National Employment Council for the Catering Industry v Simbisa Brands

### Preamble
1
HH463-18
HC 1471/17
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NATIONAL EMPLOYMENT COUNCIL FOR THE CATERING INDUSTRY

versus

SIMBISA BRANDS

HIGH COURT OF ZIMBABWE

CHAREWA J

HARARE, 15, 17 May, 8 June & 8 August 2018

Opposed Application – Stated Case

Mr G Machingambi, for the applicant

Mr Lunga, for respondent

CHAREWA J: The plaintiff issued summons against the defendant claiming payment of $346 972.32 in respect of outstanding pension fund contributions for the period 30 April 2016 to 31 January 2017.

The facts and background

The facts and legal background of the matter are common cause: at all material times the defendant was a member of the pension fund for the National Employment Council (NEC) for the Catering Industry as required by s 8 of the Industrial Agreement: Catering Industry, S.I. 359 of 1980. On 10 March 2016 defendant notified plaintiff in writing of its intention to cease its membership with the plaintiff’s pension fund and to stop all contributions by 1 April 2016.

Plaintiff advised defendant that it could not resign membership but ought to seek exemption. Defendant was subsequently denied such exemption. On 1 April 2016, defendant ceased all contributions in terms of its notice previously given in March. Plaintiff therefore sued defendant for pension contributions from April 2016 to date of summons.

Parties’ submissions

At the hearing, and in limine, the defendant raised the question whether the plaintiff has locus standi to institute these proceedings against the defendant as this was the prerogative of the Trustees of the Catering Industry Pension Fund. Further, defendant argued that plaintiff has no cause of action against defendant as the relationship between it and the pension fund was in contract to which plaintiff was not party. In addition, it behove on the defendant’s employees, as the parties to the employment relationship to sue for payment of their pension contributions.

On the merits, the defendant submits that there is no provision binding it to make pension fund contributions to the Catering Industry Pension Fund. Further, defendant contends that the provisions of s8 (1), (2) and (3) of S.I. 359 of 1980 are no longer legally binding upon it from the date it ceased to make contributions, on the basis that it resigned therefrom. Further and in any case, S.I. 359 of 1980 is ultra vires the enabling act as s74 of the Labour Act [Chapter 28:01] does not permit the creation of compulsory pension funds as part of collective bargaining agreement (CBAs). In addition, the statutory instrument, if it binds and prohibits the defendant from resigning, violates defendant’s right to freedom of association contrary to s58 of the Constitution of Zimbabwe. Finally, defendant submits that if it be found that there is liability on its part, then plaintiff is not the proper juristic person to enforce that liability, but the Trustees of the Catering Industry Pension Fund.

On its part, the plaintiff submits that defendant is legally bound by the provisions of S.I. 359 of 1980, which provisions are not ultra vires s74 of the Labour Act, and which creates the obligation for plaintiff to continue collecting pension fund contributions from employers in the catering industry; in which case it is the proper plaintiff in the matter. Further, plaintiff submits that the obligation created in the CBA for the defendant to pay pension contributions is constitutional as the agreement does not create an employer’s organisation to which defendant is forced to subscribe.

The issues

The parties are generally agreed on the principles of law governing CBAs and the constitutional right to freedom of assembly and association. They however differ in their interpretation of the law and its applicability to the case. In that regard, the parties are agreed that the issues which this court must deal with in order to dispose of this matter are as follows:

Did the defendant lawfully resign from being a member of the Plaintiff’s Pension Fund?

Is the Industrial Agreement: Catering Industry, S.I. 359 of 1980 ultra vires s74 of the Labour Act Chapter 28:01?

Does the agreement violate defendant’s right to freedom of assembly and association enshrined in s58 of the Constitution Amendment (No 2) Act, 2013?

Is defendant indebted to the plaintiff in the amount claimed or any other amount in respect of pension contributions?

The law and its application to the facts

Did the defendant lawfully resign from being a member of the Plaintiff’s Pension Fund?

The defendant properly made the concession, during the hearing, that, by force of law, members of the Plaintiff’s Pension Fund are in fact its employees, not itself or any other employer. Therefore defendant could not have resigned as a member of a body to which it was never a member. This concession disposes of this issue.

Whether the plaintiff has locus standi to institute these proceedings against the defendant.

The defendant argues that the Catering Industry Pension Fund being a body corporate capable of suing and being sued in its own name, the locus standi to claim any unpaid pension contributions vests with the trustees and not the plaintiff. Alternatively, since the defendant is not a member of the pension fund, when it ceased to pay the pension contributions, then the locus vests with the employees as members of the pension fund, not the plaintiff.

On its part, the plaintiff conceded that in view of the fact that s 8(6) and 16(d) of S.I. 359 of 1980 reiterates the standing of the trustees of the pension fund, then such trustees have the locus to institute proceedings. However, to the extent that the CBA imposes a right and duty upon the plaintiff’s secretary to recover and enforce the collection of pension funds, then the plaintiff remains vested with locus in terms of s 8 (3) even if the pension fund is a body corporate.

Section 8(3) provides that:

“(3) On or before the 7th day of each month in respect of the previous month’s contributions and deductions, every employer shall forward to the secretary (my emphasis) all monies payable in accordance with the provisions of sub clauses (1) and (2) of this clause, together with a statement in the form prescribed by council.”

The import of this provision is that every employer has an obligation to remit pension contributions to the plaintiff’s secretary, and the secretary has a legal duty and right to receive and collect these contributions. Further, acquittals of the contributions are made to the plaintiff on a form prescribed it. No provision is made in the law for payment to be directly made to the pension fund by any employer as the law does not create such a duty nor prescribe any mechanism therefor. It seems to me that the ordinary interpretation of the law is that it is the secretary, and not the pension fund, acting nominee officio for the plaintiff who has the power to release any payer from liability.

It is not disputed that until its purported resignation, which was incidentally made to the plaintiff and not to the pension fund, the defendant had understood the law in the same manner, making its payment to the secretary and obtaining full release from liability therefrom without any direct or indirect involvement of the trustees of the pension fund.

Ergo, the defendant understood that if it failed to make payment to the plaintiff, the plaintiff had a right and duty to enforce recovery of unpaid pension contributions. I do not therefore believe that it was by accident that the CBA did not provide for direct payment of pension contributions to the pension fund. By the same token, while the pension fund is a body corporate, the absence of a payment mechanism for pension contributions to it by employers renders it incapable of enforcing such payment. I therefore see no contradiction between s8 (3) and s 8 (6) or s 16 (d). It seems to me that the two latter provisions only make it possible for the pension fund to institute proceedings for matters other than the enforcement of the payment of pension contributions by employers. In the circumstances of the case, the common law position on locus standi enunciated by the Supreme Court is not applicable. In any case, the plaintiff’s interest in the claim is a matter of law.

I find therefore that the plaintiff’s locus standi to institute proceedings for the recovery of unpaid pension contributions is granted to it by virtue of the law which places a legal duty on it to receive such contributions.

Whether plaintiff has any cause of action against defendant.

Tied to the issue of locus standi was defendant’s averment that plaintiff did not have any cause of action against defendant.

The defendant argues that the relationship between the defendant and the pension fund is based in contract, it being predicated on the terms and conditions of employment of the employees who are members of the pension fund. Defendant expands its argument to state that CBAs are contracts between employers and trade unions and therefore if there is non-compliance therewith, it is not for the parties to the agreement to complain in law but for the parties to the employment relationship itself to do so. Therefore while a CBA ought to be interpreted as creating a statutory and binding obligation on an employer to provide a pension benefit as a condition of employment, it cannot be competently interpreted to create a statutory obligation to remit such pension amounts to a pension fund.

While this argument is ingenious, I find it so convoluted as to be meaningless. In fact, it seems to me that defendant wants to have its cake and eat it too, by saying in one breath a CBA is a statute, and in the next breath, limiting its application to contractual obligations.

In my view, a statutory provision creates statutory duties and obligations. Once an agreement has been promulgated as statute, it seems to me that it can no longer be classified as a contract, even if its original basis was in contract. Conversely, a contract subsists and operates as between the parties thereto, while a statute has wider application. As in this case, the CBA for the catering industry binds all employers and employees in the industry whether or not they were parties to its negotiation. And once a statute creates duties and obligations for persons other than the parties who negotiated it, then it has wider application and binds whichever persons have been granted certain obligations and duties.

I therefore do not agree with the defendant’s position as, firstly, membership to the catering industry pension fund is not a voluntary exercise. Employees are obliged to be members upon employment in terms of s7 (3). Further, unless exempted on good cause shown employers have an obligation to collect and remit pension contributions on behalf their employees in accordance with s 8. Therefore the provision of pension is a statutorily mandatory condition of employment which enforcement is through the plaintiff’s secretary. Thirdly, the defendant seems to be labouring under the misconception that the plaintiff is an agent of the pension fund, yet the CBA is clear: the plaintiff has its own locus as created by the CBA. It is fallacious for the defendant to argue that a CBA is not law, else it should not be a statutory instrument. Thus, the plaintiff’s cause of action is predicated upon breach of a statute or law which is extant.

Is the Industrial Agreement: Catering Industry, S.I. 359 of 1980 ultra vires s74 of the Labour Act [Chapter 28:01]?

Defendant argued that to the extent that the CBA for the catering industry seeks to bind it to make contributions to a third party, the pension fund, then it is ultra vires s74(3) of the Labour Act.

It seems to me that here too, the defendant totally misconstrued the tenor of the plaintiff’s case. Plaintiff’s claim is simple: it is that defendant was obliged to adhere to the terms of the CBA for the industry by remitting to plaintiff pension contributions for defendant’s employees. Defendant failed to do so, despite this being a mandatory requirement agreed in a statutory instrument made terms of s74 (3) of the Labour Act and must be compelled to do so.

NECs act for employees who are the weaker partner in employment relationships in order to level the playing field. In that respect the CBA authorises NECs to collect pensions on behalf of employees. Defendant having failed to honour its statutory obligation to remit pensions on behalf of its employees, the NEC is merely collecting that pension on behalf of employees. I do not want to believe that defendant seriously intends that each individual employee should institute his own claims to force defendant to pay the employee’s pension contributions to plaintiff for the reason that the plethora of cases would negatively impact on the administration of justice. Further, such an interpretation of the law would create a disproportionate burden on the employees contrary to the spirit and objective of CBAs.

Moreover, defendant seems to be confusing the plaintiff with the pension fund. The institution of NECs like the plaintiff was specifically to deal with the issues of the uneven negotiating field between employees and employers in the provision of reasonable conditions of employment. In that vein s74 (6) of the Labour Act specifically empowers CBAs to include “other more favourable conditions of employment”. In my view, that NECs have the power to enforce conditions of employment on behalf of employees is one such more favourable condition of service. I therefore find that Industrial Agreement: Catering Industry, S.I. 359 of 1980 is not ultra vires s74 of the Labour Act [Chapter 28:01].

Does the agreement violate defendant’s right to freedom of assembly and association enshrined in s58 of the Constitution Amendment (No 2) Act, 2013?

Finally, defendant argues that the decision of the Catering Industry’s Board to refuse to accept its resignation and /or grant it exemption violates its constitutional right to freedom of assembly and association.

I will make short shrift of this submission: firstly, by its own concession, defendant, not being a member of the Catering Industry Pension Fund, there is no question of it being compelled to belong to any association contrary to its rights in terms of s58 of the constitution. All that is required of the defendant is that it makes payment for pension contributions which it is obliged to make on behalf of its employees to the plaintiff. Nor is there any question of the defendant being compelled to belong to the plaintiff, which is an independent body institute to mediate negotiations between employers and employees.

Further and in any event, even were it correct that defendant is being forced to associate with anyone against its will, it ought to have shown that the right to freedom of association is absolute. If it is not, then the defendant ought to have shown that the limitation placed on the right was not prescribed by law, or was prescribed by a law which does not pursue a legitimate aim, was not reasonably necessary in a democratic society and was disproportional in its effect.

I take note that the right to freedom of association is in fact not absolute as s86 of the Constitution states that it can be limited by a law of general application as long as the limitation is fair, reasonable and necessary in a democratic society based on openness, justice, human dignity, equality and freedom. Sections 74 and 82 of the Labour Act are laws of general application which allows for the negotiation, registration and binding nature of collective bargaining agreements. Further, they are laws which remain extant and have not been challenged. I equally take note that defendant has not sought any declaraturs vis-a-viz the laws it seeks to impugn.

Is defendant indebted to the plaintiff in the amount claimed or any other amount in respect of pension contributions?

Defendant made no submissions at all in its main and supplementary heads of argument or at the hearing to dispute the quantum of the plaintiff’s claim. In the premises, I take it as admitted.

Conclusion

In the circumstances, I find that defendant did not lawfully “resign” from its obligation to pay pension contributions for its employees. Further, it is apparent that the plaintiff has both the locus standi and necessary causa to bring this claim. In addition, I find that S.I 359 of 1980 is not ultra vires the Labour Act. Moreover, defendant’s right to freedom of assembly and association has not been violated the statutory instrument. Finally, no submissions having been made by the defendant in dispute of quantum, I find that the defendant is liable to the plaintiff for pension contributions in the amount claimed in the summons.

Disposition

In the premises, it is ordered that the plaintiff’s claim is allowed. The defendant shall pay to the plaintiff the amount of $346 972.32 together with interest thereon at the prescribed rate from the date of summons to date of payment in full and costs of suit.

Machingambi Legal Practitioners, plaintiff’s legal practitioners

Lunga Attorneys, defendant’s legal practitioners