National Employment Council for the Catering Industry v Harare Club

### Preamble
1
HH 460-18
HC 8281/15
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NATIONAL EMPLOYMENT COUNCIL FOR THE CATERING INDUSTRY

versus

HARARE CLUB

HIGH COURT OF ZIMBABWE

CHAREWA J

HARARE, 15 May 2018 & 8 August 2018

Opposed Application – Stated Case

Mr G Machingambi, for the plaintiff

Mr E Kawonde, for the defendant

CHAREWA J: The plaintiff issued summons against the defendant, claiming payment of $106 665.24 comprised of outstanding council levies, pension fund dues and trade union contributions due on a collective bargaining agreement for the catering industry. The defendant raised a special plea that all claims prior to 1 September 2012 had prescribed. For the unprescribed amount, the defendant had no obligation to meet the same as it was unconstitutional to force it to belong to any employer’s organisation contrary to its right of freedom of association, and further and in any case, the statutes relied on by plaintiff to ground its claim were inapplicable as they had lost validity through abrogation.

The plaintiff conceded that part of the claim had prescribed. Further, the facts being largely common cause, the parties referred the following issues for hearing as a stated case:

Whether or not the order sought by plaintiff is unlawful in so far as it violates defendant’s fundamental constitutional right to freedom of association as enshrined in s58 of the Constitution of Zimbabwe Amendment No. 20.

Whether or not the statutes upon which plaintiff grounded its claim were inapplicable as they had lost validity through abrogation.

Whether membership of the pension fund administered by the plaintiff is optional or mandatory and the effect thereof on defendant.

Whether the defendant is indebted to the plaintiff and is obliged to make payment to the plaintiff in the unprescribed amount of $37 369.82

Whether the plaintiff’s claim is competent in as far as it does not allege that the defendant’s employees are members of the pension fund administered by the plaintiff.

The facts

It is common cause that s 19(1) and (2) of the Collective Bargaining Agreement Catering Industry (General Conditions) S.I. 167/1991 stipulates that an employer in the class of trade in which defendant falls is a member of the National Employment Council (NEC) for the Catering Industry and shall deduct one and a half per cent from the basic wage of each of its employees and add an equal amount from its own resources. Once it has done so, s 19(3) requires a person in the class of which defendant falls to remit the total amount to the plaintiff as a council levy. Further, s 19(4) grants plaintiff the right to proceed against persons in defendant’s category in the event that they fail to act as prescribed in s 19(1), (2) and (3). Defendant did fail, neglect or refuse to make payments representing the council levy between 22 January 2009 and 25 June 2015.

It is further common cause that s 8(1) and (2) of the Industrial Agreement: Catering Industry S.I. 359/1980 provides that an employer falling in the class of the defendant shall deduct 5% from the basic wage of each of its employees who are members of the pension fund and add an equal amount thereto as pension contributions. Once it has done so, s 8(3) obliges a person in the class of which defendant falls to remit the total amount to the plaintiff as pension contributions. It is not disputed that defendant failed, refused or neglected to do so between 22 January 2009 and 25 June 2015.

It is also common cause that s 7(1) of the Industrial Agreement: Catering Industry (Employers Organization and Trade Union Subscriptions) Rhodesia Government Notice 549/1976 as amended by S.I. 865/1981 stipulates that a person in the class of the defendant is obliged to make deductions from the wages of its employees on the scales indicated being in respect of subscriptions to the trade union to which its employees belong and remit the same to plaintiff. Defendant did not comply with the statutory instrument for the period 22 January 2009 to 25 June 2015.

There is no dispute between the parties as to the rates for the levies, trade union dues and pension contributions. As a result the parties agree that should the defendant be found legally liable to make payment to the plaintiff, the amount due as at 11 September 2015 is $37 369.82.

Parties’ submissions

The plaintiff submits that its claim is based purely on the law as enshrined in the applicable collective bargaining and industrial agreements encapsuled in subsidiary legislation. Further, such legislation remains valid as no applications have been brought prior to this date to impugn it as being unconstitutional. Nor have declarators to that effect been sought in the present matter. Thus, in the absence of a successful challenge to the law which stipulates that the defendant belongs to the catering industry, the defendant cannot ignore the law. Therefore, as long as the law remains on the books, the defendant is obliged to comply therewith. Further, plaintiff submits that such statutory instruments have not been abrogated but they have actually been amended so as to continue being applied. In addition, plaintiff submits that it is not necessary to allege that defendant’s employees are members of the pension fund as this is a matter of law in terms of s 7(3) of S.I. 359/1980.

On its part, the defendant submits that it does not accept that it is bound by the collective bargaining agreements as it did not elect to be so bound. Besides such agreements are unfair and unconstitutional in so far as they restrict defendant’s freedom of association. Further, and in any case, the agreements were entered in the Zimbabwe dollar era and have thus been abrogated and are no longer applicable as new agreements based on the United States dollar ought to have been entered into. Besides the plaintiff’s claim does not allege that defendant’s employees are members of the pension fund for the industry. In any event membership of such pension fund is not mandatory.

The Issues

It is not in dispute between the parties what the relevant provisions of the collective bargaining and industrial agreement prescribe in terms of the rights and obligations of parties bound by them.

I propose to resolve this matter by addressing the following questions: has the law in casu been abrogated, and therefore lost its validity? And, if the law has not lost it validity, is it mandatory? Obviously, if the law is mandatory, the parties’ issue 4 falls away as defendant is then obliged to pay to plaintiff the unprescribed amount of $37 369.82 unless plaintiff’s claim is incompetent for failure to aver that defendant’s employees are members of the pension fund. If the law the law has not been abrogated and remains valid, does it violate the defendant’s constitutional rights? If it does, what is the effect, on the rights and obligations of the defendant, of the law which remains extant and has not been set aside?

The law and its application to the facts

Has the law encapsuled in S.I. 167/1991, S.I. 359/1980 and S.I. 549/1976 as amended by S.I. 865/1981 been abrogated and is therefore invalid?

It is trite that a law lasts indefinitely until it is repealed or changed. The parties agree, in clauses 1, 5, 8 and 10(d) of the statement of agreed facts, that deductions and contributions for levies, pensions and trade union dues were pegged in percentage terms: one and a half percent rising to 3% in 2008 for council levies, 5% for pension and 5% reduced to 4% in 2014 for trade union dues. The contributions were therefore never fixed in any specific currency. The argument by defendant that the change from the Zimbabwe dollar to the US dollar at the advent of the multi-currency regime resulted in the abrogation of the collective bargaining agreements is thus fallacious and unsustainable. It was thus never necessary to enter into new agreements as percentage rates are easily calculable and convertible whatever currency is in use. I find therefore that the obligation to make contributions in terms of the percentage rates as agreed from time to time endure to this day as the law remains valid. Nor do I find it of any moment that the reduction of the percentage of union dues from 5% to 4% was unlawful as it is actually to the defendant’s benefit.

If the law with regard to the pension fund (S.I. 359 of 1980) remains valid, is it mandatory?

Defendant submits that that it is not obliged to make the deductions for pension contributions as membership to the pension fund is optional and not mandatory.

There is no dispute that s8 (1) and (2) of S.I. 359 of 1980 is peremptory. This is agreed by both parties as evidenced by paragraphs 5 and 6 of the common cause facts agreed by the parties. I therefore do not find it necessary to quote the provisions in extensio. Section 8 requires an employer belonging to the catering industry to make a percentage deduction for pension contributions from each employee, add an equal percentage from its own resources and remit the same to the plaintiff. No provision is made for any discretion or choice by the employer whether or not to comply.

The defence raised by the plaintiff is therefore totally irrelevant: the law does not require or force the employer to be a member of the Pension Fund, but only to make necessary deductions and remit the same.

Besides, it is defendant’s employees who are mandatorily members of the pension fund by operation of the law. Thus, the law, as stated in s 8(3) obliges the plaintiff to remit the pension contributions for its employees to the plaintiff. The duty to do so is mandatory as the provision is couched in peremptory terms. The defendant does not dispute that it refused and or failed to comply with these mandatory provisions. Ergo, I must find that it must be ordered to so comply.

Is the plaintiff’s claim for pension contributions incompetent for failure to aver that defendant’s employees are members of the Catering Industry Pension Fund?

Plaintiff’s claim for payment of pension contributions is predicated on S.I. 359 of 1980, which, in s 7(3) provides as follows:

“7 (1)……..

(2)……..

(3) An eligible employee shall (my emphasis), become a member of the Fund on the

first day of the month succeeding that in which he completed six months service with an employer in the industry other than an employer who has been exempted from participating in the fund.”

It seems to me that the effect of this provision is to make it mandatory for every employee in the industry who has been in employment for six months to be a member of the pension fund. The only employees who may not be members are those employed by an employer which has been granted an exemption from participating in the Fund. Therefore it is not necessary for employees to apply to belong to the pension fund: they are automatically members by operation of law merely by virtue of their employment in the industry as long as their employer is not exempt.

Therefore, the only way that defendant’s employees could not have been members of the pension fund is if the defendant had sought and obtained exemption. On the papers, defendant has not alleged that it was exempt from operation of the law, or that it even made any application to be so exempt.

Consequently I do not think that it is necessary for the plaintiff to allege that the employees are members of the pension fund, because the law is the law, whether or not one alleges it. I therefore find that the defendant’s employees are members of the pension fund by dictate of the law.

Does the law, as prescribed in s19(1), (2) and (3) of S.I. 167/1991 violate defendant’s right to freedom of association in contravention of s58 of the Constitution?

S58 of the Constitution provides that

“1)  Every person has the right to freedom of assembly and association, and the right not

to assemble or associate with others.

2)   No person may be compelled to belong to an association or to attend a meeting or

gathering.”

Plaintiff does not dispute this truism, and quite rightly so. However, the defendant, in my view has gotten hold of the wrong end of the stick. This is not a matter where the defendant is being compelled to belong to an employers’ organisation. In fact, the various collective bargaining agreements governing the issue of payment of national employment council levies, trade union dues and pensions do not remotely suggest that the employers’ in a particular industry are constituted into an employer’s organisation. Rather the obligation of the employer is merely to make payments for the benefit of its employees. It still remains free to choose to belong or not belong to an employer’s organisation. By requiring plaintiff to deduct NEC levies and remit the same to the plaintiff, the law does not compel the plaintiff to belong to the NEC. NECs are not employer organisations, but are in fact mediums or arbiters for negotiation between employers and employees.

This is because the objective of collective bargaining agreements is to level the negotiating field between the employer and the employee, who is the weaker party in the employer/employee relationship, by classifying their sectorial industries for the ease of negotiating the rights and benefits of employees. If anything, the NECs rather create employees’ organisations to the extent that they result in trade unions for particular industries.

In any event, as rightly pointed out by the plaintiff, the right to freedom of association is not absolute, it being excluded from that status by s86 of the Constitution which permits limitations of rights as prescribed by a law of general application as long as the limitation is fair, reasonable, necessary and justified in a democratic society.

More particularly, subsection 3 of s86 specifically excludes the right to freedom of association from those rights which may not be derogated from by force of law. In this respect s82 of the Labour Act [Chapter 28:01] is a law of general application. As such, it limits the right to freedom of association by allowing for parties to a collective bargaining agreement and their members, all employers, contractors and their respective employees in the undertaking or industry to which the agreement relates, to be bound thereby, in derogation of their right to freedom of association.

Therefore, to the extent that defendant makes no submissions as to the unfairness, unreasonableness or unjustifiability of the law in a democratic society, I do not find it necessary to traverse the test applied both in international law and our domestic jurisprudence with regard to a law, which, despite being valid, may nevertheless offend constitutional provisions in the bill of rights to the extent that it limits those rights.

I thus subscribe to the sentiments of Makoni J (as then was) when she stated that

“I find merit in the submissions…….that the whole fabric of the process of collective bargaining and enforceability is meant to protect the interests of those parties that are affected by it. The law maker determined that the registration of CBAs shall have the effect of binding players in the industries to which they apply. Not to do so would defeat the objectives of collective bargaining some of which are to restore the unequal bargaining position between employers and employees and to peg minimum conditions of employment to ensure adequate protection of the weaker party to an employment contract i.e. the employee. Statutory intervention is justified to deter some unscrupulous employers from abusing and trampling upon the rights of employees with impunity.”

Therefore in the absence of a successful challenge to s82 of the Labour Act, the defendant remains bound by the law and must comply with collective bargaining agreements made thereunder. By no stretch of imagination can the current plea be construed to be a challenge as to the constitutionality of s82 of the Labour Act. Consequently, I find that no violation of defendant’s constitutional rights has occurred as s19 of the Collective Bargaining Agreement S.I. 167 of 1991 does not create an employer’s organisation.

What is the effect, on the rights and obligations of the defendant, of a law which remains extant, but which violates its constitutional rights?

Having found that there is no constitutional violation of the defendant’s freedom of association, it is not necessary to traverse this question.

Conclusion

In conclusion, it is my view that the statutory instruments relied upon by the plaintiff for defendant to effect payment of NEC levy, pension contributions and trade union dues have not been abrogated and remain valid. In particular membership of the pension fund for the catering industry is mandatory for defendant’s employees requiring that defendant makes the contributions thereto as required by the law. The plaintiff’s claim is therefore competent as it alleges that defendant failed to comply with mandatory provisions. Furthermore the defendant’s constitutional right to freedom of assembly and association has not been violated as the law does not compel it to belong to an employer’s organisation. Therefore, the quantum of the claim having been agreed by the parties, the defendant must be compelled to pay the same to the plaintiff.

Disposition

Consequently, it be and is hereby ordered that the defendant shall pay to the plaintiff:

the sum of $37 369.82 with interest thereon at the prescribed rate from date of service of summons to date of full and final payment.

costs of suit.

G. Machingambi Legal Practitioners, plaintiff’s legal practitioners

Kawonde Legal Services, defendant’s legal practitioners