Gold Driven Tobacco (Pvt) Ltd v Kennedy Muchayi & Paradzayi Gavi

### Preamble
IN THE LABOUR COURT OF ZIMBABWE
JUDGMENT NO LC/H/747/14
HELD AT HARARE 18TH SEPTEMBER 2014
CASE NO
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IN THE LABOUR COURT OF ZIMBABWE	          JUDGMENT NO LC/H/747/14

HELD AT HARARE 18TH SEPTEMBER 2014		CASE NO LC/H/189/14

& 7TH NOVEMBER 2014

In the matter between:--

GOLD DRIVEN TOBACCO (PVT) LTD			Appellant

And

KENNEDY MUCHAYI					Respondent

And

PARADZAYI GAVI						2nd Respondent

Before The Honourable E Muchawa, Judge

For Appellant		Ms A Mapanzure (Legal Practitioner)

For Respondent		Mr G Machingambi (Legal Practitioner)

with 1st Respondent

MUCHAWA, J:

This is an appeal against an arbitral award.

The first and second respondents are former employees of the appellant.  They were employed in the capacities of shift manager and factory manager respectively on fixed term contracts.  Such contracts were for a two year period.  The last contracts ran from the 1st of April 2012 to the 31st of March 2014.

It is common cause that appellant’s business suffered serious financial challenges during the relevant period as a result of the economic environment which made it difficult to import raw materials.  In response,  appellant closed down its operations for some time and thereafter proceeded to terminate several of its employees’ contracts.   Those  targeted were on fixed term contracts, including the two respondents.

Appellant terminated the contracts by giving three months’ notice to the respondents for which cash in lieu of notice was offered.  Other statutory and contractual payments relevant in each case were offered.

Appellant did not however offer to pay the respondents’ salaries for the remaining contract period till the expiration of the fixed term contracts.

First respondent accepted his termination and signed for it as follows;

“I acknowledge receipt of the sum of us$8554.00 being net terminal benefits due to me as set out above and accept this amount in full and final settlement of monies due to me from the organisation.”

After receiving the letter of termination, second respondent did not

accept his terminal benefits but addressed an email to the managing director, bidding farewell and thanking the organisation for the time spent there.

The respondents subsequently lodged a complaint of alleged unfair labour practices being non payment of salaries and unfair termination of employment contracts.  That culminated in the arbitral award which upheld the claim for unfair labour practice and ordered that the respondents be paid arrear salaries until the expiry of their fixed term contracts.

The grounds of appeal before me are summarised as follows;

The Arbitrator seriously and grossly misdirected herself on the facts presented before her as to amount to a misdirection at law in holding that a fixed term contract of employment is not lawfully terminable on notice and more particularly in holding that the fixed term contracts in question did not provide that the appellant could terminate them on notice.

The Arbitrator grossly erred in law in holding that the termination of the respondent’s fixed term contracts of employment was unilateral, unlawful and amounted to an unfair labour practice.

Overally, the Arbitrator erred in law in holding that the respondents be paid their salaries up until the expiration of fixed term contracts.

The appeal is opposed.  I deal with each ground of appeal below.

Ground of appeal 1 a – Did the contracts in question provide for termination on notice

I wish to  address the challenged factual finding of the arbitrator, that the contracts in question did not provide for termination on notice.

A perusal of the contracts shows a clause which reads;

“Period of Employment

You are being employed on a fixed contract with effect from 1 April 2012 and shall

expire on 31 March 2014.  Notice of termination will be three months in writing by either party…”  (My emphasis)

In the light of the above clause, I find that the arbitrator erred on the

factual finding that the contracts in question did not provide for termination of notice.  This, in my opinion, amounts to a question of law.

Ground 16 – Can a fixed term contract be lawfully terminated on notice?

Appellant argues that it is lawful to terminate fixed term contracts on notice particularly if the contract provides for such a notice period.

Reliance is placed on the judgment by MAXWELL  J in Zuva Petroleum

(Pvt) Ltd   v Don Nyamande and Anor  LC/H/195/2014.  The facts in Zuva Petroleum supra relate to two managers who were initially offered a voluntary retrenchment package.  When they declined this there was an attempt to go the compulsory retrenchment route which also failed at negotiation level.  Thereafter respondents’ contracts were terminated on notice.

On the issue of whether such contracts could be terminated on notice, MAXWELL J  held that section 12 (4) and 12 B of the Labour Act [Chapter 28:01] did not have the effect of doing away with the termination of a contract of employment on notice.

I was also referred to the case of Lever Brothers (Pvt) Ltd v Sheilah Marapuzah and Four Others SC 23/97 where the Supreme Court stated that either party can terminate the employment relationship by giving one day’s notice in advance but in the event of neither doing so, the contracts will terminate automatically at expiry.

Respondent contends that the Labour Act and its Regulations, Statutory Instrument 15 of 2006 complement each other.  It is argued that section 12 of the Act provides for notice periods before termination of employment whilst S.I. 15 of 2006 provides the procedure to be followed in termination.

The case of Zuva Petroleum supra is distinguished as dealing with contracts without limit of time and not fixed term contracts.

Respondent further insists that a fixed term contract expires automatically on its date of expiration.  It is therefore argued that the termination on notice was unlawful and unilateral.

I associate myself with the reasoning in Zuva Petroleum supra.  The judgment correctly excludes section 12 B of the Act to be inapplicable as it deals with dismissals rather than termination.   It takes a historical approach and notes that section 12 B was inserted by an amendment in 2002.  Section 12 (4) which was inserted in 2005 did not repeal the provisions that provide for periods of notice of termination of the contract of employment to be given by either party.  I note in particular that the notice period for a contract without limit of time and for a fixed term contract of two years is similar.

I therefore think that nothing turns on the fact that the Zuva Petroleum matter is dealing with contracts without limit of time and these contracts deal with two year fixed term contracts.

I find too that none of the sections referred to by respondent have the effect of ousting termination of a contract of employment on notice.  This is particularly so where the termination on notice is for a reason other than misconduct.  (See Chirasasa case) In an article by Mucheche C.H. titled “A critique of the Termination of Contract of Employment on Notice in Zimbabwe” Exorcising The Ghost of the Past!! In A Practical Guide To Labour Law, Conciliation, Mediation and Arbitration in Zimbabwe, 2nd Edition, African Dominion Publications, June 2014, reference is made to the cases of Chirasasa and Ors v Nhamo and Anor 2003 (2) ZLR 206 (S) – and  P Mudyahoto v Road Motor Service (Pvt) Ltd LC/MS/14/12 .

In the Chirasasa case no act of misconduct was alleged and it was held that the employer could terminate the contracts of employment on notice.  The case arose however before the enactment of section 12 B of the Labour Act.

The Mudyahoto matter dealt with a situation where an act of misconduct was alleged.

Mucheche concludes his article in a manner I totally agree with.  He states that there is need for a definitive Supreme Court judgment to determine whether the provisions in the labour Act in section 12 B and 12 (4) as read with section 5 of the Labour (National Employment Code of Conduct) Regulations, 2006, S.I.  15 of 2006 proscribe termination of contract on notice.  Before that is done, on the basis of the facts on this matter, I have to find that this ground of appeal succeeds.

Ground 2 – Whether the termination of Respondents’ fixed term contracts was unilateral, unlawful and amounted to an unfair labour practice

In the event that I may be wrong on the first ground of appeal, I consider ground two.

Appellant relies on the Chirasasa case supra for asserting that a refusal to accept a change in terms and conditions of employment necessitated by the commercial interests of a business is good enough reason for terminating a contract of employment.  This is because in casu it was common cause that appellant’s business was struggling.

Respondent counters this argument by stating that the excuse of a struggling business is not an adequate and lawful excuse not to follow the procedures.  It is further argued that appellant should have proceeded by securing a mutual agreement.  As there was no such agreement, it is argued that the termination was unlawful.  Reliance is placed on the case of Choga v Johnson’s Motors Transport (Pvt) Ltd  1998 (2) ZLR 560 on the need for a mutual agreement to be reduced to writing.

I agree that there was no mutual termination.  I have however already found that the termination on notice was lawful in the circumstances.  I am also supported by the Chirasasa case which stated that termination in the commercial interest of an organisation was lawful.

Acceptance of Termination By First Respondent

First respondent did accept his terminal benefits in full and final settlement of his claims.

In find that first respondent is bound by the ordinary meaning and effect of the words in the document he signed (Burger v Central SAR 1903 TS 571).  By accepting terminal benefits, first respondent accepted termination of his employment as he could not accept terminal benefits conditionally (See  Forestry Commission v Kujinga HH-36-92).   The Supreme Court confirms that position in Gauntlet Security Services (Pvt) Ltd v Hlabangani SC51/04.

In similar manner the principles of waiver and estoppel work against first respondent.  (See Chidziva + Ors v Zimbabwe Iron and Steel Company Ltd 1997 (2) ZLR 368 (S) and Ndemera v Marie and Two Ors SC-39-06).  His explanation that he collected and signed way after the contract was terminated is unacceptable to me.

Acceptance of Termination By 2nd Respondent?

Appellant claims that 2nd Respondent accepted his termination of employment by writing an email bidding farewell and wishing the organisation well.   His email is said not to reflect any bitterness.

Respondent argues that 2nd respondent’s refusal to accept the terminal benefits is clear evidence of non acceptance of the termination.  The email is explained as a sign of simple good manners.

I find second respondent’s position to be different from that of first respondent.  His actions clearly show that he did not accept termination of his contract.

Ground 3 – Propriety of order to pay respondents their salaries up to the expiration of the fixed term contracts

Having already found, as I have done, that the termination of the contracts on notice, in terms of the contractual provision and regard being had to the fact that there was no misconduct, that the termination was lawful, I find therefore that the arbitrator erred.  There was no legal basis on which to award salaries up to the expiration of the fixed term contracts.

Accordingly the appeal succeeds.

The arbitral award of the 25 February 2014 by Arbitrator N Shumba be and is hereby set aside in its entirety.

It be and is hereby substituted as follows

“The claim of unfair labour practice be and is hereby dismissed.”

Chinawa Law Chambers, applicant’s legal practitioners

G Machingambi Legal Practitioners, respondents’ legal practitioners