Agribank Limited v Newton Mwehaliri & 2 Ors

### Preamble
IN THE LABOUR COURT OF ZIMBABWE
JUDGMENT NO LC/H/433/2016
HARARE, 6 JUNE 2015 &
CASE NO LC/H/993/2015
22 JULY 2016
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IN THE LABOUR COURT OF ZIMBABWE	         JUDGMENT NO LC/H/433/2016

HARARE, 6 JUNE 2015 &					         CASE NO LC/H/993/2015

22 JULY 2016

In the matter between

AGRIBANK LIMITED						APPELLANT

And

NEWTON MWEHALIRI						1ST RESPONDENT

And

GODFREY MUNGURUMA					2ND RESPONDENT

And

FUNGAI TAKAONA						3RD RESPONDENT

Before the Honourable Muzofa J

For the Appellant	J Dondo  (Legal Practitioner)

For the Respondent	Z Chirombe  (Trade Unionist)

MUZOFA J:

The three respondents were employed by the appellant in different capacities.

During the course of their employment, the respondents committed certain acts of misconduct whose details are irrelevant in the resolution of this case.

All the respondents were charged albeit separately and were found liable.

The penalty given for each of them was a demotion and a final written warning. Each of them appealed to the National Employment Council Appeals board.

For the first respondent the appeals board confirmed the verdict but altered the penalty. The appellant had demoted the first respondent from Grade C5 to B4. The appeals board altered the penalty of demotion from Grade C5 to Grade C4 and ordered that his salary and benefits be retained at Grade C5.

The second respondent was demoted from Grade C4 to Grade B1. He appealed to the grievance and disciplinary committee. There was a deadlock the matter was referred to the appeals board which referred the matter back to the grievance and disciplinary committee. The second respondent was retrenched before the appeal was finalised.

The third respondent was demoted from Grade C5 to Grade B4. He appealed to the appeals board. The verdict was confirmed and the demotion was altered from Grade C5 to Grade C4.

Following the decisions of the appeals board, the appellant adjusted and paid the respondents in terms of the demotion except for the second respondent whose case was not finalised.

A dispute ensued in so far as the implication of the demotion. The appellant reduced the salaries and benefits, transferred the respondents and denied them the transfer allowances, as part of the demotion. The respondents were dissatisfied by this interpretation of demotion and referred the matter to a labour officer in June 2015.

In July 2015 the three respondents were retrenched, but they persued their matters.

Conciliation efforts failed and the matter was referred to arbitration. The arbitrator ruled that the appellant committed unfair labour practices and ordered that the first respondent be paid $11 935-73 being salary arrears and allowances, the second respondent be paid $37 550-38 being back pay, retrenchment package arrears and allowances and the third respondent be paid $12 005-73 being back pay, retrenchment package arrears and allowances.

The appellant appeals against the said decision. The appeal raises two issues, firstly what constitutes a demotion and secondly whether the respondents were not entitled to transfer allowances.

For the appellant it was submitted that the respondents were found liable for committing certain acts of misconduct. It was within the appellant’s power to set out the penalties of which demotion was one of them. In casu demotion was a reduction in responsibilities (down grade) and the attendant salaries and benefits.

Consequent to the misconduct the respondents were transferred therefore they were not entitled to the transfer allowances.

For the respondent it was submitted that a demotion was only a diminution of dignity, importance or responsibility. The change in grade was enough. The reduction in salary was not implied in the penalty therefore there was an unfair labour practice.

The respondents relied on two South African cases in support of their case Van Niekerk v Medicross Health Care Group (Pty) Ltd [1198] 8 BALR 1038 (CCMA) and Van der Riet v Leisurenet t/a Health & Racquet Clubs [1997] 6 BLLR 721 (LAC).

The two cases do not assist the court in the resolution as to what constitutes a demotion. In South Africa there is legislation that makes provision for the demotion of an employee in the right circumstances.

I was not referred to a similar piece of legislature and I am unaware of one.

In light of that legislation the court had to deal with completely different instances of demotion from the one in casu.

In the Van Der Riet case the employee resigned after being effectively demoted as a result of a restructuring exercise. The employer failed to consult the employee on the demotion. This was held to be constructive dismissal.

Similarly in the Van Niekerk case a demotion was held to be unlawful because the employer did not counsel or consult the employee.

This case pins on the interpretation of the term ‘demotion’.

According to the golden rule of interpretation the language in any document is to be given its grammatical and ordinary meaning, unless this would result in some absurdity.

According to the American Heritage Dictionary of the English Language 5th ed 2011, demotion means to reduce in grade, rank or status.

A cue can be taken from such cases as referred to by both counsel that a demotion is a compulsory reduction in an employee’s rank or job title within the organizational hierarchy. A demotion may also lead to the loss of other privileges and benefits.

Courts have held that a reduction in responsibilities even where the salary and benefits are retained there is a demotion.

I prefer to take a simple approach in this case. It is not in dispute that the respondents were demoted from one grade to another.

The attendant consequences of that penalty would therefore be twofold. First the duties and responsibilities would change albeit they are lesser. That is demotion in so far as status, dignity and power. The second consequence is the variation of the salary and benefits.

The normal course of a business entity such as the appellant employees are placed in grades. Those grades do not exist on paper only they affect the job and benefits of the employees. For instances employees in the appellant’s Grade C4 have certain responsibilities and a band of salaries and benefits.

It would certainly result in an inconsistency or absurdity to adopt the respondent’s interpretation of demotion. I say this because, while a person is said to be in grade B4 yet his salary and benefits remain that of a C5 employee.

The employee would have lesser responsibilities yet enjoy better benefits similar to employees in the higher grade. If this is not an absurdity that actually borders on injustice in respect of other employees.

This interpretation could result in chaos in the grading system in the workplace.

It is therefore my considered view that demotion in this case is the reduction in rank or status coupled with a reduction in salaries and benefits. There was no unlawful reduction in salaries. The appellant’s conduct was a natural consequence of the penalty meted, that is demotion.

I will now address the individual circumstances of the respondents.

As regards the first respondent the appeals board ordered that he be demoted from Grade C5 to C4. The salary differentials have since been paid. It was conceded that his claim be reduced by $2 156-35. In so far as salary arrears the first respondent has no claim.

The second respondent was demoted from Grade C4 to Grade B1. He appealed to the Grievance and Disciplinary Committee. The committee reached a deadlock and referred the matter to the appeals board. The appeals board referred the matter back to the committee to hear the second respondent. This was not done until he was retrenched.

The facts of this case show that the only available decision in respect of the second respondent is that by the appellant. In the absence of any variation of the demotion by any appeal authority, the respondent is entitled to a salary in Grade B1.

Before the arbitrator the second respondent claimed $3905-68 in salary underpayments and long term service award underpayments. That claim falls away.

It was not in dispute that the third respondent’s appeal varied the demotion from Grade C5 to C4. There was no order as to where his salary and benefits would be pegged unlike in the first respondent’s case.

To that extent the appellant paid the salaries and arrears between the two grades. The second respondent’s claim of $825-44 falls away.

The second issue relates to the transfer allowances.

The appellant submitted that the transfer was necessitated by the demotions. The appellant’s policy did not provide for payment of transfer costs under such circumstances.

It was further argued that the respondents did not prove their claims.

For the respondents it was submitted that the penalty did not provide for a transfer. The appellant’s policy provide for the payment of transfer costs particularly clause 7.8.1 and 7.2.

The respondents were therefore entitled to the transfer costs.

The court was not favoured with the record of the appellant’s disciplinary committee to ascertain the wording of the penalty. What is clear though from both parties’ submission is that the penalty issued for the respondents was a demotion and a final written warning.

The penalty is clear, it allows no ambiguity. For the appellant to read into that penalty a transfer would be a traverse of justice.

It might be accepted that since the respondents’ grade had changed they needed to be relocated to where their ‘new’ services can be utilised to the full. In my view that is a business decision made by the appellant. To allocate resources as it sees fit, so the decision was for sound operational reasons.

To argue that the transfers’ were of the respondent’s making due to misconduct amounts to an additional penalty. The transfers were not part of the penalties.

The transfers were not requested by the employees.

The Consolidated Human Resources Policies set out the appellant’s position on transfers specifically clause 7.8 which provides:

“7.8.1. The bank shall pay the following transfer costs upon the recommendation of the Head of Department provided such transfer is in the interest of the Bank and not at the employee’s request”.

It then sets a long list of the costs that would be paid that is school uniforms, disturbance allowance, removal expenses, and visits to seek accommodation, temporary accommodation, storage costs and motor vehicles.

Most of the costs should be proved and should have been approved by the head of department.

As stated before the transfers were not on request by the respondents so they are entitled to recover the costs subject to the conditions set out in clause 7.8 of the Policy.

It is trite that in any claim the claimant should prove every claim see Heywood Investments (Pvt) Ltd t/a GDC Hauliers v Pharaoh Zakayo.

Before the arbitrator the respondents produced an annexture which set out the claims as follow, viz the transfer costs.

The first respondent – Newton Mwehaliri:

Out of Hotel Allowance section 75 (29 September to 31 December 2014) $2250-00.

Per Diem section 7.5 (29 September to 31 December 2014) $1 875-00

Overnight allowance section 7.4.4 (29 September to 31 December 2014) $300-00.

Disturbance Allowance section 7.8.1 (b)(i) (1 January 2015) $1024-38.

Overnight and per diem section 7.4.4 ($4 + $25)(1 January to 31 May 15) $3 712-00

Removal expenses section 7.8.1  c) $637-00.

Total	$9 779-38

Unpaid fuel coupons (December 2014 – June 2015) 35 litres per month 245 litres of petrol.

Second respondent	-	Godfrey Munguruma

Disturbance allowance section 7.8.1 (b) (i) 			$  1 005-62

Overnight allowance section 7.4.4 ($4 + $25) by 300 days 	$8   700-00

Removal expenses section 7.8.1 (c) 				$  1 500-00

School Uniforms section 7.8.1 (a) ($300 x 2)			 $    600-00

Visits to seek accommodation section 7.8.1 (d) ($500 		 $ 2 500-00

x 5 days)

Total										$14 305-62

Third Respondent	Fungayi Takaona

Disturbance allowance section 7.8.1 (b)(i)			$ 1024-38

Overnight allowance section 7.4.4 ($4 + 30)			$   120-00

Removal Expenses section 7.8.1 (c)				$6 500-00

Out of Hotel 30 days x 25						$   750-00

Per diem ($25 x 30 days)						$   750-00

Reimbursement of money unlawfully deducted from		$1000-00

my salary

Transport – Mutoko to Machipisa and back			$ 200-00

Meals $15 per day by 30 days				            $ 300-00

Reimbursement of $733 unlawfully deducted from my pay	$ 733-00

Slip

Total									       $11 377-38

Unpaid fuel coupons November to June 2015 1540 litres.

Besides that document setting out the claim nothing further was produced to prove the claim.

The language of the policy show that claims for school uniforms, visits to seek accommodation should be proved. In casu they were not proved.

The respondent’s claims refer to subsections of clause 7 giving the benefit. However there is no reference as to where they obtained figures for instance of unapproved claims like overnight allowances. Despite the provision in Clause 7.4, and 7.5 there must have been evidence as to the applicable rate at that time.

In my view the arbitrator fell into error to award the claims with no evidence. Since the court has determined that the respondents are entitled to transfer costs. The justice of this case requires that the matter be remitted to the arbitrator to quantify the respondent’s entitlements based on evidence.

From the foregoing the appeal succeeds. The arbitration award is set aside and substituted by the following order:

“1.	The claimants claim for salary arrears be and is hereby dismissed.

2.	The issue on transfer costs is remitted to the same arbitrator to quantify the transfer costs.”

Dondo & Partners, respondent’s legal practitioners