The implications of Section 12 and 18 of the Labour Amendment Act, 2015 on FDI: The case of the Willowvale industrial area.

Abstract

The area of labour retrenchment regulations and their implications on FDI is a relevant and controversial issue in Zimbabwe. A Supreme Court common law ruling in July 2015 allowed for the termination of employee contracts without severance packages on three months’ notice which resulted in mass dismissal based on this precedent. This led to the fast trekking of a Labour Amendment Act by the Government of Zimbabwe to halt these dismissals but the act was largely considered as not being reflective of the challenges affecting industrialists in retrenching employees. It was from such a backdrop that the study focused on studying the implications of section 12 and 18 of the Labour Amendment Act, 2015 on FDI in Willowvale. Views from different authorities on the impact retrenchment regulations were having on FDI were reviewed to gain greater understanding of the research topic. The research then triangulated data collection methods to acquire data on the implications of section 12 and 18 of the Labour Amendment Act, 2015 on FDI in Willowvale. Methods such as in-depth interviews, close ended questionnaires and documentary search were used. The study then came up with the major findings that section 12 of the Labour Amendment Act, 2015 which imposed a retrenchment package to be paid to retrenched employees and section 18 which allowed section 12 to be applied in retrospect to when the mass dismissals started were deterring foreign investment in Willowvale as well as Zimbabwe at large which was suffering from low FDI in-flows within the region. The study also discovered that the enactment of section 12 and 18 of the Labour Amendment Act had angered industrialists, added to the difficulty of doing business in Zimbabwe and resulted in an on-going legal battle between the government of Zimbabwe and the employer representative organizations. The study concluded that the government of Zimbabwe was adopting a neutral stance when it came to the idea of amending the labour retrenchment act. The study also concluded that companies within Willowvale were struggling to cope with retrenchment regulations. The study recommends the amendment of labour legislation in Zimbabwe particularly section 12 and 18 of the Labour Amendment Act, 2015 to increase FDI. The study also strongly recommends an increase in stakeholder participation in the making of labour legislation in Zimbabwe.