Maxwell Sabilika v Clover Leaf Motors Group & Richard Mwanza & 22 Ors

### Preamble
IN THE LABOUR COURT OF ZIMBABWE JUDGMENT NO.
LC/H/581/16
HARARE, 27 JUNE 2016 CASE NO.
JUDGMENT NO. LC/H/581/2016
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IN THE LABOUR COURT OF ZIMBABWE	    JUDGMENT NO. LC/H/581/16

HARARE, 27 JUNE 2016				     CASE NO. LC/H/LRA/31/16

AND 23 SEPTEMBER 2016

In the matter between:-

MAXWELL SABILIKA						Applicant

And

CLOVER LEAF MOTORS GROUP				1st Respondent

And

RICHARD MWANZA & 22 ORS					2nd Respondent

Before The Honourables E. Muchawa, J

P. Muzofa, J

Applicant	In person (Labour Officer)

For 1st Respondent	J.R. Tsivama (Legal Practitioner)

For 2nd Respondent	M Mandikumba (Legal Practitioner)

MUCHAWA, J:

This matter came before us as an application for confirmation of the ruling of the applicant in a matter concerning the first respondent and the second respondents being Richard Mwanza and 22 others.

On the 24th of July 2015, the first respondent gave Richard Mwanza and 22 others, three months’ notice of intention to terminate contracts of employment between them.  In the letters of notice to terminate, the first respondent indicated that the decision had been reached due to the declining company performance.

The second respondent and 22 others lodged a complaint of an unfair labour practice alleging that the reasons given for termination qualified as a retrenchment and the giving of notice was therefore wrongful and unlawful.

On the other hand, the first respondent argued that it had correctly utilised its common law right to terminate on notice as provided in the Labour Act [Chapter 28:01].

The applicant found that the first respondent should have proceeded to retrench the second respondent and 22 others as the reduction of staff for the purpose of reducing expenditure or costs fits within the definition of retrenchment in the Act.  The termination of employment on notice was therefore found to be wrongful and unlawful.  It was ordered that the second respondent and 22 others be reinstated without loss of salaries and benefits and damages be paid in lieu of reinstatement.

The first respondent opposes the confirmation of the ruling on the following grounds;

That the employer is not obliged to retrench where the intention is to reduce staff and that the employer is free to choose an option including termination on notice.

That the Labour Amendment Act No. 5 of 2015, Section 18 could not be applied retrospectively to the actual termination save for the transitional section relating to the applicable benefits.

That the applicant had no jurisdiction to determine this matter.

I proceed hereunder to consider each of the grounds raised in opposition of the confirmation.

Whether the employer is obliged to retrench where the intention is to reduce staff or could opt for termination on notice and retrospectivity

Whereas the 1st respondent referred to Section 12C(1) of the Labour Act [Chapter 28:01] as amended to argue that the Labour Act gives the employer the right to exercise the option of retrenchment if it so “wishes to retrench”; the 2nd respondent and 22 others referred to the definition section 2 of the Act.  In that section

““retrench”, in relation to an employee, means terminate the employee’s employment for the purpose of reducing expenditure or costs ….”

The first respondent further argues that when it gave 2nd respondent and 22 others, 3 months notice of intention to terminate contracts of employment, it was exercising its common law right to terminate on notice.  Such notice was given on the 24th of July 2015.

It is further argued that the Labour Amendment Act No. 5 of 2015 only came into effect on the 26th August 2015 and cannot be interpreted to take away the right of an employer to terminate on notice.

The 2nd respondent and 22 others rely on Section 12 (4a) of the Labour Act (as amended by Act No. 5 of 2015) to argue that the right to terminate on notice cannot be exercised arbitrarily.  This section provides as follows:-

“No employer shall terminate a contract of employment on notice unless –

the termination is in terms of an employment code or, in the absence of an employment code, in terms of the model code made under Section 101 (9); or

the employer and employee mutually agree in writing to the termination of the contract; or

the employee was engaged for a period of fixed duration or for the performance of some specific service; or

pursuant to retrenchment, in accordance with section 12C.”

I believe the first respondent was well within its rights to give three months’ notice of termination of employment in terms of section 12 (4) of the Labour Act on the 24th July 2015.

The case of Don Nyamande and Anor v Zuva Petroleum (Pvt) Ltd SC 43/15 dealt with the legal status of the employer’s common law right to terminate an employment relationship on notice and held that section 12B of the Labour Act had not abolished the employer’s common law right to terminate an employment contract on notice.  This judgment was handed down on the 17th of July 2015.  The 1st respondent acted in terms of this reaffirmed right to terminate on notice on the 24th of July 2015 in giving notice of termination of employment.

As on the 24th of July 2015, the common law right to terminate on notice existed.  The Amendment Act No. 5 of 2015 only came into effect on the 26th of August 2015 as a direct response to the en masse terminations on notice done by employers in response to Zuva Petroleum supra judgment.

In the case of Barclays Bank v Tichawana Nyahuma SC 86/04, Chidyausiku CJ quoted with approval from the case of Nkomo & Anor v Attorney General and Ors 1993 (2) ZLR 422 (S) at 428H – 429C.

“It is a cardinal rule in our law dating probably from codex 1: 14: 7 that there is a strong presumption against a retrospective construction See Agere v Nyambuya 1985 (2) ZLR 336 (S) at 338 G – 339G.  Even where a statutory provision is expressly stated to be retrospective in its operation, it is not to be treated as in anyway affecting acts and transactions which have already been completed, or which stand to be completed, shortly, or in respect of which action is pending or has been instituted but not yet decided, unless such construction appears clearly from the language used or arises by necessary implication.  ………….. Care must always be taken to ensure that the retrospectivity is confined to the exact extent which the section of the Act provides.”

Section 18 of the Labour Amendment Act No 5 of 2015 provides for the transition as follows;

“Section 12 of the Labour Act [Chapter 28:01] as amended by this Act applies to every employee whose services were terminated on three months’ notice on or after 17th July 2015.”

This section cannot be said to be one with clear and unambiguous wording such as to rebut the presumption against retrospectivity.

Section 12 of the Labour Act still includes S12 (4) which provides for periods of notice of termination of contract; S12 (4a) which limits termination on notice to certain specified categories; S 12 (4b) which provides that where notice of termination of a contract has been given in a case of a contract without limitation of time, the provisions of section 12C shall apply regarding compensation.

A proper reading of the above sections therefore shows that it is only the right to compensation which had not accrued at the time of the amendment which is affected retrospectively.  This does not affect the right of the 1st respondent to terminate on notice which vested right cannot be taken away in the circumstances.  A reading of Section 12 (4b) of the Labour Act in fact shows that intention of the legislature was to ensure that where notice of termination had been given then the compensation clause would apply retrospectively.  The giving of notice to terminate would not be made unlawful.

In any event, a literal reading of section 12C (1) shows that it is left to the employer to select whether to retrench or not as the employer’s wishes determine whether or not the procedure of retrenchment is followed.  I do not think the definition of the word “retrench” which sets out the instances wherein such retrenchment  may happen, takes away the discretion given to the employer in section 12C (1) to decide whether or not to retrench.

In fact in the Zuva Petroleum case supra, the employer abandoned a retrenchment exercise which was already under way and opted to give notice of termination.  The Supreme Court still upheld the employer’s right to terminate on notice even in those circumstances.  See also Chirasasa and Ors v Nhamo NO & Anor 2003 (2) ZLR 206 (S).

I find therefore that the 1st respondent was not obliged to retrench where the expressed intention for termination was to reduce staff.  Further, that the first respondent correctly exercised the right to terminate on notice, which right was not affected by the retrospectivity clause.  Such a clause only applied to the applicable compensation upon termination on notice.

Whether the applicant had jurisdiction to deal with this matter.

On 16 October 2015, the 2nd respondent and 22 others referred a complaint of an unfair labour practice to the Labour Officer alleging wrongful termination of employment on notice and claiming that they should have been retrenched instead.

The first respondent alleges that the real dispute therefore was a retrenchment dispute and should have been referred to the Retrenchment Board and not an unfair labour practice as defined in Section 8 of the Labour Act.

It is argued for the 2nd and 22 other respondents that an unlawful termination of employment on notice amounts to an unfair labour practice and the labour officer correctly exercised his jurisdiction.

It is clear to me that what the employees were disputing was the lawfulness of the termination of employment on notice.  That was the real dispute.  The allegation that they should have been retrenched instead, does not change the dispute to a retrenchment one which should have gone before the Retrenchment Board.  In any event, disputes are referred to the Retrenchment Board by the employer through written notice of his intention to retrench or through the Works Council or employment council.  See sections 12C (1) (iii), 12C (2) and 12C (6) of the Labour Act.

I note that neither a retrenchment dispute not an unlawful termination are listed as unfair labour practices in section 8 of the Labour Act.  In the Zuva Petroleum case supra, Chidyausiku CJ looked in detail at Section 8 of the Act and concluded that termination of employment on notice is not among the conduct outlawed by section 8 of the Act.

The labour officer therefore erred in treating the matter before him as an unfair labour practice.  The dispute before him was one in which the labour officer would have power to conciliate over and then make a ruling in terms of Section 93 of the Labour Act.  Section 93 (1) provides that a labour officer to whom a dispute or unfair labour practice has been referred, or to whose attention it has come, shall attempt to settle it through conciliation or, if agreed by the parties, by reference to arbitration.

Section 93 (5) (c) provides further that where conciliation fails and the dispute is of right, the labour officer may proceed to make a ruling.

I find therefore that the labour officer had jurisdiction to deal with the dispute before him.

Based on my findings that the first respondent correctly exercised its right to terminate on notice, I cannot confirm the applicant’s ruling and order.

Accordingly the ruling and order are set aside and substituted as follows.

“The first respondent is ordered to pay the 2nd respondent and 22 others compensation for loss of employment in terms of Section 12 (4b) as read with Section 12C (2) of the Labour Act (as amended).”

Sawyer and Mkushi, 1st respondent’s legal practitioners

Muringani, Mandikumba & Partners, 2nd respondent’s legal practitioners

………………………………….. I agree

Muzofa J

…………………………………..

Muchawa J