Karume T Marambanyika VS H Robinson & Company

### Preamble
IN THE LABOUR COURT OF ZIMBABWE
JUDGMENT NO LC/H/440/2016
HARARE, 14 JANUARY 2015 &
22 JULY 2016
CASE NO LC/H/661/2014
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IN THE LABOUR COURT OF ZIMBABWE	       JUDGMENT NO LC/H/440/2016

HARARE, 14 JANUARY 2015 &			                  CASE NO LC/H/661/2014

22 JULY 2016

In the matter between

KARUME T MARAMBANYIKA						APPELLANT

Versus

H ROBINSON & COMPANY						RESPONDENT

Before the Honourable R F Manyangadze J

For the Appellant	F Malinga  (Legal Practitioner)

For the Respondent     I Chagonda  (Legal Practitioner)

MANYANGADZE J:

This is an appeal against an arbitral award granted on 7 July 2014, in terms of which the respondent was ordered to pay the appellant certain amounts of money in fulfilment of a retrenchment package approved by the Minister of Labour and Social Welfare (the Minister). The arbitral award also disallowed certain items that had been approved in the retrenchment package.

Dissatisfied with the amounts awarded and the disallowances made by the arbitrator, the appellant lodged an appeal with this court.

The facts of this matter are common cause. The appellant was among a group of employees who were retrenched by the respondent, way back in 2008. The process of retrenchment went through the Retrenchment Board, and a retrenchment package was approved by the Minister on 25 September 2008, as required by the Labour Act [Chapter 28:01] (the Act). The approved retrenchment package was on the following terms and conditions:

Terms and Conditions of Retrenchment

The appellant subsequently lodged a complaint with a labour officer, alleging non-payment of the approved retrenchment package. Conciliation failed, and the matter ended up at arbitration, resulting in the arbitral award in contention.

In an arbitral award handed down on 7 July 2014, the arbitrator gave some figures to the Ministerial package. This resulted in the following award:

“(a)	That the respondent pay the claimant service pay, severance pay and relocation allowance at the rate of $60-00 per month. (For clarity Service pay = 4 x $60-00 x 9 years = $2160, severance pay = 4 x $60-00 - $240-00 and relocation = $60-00 and total = $2460).

(b)	That the claim for the Mazda B 18 at 20% of market value to claimant is hereby dismissed for lack of proof.

(c)	That each party meets the cost of this arbitration equally.”

Aggrieved by the award the appellant then filed an appeal with this court. The grounds of appeal are stated as follows:

“1.	The arbitrator erred by considering and concluding that the salary rate applicable was in the range of S$50-00 - $60-00 and thus fixed the salary at $60-00 per month.

2.	The arbitrator ought to have considered that section 125 of the Labour Act [Chapter 28:01] provides that the employer is under statutory obligation to keep the records of an employee’s earnings and benefits which records should have been used to prove the actual salary as opposed to the range of US$50-00 – 60-00, as the employer was well able to produce such records as it closed its business well into the multicurrency system in March 2011.

3.	The arbitrator erred at law by failing to consider that the employer – employee relationship terminates upon the payment of the retrenchment package and in that respect the appellant should have remained in employment until such time that he received the retrenchment package and accordingly he is entitled to the usage of the current salary rate in calculating the retrenchment package.

4.	The arbitrator erred at law by disallowing an item ordered to be awarded or given as part of the retrenchment package, that is, dismissing the claim for the motor vehicle when it was instructive on her part to make an award of 20% of market value as stated by the retrenchment board, it being that the appellant was not required to prove anything concerning the motor vehicle.

5.	The arbitrator ought to have considered that the appellant had done well by using Lori mark salary rates which only could be refused upon the employer producing records in accordance with section 125 of the Labour Act [Chapter 25:01].

6.	The arbitrator erred at law by disallowing the payment of Medical Aid when it had been settled that it should be settled by the retrenchment board for which appellant provided a rate which should be used.”

In paragraph 1 of its heads of argument, the respondent raised a point in limine, which is to the effect that there is no proper respondent before the court. The entity cited as the respondent sold its shareholding and assets to OK Zimbabwe Limited (“OK”). In other words, there was a transfer of an undertaking from H Robinson & Company t/a Markro Mukuvisi Wholesalers, to OK. Thus, H Robinson & Company could no longer be the respondent, as all its rights and obligations were transferred to OK.

Basically, the argument by the respondent is that the rights and obligations of the respondent, including the retrenchment package in question, were transferred to the acquiring entity, OK. This is in terms of section 16 of the Act, which governs the rights of employees on transfer of an undertaking.

Section 16 (1) provides as follows:

“Subject to this section, whenever any undertaking in which any persons are employed is alienated or transferred in any way whatsoever, the employment of such persons shall, unless otherwise lawfully terminated, be deemed to be transferred to the transferee of the undertaking on terms and conditions which are not less favourable than those which applied immediately before the transfer, and the continuity of the employment of such employees shall be deemed not have been interrupted.” (underlining added)

It is not in dispute that H Robinson & Company was acquired by OK. The acquisition took place subsequent to approval of the appellant’s retrenchment.

In response to the respondent’s contention, the appellant pointed out that the respondent was not being consistent on this aspect. On the one hand, it was saying that the appellant’s employment was terminated at the point the Minister approved the retrenchment. On the other hand, it is averring that the respondent should claim payment from OK.

Indeed, the respondent advanced a self-contradictory position. Section 16, which it relied on, applies to an employee whose contract of employment has not been lawfully terminated. The employee is deemed to be employed by the transferee Company, in this case OK, on the same terms and conditions. The underlining in the cited provision, supra, clearly shows this. The respondent cannot therefore properly argue the case for the transfer of the appellant’s contract of employment to OK, whilst at the same time averring that such contract was terminated well before the transfer of H Robinson to OK took place. In the circumstances, the point in limine cannot be upheld.

Another aspect that militates against the point in limine is the provision in section 16 (2) (c) of the Act, which appears to be giving a former employee the right to enforce rights it would have enforced against his erstwhile employer. Section 16 (2) (c) reads:

“(2)	Nothing in subsection (1) shall be deemed—

(c)	to affect the rights of employees concerned which they could have enforced against the person who employed them immediately before the transfer, and such rights may be enforced against either the employer or the person to whom the undertaking has been transferred or against both such persons at any time prior to, on or after the transfer;”

Further to this, there is a pertinent issue that the appellant raised. It was to the effect that termination of the contract of employment is not brought about by the Minister’s approval of the retrenchment. The appellant contended that the employment relationship terminates upon payment of the retrenchment package. The respondent maintained its stance, that the Minister’s approval terminates the employment relationship.

The Supreme Court clarified the point at which an employment relationship terminates during a retrenchment process, in the recent case of Freda Rebecca Mine v Nhliziyo & 180 Ors 2013 (1) ZLR 503. ZIYAMBI JA stated, at page 507:

“The Minister’s directive is not constitutive of the retrenchment nor does it terminate the contract of employment of the proposed retrenchees. It merely sets the conditions upon which the employer, if still so minded, can proceed to retrench. The contract is terminated by the employer when it proceeds with the retrenchment. “

From this case, it is clear that, it is not the ministerial approval that terminates the contract of employment. It is acceptance by the employer, of the terms and conditions approved by the Minister, that terminates the contract. When the employer proceeds to retrench, on the approved terms and conditions, it signifies termination of the employment relationship.

In casu, no argument has been raised against the terms and conditions approved by the Minister. In fact, the respondent commenced the retrenchment process, by paying some of the items approved, such as fuel and cellphone handsets and lines.

The respondent even argued that it paid the appellant an amount of US$135-00, in full and final settlement of the retrenchment. The respondent went on to aver that acceptance of this payment constituted waiver on the part of the appellant, who cannot therefore proceed with a retrenchment claim. In this regard, the respondent made reference to the case of Chidziva & Ors v Zimbabwe Iron & Steel Company, SC-137-07.

The appellant, to the contrary, averred that there was no such waiver. The payment referred to, the amount of US$135-00, was not part of the retrenchment package. The appellant explained that it was a gratuitous payment, as part of profit sharing for that year.

The record contains a document captioned “ONE OFF ALLOWANCES RETRENCHED MANAGERS”.

It lists the names of the employees, including the appellant, who received this payment. There is nothing, ex-facie this document, that shows that it was payment done in full and final settlement of the retrenchment approved by the Minister. During oral submissions, the respondent described it as a once off ex gratia allowance, lending weight to the appellant’s averment that it was a gratuitous payment, not intended to settle the retrenchment. Indeed, the terms and conditions set out by the Minister, cannot reasonably be conceived as having been extinguished by a single US$135-00 payment.

In my view, the gravamen of this appeal is the manner in which the retrenchment was quantified by the arbitrator. The quarrel between the parties arose from the figures the arbitrator attached to the terms and conditions set by the Minister. The figures are denominated in United States dollars.

The appellant contends that the amounts, in United States dollar terms, should have been much higher. On the other hand, the respondent contends that the award should not even have been denominated in United States dollars, since the retrenchment was approved during the Zimbabwean dollar era.

The respondent is not correct in its assertion that payment should not be done in United States dollars. There is clear authority that contractual obligations incurred during the Zimbabwean dollar era can, post that era, be paid in United States dollars. The court exercises its equitable jurisdiction in determining an acceptable US dollar value.

In the case of Madhatter Mining Company v Marvellous Tapfuma SC 51-14, the Supreme Court remitted the case to the Labour Court, for the latter to exercise its equitable jurisdiction in determining the basis for computing a debt incurred in Zimbabwean dollars but is now being claimed in United States dollars. In ordering the remittal, GWAUNZA JA made the following remarks; at pages 16-17 of the cyclostyled judgment:

“The principles of equity and social justice as well as the imperative for the Labour Court to secure the just and effective resolution of labour disputes, are all called into question when it comes to determining the basis and formula for computing a debt (e.g. damages) suffered in Zimbabwe dollars but claimed in foreign currency. This is particularly so where such damages, being owed to an employee, can no longer be paid in Zimbabwe currency realistically or in a way that gives due value to the employee. The undeniable fact is that a debt is not wiped out by the mere fact that there has been a change to the realisable currency. Equity would demand that a formula be found to give effect to the employee’s entitlement to payment of, and the employer’s obligation to pay, the debt in question.

Accordingly I will, in casu, do no more than be guided by the recent authorities on this matter that, have been cited above.

In doing so however, I will note that I fully appreciate and do not in any way underestimate the complexity of the exercise to compute – from Zimbabwe to USA dollars – and for value, the damages awarded to the respondent in this appeal. This is particularly so given the intermittent changes to the worth of the Zimbabwe dollar that were occasioned by the removal of zeros from that currency during the hyper-inflationary era of 2006-2009. I would accordingly venture to suggest to the Labour Court that it considers enlisting the services of an appropriately qualified expert in financial matters, in order to work out a formula for calculating the damages in question. Such formula should give fair value, in USA dollars, to the damages – denominated in Zimbabwe dollars – that have been awarded to the respondent in this case.” (Underlining added)

On the basis of this approach, an amount awarded in Zimbabwean dollars can be converted to United States dollars. The respondent’s insistence on payment of the package in a currency that has completely lost its value, does not stand up to the clear position taken by the Supreme Court on the matter. The Supreme Court, at page 17 of the Madhatter case, ordered as follows:

“2.	(a)	…

(b)	…

(c)	The amounts referred to in paragraph (a) and (b) albeit computed in Zimbabwe dollars, shall be converted to foreign currency in the manner and at the rate determined by the Labour Court in terms of paragraph 3 of this order;

3.	The matter is remitted to the Labour Court for a determination, in the exercise of its equitable jurisdiction, of the question and the applicable rate of conversion into foreign currency, of the damages due to the respondent in terms of paragraph 2 above.”

The problem with the instant case, however, is that there is no clear basis on which the arbitrator converted the package into United States dollars. The record does not show evidence of what the arbitrator based his conversion on. This was compounded by the stance adopted by the respondent that the award should not be in United States dollars at all. As a result, the respondent made no submissions that could assist the arbitrator in arriving at an appropriate and equitable United States dollar denominated amount.

Whilst the arbitrator correctly held that the retrenchment package could be computed in United States dollars, she was not furnished with adequate material on which to base the computation. She then made a very cursory assessment of what she considered to be the prevailing salaries at the inception of the multi-currency system. Her predicament is reflected in these remarks, at page 8 of her award:

“The parties have not even attempted to convert what was due to the claimant, though Mr Chagonda for the respondent remarked that the claimant would not get anything after the slashing of the twelve zeroes if the package was calculated and he had to be paid in United States Dollars.”

From the Supreme Court matter looked at, there is certainly need to place adequate material before the tribunal called upon to exercise its equitable jurisdiction, to assist it in determining an appropriate award in United States dollar terms. This was not done in casu. This resulted in figures that appear to have been arbitrarily determined by the arbitrator.

There is certainly need for an appropriate computation of the retrenchment package in United States dollar values. This would be in fulfilment of the terms and conditions approved by the Minister.

As already indicated, the respondent did not mount a challenge to those terms and conditions. If at all it was aggrieved by those terms and conditions, it should have filed an application for a review thereof. As matters stand now, some figures have to be attached to those terms and conditions, which terms and conditions remain as they were approved. In this regard, it was a misdirection on the part of the arbitrator, to set aside some of the terms and conditions. It has already been indicated that the arbitrator disallowed the award on medical aid and motor vehicle. This amounted to an improper variation of the approved award, when the question before him was basically whether or not the terms and conditions approved were met by the respondent.. The arbitrator had no mandate to tinker with the terms and conditions themselves.

There is, in my view, no need to proceed to a consideration and analysis of the cross-appeal. The reason for this is that the issues raised in the cross-appeal have in fact been considered and disposed of in the main appeal. The outcome of the main appeal is such that the grounds of appeal in the cross-appeal cannot be upheld.

It is the court’s considered view that this matter be remitted to the arbitrator, for a proper quantification of the retrenchment in United States dollars, with the benefit of submissions from both parties. The arbitrator did not benefit from such submissions because of the respondent’s uncompromising stance that the package should not be in United States dollars.

As recommended in the Madhatter case, supra, it may be necessary to enlist the services of an expert in financial matters. The arbitrator did not benefit from such expert evidence, hence the inadequacies of the resultant computation. This is a complex and technical issue, which might require expert evidence from the financial services sector. This, in my view, left a gap in the arbitral proceedings, warranting remittal of the matter for an appropriate computation of the retrenchment package in United States dollars.

It is accordingly ordered that:

“A.	IN RESPECT OF THE MAIN APPEAL

The appeal be and is hereby allowed.

The arbitral award handed down by Honourable N Shumba on 7 July 2014 be and is hereby set aside.

The matter be and is hereby remitted to the arbitrator for determination of an applicable rate of conversion into United States dollars, of the approved terms and conditions of the retrenchment.

Each party bears its own costs.

B.	IN RESPECT OF THE CROSS-APPEAL

The cross-appeal be and is hereby dismissed.

Each party bears its own costs.”

Muronda & Muyangwa, appellant’s legal practitioners

Atherstone & Cook, respondent’s legal practitioners