Measures to avoid retrenchment require careful thought

Davies Ndumiso Sibanda
MANY employers struggle with payment of salaries that they can no longer afford and end up breaking the law when they can either negotiate salary reduction with affected workers or apply for exemption.

When the business recognises that it is struggling it must establish the cause of the challenges and if labour costs are involved then several options have to be considered. For example, one can decide to reduce staff by retrenching some employees, or alternatively terminate all fixed term contract workers or negotiate salary reduction with all employees or managerial employees only if that’s where the problem lies.

However, where non-managerial employees covered by the NEC are involved whether the parties have agreed or disagreed, NEC approval or confirmation of the salary reduction must be sought.

In most cases, these processes are not as simple as they look. They involve full disclosure of the state of the business, which has to be communicated to the workers at works council for non-managerial workers and in a special meeting for managerial employees where they have no works council. In most cases workers will query the figures presented by managers or management decisions and action plan and workers will also propose alternatives that the employer has to consider before implementing the plan.

A major limiting factor in securing agreement of workers has been the dictatorial approach by employers and in worse cases the workers have been threatened to sign off the agreement. Such approaches are dangerous in that at some point workers could turn around and allege that they were forced to sign the agreement and if they have a good lawyer, he is likely to build his argument around how the agreement was signed and not whether there was an agreement or not and when that happens, prospects of success can be high.

To avoid all these problems, employers should engage workers in a free atmosphere having given them reasonable notice, allowed them to involve the union if they so wish and on his part if he feels uncomfortable he seeks expert advice for guidance.

At the time of engagement, the employer should have his facts right, clearly explaining to the workers what is going to happen, why it is going to happen that way and the consequences of getting an exemption. There are intricate questions that need to be addressed such as, when does salary reduction kick in, by how much the salaries will be reduced, for how long the measures to avoid retrenchment will remain in place, what happens if the business situation gets worse and what happens at the end of the life of the exemption and the employer wants to extend it.

Further there will be workers who will opt to be retrenched rather than have their salaries reduced. All these are complex matters that require attention before the employer engages the workers.

In conclusion, it is advisable to seek expert advice if one is to get the best deal out of measures to avoid retrenchment and avoid unnecessary litigation related to interpretation of the whole process.

Davies Ndumiso Sibanda can be contacted on: email: Or cell No: 0772 375 235

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