Turnall Holdings Limited v Verukai Emilton N.O. & 2 Ors

### Preamble
Judgment No. SC 102/20
1
Civil Appeal No. SCB 37/19
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REPORTABLE	(110)

TURNALL     HOLDINGS     LIMITED

v

VERUKAI     EMILTON     N.O.     (2)     NQOBILE     NDLOVU     (3)     PHATHISIWE     MACHANGU

SUPREME COURT OF ZIMBABWE

GUVAVA JA; MATHONSI JA & KUDYA AJA

BULAWAYO:	20 & 21 JULY 2020

L. Nkomo, for the appellant

First respondent in default

Second respondent in person

Third respondent in person

MATHONSI JA:	This is an appeal against the whole judgment of the Labour Court handed down on 21 June 2019 in which it partially confirmed a draft ruling of a Labour Officer.  The Labour Court remitted the matter to the Labour Officer for a determination of the issue of reinstatement, alternatively damages in lieu thereof and their quantification.

Background facts

The facts of this matter are generally common cause. The appellant employed the second and third respondents as Human Resources Officer and Stores Controller respectively. Between 2015 and 2016 the appellant faced financial challenges and embarked on a number of measures designed to contain the financial incongruence. It put some employees on retrenchment in 2016 but the second and third respondents were not among those employees identified for retrenchment.

As a result of the financial difficulties the appellant ran a three months’ salary backlog. It then unilaterally imposed a salary cut of 50 percent. This was resisted by the second and third respondents who instead proposed a 20 percent salary cut.  A labour dispute then arose as a result of the 50 percent salary reduction which was effective from 1 July 2016.  The dispute was referred to a Labour Officer for conciliation.

The Labour Officer was unable to unlock the impasse between the parties and was about to issue a certificate of no settlement on 7 March 2018 when the appellant requested that the matter be briefly stood down to enable the parties to explore an out of court settlement. The Labour Officer obliged allowing the parties to return to the employer’s offices for that purpose. Upon arrival, the appellant immediately served the second and third respondents with retrenchment letters.

In those letters dated 7 March 2018, the appellant made it clear that it was unable to meet the employees’ demands and that it had no option “but to terminate (the) contracts of employment”.  The letters also set out that the termination was in accordance with s 12C of the Labour Amendment Act No. 5 of 2015.  They also set out the terminal benefits and severage packages to be paid to the employees.  The letters, concluded by thanking the second and third respondents “for the valued contribution” they had made during the tenure of their employment.

It was not until 14 March 2018 that the appellant wrote a letter to the Retrenchment Board in the following terms:

“RE: NOTICE OF INTENTION TO RETRENCH 4 NON NEC EMPLOYEES

We hereby notify the Retrenchment Board of our intention to retrench 4 (four) employees (find attached annexure 1 with list of employees) with effect from 1 June 2018 in accordance with section 12C (1) of the Labour Amendment Act No. 5, to align the business cost with business activity.  Reasons for the retrenchment exercise are contained in Annexure 2 herewith attached.

We have also attached letters of notice to terminate employment contract through retrenchment for the 4 (four) affected employees (Annexure 3).

Should you require any further details please contact the undersigned.”

Meanwhile, the second and third respondents reported a new case of unfair dismissal to a Labour Officer.  The first respondent conciliated the dispute and in due course issued a certificate of no settlement. The first respondent made a draft ruling which found that the appellant had not followed the mandatory procedure for a lawful retrenchment process. It had failed to serve the second and third respondents with proper retrenchment notices. The first respondent awarded damages in lieu of reinstatement.

It is that draft ruling which the first respondent applied in terms of s 93 (5a) (a) and (b) of the Act to have it confirmed.  The application was opposed by the appellant on the basis that the first respondent had no jurisdiction to entertain the complaint as at the time the employees had ceased to be employees owing to the retrenchment.

The court a quo found that there was no valid retrenchment, the appellant having failed to give notice of the intended retrenchment. It however found that the Labour Officer had not heard the parties before quantification of damages in lieu of reinstatement.  It remitted the matter for the purposes of hearing evidence before quantification.

The appellant was aggrieved and noted an appeal to this Court on eight grounds of appeal. At the hearing of the appeal Mr Nkomo, who appeared for the appellant, conceded that most of them were not valid grounds.  Mr Nkomo abandoned all the grounds except grounds of appeal 1 and 7.

Only two issues commend themselves for determination in this appeal from these grounds.  They are the following:

1. 	Whether the retrenchment was lawful; and

2. 	Whether the second and third respondents waived their right to challenge the retrenchment.

Whether the retrenchment was lawful

The process by which an employer may retrench an employee is set out in the Labour Act [Chapter 28:01]. In terms of s 12 (4a) no employer shall terminate a contract of employment on notice unless the termination is in terms of an employment code; the employer and employee mutually agree in writing to the termination; the employee was engaged for a period of fixed duration; or pursuant to retrenchment in accordance with s 12C.

Section 12C (1) sets out the procedure to be followed by an employer who wishes to retrench any one or more employees.  Written notice must be given to the Works Council.  If the there is no Works Council, notice must be given to the Employment Council established for the undertaking or industry. If there is no employment council for the undertaking, notice must be given to the Retrenchment Board.

In addition, details of every employee to be retrenched and the reasons for the “proposed” retrenchment must be set out.  Subsection (2) provides that “unless better terms are agreed between the employer and employees concerned, a minimum retrenchment package set out therein shall be paid.”

Mr Nkomo for the appellant submitted that the employees are not in the list of those entities required to be given notice of the retrenchment in terms of s 12(C)(1)(a) of the Act. He submitted that whatever notice was required was given to the second and third respondents in the termination letters handed to them on 7 March 2018. In other words, so the argument goes, the employer is required to give other people notice of retrenchment but not the concerned employees who can be served only with termination letters as those dated 7 March 2018.

Surely that was never the intention of Amendment Act No. 5 of 2015. The mere fact that s 12C (2) talks of better terms being agreed should be taken to mean that the employees are also entitled to notice of retrenchment.  After receipt of such notice, they are entitled to negotiate with the employer terms of retrenchment better than the minimum retrenchment package spelt out in that provision.

What this means is that the giving of notice of retrenchment is imperative in the retrenchment process. It is that notice which triggers the commencement of negotiations which may culminate in the agreement of a package  In the event that such a package is not agreed, the employer may then fall back on the minimum retrenchment package set out in s 12C (2).

It is this procedure for retrenchment which was completely ignored by the appellant. While retrenchment was not even the subject of the dispute which was being conciliated at that time and the second and third respondents had never been considered for retrenchment, the appellant surprised them with letters of termination of employment on retrenchment. The appellant must have realised that it had burnt its fingers by terminating the contracts the way it did. It then set about trying to correct its mistakes by giving notice of an intended retrenchment to the Retrenchment Board 7 days after the employees had been terminated.

The appellant also tried to invite the second and third respondents for meetings to discuss their retrenchment package long after they had been sent home. This was an exercise in futility.  It could not clothe what was done in breach of the law with legality in retrospect. The termination of employment remained unlawful.

Whether the Employees Waived Their Right To Challenge The Retrenchment

It was submitted on behalf of the appellant that, by accepting the package paid into their accounts and also vigorously pursuing it through emails sent to the employer, the employees should be taken to have waived their right to challenge the retrenchment. Reliance was placed on the fact that the retrenchment process prescribed by s 12C of the Act was fully complied with and therefore by accepting the retrenchment package the employees brought the relationship to an end.

The difficulty with that argument is self-evident. We have already found that there was no compliance with the procedure for retrenchment set out in s 12C.  In addition, there is a dispute as to what it is the employees accepted or pursued in the emails.  According to the second respondent, the cash in lieu of notice they claimed was only their benefit in respect of notice pay but certainly not part of a retrenchment package. They challenged retrenchment from the very beginning.

In order for waiver to be sustained, it requires full knowledge of the legal rights being abandoned. Where the parties are not at ad idem as to what it is they were waiving, there cannot be a valid waiver.  The court a quo can therefore not be faulted for drawing the conclusion that the alleged acceptance did not clothe the process with legality because it was a nullity. The facts of the matter are clearly distinguishable from both Chidziva & Ors v Zimbabwe Iron & Steel Company Ltd 1997 (2) ZLR 368 (S) and Marikanda v Kafu & Ors SC 90/20.

The appeal is without merit.  It is accordingly dismissed with costs.

GUVAVA JA:			I agree

KUDYA AJA:			I agree

Joel Pincus, Konson & Wolhuter, appellant’s legal practitioners