Restructuring, Retrenchment and the Law: Why Process Alone Is Not Enough

An analysis of restructuring and retrenchment in Zimbabwe, examining why legal compliance alone is insufficient without fairness, transparency and good-faith consultation (image source)

When Zimbabwe’s Supreme Court delivered judgment in Nyamande & Another v Zuva Petroleum (SC 43/15) in July 2015, it reaffirmed an employer’s common-law right to terminate employment on notice. The ruling triggered widespread job losses, prompting swift legislative intervention through amendments to the Labour Act. Although the legal position has since evolved, the episode remains a defining moment in Zimbabwe’s labour relations, illustrating how decisions that are legally sound can still carry profound social and economic consequences.

Restructuring, in principle, is a legitimate business strategy. It enables organisations to adapt to changing market conditions, technological developments or financial stress. In Zimbabwe, however, the concept has become contentious. Workers and unions often argue that restructuring processes are used to weaken bargaining power while presenting retrenchment as unavoidable, particularly in an already fragile economy.

This does not mean all restructuring is improper or that every retrenchment is unfair. Rather, it underscores a persistent concern: that employers may comply with formal procedures while employees feel outcomes were predetermined. Zimbabwe’s Labour Act does not treat retrenchment as a routine administrative exercise. Section 12C establishes a framework requiring written notice, meaningful consultation through recognised structures, and oversight by the Retrenchment Board.

Legislative reforms have sought to strengthen this framework. In 2023, Parliament enacted the Labour Amendment Act (Act 11 of 2023), revising aspects of Section 12C, including retrenchment package provisions. These changes were reinforced by the Labour (Retrenchment) Regulations, 2024 (SI 191 of 2024), gazetted in December 2024. The regulations introduced standardised forms, defined timelines and a requirement for the Retrenchment Board to issue notification certificates within set periods, addressing long-standing concerns about procedural delays that often dilute workers’ rights.

Despite these reforms, tension persists between procedural compliance and substantive fairness. Workers frequently describe consultation processes as informational rather than deliberative, particularly where selection lists appear to have been finalised in advance. Several high-profile cases have reinforced this perception. In 2017, Air Zimbabwe announced plans to cut nearly half its workforce as part of a turnaround strategy. More recently, CBZ Holdings retrenched 347 employees in early 2025 following a group restructuring, while Steward Bank attributed staff reductions to digitisation initiatives. In the retail sector, OK Zimbabwe closed stores and restructured operations amid funding and competitive pressures.

In many such cases, the economic rationale for restructuring may be credible. The unresolved issue is whether selection criteria, the quality of consultation and post-retrenchment hiring practices align with the law’s emphasis on fairness rather than mere compliance. International experience suggests this challenge is not unique to Zimbabwe. In the United Kingdom, controversy over “fire and rehire” practices led to a statutory Code of Practice on Dismissal and Re-engagement in July 2024. In the United States, scrutiny of labour practices has similarly focused on the gap between legality and perceived coercion.

For Zimbabwe, the central challenge lies in institutional capacity and enforcement speed. Trust is most effectively built not by banning restructuring, but by making it verifiable: clear and objective selection criteria, documented and genuine consultations, and consistency between retrenchment decisions and subsequent hiring. Economic pressure does not negate the obligation to act in good faith. Where restructuring is genuinely necessary, it should be defensible in evidence and over time. Where it is not, suspicion will endure, regardless of how compliant the paperwork may appear.