Mark Ralphs v Tredcor Zimbabwe (Pvt) Ltd t/a Trentyre Zimbabwe

### Preamble
IN THE LABOUR COURT OF ZIMBABWE JUDGEMENT NO LC/H/655/2016
HARARE, 22 FEBRUARY 2016 & CASE NO LC/H/772/2015
21 OCTOBER 2016
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IN THE LABOUR COURT OF ZIMBABWE	 JUDGEMENT NO LC/H/655/2016

HARARE, 22 FEBRUARY 2016 &		                           CASE NO LC/H/772/2015

21 OCTBER 2016

In the matter between:

MARK RALPHS							      APPELLANT

And

TREDCOR ZIMBABWE (PVT) LTD				      RESPONDENT

t/a TRENTYRE ZIMBABWE

Before Honourable Manyangadze J

For the Appellant	  G Makings (Legal Practitioner)

For the Respondent	  N Masunda (Legal Practitioner)

MANYANGADZE J:

This is an appeal against an arbitral award handed down on 15 July 2012, in terms of which the appellant’s dismissal for various acts of misconduct was upheld.

The factual background to the matter can be summarised as follows.

The appellant was employed by the respondent as Operations Manager.  In the papers on record, his position is variously described as General Manager, General Manager of Operations and Operations Manager.  Whatever the precise designation is, the record shows that he was head of the respondent’s operations in Zimbabwe.  The respondent is headquartered in South Africa, and also carries on business in Zimbabwe, with a countrywide branch network.  The appellant was in charge of the company’s Zimbabwe operations.

On 18 September 2012, the appellant was suspended from employment on numerous allegations of misconduct.  The factual particulars of the allegations were specified as follows:

“1.	Failed to comply with Zimbabwean tax legislation by not declaring taxable remuneration or benefits including gym fees, loans, fuel and school fees for specific employees on the company payroll including yourself.

2.	Failed to declare or report a private overseas trip to Australia that you took on or around December 2011 at the company’s expense.

3.	On or around June you used the company’s house boat with authorisation and for your own personal private use without authorisation.

4.	Request a company loan for yourself and presented documents to the company as proof of “refunding” expenses related to the private and unauthorised use of the house boat.

5.	Continued the practice of granting of company loans to employees whilst declaring and reporting the discontinuation thereof.

6.	Wilful and knowingly you failed to comply with company policies and procedures in relation to:

Declaring taxable remuneration or benefits including Gym fees’, loans, fuel and school fees for specific employees on the company payroll.

6.2	Private expenses for trips going on vacation for yourself.

6.3	The private use of the company house boat knowing fully well that use of the house boat is strictly limited to business purposes.

Payment of the costs for this private use with company funds.

Granting of company loans to employees.

6.6 Granting credit to customers in that you authorised supply of goods to the value of US$10 000 on credit to customer who does not have a proper account with the company.

You further provided free fitting and balancing of service to a customer, based on a mere “promise” that he will continue to give us business.

You have unfairly discriminated the other employees by allowing using an “arbitrary criteria” in allocating remuneration of benefits including Medical Aid contributions, gym fees, loans, fuel and school fees to specific employees on the company payroll without considering legal principles as fairness and/or consistency.

Bringing company’s name into disrepute”.

Following this suspension, the appellant was formally charged with misconduct in terms of the Labour (National Employment Code of Conduct) Regulations, Statutory Instrument 15 of 2006 (“the National Code”). The charges were as follows:

Section 4 (a) any act of conduct inconsistent with the fulfilment of the express or implied conditions of your employment contract.

Section 4 (b) wilful disobedience to a lawful order.

Section 4 (d) theft or fraud.

Section 4 (f) gross incompetency or inefficiency in the performance of his or her work.

On 31 January 2013, a Disciplinary Committee convened by the respondent found him guilty of contravening sections 4 (a), 4 (b), and 4 (f) of the national code.  On 8 February 2013 the Disciplinary Committee imposed a penalty of dismissal.  In terms of the procedure outlined in the national code, the matter subsequently went for compulsory arbitration.

An arbitral award handed down by Honourable T S Makamure on 30 October 2013 set aside the Disciplinary Committee’s determination, and ordered the appellant’s reinstatement.

The respondent appealed to the Labour Court against Honourable Makamure’s arbitral award.  In a judgement handed down on 26 September 2016, the Labour Court upheld the appeal, and set aside Honourable Makamure’s arbitral award.  It however, remitted the matter for a re-hearing before a different arbitrator.  The basis for the remittal was that the arbitral award lacked specificity as to what was established by the evidence.  The substantive issues were not clearly and specifically disposed of.

Following the remittal, the matter went before Honourable S. Mukonya, who, on 20 July 2015, handed down the award which is the subject of the present appeal.

The grounds of appeal are stated as follows:

“(i)   The arbitrator has misdirected himself on a question of law in finding the appellant guilty of a greater number of offences in his analysis of the arguments place before him than in his award, leaving the appellant unsure of which offences the guilty verdicts have been upheld.  The finding is so outrageous in its defiance of logic that no sensible person properly applying his mind to the point to be decided would have come to this conclusion and as such it is a misdirection that cannot be allowed to stand (see Barros and Another v Chiponda 1999 (1) ZLR 58 SC and Hama c National Railways of Zimbabwe 1996 (1) ZLR 664, 670D).

(ii)	In the absence of any evidence the arbitrator has made a finding that the appellant was the ‘numero uno’ at the company and has, in light of this, found that he is personally responsible for financial decisions made by the Finance Director.  The arbitrator has also taken no account to the fact that the practice of giving tax free benefits has been in place since the early days of hyperinflation in 2006/7 and was introduced not by the appellant but by the then Managing Director.  As such it is an existing condition of employment that cannot be unilaterally altered that in any case if there was a problem with this approach it should have been raised at the time and has since become prescribed.  It is also clear from the evidence that the assertion that the company was being laid open to the imposition of penalties by ZIMRA is clearly without foundation as at no time have ZIMRA imposed or threatened to impose any penalty.  Clearly the above conclusions drawn by the arbitrator are without foundation and are in terms of the above quoted Authorities a further misdirection in law that cannot be sustained.

(iii)	The arbitrator has further misdirected himself in coming to a conclusion that where an existing condition of employment relating to the use of a house boat as a perk has been unilaterally withdrawn that this can be lawfully justified in the face of case authority that has found such withdrawal is unlawful.  (See Air Zimbabwe v Zendera SC 125/05).  This misdirection is further compounded by the fact that use of the boat on the occasion in question was clearly on a private hire basis and as such was not exercising of the rights coming out of the longstanding perk.  No reasonable man faced with the facts placed before the Arbitrator could have come to this conclusion (See above case Authorities).

(iv)	The finding made by the arbitrator that the appellant was vicariously liable for the actions of all managers below in respect of all disciplinary action taken by them against their employees is also a clear misdirection in law on the principles laid down in the above judgements, as this form of collective punishment cannot be justified.  In the case in question an appeal was successfully pursued by an employee on the basis that there was no clear seniority structure in the company and therefore the appeal was not correctly heard.  To put the blame for this on the appellant is clearly untenable as he had no means of rectifying this and was not responsible for the appointment of two senior managers to cover different aspects of the business, without clearly stating who was the senior employee.  The finding made by the arbitrator was with respect a clear misdirection in law.

(v)	The count dealing with the issuing of loans by the appellant is a further misdirection in law as nor reasonable man in the position of the arbitrator would have come to the conclusion that an existing policy allowing access to loans could be unilaterally withdrawn by either a verbal instruction that was contested or by way of a written instruction.  There is clear legal authority that states that existing conditions of employment cannot be altered by the employer acting on his yet the arbitrator found that this was lawful.  (See case authority referred to in point (iii) above).  Additionally no cognisance was taken of the fact that no further loans were granted to any employees after the written instruction to cease the practice was received, despite the fact that in law this perk could have been continues until an alternative arrangement was negotiated between the employees concerned and the company.  In these circumstances no reasonable man would have come to the conclusion that the appellant had acted in a manner inconsistent to his contract of employment and as such the decision made was a misdirection in law.  (See above case authorities).

(vi)	The finding that the provision of perks to different managers at different levels is a discrimination practice is without foundation in law as discrimination in terms of our labour legislation needs to be on one of the criteria referred to in section 5 of the Labour Act and clearly the basis for different perks being paid was grade and size of branch related and not on any of the grounds laid down in the Labour Act.  This is a very clear misdirection in law on the part of the arbitrator which cannot be allowed to stand.

(vii)	With regard to the allegations relating to Health and Safety the basis of the finding made by the arbitrator is that the appellant is guilty because he did not contact the officers in South Africa to point out that there was insufficient funding to finance the full upgrading of Health and Safety standards in all branches in Zimbabwe. However the Health and Safety Audit team who carried out the audit, who were from South Africa, were fully aware of the position on the ground and could readily have arranged for the funding had it been available so it is clear that no action was taken because there were insufficient funds available not because South Africa did not know funds were required.  It is also clear that improvements within available budgets were put into place and the standard of health and safety within the branches exceeded local requirement, so much so that the company received praise from the local Health and Safety officials for their work in this regard.  In this circumstance a finding that the appellant acted in a manner inconsistent with the provisions of his contract of employment is completely unwarranted and can only be described as one so outrageous in its defiance of logic that no sensible person properly applying his mind to the point to be decided would have come to this conclusion as such the decision cannot be allowed to stand (See authorities referred to above)”.

The respondent raised a point in limine, which was to the effect that the grounds of appeal are on factual issues and do not raise points of law.  As such, they are not appealable as required by section 98 (10) of the Labour Act [Chapter 28:01] (“the Act”), which stipulates that an appeal to the Labour Court from an arbitral determination shall only be on a question of law.

I note that the grounds of appeal are unnecessarily detailed and inelegantly drafted.  However, inspite of the inelegance, some appealable issues do emerge from the grounds.  There are issues of unilateral withdrawal of contractual benefits, what constitutes a lawful instruction and vicarious liability.  One would have to consider the question of what the law is on such issues, quite apart from the factual question of what happened.  See Muzuva v United Bottlers (Pvt) Ltd 1994 (1) ZLR 217 (S).

It is therefore not correct to say that the appeal raises purely factual issues and violates section 98 (10) of the Act.  In the circumstances, I am unable to uphold the point in limine.

I now turn to the merits of the appeal.  I will deal with the appeal as presented in the appellant’s grounds of appeal.

Ground (i)

The appellant avers that certain counts of misconduct are addressed in the body of the arbitral award, but are not reflected in the operative part thereof.  These are the counts relating to loan approvals (count 1.4), discrimination (count 1.7) and poor staff management (count 4.1).    These are the counts not reflected in the operative part of the award.  In the award itself, there is a definite finding of guilty on all these counts. The appellant contend that he should not be found guilty in respect of these counts, as they are not part of the operative portion of the arbitral award.

In countering this issue, the respondent averred that what the appellant is focusing on are the various individual counts, which fall under specific charges the appellant was facing.  He was found guilty of these main charges.  Each of the charges is dismissible, even if the appellant is found guilty of only one count thereunder.  In other words, inclusion or omission of certain counts in the final operative award is neither here nor there.

It is clear the counts in the operative part of the award fall under either one or the other of the main charges preferred against the appellant.  No charge has been omitted, though some counts thereunder may have been omitted.  This could possibly have been done erroneously.  Be that as it may, it does not change the complexion of the award, upholding a guilty verdict in respect of each main charge under the national code i.e. contravening;

Section 4 (a),

Section 4 (b)

Section 4 (f)

It must be noted however that the appellant’s grounds of appeal and heads of argument address all the counts.  I will accordingly deal with the rest of the grounds of appeal as they are addressed.

Ground (ii)

The point being argued here is basically that the appellant was not the one responsible for tax remittances.  These were financial matters under the purview of the Finance Director.

The respondent argued that the appellant, as head of operations, had overall responsibility for all the company’s operations in Zimbabwe.  It was a responsibility covering the entire spectrum of the respondent’s business-sales, marketing and financial management.

It was also pointed out that the appellant co-signed the company’s financial documents.  Payment of the tax free benefits was done with his knowledge and consent.  This exposed the company to the risk of sanctions from ZIMRA, the country’s revenue authority.

On this issue, the arbitrator found that:

“By his own admission, claimant was jointly in charge of the company’s finances together with the Finance Manager since they were the highest ranking employees of Trentyre in Zimbabwe at that time.  The two executives, claimant included, had authority over the financial affairs of Trentyre, for examples, it is on record that they could decide to revise employees’ allowances and approve each other’s loans, with the claimant countersigning.  This clearly confirms that claimant was also jointly responsible and accountable for the financial affairs of the respondent, including remitting of the tax dues.  Claimant, through either express or implied conditions of his contract of employment as General Manager, had the ultimate responsibility to see to it that the Finance Manager did comply with the company’s tax obligations”.

The arbitrator relied on the case of Zhou v Zvimba Rural Council SC 42-06, where the Supreme Court held that the Chief Executive Officer could not exempt himself from responsibility for the financial mismanagement brought about by the Treasurer.  In particular, the arbitrator made reference to these remarks by the Supreme Court:

“It is evident to me that the appellant breached his duty to ensure that proper financial procedures were followed in compliance with the Council regulations.  I find no merit, therefore, in the submission that the appellant was not to be held responsible for the acts of the treasurer in incurring the overdraft”.

I do not see how the arbitrator can be faulted for this approach.  In the instant case the facts show that there was joint accountability, the appellant was in a position to refuse to counter-sign expenditures that could jeopardise the company’s interests.  The omission on tax payments certainly exposed the company to the risk of the penalties indicated by the audit findings.  For a senior executive in the appellant’s position, it was conduct inconsistent with the fulfilment of the express or implied terms and conditions of his contract of employment.

This ground of appeal accordingly fails.

Ground (iii)

This ground relates to the instruction not to use the company house boat for private purposes.  The appellant did not comply with that instruction.  The appellant’s contention is that the use of the house boat was part of his benefits.  It could not be unilaterally withdrawn.

The respondent, on the other hand, contended that the instruction to suspend private use of the house boat was a business decision, taken in the interests of improving viability.  The house boat was a company asset in respect of which the company could deal as it saw fit.  In this case, a decision had been made to sell some assets of the company, including the house boat.

There was therefore a clear instruction prohibiting private use, in the light of the policy decisions taken to dispose some of the business assets.  The appellant was aware of all this, as a senior executive, yet he insisted on using the boat, in defiance of the instruction.

Reference was made to the cases of Matereke v C.T. Bowring & Associates (Pvt) Ltd 1987 (1) ZLR 206 and Samkange v Wycombe Foundation 2001 (1) ZLR80 where the court considered the elements that constitute disobedience to a lawful instruction.   The elements were said to be knowledge of the instruction and deliberateness in its disregard.  These elements were found to be present in the appellant’s case.

The arbitrator remarked, at page 10 of his award:

“Claimant does not dispute that the instruction to discontinue use of the boat was communicated to him.  His argument is that it was his benefit as per his contract and that the instruction was a unilateral alteration to his contract and was therefore unlawful.  Be that as it may, there were other lawful means of addressing that issue instead of claimant taking matters into his own hands and go on to defy a lawful instruction ostensibly because respondent was delaying to resolve his complaint on the same issue.  It should also be appreciated that the boat is a company asset whose use is not determined by the employee”.

Relying on the cases of Matereke and Samkange, supra, the arbitrator held that the instruction to discontinue personal use of the house boat was lawful, and the appellant could not take matters into his own hands in defiance of the clear instruction. The appellant, as the company’s top man, must have been aware of such decisions and why they were being made.  The arbitrator, in my view, correctly held that his actions amounted to disobedience to a lawful instruction and properly upheld the conviction under section 4(b).

Ground (iv)

The appellant disputes liability for the actions of managers under him in respect of disciplinary actions handled by them.

It is not clear why the appellant took this point on appeal.  A reading of the arbitral award clearly shows that the arbitrator absolved the appellant from liability under this specific item.  He held that the appellant could not be held responsible for the outcomes of disciplinary proceedings the managers were directly responsible for and conducted.

Consequently, nothing turns on this ground of appeal.

Ground (v)

This ground is concerned with the improper granting of loans to the Finance Manager, the appellant himself, and other staff members.

The appellant’s contention is that the instruction to stop granting loans was tantamount to a unilateral withdrawal of contractual benefits.  His argument here is the same as that under ground (iii), in relation to the private use of the house boat.

There seems to be a misunderstanding as to the context in which this count was preferred. It was preferred as one of the particulars of misconduct falling under the charge under section 4 (a), conduct inconsistent with the terms of employment.  It is item 1.4 under this charge.  There is need to go back to the Disciplinary Committee’s verdict in order to place this count in its proper context.  The Disciplinary Committee’s finding is recorded on page 116 of the record as follows:

“I accept the argument that the granting of loans might have been past practice and therefore can be constructed as a perk, however the issue at hand is that these loans required approval from senior management.  At no time was Mr Ralphs without a Director as a direct reporting line.

Secondly the fact that the loans were taken out to improve a property jointly owned by Mr Ralphs and the second signatory to the loan, at a time when the company could ill afford the loan, leads me to believe that these loans were willingly kept from senior management, thus is fraudulent in terms of company policy and I find Mr Ralphs guilty”.

So it is in the context of a contravention of section 4(a), and not section 4 (b), that the appellant was found guilty of misconduct.  There were of course elements of his conduct which fell under section 4 (b), in that there was an instruction not to continue granting the loans, which instruction he disregarded.  The arbitrator adverted to this element as well in his analysis.

However, overally, the appellant’s conduct was adjudged improper in the light of section 4 (a).  As the executive at the apex of the respondent’s operations in Zimbabwe, the appellant was expected to safeguard the respondent’s business interests.  Any actions contrary to such interests would certainly be inconsistent with employer’s expectations from an official entrusted with ensuring viability of its operations.  In this regard the respondent submitted, in paragraph 18 of its heads of argument:

“The order to cease lending was lawfully given by the employer in the interests of the advancement of the business as the company was not performing well financially.  This is evident in the fact that at the time the instruction was given the workers were threatening to strike due to their wages which were below minimum wage.  The appellant being a senior manager in the company did not act with good faith or in the interests of the company”.

I therefore find that the conviction of the appellant was properly upheld under this charge.

Ground (vi)

The appellant averred that he did not perpetuate discriminatory practices in violation of the Act.  The perks/benefits given to staff members were in accordance with seniority and branch size.  He contended that there is nothing in our law that prevents different perks from being given to different levels of management in a company, as long as the differences are not based on any of the grounds listed in section 5 of the Act.

The respondent averred that there was discrimination in that the appellant used an arbitrary criterion on allocating remuneration and benefits to staff.

In my view, there was need for greater detail and particularity under this charge.  This is not coming out in the arbitral award, to show the basis on which the conviction was upheld.  There is therefore merit in the appellant’s contention that differentiation in perks depends on many factors.  Discrimination must be clearly established.  The arbitrator even acknowledges that no individual employees complained about discrimination.  He however, goes on to say that that does not make the appellant’s actions correct or lawful.  One then wonders what evidence was used to establish discrimination, in the absence of complaints from affected employees.

This ground of appeal has some merit and must be upheld.

Ground (vii)

The appellant is alleged to have failed to address serious issues raised by the Health and Safety Audit.  This gave rise to a charge of gross incompetence or inefficiency under section 4 (f).

The appellant avers that the health and safety standards complied with the local standards i.e. met all the minimum Zimbabwe legal requirements.  However, company policy requires that the health and safety standards meet international standards.  The company benchmarks its standards against best international practices.  The appellant acknowledges this.  He also acknowledges he did not implement the required international standards.  He however, advances the explanation that the finances did not allow for such standards to be met.

The respondent alleged, an allegation which the appellant did not dispute, that he did not engage his superiors in South Africa on the financial challenges and constraints in adopting international standards on health and safety.  There was no reasonable explanation from the appellant for his failure to engage the South African office on this issue.

What particularly irked the respondent is that some funds continued to be channelled to some low or even non priority issues such as loans and trips abroad.  In this regard the respondent submitted, in paragraph 19 if its heads of argument:

“During the disciplinary hearing the claimant cited insufficiency of funds as grounds for not dealing with the issues therefore admitting that he had failed to address the issues.  This however is inconsistent with the fact that loans were still being granted with the appellant’s consent; air tickets were paid for a trip to Australia and the appellant and the Finance Manager were still receiving their full benefits.  It is clear that the appellant did not prioritise the urgent health and safety issues and ensuring that the company was working at its best but put his personal interests first”.

The arbitrator remarked, at page 12 of his award:

“Claimant also argued that he had not done so owing to shortage of funds.  Respondent submitted that claimant had not raised the issue of shortage of funds with management in South Africa nor had he wrote to them asking for funds for the same purpose.  This had not been disputed by claimant.  Surely where company policy advocates for far much better health and safety standards, these should be adhered to unless claimant has a good reason not to”.

At the level of seniority at which the appellant operated, this approach to duty reflected a serious gap in competence and efficiency.   As already indicated, he was no ordinary employee.  Neither was he an ordinary manager.  He was head of the respondent’s country operations.  In my view the arbitral award cannot be upset in this respect.

Overally, the arbitrator’s findings cannot be said to be outrageous or grossly unreasonable to warrant interference.  In my view, the arbitral award was well reasoned and even supported by relevant case authorities. The appeal cannot, in the circumstances, succeed.  As already noted, all the counts in the operative part of the award fall under the charges preferred against the appellant, viz contravening sections 4 (a), 4 (b) and 4 (f) of the national code.

In the result, it is ordered that:

The appeal be and is hereby dismissed.

The appellant shall bear the respondent’s costs

G Makings, appellant’s legal practitioners

Scanlen & Holderness, respondent’s legal practitioners