Lilford Nhandara v Bongani Mantula & 23 Others and First Capital Bank Limited

### Preamble
IN THE LABOUR COURT OF ZIMBABWE
JUDGMENT NO. LC/H/72/2022
HARARE, 09 MARCH, 2022
CASE NO. LC/H/252/21
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IN THE LABOUR COURT OF ZIMBABWE	     JUDGMENT NO. LC/H/72/2022

HARARE, 09 MARCH, 2022		               CASE NO. LC/H/252/21

AND 25 MARCH, 2022

In the matter between:

LILFORD NHANDARA						Applicant

Versus

BONGANI MANTULA & 23 OTHERS				1st-23rd Respondents

FIRST CAPITAL BANK LIMITED				24th Respondent

Before The Honourable Kachambwa J;

For Applicant:					In Person

For 1st Respondent:					R. Matsikidze (Legal Practitioners)

For 2nd Respondent:					N. Mugandiwa (Legal Practitioners)

KACHAMBWA J:

The Application

1. 	This is an application by a labour officer. It is for the confirmation of the officer’s draft ruling. It is in terms of section 93 (5a) (a) and (b) of the Labour Act, [Chapter 28:01]  (the Act).  It is opposed by the 1st to the 23rd respondents. it is supported by the 24th respondent in whose favour the ruling is.

The case before the Labour officer

2.	The 24th respondent (the employer) embarked on a retrenchment exercise for the 1st to the 23rd respondents (the employees). After going through various stages the employer and employees did not agree on the retrenchment package. This led to the employer paying out a package above the minimum package but at the same time claiming that its payment was in line with the minimum package requirement. Aggrieved by the retrenchment the employees approached the labour officer alleging that the employer had committed an unfair dismissal because it had not followed the retrenchment procedures, that infact this was a summary dismissal in the disguise of a retrenchment.

3.	The employees’ argument was that sections 12C and 12D had not been followed. It was alleged that section 12C required the employer to give a notice to the employees containing the following information-

3.1.	a list of all the intended retrenches,

3.2.	the notice period

3.3.	state each employees period of service

3.4.	reasons for the retrenchment

3.5.	the offer by the employer

3.6.	the employee’s rights during the notice period; and

3.7.	the reason for choosing employee X against employee Y

The employees also argued that the employer was supposed to engage the

employees in negotiations on measures to avoid retrenchment as required by section 12D. It was said that this was compulsory.

4.	It was also argued that the minimum package of section 12C subsection 2 did not apply to an employer that was able to pay more than the minimum like the present one. The employer was said to have offered better packages in the past despite the fact that profits were lower then. The employees claimed other benefits too. They also claimed that the period between January 2009 and February 2019 should be paid for in United States dollars or equivalent values.

5.	The employer resisted the claim and argued that it had given the relevant notice and had made an offer to the employees who in turn had refused the offer. It also said that there was no legal justification for paying in Unites States currency.

6.	The employees prayed that the retrenchment exercise be declared to be unlawful and be set aside while they are reinstated with full salary and benefits or that the employer pays the counter offered package.

The Ruling

7.	The Labour officer did not agree that section 12C was not followed. He rejected some of the details that the employers wanted to be included in the  notice to retrench. He said that it was not in the relevant legislation. On the need to consult employees on ways to avoid retrenchment he said that it was not compulsory. He held the word “may”  to mean that it was not compulsory.

8.	On the counter offer the officer was of the view that the procedure was the same for all the employees. There was no issue of an employer being forced to agree or to pay a higher amount because the employer is considered to afford it. Payment in United States currency was dismissed as not being in line with the relevant law. The retrenchment process was held to be lawful. The claims were dismissed.

Analysis of the Ruling

9.	Is the ruling correct?. In other words was the retrenchment procedure correctly executed? Are the claims by the employees misplaced?.

The said section 12C reads in part

“(1)	An employer who wishes to retrench any one or more employees shall-

(a)	give written notice of his or her intention-

(i)	to the works council established for the undertaking; or

(ii)	If there is no works council established for the undertaking or if a majority of the employees concerned agree to such a course, to the employment council established for the undertaking or industry; or

(iii)	if there is no works council or employment council for the undertaking concerned, to the Retrenchment Board, and in such event any reference in this section to the performance of functions by a works council or employment council shall be construed as a reference to the Retrenchment Board to perform such functions on its behalf; and

(b)	provide the works council, employment council or the Retrenchment Board, as the case maybe, with details of every employee whom the employer wishes to retrench and of the reasons for the proposed retrenchment; and

(c)	send a copy of the notice to the Retrenchment Board.

(2)	Unless better terms are agreed between the employer and employees concerned or their representatives, a package (hereinafter called (“the minimum retrenchment package”) of not less than one month’s salary or wages for every two years of service as an employee (or the equivalent lesser proportion of month’s salary or wages for a lesser period of service) shall be paid by the employer as compensation for loss of employment 9whether the loss of employment is occasioned by retrenchment or by virtue of termination of employment takes effect”.

10.	The Labour officer’s interpretation is correct here. The section does not demand a lot of the details claimed by the employees. They may be desirable but they are not listed. The details listed were covered. Further, indeed if it was the intention of the legislature to exclude employers who can afford more than the minimum package it would have done so. Critical also is the fact that the section does not even talk of a notice to the employee. However the notice was copied to the employees. It contained the details in terms of section 12C. Therefore the employees’ argument fails.

11.	Section 12D reads-

“(1)	Every employer shall ensure that, at the earliest possible opportunity, his employees are kept informed of and consulted in regard to any major changes in production, programmes, organization or technology that are likely to entail the retrenchment of any group of five or more employees in a six-month period.

(2)	Subject to this section, before giving notice of the intention to retrench any employees in terms of section twelve C, an employer may agree with the employees concerned, or with any workers committee, works council or employment council which represents the employees, to have recourse to either or both of the following measures for a period not exceeding twelve months-

(a)	subject to subsection 94), placing the employees on short-time work; or

(b)	instituting a system of shifts as provided in subsection (5)”

The word “may” here is qualifying the agreement. However inorder to agree or not agree usually parties would have engaged. On the other hand if the employer is not willing to go that road what is the point in raising the issue?. There won’t be any point in taking that direction. It cannot be held to be compulsory to engage as argued by the employees. It cannot be made compulsory to consult with the employees as such. It needs be bourne in mind that this legislation was made more with the protection of the employees in mind. Therefore if it was really the intention of the legislature to require the consultation to be compulsory it would have clearly legislated likewise. Therefore section 12D was satisfied. There is no need to bring in other interpretation tenets. It is not even a question of the use of the words “shall” or “may”. The meaning is clear. There was no need to consult on the measures to avoid retrenchment. It is not compulsory. The Labour officer was correct.

12.	The Labour officer also ruled that the claim to pay the counter offered package was not successful. That ruling appears correct also. If the legislature wanted to exclude those with the capacity to pay, from the minimum package, it would easily have done so. The legislation was a reaction to employees being forced out of employment with very little terminal benefits. Therefore if there was any intention to protect them that much it would have been done rather than leave it to interpretation by the courts.

13.	Therefore after all is said and done the retrenchment was legally carried out.

14.	The employees demanded payment in United States dollars for the period January 2009 to February 2019. They claimed that that is because “For that period they were also remunerated in United States Dollars,…..” . They also argued that it is in line with section 4 of Statutory Instrument 33/19 (now in the Finance Act (No2) of 2019 …..as interpreted in the case of Zambezi Gas Zimbabwe (Private) Limited vs N.Z.Barber (Private) Limited and Anor SC 3/20. This claim was shot down by the labour officer. However the claimants think that it has merit as interpreted in the Zambezi Gas case supra. They allege that the retrenchment were not ascertained and valued by the effective date. That reasoning misses the point that the same case raises, that if the value is expressed in United states dollars it falls in the “trap”. The salaries and benefits for the period are expressed in United States dollars although the quantum is still to be ascertained. Therefore they are within the ambit. The full text on this issue as on page 9 of the cyclostyled judgment reads-

“Section (4) (1) (d) of Statutory Instrument 33/19 would not apply to assets and liabilities, the values of which were expressed in any foreign currency other than the United States dollar immediately before the effective date. If, for example, the value of the assets and liabilities was immediately before the effective date to be assessed by application of an agreed formula, 5 4(1) (d) of Statutory Instrument 33/19 would not apply to such a transaction even if the payment would thereafter be in United States dollars. It is the assessment and expression of the value of assets, and liabilities in United States dollars that matters.

Section 4 (1) (d) of Statutory Instrument 33/19 is specific as to the type of assets and liabilities that are excluded from the reach of its provisions.

The …….What brings the asset or liability within the provisions of the statute is the fact that its value was expressed in United States dollars immediately before the effective date and did not fall within the class of assets and liabilities referred to in section 44 (2) of the Reserve Bank of Zimbabwe Act [Chapter 22:15] (“the principal Act”).  (My underlining).

The salaries and all the other claims that the employees want in United States dollars were expressed in United States dollars before the effective date. Therefore they are liable. That means that the draft ruling is correct on this point.

The employees also argued for equity as well. This is an amorphous principle. There is no issue of equity in the light of the clear provision.

In the result the draft must be confirmed. It is accordingly ordered that;

1.	The application for confirmation of the draft ruling be and is hereby

granted.

2.	The draft ruling of labour officer Lilford Nhandara be and is hereby confirmed.

3.	The 1st to the 23rd Respondent’s claim of unfair dismissal through unlawful retrenchment be and is hereby dismissed.

4.	The retrenchment of the 1st to the 23rd Respondent by the 24th Respondent be and is hereby upheld.

5.	The 1st to the 23rd Respondent’s retrenchment package shall be paid in Zimbabwean dollars.

6.	Each party shall bear its own costs.