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Home » LEGAL MATTERS: Layoffs and constructive dismissal in Covid era

LEGAL MATTERS: Layoffs and constructive dismissal in Covid era

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THE term constructive dismissal relates to a situation where an employee terminates the employment relationship with or without notice. The employee then goes on to allege that the termination was because the employer made continued employment intolerable for them.
The Labour Act provides for constructive dismissal as a form of unfair dismissal in section 12B (3)(a).
The threshold for constructive dismissal is normally that the employer’s conduct must be so serious as to justify the employee’s leaving at once.
The decision to serve a notice period then becomes a matter of choice, but as long as the threshold of seriousness has been crossed, then a case for constructive dismissal can be made.

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There are three essential ingredients for constructive dismissal and they are i) whether the employee brought the contract to an end, ii) whether the reason for the employee’s action was that the employer had rendered the prospect of continued employment intolerable and iii) whether the employee had no reasonable alternative other than terminating the contract. The onus of proving these requirements rests on the employee.

The facts of each case will of course differ, but they must align with the three principles outlined above if the case is to stick.
The general position of the law is that if the employer is guilty of conduct which is a significant breach going to the root of the contract of employment, or which shows that the employer no longer intends to be bound by one or more of the essential terms of the contract, then the employee is entitled to treat himself as discharged.

Do layoffs due to Covid-19 amount to constructive dismissal?
The question of whether temporarily laying employees off constitutes constructive dismissal has been dealt with in labour tribunals the world over. In Canada, it was held in the case of Taylor v. Hanley Hospitality that being temporarily laid off does not amount to constructive dismissal.

This judgment was given in the context of layoffs being done without any salary and benefits. In a lot of cases locally, employees are asked to stay at home while receiving either full or partial salary and benefits. Such employees normally would not have a strong case for constructive dismissal.
If an employee is to argue that being temporarily laid off is tantamount to constructive dismissal, then regard must be had to the three principles I outlined above.

One view is that where an employee is laid off without pay, then that amounts to constructive dismissal. One must recall that an employment relationship is governed by agreed terms between the parties.
One of those terms is that the employee will receive a salary for work done. Where that salary is unilaterally taken away and the employee is directed by the employer not to do any work, then one might argue that the threshold of seriousness has been crossed and that the ingredients of constructive dismissal apply.

Of course there is the elephant in the room, which is that the layoff would have been caused by Covid-19 related business stress. This however, does not stop the argument from being made, meaning that an employee has at the very least a fighting chance in court.
This position of the law is dealt with in the case of Astra Holdings (Pvt) Ltd v Kahwa SC 97/2004. The court in that case stated that an employer is entitled to withhold work from an employee (in other words can lay off an employee) so long as salary and benefits continue to be paid in accordance with the contract of employment.

How can litigation be avoided?
The court’s remarks in Astra v Kahwa are a restatement of the common law. Common law is the part of our law derived from custom and judicial precedent. It is a position that has been acknowledged and accepted in our courts over time, and thus, attained the status of a binding principle.
The common law is however, inferior to statute law, which is written law found in Acts of Parliament and other subsidiary legislation like statutory instruments.

The point I make is that a law can be made to extinguish the right to claim constructive dismissal when one has been laid off due to Covid-19 business related difficulties. This has already been done in other jurisdictions.
The limitation of the right to claim constructive dismissal will apply only to Covid-19 related layoffs, so the general remedy will still be available to anybody with a genuine case to make. If done correctly, such a law could help protect businesses from potential exposure to legal suits from disgruntled employees.

As is often the case in Zimbabwe, however, the fact that there is not much litigation on this particular aspect is not because there is no exposure or risk on the part of businesses. It is because the litigating public has not wised up to it yet.
Zimbabweans, particularly private individuals, are not a very litigious lot. This however, does not mean that there will never come a case that causes an avalanche of litigation, overwhelming and astounding employers across the board.

What employers must do
In the absence of a law that regulates this particular aspect of employer-employee relations, employers must be mindful to include clauses in their contracts that allow them latitude should unforeseen events like Covid-19 occur.
From this base, they can craft workplace policies that help protect the business, while observing and protecting employee rights.

Muza is a duly admitted legal practitioner and litigation specialist. He writes in his personal capacity and is reachable at hilarykmuza@gmail.com.

 

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