US flags Zimbabwe's rigid labour laws

The United States government has warned that Zimbabwe's strict labour regulations are making it increasingly difficult for employers to respond to economic downturns, as retrenchments continue to rise across key industries.

In its recently released 2025 Zimbabwe Investment Climate Statement, Washington highlighted that the country's labour framework — which restricts layoffs and limits contract terminations — has left many businesses unable to adapt to economic challenges.

"The country's labour laws make it very difficult for employers to adjust employment in response to an economic downturn, except in the Special Economic Zones (SEZs) where labour laws do not apply," the US State Department said in its report.

"Outside the SEZs, the employer must engage employees and their representatives and agree to adopt measures to avoid retrenchment. If the measures fail, the employer can retrench and pay an all-inclusive package of one-month salary for every year of service or the pro rata share thereof."

The report comes as Zimbabwe continues to experience widespread job cuts, particularly in manufacturing, construction, and retail, as firms battle mounting operational costs and falling consumer demand.

In September, Public Service, Labour and Social Welfare Minister Edgar Moyo announced that government would intensify scrutiny of retrenchment exercises and investigate companies accused of abusing the process.

Moyo's remarks followed growing reports of firms laying off permanent staff only to rehire for the same roles on short-term contracts — a tactic unions claim is designed to avoid paying higher wages and benefits to experienced workers.

According to the US report, Zimbabwe's Labour Act and its 2015 and 2023 amendments permit the termination of contracts only under specific conditions — including mutual agreement, expiry of a fixed-term contract, or through a registered code of conduct.

In cases where a company does not have its own employment code, it must adhere to the national model code when carrying out dismissals. The law does not recognise "unfair dismissals" or arbitrary layoffs.

The State Department also noted that Zimbabwe's collective bargaining framework applies across entire industries and not just to union members. Negotiations occur both at the enterprise and sectoral levels under National Employment Councils (NECs).

"Unions representing at least 50% of workers may bargain with the authorisation of the Minister of Public Service, Labour and Social Welfare," the report stated.
"The law also encourages the creation of employee-controlled workers' committees in enterprises where less than 50% of workers are unionised."

However, the report observed tensions between trade unions and workers' committees, saying employers often use the latter to weaken organised labour.

"Trade unions regarded the existence of such a parallel body as an arrangement that allows employers to undermine the role of unions," it said.

With retrenchments becoming increasingly common, many employers are now turning to temporary or contract workers — including graduate trainees and interns — to avoid severance costs and complex termination procedures.

The US noted that while the 2015 Labour Amendment Act requires employment councils to limit the number of times short-term contracts can be renewed, enforcement remains weak.

"Employers in all sectors rely heavily on temporary or contract workers to avoid having to pay severance costs and follow other onerous termination procedures," the report said.
"The government does not waive labour laws to attract or retain investment, except in the case of SEZs."

The report also reaffirmed Zimbabwean workers' rights to form and join unions, bargain collectively, and strike legally, though these freedoms are restricted for public sector employees, who can only form associations rather than trade unions.

Despite the 2019 establishment of the Tripartite Negotiating Forum (TNF) to strengthen dialogue between government, labour, and business, progress has been minimal.

The report concludes that while Zimbabwe's laws are designed to protect workers, their rigidity continues to constrain private-sector flexibility - deterring investment and hindering job creation.