Urban Development Co-operation v Jonathan Rondodzai

### Preamble
IN THE LABOUR COURT OF ZIMBABWE
JUDGMENT NO. LC/H/509/14
HARARE ON 5th JUNE, 2014
CASE NO. LC/H/259/13
AND 15 AUGUST, 2014
JUDGMENT NO. LC/H/509/14
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IN THE LABOUR COURT OF ZIMBABWE	                          JUDGMENT NO. LC/H/509/14

HARARE ON 5th JUNE, 2014			                         		CASE NO. LC/H/259/13

AND 15th AUGUST, 2014

In the matter between

URBAN DEVELOPMENT CO-OPERATION			–	APPELLANT

And

JONATHAN RONDODZAI					-	RESPONDENT

Before The Honourable P. Muzofa J.

For Appellant  :	Mr E. Drury (Legal Practitioner)

Respondent       :	Advocate Mahere

with Mr Nyamutombwa (Legal Practitioner)

MUZOFA J,

This is an appeal and cross appeal against the quantum of damages in lieu of reinstatement awarded to the Respondent (Jonathan) by the Arbitrator.

The salient facts are as follows, Jonathan was employed by the Appellant (UDCORP) as a Manager in the Department of Development and Technical Services. He was charged and dismissed on charges of misconduct. He referred the matter to a Labour Officer for conciliation which failed. The matter was thereafter referred for compulsory arbitration. The Arbitrator made a finding that Jonathan had been unfairly dismissed. An order for reinstatement and damages in lieu of reinstatement was made as follows;

“1.	Claimant be reinstated to his position with full salary and benefits commencing on 1st October 2012.

That if reinstatement is no longer possible due to irreconcilable differences parties negotiate damages in lieu of reinstatement.

That if parties are unable to reach an agreement on the quantum of damages may approach this Court for assessment of damages in lieu of reinstated. (sic)

Arbitration costs be borne by parties in equal shares.

Respondent to pay legal fees borne by claimant at his lawyers’ scale.”

When the parties subsequently failed to agree on the quantum of damages. Jonathan applied for quantification of the damages. The Arbitrator made the following award;

“1.	24 months salary inclusive of notice pay at $1674.00 per month x 24 months = $40 176.00

2. Cash in lieu of leave days 3 months						=$ 5 022.00

Sub total 									 $45 198.00

7 months fuel allowance $280.00						    1 960.00

7 months housing allowance $72.50						    1 207.00

7 months representation allowance $172.50					    1 207.00

7 months education allowance $42.50 						       297.00

7 months cell phone allowance $50.40 						       352.00

Sub total 									  $ 5 024.00

Total damages payable in lieu of claimant’s reinstatement 			 $50 222.00

Plus interest rate at the prescribed rate

N.B. The figures used in the quantification are based on the Applicant’s March 2012 pay slip attached in the submission.

Gratuity for 25 years is in terms of third schedule (Section 31) of Statutory Instrument of 278 of 2001 regulation is calculated at (sic) per this formula 30/100 x 25 years = $12 555.00.

If there is a pension scheme in place Respondent is thus ordered to pay the amount greater between the gratuity and pension.”

UDCORP was ordered to pay costs on an attorney-client scale.

Both parties were aggrieved by the award, UDCORP appealed and Jonathan cross appealed against the decision. The issue raised by parties is what damages were due to Jonathan and whether the order of costs was appropriate in the circumstances. I propose to set out what each of the parties deemed were Jonathan’s entitlements.

According to UDCORP Jonathan was entitled to;

(i)	3 months’ salary 				US$ 5 022.00

3 months’ allowances				US$ 1 853.00

3 months’ notice pay				US$ 5 022.00

3 months’ cash in lieu of leave			US$ 5 022.00

Total				           		US$16 919.00

(ii)	Gratuity of 					US$12 555.00

Total award					US$29 474.00

According to Jonathan he was entitled to the following damages;

Backpay 7 months x $1 532.4					US$10 726.80

Motor vehicle benefit						US$  5 000.00

Relocation Provision 						US$10 044.00

Punitive damages $1 674 x 24 months			US$40 264.00

Damages for unlawful dismissal/pension gratuity		US$60 264.80

being $1 674.00 (Jonathan’s salary and benefits) x 36 months

(3 additional years to the 24 month period

used by the Arbitrator to bring total to 5 years).

In addition Jonathan urged the Court to confirm

the Arbitrator’s award of damages for

unlawful dismissal in the sum of 				US$50 222.00

and pension gratuity in the sum of				US$12 555.00

Total						         	          US$188 987.80

Confirm the Arbitrator’s award on costs and an order for costs on attorney- client scale in respect of this appeal.

It is trite that quantification of damages is evidence based. The claimant should prove all the claims see generally Heywood Investments (Pvt) Ltd. t/a GDC Hauliers vs. Pharaoh Zakeyo SC 32/13 and Redstar Wholesalers vs. Edmore Mabiko SC 52/05. It is also trite that failure to give reasons for a decision amounts to a gross misdirection. The Arbitrator in this case having been seized with a matter for quantification made an award without giving reasons. For instance UDCORP submitted that Jonathan was entitled to damages for 3 months, Jonathan had claimed 5 years’ damages. The Arbitrator awarded 24 months damages and no reasons were given for the decision. Clearly the Arbitrator erred, on what basis did he award the 24 months. The Arbitrator completely ignored some of Jonathan’s claims that were before him for instance the claims for motor vehicle, punitive damages, relocation provision and no reasons were given. It cannot be over-emphasized that a careful analysis of each claim should be made and reasons given for any conclusion reached. The Arbitrator in this case clearly approached the matter from a wrong angle.

That as it may the Court will address the issues as raised by the parties. I propose to deal with the claims in turn.

Damages in lieu of reinstatement

As correctly pointed out by both parties damages are calculated in terms of the period within which it would reasonably take a person in the position of the dismissed employee to find alternative employment. In addition a dismissed employee is required to mitigate his loss by looking for alternative employment see Clan Transport Company (Pvt) Ltd v Clan Transport Workers’ Committee SC 1/02.

UDCORP submitted that the Arbitrator having made a finding that Jonathan had secured employment within 3 months erred in awarding damages for 24 months. Jonathan cross appealed that he was entitled to 5 years’ damages. As indicated before no reasons were given for the award of 24 months. UDCORP’s ground of appeal was not supported by the record of the arbitration proceedings. The Arbitrator did not make a finding as alleged. This argument does not take its appeal any further. UDCORP in its heads of argument to buttress its submission on the 3 months damages claimed Jonathan had claimed;

“Damages in lieu of reinstatement and for the period of which the claimant was unable to find alternative employment being 3 months”

These were submissions made by Jonathan in the first arbitration. This appeal is based on the appeal from the second arbitration being for quantification. Before this Court, Jonathan gave evidence and the 3 months claim was not raised. My finding is that this appeal being based on the record is confined to what transpired before the Arbitrator for the quantification, no claim was made for 3 months. Under cross examination it was not even raised that he claimed 3 months damages in lieu of reinstatement. On that basis UDCORP’s first ground of appeal fails.

Having made that finding what then is Jonathan entitled to. Jonathan gave evidence before this Court. It was shown and it was not disputed that Jonathan applied for jobs to Mutare City Council, Gweru City Council and Planafric and did not manage to secure employment. The application letters were produced and a response of regret from Planafric was produced as evidence. Jonathan was dismissed in March 2012. The application letters show that in the year 2012 he indeed looked for alternative employment. Thereafter he did not look for employment. This observation was supported by his evidence under cross examination, he was asked when did he stop looking for a job. His response was that he applied for jobs in 2012 and gave up. It is therefore this Court’s finding that Jonathan looked for alternative employment in the first year of his dismissal.

Jonathan also gave evidence that it would take a person in his position 5 years to secure employment. This was because his profession limited him to local authorities and his age being 46 years was a disadvantage. He indicated that employers preferred younger professionals. UDCORP did not dispute that it would take 5 years to secure employment even under cross examination this was not raised. The Court was just urged to disregard the claim on the basis that it was excessive and was referred to the case of Ambali vs. Bata Shoe Company Ltd. 1999 (1) ZLR 417 (SC).

Evidence was led that Jonathan conducted ad hoc consultancies that earned him $9 500.00. This was not disputed. In my view Jonathan mitigated his loss by seeking for employment in the year 2012 thereafter he engaged in ad hoc consultancies. However his claim for 5 years is excessive. Since his profession can be accommodated in local authorities there are a number of them in Zimbabwe and had he continued to look for employment beyond 2012 he could have secured alternative employment. In addition there are other potential employers as evidenced by the existence of such entities like UDCORP that could engage him. It is therefore my finding that Jonathan could have reasonably secured employment within 3 years being 36 months. Both parties in calculating damages used a salary of $1 674.00 as opposed to the $1 532.00 reflected on the March pay slip filed of record. Since there was no dispute on the said salary the Court will use the $1 674.00. The award therefore is $60 264.00 less $9 500 he received from consultancies. Amount due is $50 764.

Back pay and allowances

The second ground of appeal by UDCORP was that the Arbitrator erred by awarding damages for allowances for a 7 month period. For Jonathan it was argued that this ground of appeal does not raise a question of law. Precedent is clear that quantification of damages is a question of fact unless it is shown that incorrect principles were applied in the calculation of damages Tel One Pvt Ltd vs. Zulu SC 110/04. In casu the Arbitrator misdirected himself in addressing the issue of back pay and allowances as would be fully shown in this judgment. Accordingly the ground of appeal is properly before the Court.

On this issue Jonathan cross appealed that the Arbitrator erred by failing to award back pay. For UDCORP it was submitted that Jonathan was not entitled to the allowances that were awarded for they ceased when his contract of employment was terminated. It was further submitted that Jonathan did not prove that he was entitled to the allowances.

The starting point in the determination of whether a wrongfully dismissed employee is entitled to back pay and benefits is the order for reinstatement. This can be deciphered from the wording of the order. In Chegutu Municipality vs. Manyora 1996 (1) ZLR 262 (S) at 268 A – B the Court had this to say on the issue;

“--------- the word ‘reinstate’ or ‘reinstatement’ carries no automatic retrospective connotation, either in ordinary language or in our legislation. Normally it means simply that the person concerned will be placed again in his/her former job. If retrospectively is intended, one would normally look for additional words such as “with effect from (a particular date in the past) or ‘with back pay and all benefits from ….. date”.

See also Oliver Chiriseri and Another v Plan International SC 56/02 at page 6.

In casu the order by the Arbitrator was in the following terms;

“The claimant be reinstated to his position with full salary and benefits commencing on 1 October 2012.”

Applying the principle in the Chegutu Municipality case (supra) there is no wording

indicating that retrospectivity was intended by the Arbitrator.

I would however want to comment on the initial award made by the Arbitrator. In the body of the judgment the Arbitrator noted that he would award back pay and benefits from the date of dismissal. However in the award no such order was made. Clearly this indicates that the Arbitrator did not apply his mind to the case particularly in view of precedents on the issue of back pay. There was undisputed evidence that Jonathan’s representatives sought an amendment of the order or clarification but nothing was given. To that extent this Court is bound by the order as given by the Arbitrator. The order is the one that is enforceable, and upon which an appeal is founded see First Mutual Life Limited v Jackson Muzivi SC 9/07. I do not accept the submissions on behalf of Jonathan that the order must be read in view of the preceding paragraph. Jonathan should have appealed against the initial award that reinstated him from 1st October 2012. This award was not challenged. That which is not challenged is taken as accepted. Instead Jonathan went on to apply for quantification based on the initial award.

Having made a finding that the initial award did not intend any retrospectivity the inescapable conclusion is that Jonathan is not entitled to back pay and the consequent benefits. The Arbitrator surprisingly awarded allowances in retrospective.

It is not clear on what basis. This is so because the 7 month period of allowances is clearly the period from dismissal March 2012 to the date of reinstatement 1 October 2012 yet his initial award was not worded to have retrospective effect. Accordingly Jonathan was not entitled to back pay and the allowances for the 7 month period. This therefore means UDCORP’s second ground of appeal succeeds and Jonathan’s first ground of appeal is dismissed.

Motor Vehicle Benefit

This claim was placed before the Arbitrator but it was not addressed. When the issue was raised before the Court, the Court requested evidence to support the claim. It was submitted on behalf of Jonathan that they could not access documents in the possession of the employer therefore there was no evidence. As indicated in the First Mutual case the employee has the onus to prove his claims. Where he is uncertain of the claim then there is no claim. In line with that principle Counsel for Jonathan correctly applied to have this claim treated as abandoned. The claim for the motor vehicle benefit was therefore struck off.

Relocation Provision

This claim by Jonathan in his cross appeal in the sum of $10 044.00 was abandoned. The Court will not address it.

Punitive damages

Jonathan claimed punitive damages in the sum of $40 264. It was submitted for Jonathan that the Court can award such damages in terms of Section 89(2)(c)(iii) of the Labour Act [Chapter 28:01] (the Act). It was further submitted that the Court should calculate it as a retrenchment package in view of the fact that the relationship was untenable. For the employer it was submitted that Jonathan did not deserve an award for punitive damages since he is the one who opted not to be reinstated.

As correctly pointed out on behalf of Jonathan both the Act and precedent has not set out how punitive damages should be calculated. However before dealing with that aspect I would address the issue under what circumstances punitive damages may be awarded. Section 89 (2)(c)(iii) provides;

“Should damages be awarded instead of reinstatement or employment as a result of an untenable working relationship arising from unlawful or wrongful dismissal by the employer, punitive damages may be imposed.”

It is plain from the Act that punitive damages are not granted in every case where there has been unlawful termination. The use of the word “may” gives the Court a discretion dependent upon the facts and circumstances of each case. It therefore requires the Court to consider the circumstances of each case and decide whether to grant punitive damages.

In the cases highlighted decided before the 2005 amendment like ZUPCO vs. CHISVO 1999 (1) ZLR 67 (SC) that seemed to promote awards for punitive damages, it seems to me the underlying factor was to send a message to the employer that reinstatement is the more appropriate and equitable alternative. In casu for Jonathan it was outlined how the employer had made the working relationship untenable prior to the charges being preferred during the disciplinary hearing and the continuous threats of dismissal. It was further submitted that the relationship had already broken down. Jonathan gave evidence before this Court. His evidence was only confined to the mitigation of his loss. No facts were placed before the Court to prove the award for punitive damages. The submissions made in the Heads of Argument amount to giving evidence from the bar which is undesirable. It was submitted for UDCORP that these circumstances were not even placed before the Arbitrator and therefore they cannot be belatedly placed before this Court.

In the ZUPCO case (supra) the Court also noted on page 68, paragraph E;

“But there must be cases, and this would appear to us to be one of them, where reinstatement is obviously equitable solution, unless of course the employee does not want to be reinstated or has for health or other reasons become incapable of reinstatement.” emphasis added.

Where reinstatement has been ordered either party has an option to decline reinstatement. In my view where the employer declines reinstatement, then the sanction, ‘damages should be sufficiently high to suggest to the employer that reinstatement was the more equitable alternative can be justified. These are the punitive damages. The initial award for reinstatement is dated 11th September 2012 on 14th September 2012. Jonathan’s legal representatives wrote to UDCORP;

“Further to the arbitral proceedings before Honourable Gabilo and the subsequent award handed down on 11 September 2012 in our favour, we request you to advise us on your attitude in light of the award. Furthermore, our instructions are to advise you that our client is not inclined to the option of reinstatement but would much rather engage in negotiations on the damages in lieu of reinstatement”

Clearly it was upon Jonathan’s election that reinstatement was not persued. The question then is where an employee does not want to be reinstated is an order for punitive damages competent?    I do not believe so. Why should the employer be sanctioned when the employee was the first to say no to reinstatement. It may be argued that the decision was informed by UDCORP’s conduct prior to the dismissal. The fact remains Jonathan communicated  his intention to his employer. I therefore do not believe that the circumstances of this case requires that punitive damages be awarded. Even if I am wrong in coming to the conclusion. Punitive damages cannot be awarded in casu. I say so because the referred Section 89(2)(iii) of the Act only envisages an award for punitive damages where an application has been made in terms of sub paragraph (ii) of subsection 7 of Section ninety-

Costs

The Arbitrator awarded costs on a legal practitioner and client scale against the employer UDCORP. UDCORP appealed to this Court against that award. Costs on a higher scale are usually awarded where there has been some conduct amounting to dishonesty on the other party or dilatory conduct see Chioza vs. Sawyer 1997 (2) ZLR 178 (SC). In casu the Arbitrator noted that the employer abandoned the quantification proceedings on the pretext that an application for stay of execution had been made without producing proof that it had been granted. This stalled the proceedings to the prejudice of Jonathan. Clearly there was a misrepresentation. It was not shown that the Arbitrator’s decision was unreasonable in the circumstances. This third ground of appeal by UDCORP is therefore dismissed.

The Court does not to intend to award costs  in the present appeal despite the fact that Counsel for Jonathan made the request. This is so because both parties partially succeeded.

The award by the Arbitrator for 25 years gratuity was not challenged by UDCORP and claimed by Jonathan as pension gratuity it is therefore awarded in the sum of $12 555.00. In addition, due to the unlawful termination of the employment contract Jonathan is entitled to the 3 months’ notice being $1 674 x 3 months = $5 022. He is also entitled to the 3 months’ cash in lieu of leave as indicated in UDCORP’s offer.

From the foregoing the following order is made:-

The arbitral award dated 14 March 2013 be and is hereby set aside.

UDCORP is ordered to pay the Respondent damages as follows:-

Damages in lieu of reinstatement 			$50 764.00

Gratuity for 25 years				$12 555.00

3 months’ notice pay				$ 5 022.00

3 months’ cash in lieu of leave			$ 5 022.00

Total							$73 363.00

Less any statutory deductions.

The award of costs on a client legal practitioner scale made by the Arbitrator is hereby upheld.

There shall be no order as to costs.

Honey and Blanckenberg  - Appellant’s legal practitioners

Nyakutombwa – Respondent’s legal practitioners