Employer’s Right To Restructure And Reorganize At The Workplace

Employer’s Right To Restructure And Reorganize At The Workplace

The law permits an employer to restructure and reorganise its operations at the workplace subject to s 25A (5) (a) of the Labour Act [Chapter 28:01]. The section requires an employer to consult the Works Council before implementing a restructuring exercise. In the ordinary course of business, change is inevitable. Things cannot remain the same forever. In Chirasasa & Ors v Nhamo NO 2003 (2) ZLR 206 at 220 (SC) Malaba JA (as he then was) drove the point home when he said that:

“The appellants perhaps failed to appreciate that a contract of employment cannot remain static throughout the whole of its existence regardless of the changes in the fortunes of the business. Refusal to accept a change in the terms and conditions of employment necessitated by the commercial interests of a business may be a good enough reason for terminating a contract of employment on notice.”

It is idle and folly for employees to resist change or restructuring in an organization for purely personal reasons at any level, be it at management or shop floor level. Change may be driven by a shift in business strategy or technological development. Resistance to change may have severe consequences for employees as it turned out in the case of  Montclair Hotel and Casino v Laurence Dube SC 68/18. The salient facts of the matter were as follows;

Laurence Dube, the employee was employed by Montclair Hotel and Casino as an accountant reporting to the General Manager in terms of his job description dated 10 December 2008. Sometime in 2011 the employer embarked on a restructuring exercise which introduced a new management system called HALA. The implementation of the HALA system of administration had the effect of promoting the Finance Manager over the employee and generally reorganising the management structures much to the chagrin of the employee. He protested that the HALA system of management breached his original contract of employment in that it subordinated him to the Finance Manager who hitherto was his subordinate. In protest he wilfully disobeyed the employer’s orders given through the Finance Manager arguing that the unilateral alteration of his contract of employment was unlawful.

The new management structure was implemented after consultation with management and the entire staff, the employee included. The employee complained that the taking over of his core business by the Finance Manager amounted to constructive dismissal. He raised a formal written grievance addressed to the General Manager against the implementation of the HALA system. The grievance was referred to the employer’s board which could not uphold the grievance citing that the implementation of the new system was procedural. The board gave the employee the option to negotiate a mutual separation package with the employer if he felt that he could not continue under the new system. The parties engaged in negotiation for a package but could not agree. Meanwhile the employee flatly refused to submit to the Finance Manager as per new system. As a result he was charged for misconduct of wilful disobedience to a lawful order. His defence was basically that he could not obey his employer’s orders before his grievances had been resolved, because until then he still considered the Finance Manager his junior. When ordered by the Finance Manager to conduct a handover takeover with the bookkeeper he refused saying that he knew his duties. When ordered to relocate to the bookkeeper’s office he refused saying that he was not going to change offices before the resolution of his grievances. Thus according to his defence, he wilfully disobeyed the Finance Manager’s orders as being tainted with illegality. On that score, he was adamant that he was not obliged to obey his employer’s orders given through the Finance Manager.

As a result he was found guilty and dismissed after a fully-fledged disciplinary hearing. He appealed to the Labour Court which upheld his appeal and set aside his dismissal. On appeal the Supreme Court overturned the decision of the Labour Court and held as follows among other things;

The court a quo was equally oblivious of the fact that most of the disputed orders originated from the General Manager to whom the applicant was supposed to report in terms of his original contract of employment. The Finance manager was more of a conduit for conveying the General Manager’s orders. While the respondent might have had genuine lawful grievances, his woes do not arise from raising those grievances. His dismissal had nothing to do with the grievances. This is because he was charged and dismissed from employment on charges of wilful refusal to obey lawful orders. Although on the facts it is clear that the appellant was keen on getting rid of the respondent for raising the grievances, it did not dismiss him for lawfully raising grievances in terms of its registered code of conduct. It dismissed him for wilful disobedience to lawful orders thus notwithstanding the acrimony between the parties, the merits and demerits of the respondent’s grievances are irrelevant. The crisp issue for determination is whether or not the respondent disobeyed a lawful order given by his employer which disobedience goes to the root of his contract of employment. This is so because the raising of grievances does not suspend an employee’s fundamental obligation to obey his employer’s lawful orders. The facts giving rise to the alleged disobedience to lawful orders are by and large common cause. It is common cause that on diver’s occasions following the implementation of the restructuring exercise, the respondent was given numerous orders by the employer through the Finance Manager which he wilfully disobeyed. These include orders:1.To relocate to the bookkeeper’s office to make way for the Finance Manager.2.To share the appellant‘s laptop with the bookkeeper.3.To carry out a handover-takeover with the Finance Manager.4.To report to the Finance Manager.5.To follow the new company structures in discharging his duties. It is not in dispute that the respondent disobeyed all the above 5 orders given by his employer through the Finance Manager to whom he was now supposed to report in accordance with the newly introduced HALA system of administration…The respondent’s response to the orders clearly shows that he understood them but deliberately disobeyed the orders believing them to be unlawful and in breach of his contract of employment. His attitude to his employer’s orders is captured in his lawyer’s submission at pages 149 of the record of proceedings where he says: “The accused (respondent) wants justice. He is not submitting to the current authority that erodes the current benefits that he has. If the company doesn’t want him why shouldn’t they give him an exit package? Why shouldn’t the employer divorce him from the position he is at? He can be retrenched”. The above statement evinces a wilful and deliberate set mind to disobey his employer’s orders. It is plain from the record of proceedings that the respondent disobeyed the Finance Manager‘s orders simply because he detested them and was therefore resisting the HALA system that rendered him subordinate to the Finance Manager who was previously his junior. In resisting change both the respondent and his lawyer were oblivious to the fact that in the ordinary run of things change is inevitable.

The respondent’s adherence to the old system of administration would have caused untold havoc at the work place thereby rendering the HALA system virtually chaotic and ineffectual to the detriment of the entire enterprise. Although the respondent’s complaints are premised on demotion, the facts prove otherwise. He was employed as an accountant. He continued to earn his salary in terms of his contract of employment. His only objection was that the Finance Manager had been promoted above him. His contract of employment however gives him no entitlement to promotion nor does it inhibit the promotion of any employee over him. While the Finance Manager may have been his junior prior to the implementation of the HALA system of administration, he ceased to be his junior and became his senior with effect from 28 September 2011 when the HALA system was implemented. From henceforth onwards the respondent was obliged to take instructions from the Finance Manager. The respondent’s refusal to obey the Finance Manager’s orders on account that he was previously his subordinate has no basis in law because promotion is at the discretion of the employer.”

 With these words, the employee’s fate was sealed.

It is important for an employer to consult its employees before engaging in any form of restructuring as statutorily required by s25A (5) (a) of the Labour Act. Where there is no Works Council in place, the employer can resort to consulting employees individually to avoid the decision being challenged on the ground of being unilateral. Any restructuring should not have the effect of lowering employees’ earnings, otherwise it will be tantamount to unilateral downgrading which is unlawful. On the other hand, employees are duty bound to submit and obey to the new structure even after raising grievances, lest they will be charged of wilful disobedience of a lawful order.

The contents of this article are for general information purposes only and do not constitute our legal or professional advice. We accept no responsibility for any loss or damage of whatsoever nature which may arise from reliance on any of the information published herein.

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