Small Enterprises Development Corporation v Stanslous Makusha

### Preamble
IN THE LABOUR COURT OF ZIMBABWE
JUDGMENT NO. LC/H/17/16
HELD AT HARARE ON 1st OCTOBER, 2015
CASE NO. LC/H/227/15
AND 22ND JANUARY, 2016
JUDGMENT NO. LC/H/17/16
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IN THE LABOUR COURT OF ZIMBABWE	  JUDGMENT NO. LC/H/17/16

HELD AT HARARE ON 1st OCTOBER, 2015     CASE NO.LC/H/227/15

AND 22ND JANUARY, 2016

In the matter between:-

SMALL ENTERPRISES DEVELOPMENT

CORPORATION								Appellant

And

STANSLOUS MAKUSHA							Respondent

Before the Honourable Mhuri, J.

For Appellant	: Mr. F. Piki (Legal Practitioner)

For Respondent: Mr. G.C. Manyurureni (Legal Practitioner)

MHURI J.

On the 1st of August, 2014, the Labour Court (Muzofa J.) issued a judgment in a matter pitting the above parties (Stanslous Makusha V Small Enterprises Development Corporation (SEDCO) LC/H/918/2013).

Two preliminary issues had been raised in that matter, to wit; that Appellant was improperly before the court as he had not exhausted internal remedies and that some of the grounds of appeal were actually grounds for review.

The Court upheld the preliminary points.  At page 2 of the cyclostyled judgment it is stated;

“It is my considered view that the Code of Conduct is clear it needs no interpretation.

The Appellant was provided with a clear procedure to follow.

The Appellant chose not to follow it.

The Appellant should not be allowed to circumvent the procedure outlined in the Code of Conduct and appeal before this court.

The point in limine has merit the Appellant has to refer the matter to a Labour Officer first.” (underlining for emphasis)

Having made the above findings, an order was then made as follows:-

“1.	The preliminary points be and are hereby upheld.

2.	The Appellant is ordered to refer the matter to a Labour Officer.

3.	No order as to costs.”

As a result of the above order, Respondent (Makusha) took his matter to the Labour Officer and eventually to an Arbitrator.

Before the Arbitrator, Appellant raised the issue that Respondent’s matter was out of time and should not be entertained, as it was filed way after the seven (7) day period provided by Statutory Instrument 15 of 2006.

The Arbitrator dismissed the point in limine, ruling that the matter had not prescribed.  That the Labour Officer who referred the matter to him for arbitration was acting with the blessing of the Labour Court.

This finding and ruling by the Arbitrator aggrieved Appellant who then filed the current appeal. The first of its grounds of appeal is that:-

“1.1	The Arbitrator grossly erred at law in dismissing the point in limine at the inception of the hearing given that the Respondent’s claim was an appeal to the Labour Officer which ought to have been filed within 7 days of the decision by the Appellant to dismiss the Respondent.

The Honourable Arbitrator deliberated on a wrong principle of law, that of prescription in terms of Section 94 when the principle of law raised by the Appellant was that the appeal was out of time.”

To determine this ground of appeal one needs to look at this Court’s findings and order in respect of the point in limine raised then.

The Court’s findings and order captured earlier in this judgment are very clear.

Firstly, it was its finding that Respondent ought to have referred his matter to the Labour Officer.  Secondly, it was then the Court’s order that Respondent refers his matter to the Labour Officer.

When referring to the Court’s order, the Arbitrator rightly stated,

“I find this judgment to be clear and empowering the claimant to exercise his right following the relevant legal procedures.”

The Board’s determination referred to in paragraph 4(4) page 10 of Appellant’s Code, is a determination after an appeal against the Disciplinary Committee’s decision.  In casu, the Board sat as the Disciplinary Committee and not as an Appeal Committee.  The time frame for filing an appeal from the Disciplinary Committee’s decision to the Board is stated as 7 days.  The time frame for appeals from the Board (Appeal Committee) to the Labour Relations Tribunal (Labour Court) is 21 days as prescribed in the Rules, Statutory Instrument 59 of 2006.

In casu, the Court ordered that the matter be referred to a Labour Officer.  There are no time frames in the Code which cover this situation.  Statutory Instrument 15 of 2006 (the National Code) does not apply where there is a registered Code of conduct which is operational.  The Arbitrator was therefore correct in declining to invoke the provisions of that Statutory Instrument.

Reference of a matter to a Labour Officer in terms of Section 93 is covered by Section 94.  Section 94 provides for the time limit within which a dispute/unfair labour practice can be referred to a Labour Officer.

“(1) Subject to subsection (2) no Labour Officer shall entertain any dispute or unfair labour practice unless-

It is referred to him or

Has otherwise come to his attention.

within two years from the date when the dispute or unfair labour practice first arose.”

The Arbitrator relied on the above section and found jurisdiction to hear the matter.  In the absence of any provision in the code and the national code not being applicable, I do not faulter the Arbitrator in relying on Section 94 and finding that the matter had not prescribed.

This ground of appeal therefore fails.

I now turn to deal with the grounds that challenge the Arbitrator’s findings on procedural and substantive issues.

The proceedings that led to Respondent’s dismissal were conducted in terms of Appellant’s Code of Conduct.  This is common cause.  The Code is a 1994 Code which is still in force unamended since.  As alluded to earlier, the National Employment Code Statutory Instrument 15 of 2006 would not be applicable.

Due to certain circumstances, Appellant was unable to convene a Disciplinary Committee as provided in its Code.  Instead, the Board appointed members of the Board to sit as the Disciplinary Committee that heard Respondent’s matter.

It was the Arbitrator’s view that the Code should act as a guideline in any disciplinary proceedings and that he could not endorse the proceedings that are not done as per the applicable code.

A code of conduct is a product of negotiations between two parties (employers/employees) it is a binding agreement between these two and the provisions therein must be complied with.

SANDURA JA’s (as he then was) remarks in the case of

MADODA V TANGANDA TEA COMPANY LIMITED 1999 (1) ZLR 374 S at 379 B-C

are apt.  He opined that

“In my view, where a disciplinary committee is established in terms of a registered code of conduct and the composition is not as provided for in the code, the deviation from the provisions of the code constitutes a procedural irregularity.”

In casu, the Disciplinary Committee was composed of only three members of the Board, one of them being the chairperson and whereas the code prescribes five (5) members of which two are supposed to be members of the workers committee and three management representatives one of whom is designated as the chairman.

Clearly, the Disciplinary Committee appointed by the Board in this case was not properly constituted.  I agree with the Arbitrator’s finding that this was a procedural irregularity.

Was this irregularity so fatal that it rendered the hearing unfair as found by the Arbitrator.

Appellant submitted that, the non-compliance with the provision of the Code was not deliberate but was made impossible because of the status of Respondent (Acting Assistant General Manager) and non-availability of management officers who could be appointed to be members of the Disciplinary Committee.  This submission is persuasive.   Under these circumstances it was proper for the Board to appoint some of its members to be members of the Disciplinary Committee.  The rules of natural justice i.e. the audi alterum partem rule was observed.

See 	DULY HOLDINGS V PETER CHANAIWA SC 17/2007

in which the Court found no fault in the manner Duly Holdings conducted the hearing in circumstances where it was impossible to properly constitute a Disciplinary Committee.

I find that the Arbitrator erred in holding that the hearing was not fair.

The Code also stipulates the time period within which a hearing is to be concluded.

Clause 17 provides;

“The proceedings to determine the alleged misconduct shall not exceed 14 days from the date of their commencement without a decision being reached …..”

It is not in issue that the hearing took more than 14 days to conclude.  From the record, it is not in dispute that Respondent’s Legal Practitioner sought postponements of the hearing for one reason or the other.  At one time he agreed to waive the 14 day period when he asked for a postponement.

Section 101 (6) of the Labour Act provides for situations such as what happened in casu.

It reads;

“If a matter is not determined within 30 days of the date of the notification referred to in paragraph (e) of subsection (3), the employee or employer concerned may refer such matter to a Labour Officer, who may then determine or otherwise dispose of the matter in accordance with Section ninety-three.”

This provision was not invoked by either party particularly Respondent when he realised that Appellant was way out of time in giving a determination.

This delay however does not have the effect of nullifying the proceedings and the fact that Respondent was on full salary and benefits during this period, shows that he suffered no prejudice.

In conclusion therefore I find that the procedural irregularities were not so fatal as to render the hearing unfair as found by the Arbitrator.

On the merits, Respondent was found guilty of lack of skill which he expressly or impliedly held himself out to possess.

In brief, the allegations were that, during the period 2010 = 2011 he, as Assistant General Manager (Finance and Administration) and Acting General Manager; failed to:-

Put internal control systems to enable IT Department to capture accurate information with regards to receipt books, records of loan repayments, of client account balances and reconciliation statements, thereby exposing Appellant to actual prejudice of $91 173.

Supervise staff subordinate causing misplacement of documents resulting in double loan disbursements and prejudice.

Notice, detect and observe variation of security and clients payment requirements.

Account and manage funds, disbursement of funds and resources without accounting for previous loan disbursements at Gweru Branch.

The resultant loss was $105 380 in 2010 and

$80 125 in 2011.

To account, manage, supervise and/follow up branch reconciliations resulting in failure to detect, notice and observe fraudulent activities, double disbursement causing $8 843 due to non-banking $227 388 as shortfall.

Detect, observe and/or notice erroneous disbursement of $10 400 early resulting in unauthorised use of Mutare branch funds by Harare Branch.

Timeously detect, notice and observe the above.

He authorized erroneous documents

In his analysis of the evidence and submissions, the Arbitrator, in one breath acknowledges the shortfalls and fraudulent activities which occurred at Appellant’s branches.  In another breath makes a finding that there was no evidence to prove lack of skill on the part of Respondent.  It is not in dispute that Respondent was in a supervisory position, supervising the subordinates some of whom committed the activities mentioned earlier.

The purposes of the job as per Respondent’s Job Description were:

To manage and supervise the day to day activities of the Branch as well as lead and manage the development and implementation of SEDCO operations;

to provide leadership in the form of guidance and supervision of all operational units so that each unit achieves its set targets in terms of revenue, staff costs, operating expenses and projects.

In its deliberations, the Disciplinary Committee commented as follows:

“The committee noted the length and amount of evidence presented before it.  The evidence presented by the complainant was not rebutted by the accused.  This includes the complainants report to the committee which put into motion these proceedings in terms of the Code of Conduct.  The accused decided not to cross examine the complainant; instead they concentrated on the witness, the internal auditor.  The Committee finds the witness credible.”

This finding cannot be interfered with in my view as it touched on the credibility of a witness and on the unrebutted evidence of the complainant.  In his oral submissions before this Court, Respondent made the submission that he did what an employee of average competence, skills and comparable experience could have done.  That he discharged his mandate under the most challenging of circumstances.  The subordinates took advantage of this and pilfered from Appellant.  This clearly supports the findings by Disciplinary Committee that there was lack of skill on the part of Respondent.  The Disciplinary Committee having found that:-

Respondent authorised disbursements that did not reach the intended loan beneficiaries.  Respondent having been employed to put in place controls and systems.

He appended his signature on double requests.

He did not review bank reconciliations, review internal controls, as a result of which the system failed.

In view of the above, it is my considered view that on a balance of probabilities, the Respondents guilt was proved as such the Arbitrators findings cannot be allowed to stand.

It is trite that where the employer is of the view that the act of misconduct goes to the root of the employer-employee relationship and in its discretion imposes a dismissal penalty, an Appellate court cannot interfere with the exercise of such a discretion unless it is shown that the discretion was not judiciously exercised.

tregers plastics (private) Limited

Vs

(1)Woodreck Sibanda

(2) Paul magondo sc 22/2012

Appellant’s code of conduct provides for a dismissal penalty for the act of misconduct respondent was found guilty of.  The Disciplinary Committee considered both the mitigatory and aggravating factors and came to the conclusion that a dismissal penalty should be imposed.

I find no basis to interfere with the exercise of this discretion.

In the result, I will allow the appeal and order that the arbitral award be and is hereby set aside.  The Disciplinary Committee’s decision be and is hereby confirmed.

IEG Musimbe & Partners – Appellant’s legal practitioners

Manyurureni & Company – Respondent’s legal practitioners