Julius Muchati & 5 Others v National Handling Services

### Preamble
IN THE LABOUR COURT OF ZIMBABWE
JUDGMENT
NO LC/H/407/16
HELD AT HARARE 12 MAY 2016
CASE NO
JUDGMENT NO LC/H/407/16
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IN THE LABOUR COURT OF ZIMBABWE			JUDGMENT NO LC/H/407/16

HELD AT HARARE 12 MAY 2016				CASE NO LC/H/198/14

&  22 JULY 2016

In the matter between:

JULIUS MUCHATI & 5 OTHERS				Appellants

And

NATIONAL HANDLING SERVICES				Respondent

Before The Honourable F C Maxwell, Judge

For Appellants		Mr R R Mutindindi (Legal Practitioner)

For Respondent		Ms R Nemaramba – Dodzo (Legal Practitioner)

MAXWELL, J:

This is an appeal against an arbitral award in favour of respondent.  Appellants were employed by respondent.  Initially they were employed by Air Zimbabwe Holdings Ltd.  In 2009 appellants were sent notices of intention to retrenchment.  The retrenchment was challenged and there were protracted negotiations.  Subsequently retrenchment packages were agreed to on an individual basis.  Air Zimbabwe Holdings disbanded  in 2012 forming respondent and Air Zimbabwe (Pvt) Ltd.

A dispute arose on payment of the retrenchment package.  Appellants referred the dispute to a labour officer in September 2012.  No Settlement was reached on conciliation.  The matter was subsequently referred to arbitration.  The arbitrator gave on award which is the subject of this appeal.  The grounds of appeal are;

The arbitrator grossly erred and seriously misdirected himself on a question of law by dismissing the appellants’ claim on the erroneous basis that appellants were paid a retrenchment package in full when at law there was never such a lawful retrenchment without the Minister of Labour or retrenchment board’s approval of the purported retrenchment, which retrenchment was null and void ab initio.

Consequently, the arbitrator grossly erred and misdirected himself on a question of law, such misdirection being irrational and grossly unreasonable in its defiance of logic and common sense such that no reasonable person properly applying his mind to the facts and the law could have arrived at the impugned decision as he did.

The arbitrator erred on a question of law by dismissing the appellants’’ decision for payment of arrear salaries and benefits in terms of the subsisting contract of employment on the basis of a purported retrenchment which did not exist in the eyes of the law for want of compliance with labour legislation.

Appellants prayed for the appeal to be allowed with costs and the arbitral award to be set aside.  They also prayed for the matter to be remitted back to a different arbitrator to quantify the amounts due to the appellants.

In response respondent stated that the arbitrator acted within the terms of reference before him and the legality of the retrenchment was not in issue.  Further that the retrenchment was legal and appellants signed an agreement consenting to the retrenchment.  Respondent also stated that appellants failed to prove their claim for outstanding retrenchment packages.  Respondent further stated that the appeal was an abuse of court process which is meant to frustrate the respondent therefore it should be dismissed with costs.

It is clear that the appeal hinges on the legality of the retrenchment.  It was submitted for appellants that even through proof of the Minister’s approval of the retrenchment was furnished, the approval does not apply to the parties in question as the agreement that was approved was between Air Zimbabwe Holdings and appellants.  It was also submitted that appellants were entitled to their salaries and wages as their contracts of employment were terminated by respondent who was not their employer at the time of termination.  Therefore, it was argued for appellants, the contracts of employment with respondent still subsist.

It was submitted for respondent that appellants enforced the retrenchment agreement against respondent as they were aware that Air Zimbabwe Holdings had disbanded and they had been transferred to the respondent.  Further that the retrenchment package was paid by respondent and appellants cannot turn around and shift goal posts on who their employer was.

It is important to state issues which were referred to arbitration.  These were;

Alleged non-payment of agreed retrenchment packages.

To determine what is the quantum of retrenchment packages owed to each of the employees by the employer and whether the employer is liable to pay arrear salaries up to the date of final or full payment of retrenchment package.

Whether or not the employer is liable to pay 5% interest on outstanding amounts owed to the employees together with costs on a legal practitioner and client scale.

What is the appropriate remedy, if any?

The arbitrator ruled in favour of the respondent and as stated before appellants

noted this appeal on 5 March 2014 challenging the legality of the retrenchment exercise.  On 9 June 2014 respondent filed an application for leave to adduce further evidence on the basis that the issue of the legality of the retrenchment exercise was never placed before the labour officer or arbitrator.  Appellants conceded that indeed it was a new issue but argued that it was a point of law which can be raised at any stage, even on appeal.  The application was granted and the following documents were made part of the record before this court.

Letters by 1st, 4th and 5th appellants indicating willingness to negotiate a retrenchment package;

Invitation to retrenchment negotiations from Air Zimbabwe Holdings (Pvt) Ltd to 1st, 4th and 5th appellants;

Minutes of the retrenchment negotiations between the management of Air Zimbabwe Holdings (Pvt) Ltd and all the appellants individually;

Individual retrenchment agreements for all the appellants;

Requests for the approval of the retrenchment agreement for 1st, 4th and 6th appellants; and

The Retrenchment Board’s approval for all the agreements individually.

Appellant’s submission that the agreement that was approved by the Retrenchment

Board was  between Air Zimbabwe Holdings (Pvt) Ltd and themselves is correct.  However it is not correct that the appellants’ contracts of employment with the respondent still subsist.  When the requests for approval of the retrenchment agreements were sent, the then employer clearly stated that it had restructured.  I am persuaded by the submission for the respondent that appellants were working under respondent and therefore when Air Zimbabwe Holdings (Pvt) Ltd disbanded, respondent assumed the obligation to pay the retrenchment packages for the appellants.  The record of proceedings has proof that funds were transferred from the respondent’s bank account to the appellants’ individual accounts.  The reason given on the application for internal funds transfer form is “retrenchment package.” From the documents on record the payments were made between 2010 and 2013.

There are three issues raised for respondent which I will consider before dealing with appellants’ issues.

Prescription

It was submitted for respondent that the claim had prescribed as it was raised more

than two years after its occurrence.  In response counsel for appellants submitted that the matter was not prescribed as it is a continuing matter which was referred to the Ministry of Labour on time.  Prescription of disputes is governed by section 94 of the Labour Act.  It prohibits a labour officer from entertaining a dispute unless it is referred in him or comes to his attention within two years from the date it first arose.  However if the unfair labour practice, is of a continuing nature prescription will not apply.

Page 41 of the record of proceedings shows that the dispute was referred to the labour officer on 20 September 2012.  The obligation to pay the retrenchment packages arose after the approvals.  The approvals were on different dates in 2010 and 2011.  The record shows that the payment of packages commenced in 2011.  By the time the dispute was referred for conciliation the dispute was continuing.  On record is an application for transfer to 1st appellant’s account dated 29 January 2013, which confirms that the issue had not been settled by them.  I therefore find no merit in the objection that the matter had prescribed.  Clearly it is a dispute of a continuing nature and therefore not subject to prescription.

That appellants should not be allowed to raise new legal issues as it is prejudicial

Counsel for respondent’s submission was that the 1st ground of appeal concerns

issues that were not raised a quo .  It is trite that a point of law which goes to the root of the matter can be raised at any time, even for the first time on appeal.  See Muchakata v Netherburn Mine 1996 (10 ZLR 153.  For the court to consider a new matter on appeal, its consideration should not involve any unfairness to the party against whom it is directed.  The new issue raised by the appellants is the legality of the retrenchment.  It is difficult to understand why counsel for respondent persisted with this issue.  The application for leave to adduce further evidence which was granted was aimed at dealing with this issue.  Paragraph 11 of the founding affidavit thereto concludes by saying

“This is a new issue which has been raised on appeal by the respondents hence the need for introduction of new evidence which still address the issue.”

The granting of the application removed any possible prejudice that respondent might have suffered by the introduction of a new matter on appeal.  I therefore find that counsel for respondent was making submissions on an issue that had been overtaken by events.  No prejudice was suffered by respondent as it was given opportunity to respond to the new issue before the matter was set down for hearing.

That appellants waived their right to object to retrenchment by receiving the package

Counsel for appellants submitted that the issue of waiver does not arise as the

retrenchment process was a nullity at law.  Further that appellants were purportedly retrenched by Air Zimbabwe Holdings (Pvt) Ltd.  It was submitted for respondent that the appellants were aware that they had been transferred to respondent and that respondent was bound by the agreement reached with Air Zimbabwe Holdings (Pvt) Ltd.

The record confirms the submissions for respondent.  The notification to a party to attend conciliation proceedings indicates that the issue referred for conciliation was “Alleged non-payment of agreed retrenchment package.”  (Underlining for emphasis).  The statement of claim and submissions before the arbitrator indicates that the appellants were relying on the agreement reached with Air Zimbabwe Holdings (Pvt) Ltd even though their claim was against respondent.  Appellants have not alleged that there was a separate agreement with the respondent which gave rise to arbitration.  I therefore find that the agreed retrenchment package was the package that was agreed between the appellants and the then employer, Air Zimbabwe Holdings (Pvt) Ltd, which was binding on the new employer, the respondent.  By seeking to enforce the agreement and subsequently accepting the package subject of the agreement, appellants cannot now claim that they were not retrenched by the respondent.

Again in the statement of claim and submission before the Arbitrator, appellants state in paragraph 5.4

“In casu, it is respectfully submitted that the claimants are entitled to their salaries up to the date of final payment.  As long as their packages have not been paid they remain employees of the respondent.  The date of termination is the date of full and final payment of the retrenchment packages.”  (Underlining for emphasis)

The argument that they remain employees of the respondent seems to be an afterthought as initially they accepted that the payment of the packages terminated their relationship.  Counsel for respondent’s submission that appellants waived their right to object to retrenchment by receiving the package is therefore not accurate.  At the time the package was paid there was no basis for objecting to retrenchment as it was by agreement.

Now turning to the grounds of appeal, the first ground of appeal clearly has no merit.  One would have thought that after receiving proof that the retrenchment was approved, appellants would abandon the claim that the retrenchment was a nullity.  The arbitrator’s finding cannot be impugned as the legality of the process was not put in issue before him.  As stated in C Kambuzuma & 22 Others v The Athol Evans Hospital Home Complex SC 118/04 the tribunal cannot be faulted for not dealing with an issue that was not placed before it.

The second ground of appeal is not a ground of appeal but a comment presumably linked to the first ground of appeal.  There is no misdirection or error spelt out therefore I disregard it.

The third ground of appeal is premised on the faulty submission that the retrenchment did not exist in the eyes of the law for want of compliance with labour legislation.  As stated before there was compliance and the arbitrator’s finding cannot be impugned.

In the final analysis there is no merit in this appeal.  Accordingly the following order is appropriate.

The appeal be and is hereby dismissed with costs for lack of merit.

Matsikidze & Mucheche, appellant’s legal practitioners

Chihambakwe, Mutizwa & Partners, respondent’s legal practitioners