Zimbabwe Institute of Management v Norman Hadzirabwi

### Preamble
IN THE LABOUR COURT OF ZIMBABWE
JUDGMENT NO LC/H/428/16
HELD AT HARARE 31 MAY 2016
CASE NO
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IN THE LABOUR CIURT OF ZIMBABWE			JUDGMENT NO LC/H/428/16

HELD AT HARARE 31 MAY 2016				CASE NO LC/H/133/16

& 22 JULY 2016

In the matter between:

ZIMBABWE INSTITUTE OF MANAGEMENT			Appellant

And

NORMAN HADZIRABWI					Respondent

Before The Honourable Muchawa, J

For Appellant			Advocate T Mpofu

For Respondent		Advocate T Zhuwarara

MUCHAWA J:

This is an appeal against an arbitral award which quantified damages in favour of the respondent.  A total of US$140 412.81 was awarded to the respondent.

The respondent was employed by the appellant as corporate services manager on a three year fixed term contract.  Such contract was to expire on 1 December 2015 when the respondent was dismissed from employment with effect from 9 January 2014.  It was found that such dismissal was unfair in an arbitral award of 12 March 2015 and reinstatement without loss of salary and benefits from date of dismissal, was ordered.  In the alternative, damages in lieu of reinstatement were awarded.

The appellant is disgruntled with the quantification award and has lodged this appeal supported by the following grounds;

The arbitrator grossly misdirected himself at law in awarding damages in the quantum of 24 months when at law and in practice the quantum of damages in contracts of respondent’s nature do no exceed a quantum of 6 months damages.

The arbitrator grossly erred and seriously misdirected at law in making a finding that the principle of mitigation of loss for dismissed employees and the duty to mitigate loss does not apply to employees who were employed on a fixed term contract of employment.

The arbitrator grossly erred and seriously misdirected on the facts which misdirection amounts to a question of law in making a finding that the appellant failed to prove the reasonable time within which the respondent could reasonably be expected to get alternative employment despite monumental evidence before the tribunal to the effect that the respondent was employed as a chief operation officer of a company named CIPM with effect from May 2015, and the schedules of various job opportunities which the respondent could have utilised.

The arbitrator grossly erred and seriously misdirected on the facts, which misdirection amounts to a question of law in awarding the respondent holiday allowance of US$10 400 when the facts do not support such an amount.

The arbitrator grossly erred and seriously misdirected on the facts, which misdirection amounts to a question of law, in awarding the respondent cell phone allowance when the contract of employment was clear to the effect that same was for business use.

The arbitrator grossly erred and seriously misdirected on the facts, which misdirection amounts to a question of law in awarding the respondent club subscriptions on the basis that these were not disputed, when clearly these were disputed by the appellant and the respondent did not provide any proof of loss suffered due to paying for subscriptions or professional fees.

The arbitrator grossly erred and seriously misdirected on the facts, which misdirection amounts to a question of law, in awarding the respondent gratuity despite the clear provisions of the contract of employment that gratuity would only be paid upon expiration of the contract and that contract termination for whatever reason before the expiry will not be eligible for gratuity.

The arbitrator grossly erred and seriously misdirected on the law in awarding pension to the respondent despite the trite position of the law that pension contributions are due to the Pension Fund in terms of section 6 of the Pension and Providence Act.

The arbitrator grossly erred and seriously misdirected on the law in awarding the respondent medical cover despite the trite position of the law that for medical aid, the employee has to prove the medical bills incurred which would be the loss which the employer has to compensate.  The respondent did not prove any loss due to medical aid before the arbitrator.  The arbitrator also grossly erred on the facts in holding that the claim was not disputed whereas it was vehemently disputed by the appellant.

The decision of the arbitrator is grossly unreasonably such that no other person given the same facts and the law would come to the same conclusion.  This is especially so considering that the award of the arbitrator especially from its paragraph 14 does not give reasons for the components awarded to the respondent and the basis why the opposition of the appellant to these components claimed was disregarded.   At best, the award of the arbitrator should thus be set aside being arbitrary and not giving reasons for the decision.

I turn to consider each ground of appeal in turn below.

Ground 1 – Quantum of damages

The appellant argues that in awarding damages in the amount of 24 months salary, the arbitrator erred as the law and the practice points to no more than 6 months’’ salary as damages in such fixed term contracts.

I have to agree with the respondent that this ground, as it stands is questioning the arbitrator’s factual findings.  The appellant has made a sweeping statement and has not pointed me to any case law indicating a principle in quantification which was improperly applied.  The case of Leopard Rock Hotel Company (Pvt) Ltd v Van Beek 2000 (1) ZLR 251 (S) held that a ruling on damages is a ruling on fact and thus not appellable unless it can be categorised as wholly unreasonable.

I accordingly strike off ground 1 of appeal as it does not raise a question of law as required by section 98 (10) of the Labour Act [Chapter 28:01].

Ground 2 – Mitigation of loss by employees on fixed term contracts

It is the appellant’s argument that the arbitrator erred by concluding that the principle of mitigation of damages does not arise in dealing with fixed term contracts.  The arbitrator awarded to the respondent damages equivalent to twenty four months salaries and benefits being the unexpired portion of the fixed term contract.

I was referred to several case authorities in support of the application of the principle of mitigation of damages even in fixed term contract scenarios.

The respondent simply avers that the conclusions of the arbitrator are logical and reasonable in the circumstances and do not warrant interference by this court.

The question before me relates to the rule of law in quantification and is a question of law.

The arbitrator distinguishes between contracts without limit of time and fixed term contracts in not applying the trite position set out in the case of Ambali v Bata Shoe Company Ltd 1999 (1) ZLR 374.  He reasons that whilst the duty to mitigate falls on an employee on a contract without limit of time, the position is not clear in relation to those on a fixed term contract.  He relies on making a deduction from Ambali supra and Gauntlet Security Services (Pvt) v Leonard 1997 (1) ZLR 583 9S) to conclude that mitigation is not applicable in fixed term contracts.

This conclusion is reached despite noting that the parties were in agreement that the calculation of damages would be the unexpired period less abatement or mitigation through alternative employment.

I believe however that the matter is settled by the case of Myers v Abraham 1952 (3) SA 121 (C) at 127 D – E where E van Winsen J as follows

“The measure of damages accorded such employee is, both in our law and in the English law, the actual loss suffered by him represented by the sum due to him for the unexpired portion of the contract less any sum he earned or could reasonably have earned during such latter period in similar employment.”

This position, I believe stands, particularly where the unexpired portion of the contract is as long as two years, as in casu.

As stated in Gauntlet Security Services ((Pvt) Ltd v Leonard 1997 (1) ZLR 583 (SC), I believe that the general rule governing the measure of damages is applicable.  A wrongfully dismissed employee must look for and accept any reasonable offer of alternative employment.  He cannot just do nothing.  If he fails to take other employment when it would have been reasonable for him to do so, then a deduction will be made in respect of the remuneration he would have earned from the substituted employment.

Ground 2 of appeal therefore succeeds.

Ground 3 –  Whether the arbitrator correctly considered evidence in relation to mitigation

In this ground of appeal, the appellant questions the arbitrator’s finding that the appellant had failed to prove the reasonable time within which the respondent could reasonably be expected to find alternative employment yet the appellant claims to have availed evidence before the tribunal.  Such evidence, it is claimed was to the effect that the respondent was employed as a chief operations officer of a company called CIPM with effect from May 2015.  Further evidence is alleged to have been schedules of various job opportunities which the respondent could have utilised.

The respondent, in my opinion correctly argues that the arbitrator did in fact consider and assess the relevance of the alleged new job at CIPM.

In paragraph 10 of the arbitral award on page 18 of the record, the arbitrator states

“It is also, in light of the above, prudent to consider the evidence produced by respondent on claimant’s employment.  The respondent produced a document meant to reflect the claimant as a chief operations officer of a company named CIPM.  The respondent however did not discuss how much he was earning or could have possibly been earning from the job.  It did not refer the tribunal to standards (sic) rates of occupiers of such an office so as to enable the tribunal to consider any possible deductions to claimant’s entitlement.  The pertinent consideration is on what it is the claimant is being alleged to have earned or should be earning so that due deductions can be made.”

The arbitrator proceeds to note that in fact there was a mere registration of a company and not employment itself.

I find nothing outrageous in the way the arbitrator dealt with the evidence relating to CIPM warranting any interference by this court.

As to the schedule of possible job opportunities placed before the arbitrator by the appellant, the arbitrator in my opinion correctly weighed these against those the appellant had applied for and correctly concluded that the respondent had taken reasonable steps to secure alternative employment.  The duty set out in Gauntlet Security supra is to look for and accept any reasonable offer of employment.  It is not to apply for every job on offer on the market.  The employee mitigates by securing not “any other work” but suitable comparable employment.

In PTC v Swabata SC 42/03 it is stated that the onus is on the employer to show that the employee did not look for alternative employment or that he did not take up a good job when it was offered to him.

In Fokoseni v Lobels Bakery there is a distinction between looking for a job and securing one.

I therefore find no merit in ground 3 of appeal.

Ground 4 – Holiday allowance

The appellant contends that the respondent is not entitled to an award of $10 400 as a holiday allowance as the facts do not support this.

The arbitrator however had the respondent’s contract of employment before him.  It provides as follows in paragraph 16;

“You are entitled to four (4) day annual holiday for two to a SADC Regional destination of your choice plus holiday allowance calculated at the rate of $350 per day each.  In addition the institute will cater for the two return tickets or transport costs up to a maximum of $1200 per return ticket.”

The case of Gauntlet Security Services supra lays out that an employee, over and above the amount of salary awarded as damages, may also be compensated for the loss of any benefit to which he was contractually entitled and of which he was deprived in consequence of the breach.

There is no question in my mind that the facts do support an entitlement to a holiday allowance.  What has to be decided, however subject to mitigation evidence being considered, is the quantum of this.

Ground 4 therefore partly succeeds.

Ground 5 – Cell phone allowance

It is argued by appellant that the cell phone allowance was awarded contrary to the provisions of the contract of employment which made it clear same was for business use.

Clause 18 of the contract of employment however provides otherwise.  It states;

“The Institute will provide you with a handset and cell phone line.  A monthly cell phone allowance equivalent to 600 units will be extended to you, payable direct to the service provider by Finance and Administration.  This allowance covers both your business and private calls.  (My emphasis)

In the same vein of Gauntlet Security Services supra, the respondent’s entitlement to a cell phone allowance for private calls is undisputable.  What is however not clear from above clause is what percentage from the 600 units was for private use.  The award itself does not deal with this.  As already stated above, mitigation has to be considered so as to establish the period to be covered.

Ground 5 of appeal partly succeeds.

Ground 6  - Club Subscriptions

The appellant’s case is that it was erroneous for the arbitrator to award club subscriptions as an undisputed claim yet it disputed this claim which was not proved on the basis  of loss suffered by the respondent.

Clause 19 of the contract of employment provides

“The Institute will pay a monthly allowance towards subscription to a business or sports club of our choice.”

The above clause lays a firm foundation for the club subscriptions claim as a contractual benefit.  There is no basis for the appellant to argue that there was need to prove loss suffered.  This allowance was to be paid to the appellant.

Like the cell phone and holiday allowance, the only remaining issue is that of the quantum of same.

Ground 7 – Gratuity

The award of gratuity to the respondent is alleged to be contrary to the contractual provisions.

Clause 15 of the contract in question provides

“At the expiry of your contract, you will be paid gratuity equivalent to one (1) month salary for each year served.  Contract termination for whatever reason before contract expiry will not be eligible for gratuity.”

I find that the gratuity benefit is contractual.  I find it unacceptable that the appellant wants to argue that the respondent’s contract was terminated before expiry and the respondent is not eligible for gratuity.  This is because the very quantification process is based on the finding that the termination of the contract was unfair.  It should therefore not have been terminated hence the order of reinstatement.  The appellant cannot be allowed to benefit from its own wrong and maintain an action arising out of its own wrong.  Standard Chartered Bank v Matsika 1997 (2) ZLR 389 (S) and Mushaya v Glens Corporation 1992 (1) ZLR 162.

The respondent is therefore entitled to gratuity whose quantum will be decided after mitigation is considered.

Ground 8 and 9 – Pension + Medical Cover

The respondent concedes that the arbitrator erred in awarding pension contributions and medical cover directly to him.  The pension funds are due to the relevant pension scheme as the medical cover is due to the medical aid provider.

Grounds 8 and 9 therefore succeed.

Ground 10

In keeping with my findings for grounds 1, 4, 5, 6 and 7 find that the arbitrator erred in his findings in paragraph 7 of the award where he concludes that the evidence on mitigation should not be considered as the claimant was on a fixed term contract.  In this he erred on the law and in some instances in not explaining how he arrived at the amount awarded.

Accordingly the appeal partly succeeds.  The quantification award of arbitrator Sengwe of 4 March 2016 is set aside and the matter is remitted before a different arbitrator for quantification of damages, guided by this judgment.

Matsikidze & Mucheche, appellant’s legal practitioners

Chambati, Mataka & Makonese, respondent’s legal practitioners