TERMINATION OF EMPLOYMENT THROUGH MUTUAL AGREEMENT
One of the worst nightmares in the life of an HR Practitioner is a judicial order for reinstatement of an employee who has been recorded as terminated in the company’s employment records. This order often reads ‘reinstatement without loss of pay and benefits’ – meaning backpay over a period the employee was not at work. It often comes a few years after the initial termination, when the employee has been replaced even. It therefore presents the ugly situation where the Line Manager is no longer keen to take on the employee, saying ‘HR, please find him a place elsewhere’. This leaves mud on a few faces, especially that of the HR Practitioner as the key adviser in these matters.
The critical point here is that while termination is often a highly emotionally charged process, it must still be handled in a manner that is judicious, balanced and legally fair.
The Law
Section 12(4a) of the Labour Act (Cap 28:01) (the act) provides for the following as the only legal ways of terminating employment in Zimbabwe:
- In terms of an Employment Code of Conduct. This has to be a properly registered Code, registered by either your company specifically, the relevant NEC or the Model Code (SI 15 of 2006) published in the Government Gazette of 27th January 2006; Or
- Mutual Agreement between employee and employer; Or
- Where a Fixed Term Contract runs out through the effluxion of time – or where the employee was engaged for the performance of a specific task/service; Or
- Through Retrenchment in terms of Section 12C of the act.
Mutual Agreement
In this discussion, we focus on termination through mutual agreement/separation. We must explore the following aspects of separation by mutual agreement:
- The legal requirements, and
- The usual pitfalls.
It is noteworthy that even before our country legislated on this matter, the right to mutual separation existed in common law. Legislation specifically provides that it be in writing. Within the wider realm of the law of contract, there has to be the proverbial meeting of the minds (ad idem) in creating the contract, just as there must be when terminating the contract.
The Legal Requirements
- There must be a current and binding contract of employment. This usually pertains to permanent and fixed term contracts of employment. It also applies to seasonal employment where the season has not come to an end.
- There must be a meeting of the minds between the employee and the employer, agreeing freely and voluntarily to a mutual separation or a termination of an existing employment relationship; and
- The agreement has to be in writing as provided by the act.
When To Employ Mutual Separation
- This usually happens in ‘no fault’ separations. Neither the employee nor the employer is in breach of the contract but circumstances dictate and/or the parties feel that it is time to separate amicably. Take for example where a material and negative change occurs within the company’s markets rendering the company’s products uncompetitive. The company runs into financial distress and it is apparent to both parties that even a retrenchment exercise cannot be funded. The parties may choose mutual separation, thus leaving a real possibility/prospect of resuscitation of a future employment relationship;
- In some instances, a ‘çool’ relationship just goes sour. No one wants to fight and parties opt to separate amicably.
- In many other instances a separation process like dismissal may take so long and cost both parties so much in terms of both financial resources and time that they decide to bring the whole process to an end through a mutual agreement.
These three instances are not exhaustive, but give one a good hang of the circumstances during which parties may choose to use this option of termination of an employment contract.
Some Pitfalls
As in many separations, there are always potential pitfalls, particularly legal ones. Often managers are so eager to see an employee out of the gate that they go for termination at any cost – a thing which often comes back to haunt them and the company:
- During a moment of highly charged emotions, parties just agree to separate without reducing it to writing;
- In similar circumstances of highly charged emotions, the mutual agreement may be reduced to writing but in such poor fashion that when the employee sits at home and realises what unemployment means for him and his family, he/she reviews the agreement and challenges it. It is desirable that in the form of a preamble of some similar provision, the agreement should indicate why the mutual agreement became necessary. The circumstances should point to a free and voluntary process/environment in which the agreement was entered into. It also helps that the employee be given adequate time to reflect on the proposed agreement. Please see Gauntlet vs Hlabangani SC51/04
- Some managers are reluctant to follow what seems to be a tedious and time consuming termination process in terms of a code of conduct. So they make continued employment untenable for the employee – and then offer them mutual separation. This often comes back in the form of Constructive Dismissal. So ultimately, no time is saved. (Please see Astra Holdings vs Kahwa SC97/04 – where the employee had her salary withheld before she rejected the employer’s offer for separation by mutual agreement. The court later found that although she had not claimed constructive dismissal, she was entitled to it.)
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