Allied Timbers (Pvt) Limited v R. Chikwena and 100 Others

IN THE LABOUR COURT OF ZIMBABWE                JUDGMENT NO. LC/MC/09/2013
HELD AT HARARE ON 01 FEBRUARY, 2013                CASE NO. LC/ MC/47/2011
In the matter between



ALLIED TIMBERS (PVT) LIMITED                          –           Appellant
And

R. CHIKWENA AND 100 OTHERS                            –           Respondent




Before The Honourable L. Matanda-Moyo, President
For Appellant      - T. Mukwindidza (Legal Practitioner)
For Respondent     - M. Mareanadzo (Legal Practitioner)


MATANDA-MOYO, L.

      This is an appeal against the arbitral award which ordered the Appellant

to pay 2010 bonuses to the Respondents. The Appellant appealed to this court

on the following grounds;

      1) That the Arbitrator erred in ordering payment of bonuses when

         Appellant had financial capacity to do so.

      2) That the arbitrator erred in holding bonuses as a right when bonuses

         are a privilege paid on the discretion of the Director of Forestry.

      3) That the Arbitrator erred in failing to give due weight to the notice

         given to the Respondents of Appellant’s inability to pay bonuses due to

         losses incurred. The Appellant prayed that the Arbitrator’s award be

         set aside and that it be substituted with an order dismissing

         Respondent’s claim for payment of bonuses.
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      The brief facts are that the Respondents are employees of the Appellant.

The Appellant did not pay Respondents 2010 bonuses. The matter was referred

for conciliation and subsequently for arbitration. The Arbitrator found that the

Appellant had failed to follow the correct procedures in advising its employees

of its inability to pay the 2010 bonuses. The Arbitrator also found that the

Appellant was at law enjoined to make full disclosure of its financial position

during the discussions with the Respondents and before the Arbitrator. It failed

to do so.   The Arbitrator ordered the Appellant to pay the 2010 bonuses.

Aggrieved by that finding the Appellant noted this appeal.



      The Appellant submitted that a bonus is given ex-gratia and payment of

such bonus is discretionary. There is no right to a bonus at common law. The

Respondent conceded that position. See Crossley Union Government 1931

NPD 114 and Zimbabwe Teachers Association vs Chairman Public Service

Commission 1996 (1) ZLR 91(H).      It is common cause that in order to find

whether payment of bonus is discretionary, one has to look at the contract of

employment. If the contract of employment maintains the common law position

then the payment of bonuses remains discretionary. However if a contract

alters the common law position to make the payment of bonuses obligatory,

then payment of bonuses becomes an obligation.          A look at contracts of

employment in issue show that the payment of bonuses is discretionary.

However the Collective Bargaining Agreement for the Industry provides for

three months notice to the employees should bonuses be unavailable that year.



      The Appellant submitted that in compliance with the provisions of the

contract of employment, it notified the Respondents of its in capacity to pay

bonuses on 12 and 26 October 2010. On 12 October 2010 such notice was made
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to the Group National Works Council and on 26 October 2010 such notice was

made to the Respondents.            The Arbitrator found that such notices did not

comply with the Collective Bargaining Agreement which required Appellant to

give 3 months advance notice. The bonus month was November. Three months

to November was end of August or 1 September at the latest. Appellant failed

to advise the Respondents on time of its failure to pay bonuses. Such finding by

the Arbitrator is correct. However he should not have ended there. He should

have made a determination on prejudice suffered by Respondents as a result.



      The Appellant submitted that the Arbitrator erred in ordering the

Appellant to pay bonuses when the Appellant was not in a financial position to

do so.   The Appellant submitted that the mere fact that the Respondents’

representatives signed the agreement on non payment of bonuses showed that

they were aware that Appellant had posted losses during that financial year.

Respondents’ representatives during the deliberations did not request for

financials as they were aware of the financial status of the Appellant.



      The Arbitrator found that the Appellant had failed to satisfy the

requirements set out in Section76 (1) (b) which provides as follows;


             “when any party of the negotiation of a collective bargaining agreement alleges
             financial incapacity as a ground for his inability to -----, it shall be the duty of such
             party to make full disclosure of his financial position, duly supported by all relevant
             accounting papers and documents, to the other party.’’



      Obviously the Arbitrator fell into error into classifying this notice as an

agreement to be reached between the two parties. An agreement was there,


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that payment of bonus was discretionary and that Appellant was obliged to

notify the Respondents 3months in advance of Appellant’s intention to vary,

suspend or defer the payment of such bonus. Clearly section 76(1) (b) of the

Labour Act is not applicable and the Arbitrator erred by invoking the provisions

of that section. In this case the Appellant was obliged to give the notice that

bonus was not going to be paid. It was then going to be up to Respondents to

challenge such a decision.



      Appellant relied on paragraph6 of the contract of employment which

provided that;


            ‘at the discretion of the Director of Forestry, you may be paid an annual bonus in
            November of each year. Some employees may receive bonus bases on production.’’



      Appellant argued that it was the Director of Forestry who had the

discretion whether to pay or not pay bonuses. I agree. Once the Director of

Forestry took that decision then the Respondents had a right to challenge the

decision.



      I am satisfied that the notice given to the Respondents, though it did not

comply with the provisions of the Collective Bargaining Agreement was valid.

There was substantial compliance with the provisions of the Collective

Bargaining Agreement.        Failure to give the months notice is a procedural

irregularity and it is settled that a procedural irregularity on its own does not

vitiate proceedings. There must be shown prejudice suffered as a result. See

Nyahuma vs Barclays Bank of Zimbabwe S/C 67/05.



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       I am satisfied that there was no evidence of prejudice suffered by the

Respondents before the arbitrator. There is no such evidence before me.



       The onus to prove capacity to pay was on the Respondent before the

arbitral proceedings. There was no proof that Appellant had capacity to pay and

that the Director of Forestry had abused the exercise of his discretion. Without

such evidence I am unable to confirm the findings of the Arbitrator.          It is

common cause that generally the industry in our country is presently struggling

financially. Such should be considered before a financial order is made against

any company.



       The courts are there to ensure that public interest is protected. It is

surely not in the public interest to award financial obligations whose effect

would lead to closure of companies. The Arbitrator failed to address his mind to

such issues. The Arbitrator had the right to call for financials had he intended to

make an award which is not contrary to public policy.



In the result the appeal succeeds and the Arbitrator’s decision is set aside with

no order as to costs.




Bere Brothers Legal Practitioner – Appellant’s Legal Practitioners

Chibaya Legal Practitioners – Respondent’s Legal Practitioners




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