a specified task.
If none of these three reasons apply, the employer has to go through a formal retrenchment process.
If employers are to follow the retrenchment route, they will be expected to include minimum compensation in collective bargaining agreements, with the default being at least one month’s pay for each year of service.
Symptom of an ailing economy
However, analysts said as much as employers are taking advantage of the Supreme Court ruling, job cuts are symptomatic of an ailing economy.
They contend that the new ruling has only accelerated what was already happening, with a total 7 000 employees having lost their jobs in 2014.
According to figures from the National Social Security Authority, Zimbabwe’s statutory corporate body responsible for all formal employees, at least 52 companies carried out retrenchments in 2014, resulting in 7 000 job cuts.
Even prior to the ruling, government was already working on the amendments to make it easier for employers to retrench employees when facing viability problems