Tambudzai Nduna v Triangle Tyres t/a Ribitiger

### Preamble
THE LABOUR COURT OF ZIMBABWE
JUDGMENT NO. LC/H/302/20
HELD AT HARARE ON 27 OCTOBER, 2020
CASE NO.
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THE LABOUR COURT OF ZIMBABWE	       	       JUDGMENT NO. LC/H/302/20

HELD AT HARARE ON 27 OCTOBER, 2020         CASE NO. LC/H/236/18

AND 18 DECEMBER, 2020

In the matter between:-

TAMBUDZAI NDUNA							Appellant

And

TRIANGLE TYRES t/a RIBITIGER					Respondent

Before the Honourable Mhuri, J.

For Appellant 			:	Mr R. Chatereza (Legal Practitioner)

For Respondent:			:	Mr B. Mupwanyiwa (Legal Practitioner)

MHURI J.

On the 31st August 2018 the Designated agent issued a determination in which he dismissed the appellant’s claim of unlawful dismissal on the basis that the exercise of retrenchment embarked on by respondent was within the ambit of the law and therefore above board.

Aggrieved by this determination, appellant noted this appeal on the ground that;

the Designated agent erred and misdirected himself on a point of law in failing to hold that the appellant was unlawfully dismissed from employment by the respondent under the guise of a retrenchment which was not done in accordance with the law.

Appellant abandoned the 2nd ground of appeal.

Appellant’s prayer was to have the Designated agent’s decision set aside and that it be replaced with an order that appellant was unlawfully dismissed under the guise of a retrenchment which was unlawfully done and also that appellant be reinstated to her position as a shop manager without loss of salary and benefits with effect from 21 July 2018 or alternatively be paid damages in lieu of reinstatement. Appellant’s submission in the main was that her contract of employment was unlawfully terminated. The dismissal having been disguised as a retrenchment which retrenchment was not done in terms of the provisions of the law vis section 3 of Statutory Instrument 186/2003 and section 12C of the Labour Act [CAP 28:01]. She relied on the two letters dated the 11th April 2018 and 21st April 2018 written by respondent to her (pages 6 and 7 of the record).

Respondent’s submission in the main was that appellant was not retrenched but the contract was terminated on notice in terms of Section 12(4) of the Labour Act as amended and also following the judgment in the case DON NYAMANDE and KINGSTONE DONGA vs

ZUVA PETROLEUM (Pvt) Ltd       SC 43/2015 (Zuva judgment)

which judicially pronounced that there was nothing amiss in the employer terminating the contract of employment on notice.

Did the Designated Agent err or misdirect himself when he dismissed appellant’s claim holding that the Respondent acted in terms of the law as provided in Section 12C (1) of the Labour Amendment Act N0.5/2015 and also that the notice to retrench was above board.

The issue before the Designated Agent for determination was the alleged unlawful dismissal and non-payment of benefits. The prayer was to have the intention to retrench ruled illegal and have the letter of the 21st April 2018 withdrawn.

Respondent’s argument before the Designated Agent was, to quote from the minutes,

“The Respondent argued that the background of the retrenchment of the Claimant cannot be said to be illegal as the procedure so adopted as per the provisions of the law……

The Respondent has it that whatever may have happened prior to the retrenchment are not the reasons for retrenchment. The Retrenchment therefore is as a result of business challenges and viability constraints in this current environment”.

Before this Court, it was Respondent’s argument that the issue was not  retrenchment but a termination of contract on notice.

It is clear from a reading of the proceedings before the Designated Agent that the issue of retrenchment was brought to the fore hence the finding by the Designated Agent that the exercise was done in terms of the law and was therefore above board.

The letter by Respondent of the 11th April 2018 titled NOTICE TO TERMINATE YOUR CONTRACT OF EMPLOYMENT reads as follows;

“It is with deep regret that the company is forced to terminate your contract due to hard economic situation.

It is by the provision of the law to serve you with this notice letter informing you that from 11th April 2018 to 11th July 2018 you will be serving your notice and at the last day of your notice you will receive your entitlement by the law”.

This letter was followed by another letter dated the 21st April 2018 titled

“RE:  LRRI   RETRENCHMENT

NOTICE OF INTENTION TO RETRENCH”

It reads as follows:-

“It is with regret that I advise you that Ribitiger t/a Triangle Tyres has been and continues to face viability challenges in the current economic environment where demand has decreased due to low disposable incomes and cash shortages.

As a result the company continues to face financing problems to ensure the business remains a sound going concern. One of the major challenges has been the financing of salaries and other administrative expenses rentals included.

As you are aware the business closed two shops in the financial year 2017 due to the harsh operating environment. With this background the company intends to terminate your employment contract effective 23rd July 2018 through retrenchment.

The company hereby notifies you that you shall be serving your statutory three months’ notice starting the 23rd April 2018 whilst at work.

This letter serves as well to invite you to negotiate the terms of the retrenchment exercise. The company is alive to the procedure of retrenchment as specified in the Labour Act [Cap 28:01] and we have seen it prudent to engage to discuss the terms of the retrenchment and seek approval of the National Employment Council. As already submitted you shall be serving your three months’ notice whilst at work meaning your last working day shall be the 23rd July 2018.

I would like to take this opportunity to thank you for your service over the years and I wish you all the best in your future endeavours.

By copy of this letter the National Employment Council for the Commercial sectors Zimbabwe is notified of our intention to terminate pending the terms that we shall discuss with you.”

Respondent’s submissions in respect of these two letters were that, the 2nd letter was a follow up of the 1st letter and complementing the 1st letter. That the court should not be distracted by the use of terminology referring to retrenchment to mean that appellant was retrenched.

Respondent argued further that in terms of the law, the minimum package paid to an employee is defined as a retrenchment package despite the circumstances under which the contract is terminated. Respondent actually extended a good gesture which was misinterpreted to mean the employer was now engaging in retrenchment, so argued Respondent.

In essence, Respondent’s position is that it did not embark on a retrenchment exercise but embarked on a termination of the contract on notice (3 months as appellant was on a contract without limit of time) following section 12 of the Labour Act and the Zuva judgment.

I am not persuaded by Respondent’s arguments. The notice letter dated the 11th April 2018 might have been a notice to terminate the contract on 3 months’ notice following the Zuva judgment though the reason for the termination given therein (hard economic situation) is one of the circumstances usually used as a reason in retrenchment exercises. The 2nd notice letter is very clear and unambiguous in its contents. It is clearly a notice to retrench, it is clear on the reasons for the retrenchment, it is copied to the National Employment Council. The Designated Agent found that Respondent was acting lawfully in terms of section 12C (1) of the Act as amended. He found the 2nd letter, i.e the intention to retrench, as having been done above board. He stated in his analysis of the evidence:-

“The intention to retrench as annexed is in terms of the 					law and thereby above board.”

This is also supported by the Respondent’s submissions before the Designated Agent.

After the Zuva judgment, the Legislature promulgated the Labour Amendment Act N0.5 of 2015 in which Section 12 of the Act was amended by the insertion of Subsections (4a) and (4b) which are to the effect that:-

“(4a) 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.

(4b) where an employee is given notice of termination of contract in terms of

subsection (4a) and such employee is employed under the terms of a

contract without limitation of time, the provisions of section 12C shall apply

with regard to compensation for loss of employment.”

It is common cause that appellant was employed under a contract without limitation of time. The notice to terminate appellant’s contract dated the 11th April 2018 was not in terms of subsection (4a) paragraph (a), neither was it under paragraph (b), nor paragraph (c). This leads to the only conclusion that the termination was under paragraph (d) ie pursuant to retrenchment in accordance with Section 12 C hence the notice dated 21st April 2018.

Respondent’s argument that the termination was not pursuant to a retrenchment is therefore rejected.

The next issue to be decided now is whether the Designated Agent erred or misdirected himself when he held that the exercise was lawfully done thereby dismissing appellant’s claim of unfair dismissal which, according to appellant was disguised as a retrenchment which was not done in terms of the law.

The Designated Agent analysed both parties evidence and in particular the appellant’s evidence vis a vis the contents of the notice letter of the 21st April 2018 and came to the conclusion that in view of the reasons stated in the notice, the allegations of unfair labour practices were separate issues hence they could not be the reason that motivated the retrenchment.

I have no reason to interfere with that conclusion.

Section 12C of the Act as amended provides for RETRENCHMENT and COMPENSATION FOR LOSS OF EMPLOYMENT ON RETRENCHMENT OR IN TERMS OF SECTION 12 (4a).

It reads as follows:-

“(1) 	an employer who wishes to retrench any one or more employees shall –

give written notice of his or her intention.

to the works council established for the undertaking or

if there is no works council established for the undertaking or if a majority of the employees concerned agree to such a course, to the employment council established for the undertaking or industry; or

if there is no works council or employment council for the undertaking concerned to the Retrenchment Board, and in such event any reference in this section to the performance of functions by a works council or employment council shall be construed as a reference to the  Retrenchment Board or a person appointed by the Board to perform such functions on its behalf; and

provide the works council, employment council or Retrenchment Board,

as the case may be, with the details of every employee whom the

employer wishes to retrench and the reasons for the proposed

retrenchment; and

send a copy of the notice to the Retrenchment Board”.

Subsection (2) reads as follows:-

“Unless better terms are agreed between the employer and employee concerned or their representatives, a package (hereinafter) called

“the minimum retrenchment package”)

……………………………………………………………………………………………………..

……………………………………………………………………………………………………..

shall be paid by the employer as compensation for loss of employment (whether the loss of employment is occasioned by retrenchment or by virtue of termination of employment pursuant to section 12 (4a) (a), (b) or (c) not later than date when the notice of termination of employment takes effect.”

Section 3(2) of the Labour Relations (Retrenchment) Regulations 2003 Statutory Instrument 186 of 2003 similarly worded also provides the procedure to be followed when an employer intends to retrench less than 5 employees. Form LRR 1 NOTICE TO RETRENCH must be filled and addressed to the works or national employment council, the name of the employee and the reasons to be stated on separate sheets of paper.

Section 6 of the said Regulations makes it mandatory to use the form in order to give effect to the procedures and provision of Section 12 C of the Act.

In the case of PROSSER & 35 OTHERS

v

ZISCO HC H 201/93 at page 3

Barklet J (as he then was) stated;

“I think as a starting point it must be stated that when dealing with matters like retrenchment, it is of considerable importance that the relevant Regulations should be carefully and clearly followed by the Company seeking to retrench employees.

The Regulations lay down a precise procedure to be followed and it is important that that procedure is specifically followed. I say that especially in regard to retrenchment matters because retrenchment by any standard is a traumatic procedure.

This is particularly so for persons who have been in employment for many years…..it is important that against such an emotionally traumatic climate that employers should simply follow the law”.

In casu, Respondent gave notice of intention to retrench dated the 21st April 2018. Contrary to the provisions it was addressed to appellant and copied to the Chief Designated Agent, National Employment Council for the Commercial Sectors. The notice was not on form LRR1 though the letter is referenced RE: LRR1. The record does not show that a copy of the notice was sent to the Retrenchment Board.

The Designated Agent correctly found that the retrenchment exercise was an act provided by law, I however find that he erred when he found that it was not unlawful. The notice alluded to above was not properly issued in terms of the provisions of the Act and Regulations.

Failure to comply with the provisions of the Act and Regulations renders the exercise a nullity.

See therefore

STANBIC BANK ZIMBABWE

vs

CHARAMBA SC 77/05

in which the court set aside retrenchment on the ground that the retrenchment had not been carried out in terms of the Regulations.

Accordingly, the appeal succeeds. The Designated Agent’s determination cannot be allowed to stand. As retrenchment is a nullity, it follows that appellant remained in Respondent’s employ but only up to the date of her resignation. The issue of constructive dismissal was not raised as a ground of appeal nor as the basis of the appeal, neither was it raised in appellant’s arguments before the Designated Agent. It is raised for the first time in the heads of argument which in my view is improper, as such I will not deal with it.

In the result, it is ordered as follows:-

that the appeal be and is hereby allowed on the ground that the retrenchment exercise was a nullity.

as appellant was still in Respondent’s employ until the 11th July 2018 when she resigned, there shall be no order for reinstatement nor the alternative of payment of damages.

Danziger & Partners 	-	Appellant’s Legal Practitioners

Mufadza and Associates	-	Respondent’s Legal Practitioners