The Constitutional Court has upheld a landmark High Court ruling declaring section 28(2) of the Reconstruction of State-Indebted Insolvent Companies Act unconstitutional, handing a major victory to 27 former employees of Shabani Mashava Mining (SMM) who had been denied their terminal benefits for nearly two decades.
The applicants, led by Josephat Gwatida, took the Justice, Legal and Parliamentary Affairs minister Ziyambi Ziyambi and the attorney-general Virginia Mabhiza to the Constitutional Court seeking confirmation of a High Court order issued by Justice Sunsley Zisengwe on February 24, 2025.
SMM was cited as the third respondent.
The case centres on the termination of the workers' employment in October 2011, following SMM's placement under 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 proceedings against SMM.
Their written request received no response.
Worse still, 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 section 28(2) 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, 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 time frames for payment to former employees of insolvent companies—safeguards conspicuously absent from the Reconstruction Act. The court also noted that no evidence had been presented showing that withholding benefits had improved SMM's financial position.
When the matter came before the constitutional court bench, led by Chief Justice Elizabeth Gwaunza and comprising justices Paddington Garwe, Annie Gowora, Ben Hlatshwayo, Bharat Patel, Susan Mavangira, and Nicholas Mathonsi, the judges confirmed 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,” the judges ruled. The court found that the absence of temporal limits rendered the limitation excessive and unjustifiable, imposing a severe and open-ended burden on workers 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 added.
The court suspended the order's operation for 180 days to allow the responsible Minister to regularise the matter. The minister and AG have not yet indicated whether they will seek to amend the legislation within the suspended period.