THE Constitutional Court has upheld a High Court ruling declaring section 28(2) of the Reconstruction of State-Indebted Insolvent Companies Act unconstitutional, clearing the way for 27 former Shabani Mashava Mines (SMM) employees to recover terminal benefits withheld for nearly two decades.
The applicants, led by Josephat Gwatida, took the Justice, Legal and Parliamentary Affairs minister and the Attorney General to the ConCourt seeking confirmation of a High Court order issued by Justice Sunsley Zisengwe on February 24 last year.
SMM was cited as the third respondent.
The case centred on the termination of the workers’ employment in October 2011, following SMM’s placement on reconstruction in 2004 due to severe financial distress.
While the company acknowledged its indebtedness to the workers for terminal benefits, the former employees found themselves trapped in a legal limbo when they sought to claim what was owed.
Under section 6(b) of the Reconstruction Act, they were required to obtain the administrator’s leave before instituting legal proceedings against SMM.
Their written request received no response.
Section 28(2) of the Act effectively suspended the protections of the Labour Act for employees of companies under reconstruction, leaving them without recourse to claim benefits or challenge their eviction from company-leased houses.
In their constitutional challenge, the workers argued that the section violated their rights to fair labour practices under section 65(1) and equality before the law under section 56(1) of the Constitution.
They contended that the provision unjustifiably shielded SMM from liability by imposing no time limit on the reconstruction process while allowing the company to evade statutory obligations indefinitely.
The High Court agreed, finding that the indefinite suspension of benefits was unfair, unreasonable, and unjustifiable.
The court drew a stark contrast with the Insolvency Act, which imposes clear timeframes for payment to former employees of insolvent companies, safeguards conspicuously absent from the Reconstruction Act.
The court also noted that no evidence showed withholding the benefits had improved SMM’s financial position.
When the matter came before the Constitutional Court, Chief Justice Elizabeth Gwaunza, sitting with Justices Paddington Garwe, Annie Gowora, Ben Hlatshwayo, Bharat Patel, Susan Mavangira and Nicholas Mathonsi, upheld the High Court’s reasoning.
“Section 86(2) requires not merely a legitimate purpose, but also a demonstrable proportionality between the means adopted and the rights limited.
“In this regard, the court a quo correctly held that the absence of temporal limits renders the limitation excessive and unjustifiable.
“An indefinite suspension of terminal benefits imposes a severe and open-ended burden on employees, who may be left without income or social security while reconstruction remains unresolved.
“Constitutional democracy does not permit the suspension of fundamental rights merely because efficiency or expediency is desirable,” the judges ruled.
The court suspended the order’s operation for 180 days to allow the responsible minister to regularise the matter. – (Newsday)
