eBusiness Weekly
Golden Sibanda and Martin Kadzere
CHIREDZI-based sugar giant, Tongaat Hulett Zimbabwe, has embarked on a programme to trim down its head count with as much as 5 000 workers facing the chop at one of the country’s single biggest employers.
While Tongaat has made an offer to workers under a voluntary retrenchment exercise, Business Weekly has it on good authority that the company will follow up with compulsory retrenchment if the targeted numbers are not achieved.
A notice signed by chief executive Aiden Mhere and addressed to staff members, says Tongaat intends to reduce its staff numbers as part of a process to redefine its operations across the region amid tough conditions.
The sugar producer said the staff downsize exercise was designed to reinvigorate its human capital capabilities and fundamentally change the company’s performance, culture and strengthen internal governance systems.
Notably, some of the affected workers are children of current and former long serving staff members who stayed in company houses and could be thrown into a quandary as to where they will find decent accommodation.
The company said employees who will take up the company offer and get paid their dues, would be allowed to stay in the company provided houses only until May 31, 2020.
The Chiredzi company employees about 18 000 workers and the staff right-sizing exercise comes after Tongaat’s Zimbabwe and regional operations were rocked by financial accounting and governance irregularities recently.
In the notice, Mhere said Tongaat was aware that some of its current employees who have put up years of dedicated work would seize the opportunity to terminate contracts with the company to take up new challenges. Tongaat has offered workers a gratuity of two weeks’ pay for every year served, retirement bonus of 4/30 of total monthly earnings multiplied by years of service and six months’ severance package plus cost of living adjustment.
Workers will also get 12 months’ medical cover through the firm’s medical facilities or medical aid contributions equivalent to the Cimas private hospital package, full salary or wages for February 2020 and allowances.
Further, workers taking up the offer have been offered three months’ salary in lieu of notice, cash in lieu of accrued vacation leave days and payment of pension benefits in terms of the relevant industry pension fund rules. Tongaat said workers will be assisted with relocation transport to a destination of their choice within Zimbabwe or an equivalent of $8 000 transport funding with the effective date for mutual separation set as March 1, 2020.
“This offer is open to employees in all grades. The company reserves the right to accept or decline any application at its own sole discretion,” said Mhere’s notice, but whose date is not indicated.
Asked for comment, corporate affairs and communications manager Adelaide Chikunguru said following numerous requests from some long serving employees for early retirement, the company had given such employees an opportunity to voluntarily retire so as to pursue other income generating projects. Tongaat would not give further official detail, especially on the targeted number.
“This programme is open to all permanent employees who wish to take a break from formal employment in order to concentrate on their own wealth creation initiatives and is a purely voluntary exercise. The company currently employs some 14 892 people at peak,” said Chikunguru vial e-mailed response.
As such, it was not clear by what factor the downsizing would help trim the company’s operating costs for the Zimbabwe operations. The South African-headquartered company wholly owns Triangle Limited and 50,3 percent of fellow sugar producing giant and Zimbabwe Stock Exchange (ZSE) listed Hippo Valley Estates Limited. Tongaat has a firm stronghold on the local sugar industry; with the South African firm having interests that straddle cane growing, milling and marketing in Zimbabwe, which rakes in millions of dollars annually.
The company owns cane fields that straddle over 30 000 hectares at Triangle and Hippo Valley Estates and also owns the country’s only two sugar mills at the two estates in Chiredzi as well as Triangle.
Regionally, Tongaat’s operations span across South Africa, Swaziland, Botswana, Mozambique and Zimbabwe. Zimbabwe operations represent combined installed sugar milling capacity of more than 640 000 tonnes. Tongaat was last year rocked by a financial scandal after a forensic audit revealed that executives at Hippo Valley and Triangle and in South Africa overstated sugar sales to meet targets and reap bonuses.
The company said in November last year, it had received results of a six-month forensic probe into its books carried out by auditors PwC, and that the audit showed fraud across its business units, including in Zimbabwe. Zimbabwean directors implicated in the audit included Shelton Nhari (Triangle Finance Director), Sydney Mtsambiwa (former managing director of Tongaat Hulett Limited’s Zimbabwean operations), Steve Frampton (former Zimbabwe Sugar Sales General Manager), Raphael Pfunye (Zimbabwe Sugar Sales Finance Executive) and John Chibwe (Hippo Valley Estates Finance Director).
In May 2019 Tongaat said its published financial results could not be relied on and that the company’s equity (the value of the business after liabilities) in its 2018 financial was overstated by between R3,5 billion to R4,5 billion and that revised financial reports would be published in October 2019.
