Reserve Bank of Zimbabwe v Joseph Lungu & 168 Others

### Preamble
IN THE LABOUR COURT OF ZIMBABWE
JUDGMENT NO LC/H/604/2014
HARARE, 19 JUNE 2014
CASE NO LC/H/970/2013
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IN THE LABOUR COURT OF ZIMBABWE	 JUDGMENT NO LC/H/604/2014

HARARE, 19 JUNE 2014 &			 CASE NO LC/H/970/2013 (REV)

12TH SEPTEMBER 2014

In the matter between:

RESERVE BANK OF ZIMBABWE					APPLICANT

Versus

JOSEPH LUNGU & 168 OTHERS					RESPONDENTS

Before the Honourables Chivizhe J, Muchawa J and Maxwell J

For the Applicant		S Mabana & V Mkwachari  (Legal Practitioners)

For the Respondent	Mrs O Nyamanhindi (Legal Practitioner)

MUCHAWA J:

This is an application for review.

The background facts to this matter are largely common cause. The respondents were employed by the applicant as security guards on fixed term contracts renewable every three months. Their duties were in respect to the applicant’s quasi fiscal activities which were finally wound up in the first quarter of 2011. The respondents’ period of employment ranged from 2007 and August 2008 to January and April 2011 when their contracts expired by effluxion of time and were not renewed.

The respondents challenged the termination of their contracts of employment alleging unfair dismissal on the basis that their contracts of employment had become permanent as they had been repeatedly renewed. The Mugumisi arbitral award and the Labour Court (LC/H/300/2012) both dismissed respondents’ claim of an unfair dismissal. That matter is pending on an application for leave to appeal to the Supreme Court.

In July 2010 in a matter involving the applicant, the workers committee and its employees, arbitrator Nasho made, an award whose relevant operative part reads as follows:

That the employees’ contracts shall be regularized in line with the multiple currency system with effect from 1 March 2009 to date.

That the employees should be paid their salaries backdated to 1 March 2009.

The claimants and the respondent be and are hereby ordered to re-convene at the Works Council with a view to regularize the employees’ contracts in line with the multiple currency system with effect from 1 March 2009 and also to engage in salary negotiations for the period 1 March 2009 to date by Tuesday 31 August 2010

A Works Council Agreement was subsequently reached. At a meeting of the 15th September 2010 it was resolved that a net salary of $500-00 per month be paid to all employees across the board for the period 1 March 2009 to December 2009 (inclusive of transport and accommodation allowance.)

Secondly the Works Council agreed to a salary structure for 1 January 2010 to date for its non-managerial grades. The lowest such grade (Grade 1) would be paid $500-00 and the highest (level 2) would be paid $1092-00.

The other aspects of the Works Council Agreement are not relevant for this matter.

It appears that the employees of the applicant made a further claim for quantification of their salary arrears before arbitrator Nasho. They were claiming a total of USD7 958 493-50. That claim was dismissed. The arbitrator found that he had no jurisdiction as his initial order had not raised the issue of quantification of the award.

The respondents in casu instituted a claim for payment of arrear salaries and benefits on 10 December 2012 following the dismissal of the unfair dismissal claims by arbitrator Mugumisi on 4 April 2012. Arbitrator Mambara found in favour of the respondents. The relevant part of the operative part of the Mambara award reads:

That the respondent be and is hereby ordered to pay each and every claimant arrear salaries and benefits per the 16 September 2010 Works Council agreement from 1 January 2010 to date each and every claimant was retrenched.

The Mambara award is the basis of the application for review before me.

The grounds for review are:

The arbitrator a quo misdirected himself at law in reviewing and making award seeking to enforce the award of another competent arbitrator in circumstances where he clearly had no such jurisdiction.

The arbitrator misdirected himself at law in reviewing and effectively altering the decisions of both another competent arbitrator and the Labour Court in case number LC/H/300/12 when he had no such jurisdiction at law.

The arbitrator misdirected himself at law in entertaining and making a ruling on a matter that was not in his terms of reference, specifically the issue of the respondents’ grade and in awarding the respondents arrear salaries and benefits on that basis.

The arbitrator misdirected himself at law in failing to appreciate that the respondents’ claim in casu was premised on the same basis as their claim in case number LC/H/300/12 which had been decided by the Labour Court and was pending appeal to the Supreme Court and that the arbitration proceedings should have been held in abeyance pending finalization of the matter in case number LC/H/300/12.

I deal with each of the grounds below:

Ground 1

The applicant submits that in ruling that the Works Council agreement of 16 September 2010 covered and applied to the respondents and then ordering that the applicant should pay the respondents arrear salaries and benefits in terms of the Works Council agreement, arbitrator Mambara clearly reviewed and sought to enforce the Nasho award.

It is further submitted that only the Labour Court, in terms of section 89 (1)(d1) and 98 (10) of the Labour Act, [Cap 28:01, has jurisdiction to review arbitral proceedings and hear appeals against arbitral awards.

A further point made is that the recourse open to the parties to whom the Nasho award applied was to register same for enforcement with either the Magistrates or High Court depending on jurisdiction in terms of section 98 (14) and (15) of the Labour Act.

The respondents submit that it is preposterous to argue that they should have registered the Nasho award. This is because the award provided that the parties were to negotiate salaries denominated in the multi-currency system. It was therefore not registrable nor enforceable.

I agree with the respondents’ position in this regard.

I now have to decide whether the Mambara award was a review and enforcement of the Nasho award.

The applicant sought to argue that the respondents were not part of the people before arbitrator Nasho. The court was referred by the respondents to a memo written by the RBZ Executive Workers Committee listing the non-managerial employees it represented in the arbitral tribunal of arbitrator Nasho. It is clear that from pages 128 to 131 of the record, some of the respondents are listed.

In the circumstances I have to find that the Mambara award did not seek to review or enforce the Nasho award.

Ground 2

The applicant submits that arbitrator Mambara erred in reviewing and altering the Mugumisi award and the Labour Court decision to the effect that there was no unfair dismissal of the respondents whose contracts had expired by effluxion of time.

The above averment relates to arbitrator Mambara’s finding that the respondents were retrenched. This is said to imply that the respondents’ employment had become of indeterminate duration contrary to the Mugumisi award and the Labour Court ruling.

Secondly, in grading the respondents’ contract security guard jobs as grade level 1 and making the applicant liable to the respondents for arrear salaries and benefits in terms of the Nasho award and the Works Council agreement, the Mambara award is said to be premising its finding in terms, other than those of the fixed term contracts. In this respect the Mambara award is said to be contrary to the Mugumisi award and the Labour Court ruling in LC/H/300/2012.

On the other hand the respondents argue that the use of the word “retrench” by arbitrator Mambara is of no consequence. This is said not to be a review of prior decision as stated above.

It was argued that the termination of the respondents on fixed term contracts amounts to a retrenchment in terms of the Labour Act as the non-renewal of their contracts was meant to “reduce expenditure or costs” and “reorganising” the applicant.

This was also said to be a finding of fact which is not appealable and it is conceded that the retrenchment finding was made in error.

The applicant referred me to Rule 35 of the Labour Court Rules, S I 59 of 2006. Rule 35 provides that where a case similar or identical to the one being heard by the court has been previously decided, any principle established by that case shall have persuasive authority. In particular the decisions of the Labour Court shall be binding on all lower tribunals including arbitrators. I believe this rule is meant to ensure certainty in law for the benefit of the parties involved.

In casu I believe the Mambara award did alter and therefore review the finding confirmed by the Labour Court that there was no unfair dismissal as alleged by the applicant. The result is a lack of certainty on the status of the respondents. This has the effect of birthing other claims which may be unnecessary. The retrenchment finding, conceded to be erroneous is fatal and so are the implied permanent contracts.

This ground of review therefore succeeds.

Ground 3

The applicant alleges that the arbitrator entertained and made a ruling on a matter which was not in his terms of reference, specifically, the issue of the respondents’ grade and in awarding arrear salaries and benefits on that basis.

The respondents argue that they were covered by the Works Council agreement and that was the starting point for the arbitrator to determine their claim.

Arbitrator Mambara’s terms of reference were:

Whether or not the employer committed an unfair labour practice in failing to pay the claimants arrear salaries and benefits due to them from 1 February 2009 upon the termination of the contracts of employment or within a reasonable period thereafter.

Whether or not the claimants’ can be adjudicated upon before the appeal in case number LC/H/300/2012 which is pending before the Supreme Court is finalized and;

the appropriate remedy.

The law clearly states that an arbitrator’s jurisdiction is found and restricted to his terms of reference. (See S 98 (4) of the Labour Act and Walenn Holdings (Pvt) Ltd v Lloyd & Anor 1996 (2) ZLR 383 (HC).

It is clear that the issue of the respondents’ grades was not in the arbitrator’s terms of reference. The manner he then proceeded to decide on a grade without any evidence of the applicant’s grading structure and especially as he even abandoned the evidence before him from the Workers’ Committee, which placed security guards in a grade stated as G1 and he proceeded to place them in grade L1 of security officers, boggles the mind.

I have to find that the arbitrator erred, went out of his terms of reference and misdirected himself as he then based his whole award on this extraneous term of reference.

Ground 4

The applicant argues that the arbitrator should have realised that the claim in casu was premised on the same basis as the claim in case number LC/H.300/12 which was pending on appeal to the Supreme Court and should have held these proceedings in abeyance pending finalisation of the appeal.

Reference is made to the prayer in the LC/H/300/12 matter wherein the respondents seek reinstatement without loss of salary or benefits or damages in lieu of reinstatement. It is argued that once the respondents are reinstated and awarded back pay, they will be automatically entitled to payment under the Works Council Agreement.

The respondent argues that the arbitrator correctly ruled that the prior matter did not affect his adjudication in the matter in casu as the substance was completely different.

In casu the respondents instituted a claim for payment of arrear salaries and benefits due to them from 1 February 2009 upon termination of their contracts of employment.

I see a distinct difference between the two. The prior decision deals with back pay which is calculated from the date of dismissal to date of reinstatement. (See Chegutu Municipality v Manyora 1997 (1) SA 662). The matter in casu deals with arrear salaries and benefits which would have accrued prior to dismissal. I find therefore that there is no merit in ground of review 4 and dismiss it.

Consequently, because of my findings on Ground 2 and 3 of this application, the review application succeeds.

The award of arbitrator Mambara of 7 November 2013 be and is hereby quashed and set aside. It is substituted as follows:

“The claim being without merit it be and is hereby dismissed.”

…………………

E MUCHAWA

JUDGE

……………………….		I agree

B.T. CHIVIZHE

JUDGE

…………………….		I agree

F.C. MAXWELL

JUDGE

T Chitapi & Associates , applicant’s legal practitioners

Muringi Kamdefwere Legal Practitioners, respondents legal practitioners