Timber Sector Employers Association v General Agriculture & Plantation Workers Union

### Preamble
IN THE LABOUR COURT OF ZIMBABWE
JUDGMENT NO. LC/H/587/2016
HARARE, 10 MARCH 2016
CASE NO.
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IN THE LABOUR COURT OF ZIMBABWE      JUDGMENT NO. LC/H/587/2016

HARARE, 10 MARCH 2016				  CASE NO. LC/H/1044/15

AND 23 SEPTEMBER 2016

In the matter between:-

TIMBER SECTOR EMPLOYERS ASSOCIATION			Appellant

And

GENERAL AGRICULTURE & PLANTATION				Respondent

WORKERS UNION

Before Honourable R.F. Manyangadze, J

For Appellant		Mr A.T. Muza (Legal Practitioner)

For Respondent		Mr P Mabundu (Legal Practitioner)

MANYANGADZE, J:

This is an appeal against an arbitral award dated 12 October 2015, in which the arbitrator declined to reduce the minimum wage in the Timber Sector.

The facts of this matter are common cause.  There is in existence a Collective Bargaining Agreement governing the timber sector of the agricultural industry, Statutory Instrument 55 of 2013.  (CBA).  The CBA provides, inter alia, for a minimum wage of US$150.00.

The parties engaged in wage negotiations in which the respondent initially sought for an increase of the minimum wage from US$150.00 to US$180.00.  It eventually backed down to the gazetted minimum wage.  Its position was that this should be maintained at US$150.00 as agreed in the CBA.

The respondent, on the other hand pushed for a reduction of the minimum wage from US$150.00 to US$105.00.  It cited the prevailing unfavourable economic climate which was affecting its ability to pay the minimum wage.

The arbitrator refused to reduce the minimum wage and ruled that it should be maintained at US$15000. The main basis of his decision was that he had no jurisdiction to reduce the minimum wage set in a registered CBA.  This was legally impermissible in terms of the provisions of the Labour Act, which gives force to the registration and operation of collective bargaining agreements.

Aggrieved by the arbitral decision, the appellant filed an appeal with this court.  The grounds of the appeal are framed as follows;

“1.	The Honourable Arbitrator erred at law in holding that he had no jurisdictional authority to review the import and efficacy of SI 55 of 2013.  At law, such genus of statutory instruments are essentially agreements which are subject to re-negotiation alteration and or review when occasion arises.

The Honourable Arbitrator also grossly misdirected himself in ignoring evidence that the appellant’s constituent members could not pay the wage limit set by SI 55 of 2013.  Such facts and attendant legal implications were not given judicious treatment by the Arbitrator.

The Honourable Arbitrator also erred at law in holding that the Appellant was bound to adhere to SI 55 of 2013 on account of the signing of Collective Bargaining Agreement that birthed S! 55 of 2013.  At law no statutory instrument may abridge a fundamental right and in casu the Arbitrators finding force (sic) the Appellant’s constituent members to adhere to an agreement they were not party to.

The Honourable Arbitrator also erred at law in holding that the Appellant’s cause asked for the arrogation of rights bestowed the Respondents in SI 55 of 2013.  The Law permits the revision, re-negotiation and recasting of Collective Bargaining agreements to answer the exigencies of the times.

The Honourable Arbitrator also grossly misdirected himself in ignoring evidence that the Appellant’s constituent members could not pay the wage limit set by SI 55 of 2013.  Such facts and attendant legal implications were not given judicious treatment by the Arbitrato5r.

The Honourable (sic) also grossly misdirected himself in determining that the minimum wage in the Timber sector should remain at US$150.00 per month in the face and clear and uncontroverted evidence and fact (sic) none of the Appellant’s constituent members could afford to pay such a wage without the peril of insolvency.”

From the outset, it is important to clearly appreciate the issue before the court.  Mr Muza, for the appellant, during oral submissions, set out the issue as;

“The appeal before you is one which raises a very important question of law, whether or not an arbitrator has the power to set minimum wages”.

Mr Mabundu for the respondent, formulated the issue as;

“My colleague has stated the main issue as whether or not the arbitrator has power to set minimum wages.  I tend to differ with the formulation of the issue before the court.  I will formulate the issue as whether or not an arbitrator can reduce an existing minimum wage in terms of an existing collective bargaining agreement”.

There is an existing, agreed minimum wage, set in terms of a duly registered CBA.  That much is a basic fact and not in dispute.  The appellant seeks the reduction of the set minimum wage.  So the issue should be as submitted by the respondent – whether or not an arbitrator can reduce an existing minimum wage provided for in an existing CBA.  All the six grounds of appeal can properly be condensed into this issue.  They are essentially an elaboration of this one issue, which is fundamental to a resolution of the appeal.  The appeal turns on a resolution of that fundamental question.  The appellant averred that the arbitrator had the mandate to reduce the set minimum wage.  It contended, in paragraph 3.1 of its heads of argument, as follows:

“3.1	The Honourable Arbitrator erred at law in holding that he had no power to review the minimum wage in the timber sector because of SI 55 of 2013.  At law, such genus of statutory instruments are essentially agreements, which agreements are subject to re-negotiation alteration and or review when occasion arises.”

The appellant further contended that the arbitrator had to take into account the economic realities of the situation.  He had to take into account the appellant’s ability to pay the minimum wage.  He ought to be wary of issuing an award that could drive the company into insolvency, which would be against public policy.  In this regard the appellant made reference to numerous cases.  The cases included those of Tel-One (Pvt) Ltd v Communication Allied Workers Union of Zimbabwe 2007 (2) ZLR 262 (H) and Continental Fashions (Pvt) Ltd v Mupfururi & Others 1997 (2) ZLR 405 (S).

The appellant summed up its case as follows, in paragraphs 29 to 30 of its heads of argument;

“29.	It is by no means an exaggeration or embellishment that none of the employers in the sector is in a financial position to pay grade A1 employees a minimum wage of US $150.00. Like ordinary contracts, collective agreements may be varied by order of court or quasi-judicial panel if it can be proved that the agreement did not reflect the parties’ initial intention. The South African Courts have held that even statutory arbitrators have the power to rectify agreements referred for interpretation or amendment.  See Cape Clothing Association v De Kock NO (2014) 35 ILJ 465 (LC).

30.	In the present matter, the Arbitrator was empowered to consider a review of the minimum wage set and has the power to review it in either direction.  In this present instant, the evidence conclusively showed that the award should have been in the form of a reduction of the minimum wage to a level that is in keeping with the economic realities of the industry as well as the macro-economic fundamentals of the country.”

In countering the appellant’s submissions, the respondent contended that the law does not permit the reduction of employees’ existing rights or benefits without their express consent, especially in this case where there is a CBA clearly providing for such rights.  Paragraph 15 of the respondent’s heads of argument expressed this position this way;

“15.	With respect, it is submitted that there is no law which permits the alteration of an existing or registered collective bargaining agreement with the result that employees’ existing rights or benefits are reduced or diminished, without the express consent of the employees concerned.”

The respondent further contended that remedies are available to an employer, in terms of the law, who faces any challenges in paying the agreed minimum wage.  They can seek exemption from the National Employment Council (NEC) which has the mandate to consider applications for exemption.

It seems to me the parties are grappling with an issue that has clear legislative provisions, set out in the Labour Act [Chapter 28:01] (the Act).

Section 82 (1) of the Act is instructive.  In fact, both parties made reference to it in their submissions. It provides as follows;

“(1)	Where a collective bargaining agreement has been registered it shall –

with effect from the date of its publication in terms of section eighty-five, or such other date as may be specified in the agreement, be binding on the parties to the agreement, including all the members of such parties, and all employers, contractors and their respective employees in the undertaking or industry to which the agreement relates;

remain binding despite –

a change of employer, or

a change of ownership of the undertaking or industry concerned; or

a change in the membership or structure of the trade union or employers organization;

remain binding until –

it is replaced by a substitute agreement, notwithstanding any provision therein contained that it shall expire by lapse of time;

it is terminated by the mutual agreement of the parties thereto.

[Subsection amended by section 45 of Act 17 of 2002]”

The provisions of Section 82 (1) are clear and unambiguous.  Only the conditions set out in paragraph (c) can lead to a variation of the CBA.  Unless and until these conditions occur, the CBA remains binding.  That obviously includes the component of the CBA setting minimum wages.  It is difficult to appreciate the basis on which the arbitrator could reduce a minimum wage in a CBA, in the light of these clear provisions.

A reading of the arbitral award shows that the arbitrator was guided by these provisions.  This is reflected by these remarks at page 5 of the award:

“I have been told that the Statutory Instrument 55 of 2013 is still in force and has not been replaced.  Furthermore, the parties have not terminated it by mutual agreement.  The Statutory Instrument 55 of 2013, therefore, is still binding on the parties and their membership, barring any changes as provided for in the section above.”

Further to that, the arbitrator held that the CBA was a contract between the parties, which he was not at liberty to vary, as this would amount to making a contract for the parties.  He had the support of Supreme Court authorities for holding this view.  This is succinctly expressed on page 8 of the award, wherein reference is made to ZIYAMBI JA’s remarks in the case of National Railways of Zimbabwe v Zimbabwe Railways Artisans Union and Others SC46/15.

The arbitrator, in my view, correctly stated;

“It is obvious that the Arbitrator or court is not arrogated, by the statute, with the right to interfere in or alter an agreement or contract, freely entered into by the parties.  The same applies in casu.  After all, ZIYAMBI JA, in National Railways of Zimbabwe v (1) Zimbabwe Railways Artisans Union, (2) Railway Association of Yard Operating, (3) Railway Association of Enginemen, (4) Amalgamated Railwaymen Union, SC 46/2015, said

“The list of subjects set out in subs (3) are suggestions as to matters that may be included by the parties in a collective bargaining agreement. Thus the parties may elect to include all or any of the suggested topics in their agreement.  The point being made is that the statute does not confer a right on any of the parties, without agreement of the others, to have included in their collective bargaining agreement, any of the subjects on the list.  This is understandable since a collective bargaining agreement is a contract between the parties to it and only they can set the terms by which they will be bound.  It follows that any benefits to be included in the collective bargaining agreement must be agreed by the parties.  They cannot be imposed by the Arbitrator, or indeed any court, in the same way that a court cannot write a contract for the parties”(My own emphasis)

There you are.  By the same token, I cannot interfere in the agreement reached by the parties to set the minimum wage at US$150.00 and that any member who has difficulty in paying the minimum wage should approach the Exemption Committee of the NEC.”

The case of Magodora and Others v Care International Zimbabwe SC24/14, underscored the same principle, that a court cannot make a contract for the parties.

Another important dimension to this case is the availability of remedies at the NEC level.  The question of the ability to pay, which the appellant seemed to dwell on a lot, can be interrogated at the NEC.  There is in existence a mechanism for applying for exemptions by an employer who raised that contention.  All the factors the appellant was referring to, such as the harsh economic environment, the need to be realistic and take into account the changing fortunes of the business, are the sort that will be considered in an application for exemption.  It is a feature incorporated in the CBA, as the parties foresaw the possibility of such problems arising.  This aspect is well captured in paragraph 12 of the respondent’s heads of argument;

“The issues being raised by the Appellant are issues which could still be raised before the Exemptions Committee with each applicant justifying why it cannot pay the minimum wage.  For instance, inability to pay would require each and every employer to bring its books of accounts and demonstrate to the satisfaction of the Exemptions Committee that it is unable to pay the minimum wage.  Each company is obviously operating differently and the degrees of inability to pay do vary from one company to another.”

It seems to me the Exemptions Committee of the NEC is a significant and integral part of the domestic remedies available.   The appellant cannot simply abandon such remedies, which are part of the binding CBA.

In casu, the appellant has not demonstrated any satisfactory reasons why its members circumvented the domestic remedies available, in the form of the NEC Exemption Committee.

It must be pointed out that this court was not seized with the question of whether or not the appellant is able to pay the minimum wage.  It was rather seized with the question as to whether the arbitrator could reduce an agreed minimum wage, concluded in a CBA that was duly registered and gazetted as a Statutory Instrument.  The arbitrator found that he could not do so.

I find no basis for interfering with the arbitrator’s decision.  In my view, the arbitral award was well reasoned and fully supported by both legislative and case authorities.  In the circumstances, the appeal cannot succeed, being devoid of merit.

It is accordingly ordered that;

The appeal be and is hereby dismissed.

The appellant shall bear the respondent’s costs.

Messrs Mawere & Sibanda, appellant’s legal practitioners

Mabundu Law Chambers, respondent’s legal practitioners