Stanbic Bank v Sitwell Gumbo

### Preamble
IN THE LABOUR COURT OF ZIMBABWE
JUDGMENT
NO LC/H/404/14
HELD AT HARARE 5TH MAY 2014
CASE
JUDGMENT NO LC/H/404/14
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IN THE LABOUR COURT OF ZIMBABWE	     JUDGMENT NO LC/H/404/14

HELD AT HARARE 5TH MAY 2014		       	      CASE NO LC/H/819/12

And 4th JULY, 2014

In the matter between:-

STANBIC BANK					Applicant

And

SITWELL GUMBO					Respondent

Before The Honourable E Muchawa, Judge

For Applicant		T Nyamasoka (Legal Practitioner)

For Respondent		Mr P.G. Mutasa (Trade Unionist)

MUCHAWA, J:

This is an appeal against an arbitral award of the 12 September 2012 by Arbitrator Dangwa.

The terms of reference before Arbitrator Dangwa were to determine the following;

Whether or not the employer committed acts of unfair labour practice.

Whether or not the employer complied with the arbitration award of Arbitrator Muzondo of 21 October 2010.

Appropriate remedy in the matter.

The background facts to this matter are that respondent was initially offered employment as a teller by appellant.  He was to be employed with effect from 1ST April 2010.  On the day of commencement of work, the 1ST April 2010, appellant terminated (the first termination) respondent’s employment on the allegation that he had failed to meet certain security requirements.  Respondent challenged this through the Ministry of Labour on the basis that appellant had relied on incorrect information.  Appellant reconsidered its position and reinstated respondent on 29TH May 2010.

One of the terms of the agreement of employment was that respondent’s confirmation to permanent employment was subject to a successful completion of three months' probation during which time the contract could be terminated by either party giving one day’s notice of such intention.

On 8 June 2010, appellant extended respondent’s probation for three months with effect from 26 May 2010, being the date he assumed duty.

On 29 June 2010, appellant served respondent with a letter terminating the contract (the second termination).  The letter was worded as follows;

“TERMINATION OF CONTRACT

Please be advised that acting in terms of section 12 (7) of the Labour Act, the bank has terminated your contract with effect from 30 June 2010.  Acting in terms of the same section, the bank has chosen to pay you cash in lieu of notice for 14 days…

I wish to thank you for the services you offered to the bank during your stay and wish you well in your future endeavours.”

The second termination was contested leading to the Muzondo arbitral award.  On 21st October 2010 Arbitrator Muzondo found the second termination to have been unlawful.  He provided that respondent should be paid back pay and allowances from the date of unlawful termination to date of confirmation or proper termination of the employment contract.

The parties sought clarification of the award.  The arbitrator confirmed that respondent’s employment had been unlawfully terminated on 30 June 2010 and that at the time appellant had neither confirmed respondent into permanent employment nor lawfully terminated.  He then ordered back pay to a date of such confirmation or lawful termination.  This interpretation of the award came out on the 7 January 2011.

On 3rd March 2011 appellant wrote a letter to arbitrator Muzondo.  The letter expressed difficulty in enforcing the award as follows;

“Regrettably, we still do not appreciate how back pay is to be effected given the fact that the probationary period has run its course and how a lawful termination can be carried out in the instance.  May we kindly have your confirmation in the simplest form as a matter of urgent (sic) to obviate further delays in finalization of the matter.”

The Arbitrator declined to give further clarification alleging he was functus officio.  What appellant proceeded to do is the subject of this appeal.

On the 19 April 2011 appellant purported to act in compliance with the arbitral award and effected a third termination.  The letter stated

“TERMINATION OF EMPLOYMENT

We write in response to the arbitration award dated 21 October 2010 and the subsequent explanation by the Arbitrator on the award, and wish to advise that since your probationary period has lapsed, the bank is unable to offer you permanent employment.  In terms of the arbitration award the back pay will be paid from the date of this letter to 30 June 2010 as full and final settlement.”

On 21 July 2011 respondent was paid an amount of USD$8 883.36 as the full and final settlement made up of July 2010 to April 2011 salary and benefits.

Respondent rejected and contested this, leading to the second arbitral award by Arbitrator Dangwa.  Arbitrator Dangwa concluded that appellant had not complied with the award of Arbitrator Muzondo and that respondent is entitled to salary from 1 May 2011 until the contract of employment is lawfully terminated.

The grounds of appeal before me are;

The arbitrator erred at law in failing to appreciate the circumstances relating to termination of a contract of probation.  The arbitrator consequently erred in not appreciating that appellant’s termination of 19 April 2011 was in compliance with the law.

The arbitrator grossly misdirected himself in concluding that the expiry of the probation period is irrelevant in the circumstances.

The arbitrator erred at law in concluding that the payment by appellant for the period April 2011 to July 2010 amounted to confirmation of reinstatement.

The arbitrator grossly misdirected himself in concluding that appellant partially complied with the award by Honourable Muzondo of

21 October 2010.

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

Ground 1	Did appellant lawfully terminate respondent’s probationary contract of employment through the 19 April 2011 letter?

Appellant submits that arbitrator Dangwa erred by concluding that there was non-compliance and specifically misdirected himself in prescribing an award which had the effect of confirming respondent to permanent employment against the provisions of the law.  This is particularly so as the Muzondo arbitral award had found that respondent could not become a permanent employee by default or waiver.  The Dangwa award is said to have done this by awarding respondent a salary from 1 May 2011 to date of lawful termination.

On the other hand, respondent argues that arbitrator Dangwa’s award was a correct interpretation of the Muzondo award.  The Dangwa award found that respondent had the option of resigning out of his own volition or have appellant lawfully terminate the probationary contract.  It is argued that the partial payment of USD8 883.36 for July 2010 to April 2011 salaries is a clear sign that appellant reinstated the respondent to his previous position.

Respondent further argues that the extension of the probation period from May 2010 until August 2010 is unlawful as it is contrary to section 12 (5) of the Labour Act.  This section provides for a single, non-renewable probationary period of not more than three months.

I agree with respondent in that the purported extension of the probation period was unlawful.  I note however that at the time the Muzondo award came out, ordering appellant to either lawfully terminate or confirm, the probationary period, both the initial and extended, had run out.

Both parties referred me to the case of Kwangwari v Commercial Bank of Zimbabwe Ltd HH-79 – 2003 for the law regarding termination of probationary contracts.  I wish to distinguish the Kwangwari  case supra on the basis that therein the employer sought to terminate an extended probationary agreement before the expiry of the extended probationary period.  Further that matter was before the amendments to the Labour Act.  The case nevertheless lays some important principles which should guide me.

The first principle is that in the absence of evidence that the employer agreed to convert an employee’s status from being a probationary to a permanent one, an employee cannot become a permanent employee by default or waiver.

Respondent counters this argument by citing section 12 (3) of the Labour Act.  It provides;

“A contract of employment that does not specify its duration or date of termination, other than a contract for casual work or seasonal work or for the performance of some specific service, shall be deemed to be a contract without limit of time.”

As the extension of probationary period is unlawful, the rationale of the provision is to stop long or repeated probationary periods which are prejudicial to the employee.  The effect of non-compliance is said to depend on the circumstances of each case.  (See Munyaradzi Gwisai, Labour and Employment Law in Zimbabwe, 1 ed, 2006 p 183)

In casu there had been two earlier attempts to terminate the probationary contract, an extension occasioned by the need to provide the three month probation period after a late assumption of duty and conciliations.  There was an arbitral award and a request for interpretation of same.  This case is far from one where respondent can argue that he had a legitimate expectation of the contract being deemed permanent.  Though I find that the period after expiry of the initial probationary period was long, up to about 8 months, I find that it was a period when the parties were clarifying their status.

In the circumstances I cannot find that respondent had become a permanent employee.  I find instead that he had at best, a fixed term contract.   The Arbitrator erred in finding as he impliedly did, that respondent had become a permanent employee. (See Madawo vs. Interfresh Ltd 2000 (1) ZLR 660 (HC) .

The Kwangwari case is further authority for the assertion that case law does not give the employer absolute power to terminate upon expiration of a probationary period as does the common law.  It states

“Before dismissal is embarked upon the general principle is that the employee should be timeously informed of his deficiency, be told how to rectify it and be given a reasonable opportunity to improve before any action is taken against him.”

The case notes that the position of a probationary employee should not be equated with that of a permanent employee.  The employer is said to be entitled to terminate a probationary employee’s employment provided it does not behave grossly unfairly.  The employer is said to have a duty to act reasonably and in a bona fide manner.  The court’s role is to prevent an employee being deprived of the prospects of employment where he meets the standards set by the employer.  This should be balanced with protecting an employer from being permanently saddled with an incompetent employee.

In casu respondent was neither given any set standards nor assessed.  He was not advised of any shortcomings.  The appellant merely terminated on the basis of expiration of the probation contract.  I find that appellant acted outside the law in this regard.  The termination was therefore unlawful.  Appellant seems to me, to have repeated what it did with the second termination in this respect the Muzondo award was not complied with.

I find therefore that appellant did not lawfully terminate respondent’s contract and the first ground of appeal partly succeeds.

Ground 2	 Did the arbitrator misdirect himself in concluding that the expiry of probation was irrelevant in the circumstances?

The appellant relied on the case of Madawo v Interfresh Ltd  2000 (1) ZLR 660 (HC) for the assertion that the rights of an employee on probation are equal to those of an employee on fixed term employment contract which can be terminated during its currency or summarily or on notice.

The fact that the probation period had already lapsed in casu was said to be pertinent, particularly in the assessment of damages.

Respondent argues that the expiry of the probation period was irrelevant.

I have already demonstrated above how the expiry of the probation period is relevant.  This is first, to establish whether there is an extension( this has legal consequences) and thereafter in assessing the effect of the delay in the status of the probationary employee.

In casu appellant was ordered in the Muzondo award “to purge its illegality and at the same time put claimant (respondent) in a position of an employee awaiting confirmation of the probationary period or otherwise.”  Appellant elected to terminate on the basis that the probationary period had lapsed anyway.

Appellant further argues that because the probation period had lapsed the options for termination had fallen away.  I was urged to treat the contract as terminated without further justification.

In the light of my findings on ground of appeal 1 above, I believe a further consideration of this ground does not help either appellant or respondent.  I will state however that the expiry of the probation is a relevant factor in the manner I have already addressed.

Ground 3. 	 Did payment for the period April 2011 to July 2010 amount to confirmation of reinstatement?

Appellant paid back pay in terms of the Muzondo award and computed it from the date of the letter of termination being 19 April 2011 to 30 June 2010 being the date when the termination was found to have been unlawful.

The arbitrator found that by paying as it did, the appellant had confirmed reinstatement as it had not contested the reinstatement.

A reading of the arbitral award shows that there were two options available.  One was to lawfully terminate and the other to confirm.  In either case back pay and allowances would be payable from 30 June 2010.

It is clear from the facts of this case that the payment was meant as back pay and a reinstatement or mutation into permanent employment could not be implied.  It had to be express as I have already found underground of appeal 1.

I find therefore that the arbitrator grossly erred in finding that payment of back pay necessarily meant confirmation of reinstatement.  There was no legal basis for that conclusion.

Ground 4	 Was the payment of back pay for April 2011 to July 2010 partial compliance with the Muzondo award?

Appellant argues it has fully complied with the Muzondo award in paying back pay for about nine months.  They rely on the case of Madawo v Interfresh Ltd 2000 (1) ZLR 660 for the position that a probationary employee cannot be paid a sum more than his terminal benefits and the period of his contract which was three months in casu.

Respondent argues that since appellant did not appeal against the Muzondo award and the probation period had lapsed, what was left was for appellant to reinstate him.  The payment made is said to be part payment as further payments are accruing monthly.

I find the Madawo v Interfresh case supra instructive.  Therein CHINHENGO J stated the position in respect to damages payable where a dismissal is unlawful and reinstatement is an inappropriate remedy as in casu.  Considering my earlier finding that respondent was not thrust into permanent employment due to the circumstances of this case, I do find that the back pay paid was adequate in this case.  It would be wrong to assess damages for respondent contrary to the principle in Madawo v Interfresh supra and at the same level as those for permanent employees.

Respondent is lucky to have been paid in excess of the three months period and his terminal benefits.

I find myself in the position of CHINHENGO J in Madawo v Interfresh supra where the conclusion I reach is that respondent’s dismissal was unlawful but he has been adequately paid and his defence does not succeed.  Appellant has adequately complied with the Muzondo award.

Consequently the appeal succeeds and the award of Arbitrator Dangwa of 12 September 2012 is set aside in its entirety.

Atherstone & Cook, applicant’s legal practitioners