Mberikunashe Masvibo & 14 Others v TN Harlequin Luxaire Limited

The applicants were all employed by the respondent on contracts without limit of time as defined in section 12 of the Labour Act. On 10th and 11th June 2015, the respondent wrote to each applicant giving notice of termination of their current contracts and offering new performance-based contracts. The respondent cited macro-economic challenges, poor company performance, and below-cost sales figures as reasons, stating it needed to align remuneration with productivity. The applicants were given three months' notice to terminate their existing contracts and offered new contracts where remuneration would be based on performance. The applicants rejected the offers, viewing them as an unlawful attempt to circumvent retrenchment regulations. Through their legal practitioners, the applicants argued that the respondent was obliged to comply with section 12C of the Labour Act as more than 5 employees were being terminated. The respondent later alleged that the applicants had repudiated their contracts by failing to report for work.

• Whether the relief sought constituted a proper declaratory order under section 14 of the High Court Act
• Whether the termination of the applicants' employment contracts was an unlawful circumvention of the provisions of the Labour Act and its regulations relating to retrenchment
• Whether the respondent was entitled to terminate the applicants' contracts on grounds of repudiation

1. The termination or variation of the applicants' contracts of employment by the respondent was declared unlawful. 2. The respondent was ordered to reinstate the applicants to their employment without loss of salary and benefits. 3. In the event that reinstatement is no longer an option, the respondent was ordered to pay the applicants damages to be determined by an arbitrator appointed by a Senior Labour Officer. 4. The respondent was ordered to pay the costs of suit.

The binding legal principle established is that an employer cannot lawfully circumvent retrenchment regulations by terminating multiple employees' contracts on notice and offering new contracts with different terms, where the true purpose and effect of such action is retrenchment as defined in the Labour Act. When an employer terminates employment contracts en masse citing economic viability, cost reduction, or reorganization as reasons, this constitutes retrenchment regardless of the label attached to it, and the applicable retrenchment regulations must be complied with. The court affirmed the principle from Mutare Board Paper Mills (Pvt) Ltd v Kodzanai that even though an employer may have the right to resort to termination on notice, if the object and effect of such action is to retrench, then the applicable regulations must be complied with.

The court made observations regarding the requirements for a declaratory order under section 14 of the High Court Act, noting that the applicant must be an 'interested person' with a direct and substantial interest in the subject matter that could be prejudicially affected by the judgment. The court also commented on the nature of the 'new' contracts being separate from the 'old' contracts, noting that if continuous employment had been intended, employees would not have been required to serve notice. The court observed that the respondent's letters alleging repudiation were opportunistic, having been written after the legal proceedings had already commenced.

This case is significant in Zimbabwean labour law jurisprudence as it reinforces the principle that employers cannot circumvent retrenchment regulations by disguising retrenchment as contract termination and renewal. It confirms that where the object and effect of mass termination is to reduce costs or reorganize the workforce due to economic challenges, the statutory retrenchment procedures must be followed regardless of how the employer characterizes the action. The case protects employees from employers attempting to avoid their obligations under retrenchment regulations by offering new contracts with less favorable terms. It upholds the protective provisions of the Labour Act and ensures that employers cannot use the contractual right to terminate on notice as a means to bypass mandatory retrenchment procedures when terminating multiple employees for economic reasons.