Davies Ndumiso Sibanda
WITH the current economic challenges, many organisations have or are planning to reduce employee salaries as a means of containing costs, however, noble as the action may look, it can be costly if legal processes involved are not followed.
The reduction of salaries is a clear legal matter. Salaries of employees cannot be unilaterally reduced by a board resolution or ministerial directive, but parties have to negotiate and agree on the reduction. Where agreement cannot be achieved, then appropriate adjudicating authorities have to be approached.
Questions have been asked as to whether ministerial directives can override the provisions of the Labour Act. The answer is that ministerial directives are subordinate to the Labour Act provisions and as such no minister is empowered by law to unilaterally cut salaries.
There are a number of decided cases confirming this position. The latest case is the E Chivaraidze and five others vs Hwange Local Board where the Arbitrator ruled that a ministerial directive to cut salaries could not override the provisions of the Labour Act.
There are employers who have used threats to get workers to sign for reduction of their salaries. This route has limited success and has a chance of creating problems for the employer later.
First for non-managerial employees, the agreement has to be secured at works council and for managerial employees without a managerial workers committee to engage at managerial employees’ works council, the employer has to individually engage managerial employees and secure their agreement.
Where no agreement is reached then the matter can be taken outside for adjudication. At this stage, the employer has to seek legal guidance to avoid unnecessary delays.
The problem with intimidating workers into submission is that they can easily litigate as a collective and win their case and the employer is ordered to restore workers’ salaries to their original position or one worker leaves and litigates successfully opening floodgates for others to follow.
The courts usually recognise the equal unequal relationship of the employer and the employees and scrutinise how the process of getting workers to accept reduction in salaries was arrived at and if they find a measure of intimidation or threat, then the agreement could be deemed void.
There is no need to dictate or threaten workers to accept reduced salaries. In the majority of cases, workers will accept reduction of salaries to reasonable levels as they will be seeing the poor performance of the business and they would like to save jobs for all rather than have some of them lose jobs through retrenchment which has now been made easier for employers.
In most cases I have dealt with, workers have not resisted salary reduction but have negotiated the quantum of reduction, the duration of reduction and the effective dates.
In conclusion, in the present economic environment salary reduction is inevitable in some sectors of the economy but must be handled in a fair and legal manner if legal challenges are to be avoided.
Davies Ndumiso Sibanda can be contacted on: email: [email protected] Or cell No: 0772 375 235