ZESA Holdings V Pardon Chakanyuka

### Preamble
THE LABOUR COURT OF ZIMBABWE
JUDGMENT NO. LC/H/364/2016
HARARE, 9 MAY 2016
CASE NO.
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THE LABOUR COURT OF ZIMBABWE         JUDGMENT NO. LC/H/364/2016

HARARE, 9 MAY 2016	    		         	CASE NO. LC/H/1083/14

AND 10 JUNE 2016

In the matter between:-

ZESA HOLDINGS							Appellant

And

PARDON CHAKANYUKA						Respondent

Before Honourable P. Muzofa, Judge

For Appellant		T. Sibanda (Legal Practitioner)

For Respondent		S. Bhebhe (Legal Practitioner)

MUZOFA, J:

The respondent was employed by the appellant until 31 October 2013 when parties mutually terminated the employment contract.  A dispute ensued in respect of the package payable to the respondent.

The dispute was referred to a Labour Officer and eventually to an arbitrator.  The arbitrator made the following award:

“1.	Respondent (appellant herein) pays claimant the gross sum of US$331 274.64 being twenty (20) months’ salary, benefits and allowances at EU grade at the rate applicable on the 31st October 2013 as damages in lieu of reinstatement with interest at the prescribed rate from the date of this order to date of full payment as computed in Annexure A.

2.	Respondent offers for purchase by claimant a Mazda BT50 Double Cab or any such similar vehicle that claimant was using as a utility vehicle at 20% of its original value.

3.	Respondent offers for purchase by claimant a Mercedes Benz E250 or any such similar vehicle that claimant was entitled to as a personally allocated vehicle from the 31st October 2012 to 31st October 2013 at 20% of its original value.

4.	Respondent avails to claimant a total of 14000 litres of diesel being 35 months’ worth of Fuel at 400 litres per month as claimant’s entitlement for the 15 months’ backpay covering the period 31 August 2012 to 31 October 2013 and 20 months for damages in lieu of reinstatement.

5.	Respondent pays claimant the sum of USS19 200 calculated at AAZ rates being the reasonable cost for claimant’s use of his own vehicle with an engine capacity of 3200CC for the period 1st August 2012 to 31 October 2013 with interest at the prescribed rate from the date of this award to date of full payment as computed in Annexure A.

6.	Respondent maintains claimant on its electricity benefit and medical aid in terms of its existing policy, custom and practice until claimant attains pensionable age.

7.	Pension issues to be dealt with in terms of the ZESA Pension Fund Rules.

8.	Respondent pays costs of this application.”

The appellant dissatisfied by the outcome approached this court on appeal.  The grounds of appeal impugn the arbitral award in respect of the medical aid benefit, the sale of the Mercedes Benz E250 and the BT50 and punitive costs.

In a matter such as this one for quantification the principles governing an appeal are settled.  Quantification is a question of fact.  The appellant has to show that there was a gross misdirection on the facts to entitle an appeal court to interfere with the findings see general Kuda Madyara v Globe and Phoenix Industries (Pvt) Ltd t/a Ran Mine SC 63/02. In casu although parties mutually terminated the contract, the agreement was based on the appellant’s indication that reinstatement was no longer tenable.

I will address the grounds of appeal in turn.

Damages for loss of employment

The arbitrator awarded respondent twenty months’ salary and benefits for loss of employment.

Appellant through its legal representative submitted that the award was grossly unreasonable in light of the proved facts of this case.

The undisputed facts before the arbitrator were that there was a mutual termination effective 31 October 2013.

In December 2013 respondent being a legal practitioner by profession established his law firm.

According to appellant respondent was gainfully employed as a partner at Chakanyuka and partners from December 2013.

Respondent therefore would be entitled to two months’salaries and benefits only.  Appellant offered a sum of $34 948,71 and 800 litres of fuel it being salaries and benefits for two months.

For the respondent it was submitted that the award was reasonable taking into consideration the circumstances of the respondent.  Respondent was a Group Company Secretary a senior post in a big organisation.

It would take him a very long time to secure a job of the same status with similar benefits.

Further to that it was argued that finding alternative employment does not disentitle one to damages but the award is reduced by the margin of earnings made.  In casu appellant did not prove how much respondent earned by way of mitigation.  The arbitrator awarded twenty four months’ salaries and benefits. He reduced it by four months taking into consideration the mitigation.

Damages for loss of employment are calculated from the date of wrongful dismissal and the date within which one could reasonably have been expected to find alternative employment.

In the Ambali v Bata Shoe Co Ltd 1999 (1) ZLR 417 (SC) the Court noted that the amount of damages could be adjusted upwards or downwards depending on how much the alternative work paid.

The facts of this case are very clear.  The respondent is a lawyer, technically he was out of employment in November since in December his legal practice was operating.

The arbitrator in my view did not properly take into consideration the effect of the respondent’s legal practice.

The arbitrator dismissed the Legal practice as alternative employment.  According to him this was self employment and not “employment” in the context of an employer and employee relationship.  This was an incorrect approach.  If one established a business that is income generating that is enough.  This is precisely the concept enshrined in the mitigation of one’s loss.

Mitigating one’s loss includes earning some income.  There is no doubt that a partner in a law firm is employed and indeed earns an income.  The respondent mitigated his loss from December 2013.  I agree with the respondent the employment at C. Nemwa and Associates is irrelevant in that it was before the mutual termination of the contract.

If the respondent was gainfully employed as at December 2013 I donot find any justification in the award of twenty months’ damages for loss of employment.

Even if consideration is made of the status of the job at appellant company, there is no justification to award twenty months.  Respondent is a legal practitioner there is no way it can take twenty months for a legal practitioner to secure employment.

A partner in a law firm is generally considered better paid than professional assistants.  There was no evidence to prove how much respondent earned at the law firm so no adjustments could be made on the damages awarded.

The respondent had been offered twelve months’ salaries and benefits for loss of employment, he declined.  The appellant had generously made this offer.

In my view the respondent is entitled to two months’ salaries and benefits.  There is no special reason to deviate from the established principle of ascertaining the period for quantification of damages for loss of employment.  It remains the period from date of loss of employment to date of securing alternative employment or period within which one could have reasonably secured alternative employment.

A point was taken for the respondent that appellant failed to prove how much the respondent earned to mitigate his loss.  Indeed the onus to show that an former employee should have earned some money and how much he earned lies on the employer see Nyaguse v Mkwasine Estates (Pvt) Ltd 2000 (1) ZLR 571 (S).

However what respondent seeks based on that submission in my view is untenable.  On that basis it was argued that appellant failed to show how much respondent earned at his law firm which infact was lower than that at his former job therefore he is entitled to twenty months’ salaries and benefits.

This approach is incorrect.  Damages for loss of employment are considered in view of the reasonable period within which the employee could have secured alternative employment.  The employer in this case the appellant proved that the respondent secured alternative employment within two months.  This is not in dispute.

The monetary adjustments can only be done where proof of the earnings is available.  In casu the appellant argued that a partner in a law firm enjoys almost the same status as the former post of the respondent.

In my view the appellant ably discharged the onus bestowed on it.

The offer of two months is appropriate and reasonable in the circumstances.  I will adopt the offer made with its breakdown as follows;

Basic salary at US$3 644 per month			$7 288.00

Allowances for two months				$8 016.80

Cafeteira (two months)					$4 858.66

Holiday grant (two months)				$1 457.60

School fees benefit item				$9 104.65

Security at US$1.400 per month			$2 800.00

Cellphone allowances @ $100 per month		$  200.00

Holiday benefits for 2 months				$1 223.00

Total						        $34 948.71

Fuel at 400 litres per month			      800 litres

The respondent also offered to pay $19.200 as compensation for use of own vehicle for the outstanding back pay component.

Medical Aid

The arbitrator ordered that the appellant continue to pay contributions for medical aid until respondent reached pensionable age in terms of appellant’s existing policy, custom and practice.

Appellant argued before this court that no policy exists justifying such an order.  The respondent’s medical aid benefit was governed by his contract of employment.  Contributions were to naturally fall away on termination of contract.

The respondent’s claim for medical aid was not based on any policy or practice.  According to respondent’s written submissions he just wanted to remain covered until he reached pensionable age or until the pension fund took over.

Respondent argued that it was customary that all employees whose contracts were terminated by consent would get a lifetime medical aid contribution.

As stated before the onus to prove that he was entitled to medical aid contributions beyond the termination date was on the respondent.  No policy was produced before the arbitrator nor any evidence adduced to confirm the customs and practices at appellant in support of the claim.  The arbitrator just believed the respondent’s version.

The arbitrator fell into error when he noted that the appellant did not deny the claim.  The written submissions placed before the arbitrator were clear.  The appellant disputed that the respondent was entitled to medical aid cover beyond the termination date.  In any event the contract between the parties did not provide for a medical aid benefit beyond the date of termination.

I find no basis why the termination of contract as of 31 October 2013 should not have had the effect to terminate appellant’s obligations in relation to medical aid contributions.    There was no evidence before the arbitrator to support the findings made.  Making a finding in the absence of evidence is a gross irregularity justifying an interference with the order.

To that extent the ground of appeal in respect of medical aid us upheld.

Sale of motor vehicles

The arbitrator ordered the appellant to sale two motor vehicles to respondent a Mercedes Benz E250 and a Mazda BT 50 a utility vehicle at 20% of its original value.

It was argued for the appellant that there was no justification for respondent to be awarded the two cars.  The Toyota Prado had already been sold to the respondent.  The two cars were pool vehicles and therefore respondent was not entitled to them.  Further it was submitted that in terms of the contract the respondent was entitled to one motor vehicle.

For the respondent it was submitted that in terms of the contract after a certain period the personal issue motor vehicle was to be sold to the respondent.

The Toyota Prado became due to respondent in October 2012.  The respondent could have exercised this right but for the dismissal.

Although the sale of the Toyota Prado was in October 2013 the right accrued in October 2012.  Therefore the respondent was entitled to the Mercedes Benz E250.

Clause 10 of the contract regulates the company vehicle an employee was entitled to and it provides:

“10.1 The company shall provide the Executive with an appropriate executive company vehicle for private and business use which the executive will be entitled to purchase after five years …

10.3 Upon retirement, resignation or termination of the contract by eighth party for reasons other than disciplinary measures, fraud or theft, the executive shall be entitled to purchase the vehicle provided that the Executive shall have been employed by the company for at least two years in that capacity.”

From that clause respondent cannot be entitled to the Mercedes Benz E250.

I say so for the following reasons.  Firstly it was unclear whether the said motor vehicle was regulated in terms of clause 10.1.  However appellant argued that this was a pool car and therefore not regulated in terms of that clause.  Respondent did not address his mind to that issue.

In my view respondent would only be entitled to buy a motor vehicle issued in terms of clause 10.1.

According to respondent as at 31 October 2013 he had no car issued in terms of that clause since the Toyota Prado issued to him previously was sold to him.

According to respondent he should have bought the Toyota Prado in 2012 and thereafter received another motor vehicle in terms of that clause.

In terms of that clause clearly the appellant would offer for sale the motor vehicle.  This was not done since this is the period respondent was on dismissal that was reversed.  Technically the respondent was in receipt of the Toyota Prado he had no other car issued in terms of clause 10.1.  I donot know on what basis he claimed the Mercedes Benz E250 which was a pool car.

The respondent’s submission that but for the dismissal he would have been issued with another vehicle is persuasive but difficult to sustain.  The bottom line remains he was not offered the Toyota Prado for sale in October 2012 and he had no motor vehicle issued to be subject to the sale.

Even if respondent would have been issued with the Mercedes Benz E250 in 2012 he was not entitled to it upon termination.  In terms of clause 10.3 of the contract the executive should have been employed by the Company for at least two years in that capacity.  In relation to respondent he should have had the motor vehicle for at least two years.  In this case he would have had the motor vehicle for a year disqualifying him to purchase the motor vehicle.

Respondent was appointed Group Legal Advisor and Corporate Secretary in November 2009.  By October 2012 he had not served five years to vest him the right to buy any vehicle issued to him in terms of the applicable contract.

In respect of the BT50, it was submitted for the appellant that this was a utility vehicle and therefore not subject to sale.

For the respondent it was submitted that the respondent had access to use of two vehicles and that he was entitled to buy the vehicles in terms of the applicable contract between the parties.  An annexure K was produced before the arbitrator which regulated the pool utility vehicle.

Annexure K is the contract that respondent relied on and clause 10 thereof is similar to the one I have referred to, clause 10.5 provides:

“In addition, the Executive may have reasonable access to a pool utility vehicle for private use as and when special circumstances necessitate.”

There’s nothing in clause 10 to justify an inference that a pool utility vehicle was available for purchase after five years of service.  From the wording of the said clause a pool utility vehicle was available for use only.

Respondent’s assertion that some executives had pool utility vehicles sold to them was not proved before the arbitrator.  No evidence was led in respect of the named executives as to the circumstances of the sale if indeed pool utility motor vehicles were sold. The onus to prove the claim was not discharged by respondent.

The respondent therefore is not entitled to the BT50 motor vehicle.

Punitive costs.

Appellant submitted that there was no basis for the arbitrator to award punitive costs.  The discretion by the arbitrator was injudiciously made.

Respondent’s response what that costs are an exercise of discretion they can only be varied where the discretion was not properly exercised.

The award by the arbitrator was that “Respondent (appellant herein) pays costs of this application”

The ground of appeal is devoid of merit for being vague.  There was no indication on what basis the order of costs was said to be punitive.

In any event the order by the arbitrator is commonly understood as costs on an ordinary scale and nothing more.  Costs follow the cause and in the award by the arbitrator the respondent had succeeded. The discretion in my view was judiciously exercised.

This ground of appeal is dismissed.

From the foregoing clearly the appeal succeeds.

Accordingly the appeal is upheld and the arbitral award is set aside and substituted by the following.

“1.	Respondent to pay two months salaries and benefit in the sum of $34 948.71.

2.	Claimant’s claim for the purchase of a Mercedes Benz E250 and a BT 50 be and is hereby dismissed.

3.	Respondent to issue 800 litres fuel for the two months period.

4.	Respondent to pay US$19 200.00 being compensation for use of own vehicle (32 00cc at AAZ rates)

5. 	Respondent to pay cost of application.”

Chinawa Law Chambers, appellant’s legal practitioners

Kantor & Immerman, respondent’s legal practitioners