Chitungwiza Municipality v Clever Makarange

### Preamble
IN THE LABOUR COURT OF ZIMBABWE
JUDGMENT
NO LC/H/549/16
HELD AT HARARE 22 JUNE 2016
CASE NO
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IN THE LABOUR COURT OF ZIMBABWE			JUDGMENT NO LC/H/549/16

HELD AT HARARE 22 JUNE 2016				CASE NO LC/H/590/15

& 9 SEPTEMBER 2016

In the matter between:

CHITUNGWIZA MUNICIPALITY				Appellant

And

CLEVER MAKARANGE						Respondent

Before The Honourable Hove, J

For Appellant			T Marume (Legal Practitioner)

For Respondent		B Makururu (Legal Practitioner)

HOVE J:

The respondent was employed by the appellant. Allegations of misconduct were raised against him, he was charged and found guilty and dismissed.

After his dismissal, a dispute arose as to the terminal benefits he was entitled to.  The matter was referred for arbitration and the arbitrator found that gratuity was payable as part of his terminal benefits.  This aggrieved the appellant who then brought these current  appeal proceedings.

The employer argues that

Gratuity cannot be paid to dismissed employees.

The arbitrator exceeded his mandate when he awarded gratuity.

The arbitrator ought not to have relied on the works council agreement.

The arbitrator ought not to have quantified the terminal benefits without hearing oral evidence.

I will consider the employers argument here below;

Did the arbitrator exceed his mandate?

In awarding gratuity the facts on record and the terms of reference show clearly that

the arbitrator did not exceed the terms of reference.  These are captured in the award and they were-

Whether or not the claimant is entitled to terminal benefits and the quantum thereof

The appropriate remedy, if any

Arbitration costs.

The arbitrator had to consider whether or not the respondent was entitled to

terminal benefits and gratuity is a terminal benefit.  The appellant did not, before the arbitrator, argue that gratuity was not part of the terminal benefits.  Infact the issue of gratuity was considered and discussed showing that the appellant considered gratuity to be part of the terminal benefits.

There is therefore no merit in this ground of appeal.  The arbitrator remained in touch with the terms of reference and did not exceed them.

Whether or not the arbitrator could have placed reliance on the Works Council agreement

The appellant argues that the works council agreement was not placed before the arbitrator.  But the record shows that the minutes of the works council had been submitted to the arbitrator as part of his statement of claim.

The appellant does not challenge this averment by the respondent and therefore there is also no merit in this ground of appeal.  Appellant has failed to establish its merits.

Whether or not gratuity could be paid to dismissed employees

The arbitrator made, on the basis of the record before him, a factual finding that there was in existence, a works council agreement which gave employees the right to terminal benefits.

The arbitrator reasoned as follows;

“An agreement made at works council is binding on the respondent.  Such an agreement is legally binding on the employer and employees concerned as clearly stated under section 25 (1) of the Act.  The works council agreement on the gratuity issue embedded this right into every employee’s contract of employment under the respondent’s employ.  In other words, the works council agreement became an extension of the individual employee’s contract of employment and any attempt to create a new right, could only be made through negotiations culminating into yet  another agreement at and by the same works council…

This is so because a collective bargaining agreement cannot be unilaterally changed or resiled from willy nilly.”

That there was a works council agreement to the effect that employees from 2007 would receive gratuity cannot be disputed.  It is there on the record.

The appellant also conceded its existence when it argued that employees dismissed because of misconduct should not benefit.  That shows that the works council agreement is there in existence and workers who are leaving employment are infact benefiting from it.

The arbitrator’s findings and conclusions can thus not be assailed in this regard.

Whether or not gratuity was a right or a mere token of appreciation given at the employer’s discretion

The appellant also argues that the gratuity is not a vested right.  The employer gave it at its discretion when employees terminated their services as a token of appreciation.  The appellant further submits that all employees are not supposed to receive gratuity as it was not a vested right.  It was given at the discretion of the employer.  It was being extended to employees as a mere token of appreciation.

The decision to award gratuity was as a result of an agreement.  Both the employer and the employees are represented in a works council meeting.  Decisions taken there legally binds both the employer and the employees.  This agreement was viewed as binding by both parties who continued to give and receive gratuity in terms of its provisions from 2007 when it was agreed upon.

When parties to a contract agree to vary their previous agreement by introducing a further term, that agreement is binding.

The arbitrator made a finding that there was a works council agreement and that finding is factual.  He also found that in terms of that agreement gratuity is payable to every employee on termination of service who would have completed 10 or more years of continuous service.  These were factual findings made by the arbitrator on the basis of the evidence of the works council agreement signed by both parties which was placed before him.

The evidence placed before him was to the following effect:

“Due to poor pensions paid to workers it as agreed at a works council that employees will be paid gratuities on termination of service.”

This is a binding agreement and the employer has since its inception, acted in terms of its provisions a right not a privilege was created.  It was not a privilege granted at the discretion of the employer.

The arbitrator having made that factual finding which was supported by the	 evidence placed before him, this court, sitting as an appellate court cannot interfere with findings of fact unless the findings complained of are irrational or grossly unreasonable.  In Nyandoro v Hokonya & Ors 1997 (2) ZLR 475 the court held that

“An appellate court will not interfere with the decision of trial court based purely on findings of fact unless it is satisfied that having regard to the evidence placed before the trial court the findings complain of are so outrageous in their defiance of logic or accepted moral standards that no sensible person who had applied his mind to the question to be decided could have arrived at that decision.”

I am of the view that the decision complained of was not grossly irrational it was supported by the agreement between the workers and the employers representatives in a works council meeting.

This agreement was implemented and employees clearly had a vested right to receive gratuity upon termination of employment.

The agreement refers to “Termination” of contract and does not distinguish between termination as a result of a dismissal or as a result of retirement.  It is therefore neither here nor there in terms of the agreement how the termination comes about.  The employer was aware of the correctness of this interpretation tothe agreement as they later sought to alter the position by specifying that those dismissed would not be entitled to the gratuity.

Unfortunately, this was now a one sided decision by the employer.  It was not proper for one of the parties to an agreement to seek to unilaterally alter the agreement.

The decision to alter the agreement was found by the arbitrator to have been unilateral.  The employer could not take away vested rights unilaterally.  The arbitrator stated that

“The purported variation of the works council agreement by the respondent, with respect, was therefore illegal and as such null and void.”

The employer may, in trying to vary the agreed position have been motivated by the fact that a dismissed employer ought not to benefit as he would have dishonourably left employment.  The employer under those circumstances has no interest in lessoning the burden brought about by the eroded pension benefit.  The employer ought to have tabled this in a works council meeting and got the agreement of the workers representatives.  As things stand, the unilateral variation is as found by the arbitrator, null and void.

Vested rights cannot be taken away unilaterally.

In the case of Magodora & Others v Care International Zimbabwe SC 24/14 the court stated that it could not avoid the explicit provisions of a contract between the employer and the employees.  Parties are bound by the express terms of the agreement.  The court stated that;

“In principle it is not open to the courts for rewrite a contract entered into between the parties or to excuse any of them from the consequences of the contract that they have freely and voluntarily accepted even if they are shown to be onerous or oppressive.  This is so as a matter of Public Policy.  See Wells v South African Alumenite Company 1927 AD 69 at 73; Christie.  The law of contract in South Africa (3 ed) at p 14-15.  Nor is it generally permissible to read into the contract some implied or tacit term that is in direct conflict with its express terms.  See South African Mutual Aid Society v Cape Town Chamber of Commerce 1962 (10 SA 598 (A) at 615 D.  First National Bank of SA Ltd V Transvaal Rugby Union & Anor 1997 (3) SA 851 (W) at 864 E-H.”

The works council agreement does not distinguish between dismissed and retired employees this cannot be read into the agreement.  The employer freely and voluntarily agreed with the workers in a works council meeting that employees would be paid gratuity upon termination of employment.  One may consider it onerous or inequitable to give gratuity to a dismissed employee but the employer cannot be excused from the consequences of the agreement that he freely entered into.  Further we can also not read into the agreement that it was for 2007 only.  This is not in the agreement and it is clear that the agreement was binding on the employer and its workers.

I also agree with the sentiments express by the Labour Court in Metal Box v Mary Tokwani & Anor LC/H/169/12 in a case were the employer also sought to unilaterally vary a works council agreement.  The court stated that;

“The applicant has to negotiate a new agreement.  It cannot unilaterally cancel the policy/agreement.  The policy was not only agreed but was also put in practice.  It was cemented.”

The same applies to the case in casu.

Whether or not the agreement was submitted to the workers  and the appropriate trade union

This argument was not placed before the arbitrator and the arbitrator’s decision cannot be challenged on the basis of an argument that was not argued before him.  The appellant cannot raise this new issue which it has not raised in the earlier proceedings.

The requirements of raising a new question of law which was not dealt with before were stated in the case of Gusterlands (Pvt) Ltd v Trade Investments Bank Ltd & Others

SC 92/05 which the court has been referred to by the respondent.

The court in that case stated that;

Secondly, the issue of the sale being imperfecta was being raised for the first time on appeal.  Is this permissible?  The general rule, as I understand it, is that a question of law may be advanced for the first time on appeal if its consideration then involves no unfairness to the party at whom it is directed.  See Estate Lala v Mohamed 1994 AD 324.”

The principles applicable to the raising of a point of law for the first time on appeal were succinctly set out by KRIEGLER J in the case of Donelly v Barclays National Bank Ltd 1990 (1) SA 375 at 380 H- 381 B, where the learned judge had this to say:

“Secondly, it is clearly a wholly new line of defence now being taken.  It was not mentioned in the summary judgment proceedings nor in the plea.  It was never referred to in evidence or argument at the trial.  Its mere novelty, of cause, is not ground per se for rejecting it.  However, generally speaking, a court of appeal will not entertain a point not raised in the court below and especially one not raised in the pleading in the court below.  In this regard, I need do no more than to refer to Herbstein & van Winsen: The Civil Practice of the Superior Courts in South Africa (3 ed) at 736 – 737.  In principle, a court of appeal is disinclined to allow a point to be raised for the first time, before it.  Generally it will decline to do so unless-

The point is covered by the pleadings;

There would be no unfairness to the other party

The facts are common cause or well-nigh incontrovertible;

There is no ground for thinking that other or further evidence would have been produced that could, have affected the point.”

It was clear that the issues raised are not covered by the pleadings and the standards

for introducing new issues on appeal as stated in the above case have not been satisfied.

In any event the employer having entered into the agreement at works council and having implanted the agreement without insisting that it be submitted to the appropriate trade union, waived its rights and is estopped from resiling from the agreement.

The employer knew that the agreement had not been taken to the appropriate trade union but implemented the agreement.  It must be taken to have, by its conduct, plainly inconsistent or irreconcilable with an intention to persevere with the exercise of its right.

In the case of Alberts v Boyson 1976 (2) ZLR 76.

The court stated that the principle of waiver is simply this, if one party by his conduct leads another to believe that the strict rights arising under the contract will not be insisted on intending that the other should not act on that belief, and he does act on it, then the first party will not afterwards be allowed to insist on the strict legal rights when it would be inequitable for him to do so.

In the circumstance therefore the employer cannot now try to resile from an agreement that it entered into and implemented and led the respondent to believe that it had no intention not to be bound by it.

Whether or not the arbitrator erred at law in quantifying the terminal benefits

Before issuing an addendum to its arbitral award, the arbitrator ought to have given the parties the opportunity to argue their positions and the employee party an opportunity to prove the amounts payable.  It was up to the parties to opt to abide by their written submissions in regards to the amounts payable but the opportunity to be heard ought to have been extended.

The arbitrator therefore misdirected himself by proceedings to quantify without hearing evidence.  The cases of First Mutual Life Assurance Ltd v Muzivi 2007 (1) ZLR 325.  Redstar Wholesalers v Mabika SC 52/05.  Make the point that a court must hear evidence before quantifying.  Failing to hear the parties was therefore a misdirection.  The addendum must be set aside and the matter remitted to the arbitral for him to hear the parties before deciding on the amounts payable.

In the result, the following order is made:

The appeal against the main arbitral award is dismissed for lack of merit.

The appeal against the issuing of the addendum is upheld.

The addendum is set aside.

The matter is remitted to the arbitrator for him to hear the parties before quantifying the amounts payable to the respondent.

There is no order as to costs.

Matsikidze & Mucheche, appellant’s legal practitioners

Makururu Legal Practitioners, respondent’s legal practitioners