Lifestyle Management v Joel M. Maziwisa

### Preamble
IN THE LABOUR COURT OF ZIMBABWE
JUDGMENT
LC/H/225/13
HELD AT HARARE ON 4 JUNE 2013
CASE NO.
JUDGMENT LC/H/225/13
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IN THE LABOUR COURT OF ZIMBABWE			JUDGMENT LC/H/225/13

HELD AT HARARE ON 4 JUNE 2013			CASE NO. LC/H/285/12

In the matter between:

LIFESTYLE MANAGEMENT			-		Appellant

And

JOEL M. MAZIWISA				-		Respondent

Before the Honourable President, E.F. Ndewere

For Appellant				Mrs J. Zindi (Legal Practitioner)

Respondent					In Person

NDEWERE E.F.

On 12 September, 2007 the Respondent was suspended on allegations of contravening Section 4(a) of Statutory Instrument 15 of 2006 for “an act of conduct or omission inconsistent with the fulfillment of the express or implied conditions” of employment.  The disciplinary hearing was set for 18 September, 2007.  On 18 September, 2007, The Respondent tendered his resignation.  He said he had decided to go on early retirement and therefore would want to resign with immediate effect.  The last sentence in the letter then said “Please feel free to discuss the Exit Package with me.”  The letter was received by the Appellant’s officials on 19 September, 2007.

The Appellant processed the Respondent’s pension benefits and on 15 November, 2007, Old Mutual the then managers of the Appellant’s pension fund wrote to the Appellant with a copy to the Respondent advising the total retirement benefit and that one third had been deposited into the Respondent’s account and two thirds would be transferred to the Old Mutual Managed Pension account to set up a pension for the Respondent.  The letter said details of the pension would be communicated to the Respondent in due course.

The Respondent says in addition to the above, the Appellant had agreed to pay him 40% of annual salary multiplied by the number of years worked, funeral policy, medical aid up to 2014, three months notice and the company vehicle he was using.  Unfortunately there was no evidence of such agreement on record.  It is possible that certain officers within Appellant’s employment made recommendations of some package to the Appellant but there is no evidence that those recommendations were ever accepted by the Appellant.  The evidence points to a rejection of any package by the Chief Executive Officer of the Appellant.

On 12 November, 2009 the Respondent wrote to the Labour Officer referring his case to him in terms of Section 93 of the Labour Act, [Chapter 28:01].  The referral letter was received on 13 November, 2009.  Conciliation failed and the Respondent’s claim was referred to arbitration.  ON 30 July, 2010, the Arbitrator gave the following award:

“The Respondent is hereby ordered to negotiate an exit package with the complainant covering the following benefits:

The company vehicle the complainant was using

Medical aid facility

Service package/separation package.

In the event that no agreement is realized after 30 calendar days from the date of this award, either party shall refer the matter to the undersigned Arbitrator for finalization by quantification.”

There was no appeal against the award of 30 July 2010, so in April, 2011, the Respondent approached the Arbitrator for quantification and claimed a total of US$204 999.00 broken down as follows:

Vehicle (super saloon)							$6000

Medical Aid (Activate members) 3 dependants x 87 months		$13833

Funeral policy x 87 months						$1566

Notice Pay x 3 months							$3000

Exit package (40% of annual salary x 37 years				$177600

13th cheque (Bonus from 2007 to 2010)					$3000

Total									US$204 999.00

The Appellant disputed the claim although it indicated a willingness to settle the matter on reasonable terms.  The Appellant’s offer is not part of the record, but it is clear that no settlement was reached.

In calculating the quantum of the award the Arbitrator used the average formula which was being used by the Retrenchment Board at the relevant time and awarded as follows;

“The Respondent is hereby ordered to issue the complainant with the vehicle (Super Saloon Nissan) complainant was using as a terminal benefit.

The complainant loses his claim for medical aid because there were no medical bills availed for a quantum to be determined to show how much the complainant should be refunded.

The Respondent is further ordered to pay complainant a separation package of 1½ months’ salary multiplied by every year served.  This translates to US$852 x37 = US$31 524

Each party to pay its share of arbitration costs.”

The Appellant noted an appeal against the quantification award by Honourable P. Shawatu.  The following were the grounds of appeal;

1.He erred in ordering the Appellant to pay the Respondent a separation package of 1 ½ months’ salary multiplied by e very year served – which translated to USD852 x 37 whose total is the sum of USD 31 524.

2. The Arbitrator erred in failing to appreciate that the claim basically arose during the Zimbabwean dollar era and to order the Appellant to pay United States dollars for a portion every year worked was punitive.

3. The Arbitrator failed to consider the fact that the Respondent has been gainfully employed from the day that he voluntarily retired from the Appellant’s company and hence his damages are mitigated.

With regard to ground of appeal one, this court does not know how the Arbitrator arrived at the figure of $852.00 as the basis for his calculations.  In his submissions the Appellant said the monthly salary for a similar position was US$568.  Then in his analysis the Arbitrator said the parties agreed to use US$568 as the basic salary to adopt for purposes of calculating the separation package, yet he himself proceeds to use $852.00, instead of the $568 he had said the parties agreed to use.  Furthermore, as appointed out by Appellant’s counsel, the Arbitrator erred in treating the matter as retrenchment and in referring to the formula being used at the time for retrenchments when it was clear that this was a case of resignation as opposed to retrenchment and that the Respondent had been paid all that was due to him as far back as November, 2007.  Appellant’s counsel argued that the Respondent was not entitled to anything more than what was paid out to him and said even if it is found that Appellant should pay anything it should just be a small token simply because the initial award of 30 July, 2020 was not challenged on appeal.

The court agrees with the submissions made by Appellant’s counsel and rules that indeed the Arbitrator erred in ordering a separation package of 1½ months’ salary multiplied by every year served when the basis of separation was resignation as opposed to retrenchment.  In view of the above, there is merit in the first ground of appeal.

Ground two of appeal is dismissed because there is nothing inherently wrong in ordering payment in US Dollars although the claim arose during the period the country was using Zimbabwean dollars because Zimbabwe is currently using the US Dollar and other currencies.  All that is required is a conversion rate given by the appropriate authority.  The rest of that ground refers to the excessiveness of the award and that issue has already been dealt with in relation to ground one above.

Ground three of the appeal refers to mitigation of loss by the Respondent.  That submission was made by the Appellant during arbitration and the Respondent did not dispute being gainfully employed.  The same submission was reiterated during the appeal in written submissions and oral hearing again the Respondent did not dispute being gainfully employed since he retired from the Appellant’s employment.

Consequently this court has no option but to accept that the Respondent has been gainfully employed and that this fact should indeed have reduced the quantum of the award against the Appellant.

Finally, during the appeal hearing, as the parties went over the documents and the dates, Appellant’s counsel realized that in actual fact, the Respondent’s claim may have prescribed in terms of the Labour Act.  Consequently in line with Rule 26 of the Labour Court Rules, the Court gave both parties an opportunity to address it on the issue of prescription.

The Appellant’s counsel said the dispute arose on 18 September, 2007 when the Respondent resigned and suggested discussion of an Exit Package.  She said the evidence shows that the Appellant accepted the resignation and the early retirement and processed pension benefits on behalf of the Respondent.  The Appellant however did not accept the idea of an Exit Package and no conclusive discussions were made in spite of the Respondent’s invitation.  In fact, Appellant’s counsel suggested collusion between certain officials of the Appellant and the Respondent since discussions with the Respondent were held at home instead of the office.

There is merit in that observation.  Eventually, on 12 November, 2009 the Respondent referred his issue to the Labour Officer.  So the Appellant’s submissions are that the two year period should be counted from 18 September 2007 because that is when the dispute arose in that the Appellant rejected the idea of a retrenchment package when they received the Respondent’s letter inviting them to negotiate a package.

In response, the Respondent said the dispute arose when the company refused to pay him; and not on the date he resigned.  The court invited him to provide communication from the Appellant showing that initially they were in agreement and thus there was no dispute and he said he had no communication from the Appellant.  The court also asked him to provide communication from the Appellant confirming the dispute in the hope that from that communication, the court could ascertain the date the dispute arose.  The Respondent said he had no written communication.

In the absence of proof pointing to another date as the date the dispute arose, this court has no option but to make a finding that the date the dispute about an exit package arose is the date the Respondent resigned and suggested negotiation of an exit package to the Appellant which is on 19 September when the resignation letter was received.

Section 94 of the Labour Act [Chapter 28:01] provides as follows:

“(i) Subject to Subsection (2) no Labour officer shall entertain any dispute or unfair labour practice unless-

It is referred to him or

Has otherwise come to his attention;

within two years from the date when the dispute or unfair labour practice first arose.”

So in the present case, the Respondent’s letter suggesting an exit package was received on 19 September, 2007 by the Appellant and the Appellant agreed to the resignation and early retirement, but it did not agree to the exit package.  So in the absence of proof of any other date, by 19 September, 2009, the two year prescriptive period had run its course.  The Respondent’s claim was therefore referred to the labour officer two months after the expiry of the period prescribed in terms of Section 94 of the Labour Act.

The provisions of Section 94 are mandatory

“……..no labour officer shall entertain any dispute or unfair labour practice unless - It is referred to him within two years from the date the dispute first arose.”

Consequently, this court has no option but to find in favour of the Appellant on the issue of prescription and confirm that the Respondent’s claim against the Appellant had prescribed and should never have been entertained by the labour officer or the Arbitrator.  This means even the initial award of 30 July, 2012 is a legal nullity because of Section 94.  The case of Mugwabi vs Seed Co Limited and Another 2000 (I) ZLR 93 (S) on legal nullities is relevant on this point.  In that case, at pages 96H to 97B Sandura JA stated as follows:

“I can do no better than quote what Lord Denning said in Macfoy vs United Africa Company Limited (1961) 3 ALL ER 1169 (PC) at 1172:

“If an act is void, then it is in law a nullity………  There is no need for an order of court to set it aside.  It is automatically null and void without more ado, though it is sometimes convenient to have the court declare it to be so and every proceeding which is founded on it is also bad and incurably bad.”

In view of all the factors outlined above the appeal must succeed and the award by Honourable P. Shawatu of 7 April, 2011 is hereby set aside, with each party paying its own costs

Mtetwa and Nyambirai incorporating Wilmot & Bennet	-	Appellant’s Legal Practitioners