The New Rwandan Labour Code: a mixed bag of pro-employer and pro-employee changes

Effective from 6 September 2018, Rwanda’s New Labour Code (law n° 66/2018 of 30/08/2018 regulating labour in Rwanda) repealedlaw n° 13/2009 of 27/05/2009 regulating labour in Rwanda(the “Repealed Labour Code”), which has been in force for over nine years. This article gives an overview of the key changes introduced by the New Labour Code. Amendment of employment contracts The New Labour Code clearly imposes a requirement that any amendment to an employment contract be consented to by both parties. This was not required under the Repealed Labour Code, although the Supreme Court of Rwanda previously held that mutual consent was required inNtukamazina Jean Baptiste v Prime Insurance Limited. In this case, the Supreme Court also held that an employee’s resignation resulting from the employer’s unilateral amendment of their contract is construed as a dismissal attracting payment of damages on the side of the employer (constructive dismissal). However, under the New Labour Code, when the amendment in question relates to a change of the employee’s position without a change in level and compensation, the employer is not required to seek the employee’s consent. Administrative leave or suspension of employment contract The Repealed Labour Code was silent about the possibility of putting an employee on leave for the purpose of conducting investigation when misconduct is alleged, and the presence of the employee at the work place is likely to jeopardize the investigation process. This has been clarified under the New Labour Code, where an employment contract may be suspended for a period not exceeding 30 days for the purpose of conducting investigations in respect of an alleged employee’s misconduct. An employee placed under an administrative leave is not paid, but in case he or she is found not to have committed the alleged misconduct and is therefore not dismissed, the employee must be paid their salary for the suspension period. Probation period The probation period has under the New Labour Law been reduced from six months to three months. The three-month probation period may be extended by the same period, but this extension is subject to certain requirements, which was not the case under the Repealed Labour Code. Employers are also required to prepare and notify an employee under probation, a written performance evaluation, before deciding to terminate the employee’s employment. Non-compliance with this requirement (at least in the author’s view) may be construed by courts as unfair dismissal. Disciplinary sanctions The New Labour Code, under article 42, introduces disciplinary sanctions, namely oral warning, written reprimand and temporary suspension (not exceeding eight working days) without pay and dismissal. The sanctions appear to be hierarchic in nature, but the law is not clear whether one is required to apply a less severe sanction before going to a more severe or if perhaps, owing to the nature and seriousness of the alleged misconduct, the employer can go straight to dismissal. This will likely be a point of contention in courts, until it is clarified by case law. Termination of labour relations The New Labour Code loosens the termination of fixed-term contracts, and unlike its predecessor, an employer can now terminate a fixed-term employment contract for legitimate reasons short of gross misconduct without a risk of paying for the outstanding contact period. Despite the flexibility introduced by the New Labour Code, employers should first consider open-ended contracts unless there are imperative reasons to use fixed-term contracts. This is owing to the fact that fixed-term employment contracts (when used for non-temporary vacancies) may be re-characterised by courts into open-ended contracts (as held by the Supreme Court in theNtukamazinacase). There are also non-legal implications associated with fixed-term contracts, including eroding the morale and productivity of employees. The New Labour Code has also provided some clarity regarding the termination of employment contracts due to gross misconduct by defining the latter. Further, and in addition to stating that gross misconduct is notified to an employee within 48 hours, it clarifies the starting point in counting the 48 hours as the time the relevant evidence is obtained. It should be noted that it is a settled precedent by the Supreme Court that non-compliance of the said period negates the gravity of the alleged misconduct and renders the termination of employment contract an unfair dismissal (seeHakizimana Gilbert v NISR). Right of reinstatement The New Labour Code introduces the right of reinstatement, which aims to protect employees dismissed for economic or technical reasons by giving them the right to be reinstated in the vacancy the employer may need to fill within six months from the date of their termination without being subject to entry competition, provided that they meet the applicable requirements for the vacancy in question. This, however, leaves a number of aspects unclear, such as the remedies available to an employee in case they are not reinstated (i.e., damages or forced reinstatement) and whether the employer has the obligation to notify the dismissed employee of the new vacancy, etc. unaddressed. In any case, employers have to be cautious and seek professional advice before bringing new employees on board following the retrenchment of employees due to economic reasons. The New Labour Code also introduces other critical changes regarding the payment of terminal benefits, work certificates, as well as the obligation of employers to have rules of procedure. Gathering from the above, the New Labour Code introduced several critical changes. Some are crystal clear while others are, to some extent, ambiguous. One will have to wait and see how they will be interpreted by the courts of law. In all cases, employers have to ensure that they are acquainted with the New Labour Code as it will have to inform their hiring decisions and human resource policies. Reviewed by Désiré Kamanzi, head of ENSafrica in Rwanda.

Dieudonné Nzafashwanayo

ENSafrica Rwanda associate [email protected] cell: +250 733 300 305