Wattle Company LTD V Minister OF Public Service, Labour & Social Services & 52 Others

### Preamble
IN THE LABOUR COURT OF ZIMBABWE
JUDGMENT
NO LC/H/435/16
HELD AT HARARE 26 JANUARY 2016
CASE NO
JUDGMENT NO LC/H/435/16
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IN THE LABOUR COURT OF ZIMBABWE			JUDGMENT NO LC/H/435/16

HELD AT HARARE 26 JANUARY 2016				CASE NO LC/H/104/15

& 22 JULY 2016

In the matter between:

WATTLE COMPANY LTD				Applicant

And

MINISTER OF PUBLIC SERVICE, LABOUR		Respondents

& SOCIAL SERVICES & 52 OTHERS

Before The Honourable R F Manyangadze, Judge

For Appellant				Mr T G Mukwindidza (Legal Practitioner)

For 1st Respondent			Ms T S Musangwa (Civil Division)

For 2nd – 52nd  Respondents		Mr C Chibaya (Legal Practitioner)

MANYANGADZE, J:

This is an application for the review of a retrenchment package approved by the 1st respondent in favour of the 2nd to the 52nd respondents.

The 2nd – 52nd respondents (retrenchees) were retrenched by the applicant in August 2015.  Their retrenchment was approved by the second respondent, the Minister of Public Service, Labour and Social Welfare (the Minister) on 24 August 2015.

The terms and conditions of the approved retrenchment are as follows:

Terms and conditions of the Retrenchment

Aggrieved by the aforesaid terms and conditions, the applicant filed an application for review with this court.  The grounds for review are stated as follows:

“1.1 The decision is grossly unreasonable as to be irrational and outrageous in its defiance of logic or of accepted moral standards that no sensible person who had applied his/her mind to the issue would have arrived at it.

The decision is grossly unreasonable and is in clear conflict with the provisions of section 12 (2) to 12 (4) of the Labour Act as amended particularly in that:

The decision is grossly unreasonable and is clear conflict with the provisions First respondent did not take into account applicant’s financial position and its incapacity to pay the quantum awarded as it clear from Annexure ‘F’ to ‘H’.  Applicant has salary arrears and is currently struggling to pay its workforce whilst it is also saddled with overwhelming debts owed to short and long term creditors.

First respondent failed to make a decision on applicant’s proposal to pay any retrenchment package over a period of 24 months.  This is in tandem with the Labour Amendment Act No 5 of 2015.

First respondent completely ignored and or avoided making a fair decision on this aspect.  Rather she simply stated that Retrenchment Board recommended 6 months.  Six months is grossly unreasonable and too short a period given applicant’s financial status.  First applicant’s omission in making a decision on this aspect is grossly unreasonable and so as to be irrational and outrageous in its defiance of logic or of accepted moral standards that no reasonable person who had applied his mind to the issue would have committed such an omission.”

There is no issue with the retrenchment procedure.  It is the retrenchment determination, as reflected in the terms and conditions approved by the Minister, that is an issue.  In other words, it is the quantum of retrenchment, and not its process, that is in issue.

The basis for the review is that the package approved is grossly unreasonable.  A perusal of the grounds for review and the parties’ heads of argument reveals two basic issues.  These are;

Whether the absence of reasons for the approval by the Minister vitiates the retrenchment determination

Whether the retrenchment determination threatens the viability or survival of the applicant.

On the question of reasons for the retrenchment determination, the applicant

averred that “a judicial decision that is not explained easily subjects itself to criticism of being arbitrary and or capricions”  On this basis, the Minister’s decision should be regarded as “irrational and a gross misdirection in that it lacks reasons.”

The applicant went so far as to suggest that the failure to give reasons can in fact vitiate the order or decision given.  Argued the applicant in paragraph 2.2 of its heads of argument;

“One could very well argue that the failure to give reasons for judgment is a gross misdirection on the part of the decision maker and one that vitiates the order  … decision given at the end of the hearing.”

The applicant relied heavily on the case of Fox & Carney P/L v Sibindi 1989 (2) ZLR 173 were the need for a court to give reasons for judgment was emphasised.  The applicant referred to the remarks of DUMBUTCHENA CJ, in paragraph 2.1 of its heads argument;

‘in a contested matter in which issues, facts and law are disputed, there must be a judicial decision or determination on some question of law or fact in dispute.  The merits and demerits of each party’s case must be stated, so that the parties understand how the disputed issues or questions were determined.’

The Minister’s powers, in relation to retrenchment packages, are circumscribed in section 12 C (9) of the Labour Act [Chapter 28:01] (the Act).   This section provides as follows:

“(9)	The Minister shall consider without delay any recommendation submitted to him by the Retrenchment Board and, having regard to the factors referred to in subsection (11), shall-

(a)	approve the proposed retrenchment, subject to such terms and conditions as he may consider necessary or desirable to impose; or

(b)	refuse to approve the proposed retrenchment;

and shall cause the Retrenchment Board, the works council or employment council, as the case may be, to notify the employer and employees concerned in writing of the decision in the matter.”

It is clear from this provision that the Minister acts on the recommendations of the Retrenchment Board.  It is the Retrenchment Board that conducts an inquiry into the matter, and hears submissions from the parties concerned.  After its assessment of the submissions from the parties, the Retrenchment Board makes recommendations to the Minister.  The Minister then exercises the powers conferred on him/her by section 9 (supra).  There is no provision in the Act, placing an obligation on the Minister to give reasons for the approval, the same way a court of law is required to give reasons for judgment.  The Act only outlines the factors the Minister should consider, when deciding whether to approve or reject a retrenchment package recommended by the Retrenchment Board.  These are set out in section 12 C (11) of the Act, which reads:

“(11)	In deciding whether or not to approve the retrenchment of employees in terms of this section, due regard shall be paid-

(a)	to the following general considerations-

(i)	that the retrenchment of employees should be avoided so far as possible, where this can be done without prejudicing the efficient  operation of the undertaking in which the employees concerned are employed;

(ii)	that the consequences of retrenchment to employees should be mitigated so far as possible;

(b)	to the following consideration in particular cases-

(i)	the reasons put forward for the proposed retrenchment; and

(ii)	the effect of the proposed retrenchment upon the employees involved, including their prospects of finding alternative employment and the terminal benefits to which they will become entitled.”

The Minister conducts no hearing.  She assesses no evidence or credibility of witnesses, from which she is then expected to produce a judgment, like a court of law does.  The Minister’s decision is based on the papers submitted by the Retrenchment Board.  In this regard, the retrenchees, in paragraph 10 of their heads of argument, submitted;

“A perusal of the said provisions will reveal that the Minister is not there to write a judgment or a decision per ser.  His or her duty is either to refuse or approve with conditions to his or her own consideration proper.  The section does not go on and expressly outline that the Minister is to give his/her reason in making a choice to approve or refuse.”

Heads of argument submitted on behalf of the 1st respondent, the Minister, reflect the same reasoning.  Paragraphs 5 and 6 of 1st respondent’s heads of argument read;

5.	“In terms of Section 12 C of the Labour Act, the Retrenchment Board makes recommendations to the Minister on whether the retrenchment should be permitted and if so, the terms and conditions to be imposed.  In formulating the recommendations interested parties (sic).  Thus it is the Retrenchment Board that looks into the pros and cons of the retrenchment and then makes the recommendations.

6.	In terms of Section 12 C (9) of the Labour Act all the 1st respondent has to do is to look at the recommendations in light of Section 12 C (11) of the Act and approve or refuse the proposed retrenchment.  Thereafter, 1st respondent has to cause the Retrenchment Board to notify the employer and employees of his decision.”

In my view, these submissions reflect a correct position of the law, as set out in section 12 C of the Act.  The propriety or otherwise of the Ministerial decision cannot be based solely on the question of whether or not reasons were given for the decision.

The applicant’s contention that the Minister’s decision should be vitiated as it is not accompanied by reasons, cannot, in the light of the provisions looked at, be upheld.

The second issue has to do with the viability of the applicant as a business enterprise.  The applicant, basically, contends that the Minister’s decision is grossly unreasonable in that it threatens the survival of the applicant.  For a decision to be set aside on this basis, it ought to be clearly demonstrated that it was so grossly unreasonable or irrational that it should not be allowed to stand.  That, precisely, is what the appellant is averring.  Its first ground of review reads;

“1.1	 The decision is grossly unreasonable as to be irrational and outrageous in its defiance of logic or of accepted moral standards that no sensible person who had applied his/her mind to the issue would have arrived at it.”

This position was stated in Hama v National Railways of Zimbabwe 1996 (1) ZLR 664..

A perusal of the documents on record, wherein are contained submissions made before the Retrenchment Board, should assist in determining whether the decision being impugned was grossly unreasonable.

“ANNEXURE F”, page 69 of the record, has a section under the heading “FINANCIAL PERFORMANCE”.  It reads as follows:

“The gross profit for the period under review was $896 thousand thus 5% above  $856 thousand.  The business attained a net profit for the period of $123 thousand against a budgeted loss of $123 thousand.

Despite showing an improved performance, the business is still burdened by payroll backlogs of more than between 9 and 11 months totalling $710 thousand.  The company has started paying these backlogs including the retrenchees targeting  to clear them over a period of between 18 and 20 months.”

“Annexure H” contains a table showing the appellant and respondents retrenchment proposals. (See record page 74).

From this information the proposal by the retrenchees gives a total figure of

US$224 517.62.

The appellant’s proposal gives a total of US$101 413.91.

The table also shows a total package of US$120 437.62, if service pay were to be at 2 weeks for every year served, a package applicant was also prepared to pay.

The Ministerial package of US$224 517.62 is set against an offer of US120 427.62.  That leaves a difference of US$104 090.

Excerpts from the “OPERATIONS AND FINANCIAL REVIEW” (supra) for the period just before approval of the retrenchment, show that the company was experiencing some improvement in its operations.  Though battling some debts, it was not facing liquidation.  The report does not show that the enterprises was threatened with liquidation.  It had infact put in place a payment plan for clearing salary arrears, described in the report as “payroll backlogs” over a period of 18 to 20 months.  These obligations, it is worth noting, included the retrenchees.

It cannot, in the circumstances, be said that the Minister’s package is grossly unreasonable, outrageous or irrational.  It must be borne in mind that this package is to be divided among 52 (fifty two) employees.  The court is mindful of the need to ensure the survival of an enterprise when approving retrenchment packages, or any awards of a financial nature.

See Tel-One (Pvt) Ltd v Communication & Allied Services Workers Union of Zimbabwe 2007 (2) ZLR 262 (H).

It has not been satisfactorily demonstrated that the terms and conditions approved by the Minister will drive the company into insolvency or force it to close shop. It is not a package “that plunges the apple cart over the cliff,” to borrow HUNGWE J’s expression in Tel-One (Pvt) Ltd, supra.

If any intervention has to be made, in my view, it will only be in respect of the payment period.  There is no definitive pronouncement in the Minister’s terms and conditions. This item is vaguely stated as:

“Period of payment requested by parties – Retrenchment Board recommended 6 months.”

The respondents had proposed 3 months against the applicant’s 24 months.

One would have expected something as precise and concise as the other 3 items, viz service pay, severance pay and relocation allowance.  One is left wondering whether the Minister endorsed the recommended 6 months as this is still stated as a recommendation.

As already indicated, the applicant expressed an intention to liquidate its payroll backlog over a period of about 18 months.  This included the retrenchees’ payments.  A period of 12 months would, in the circumstances, be equitable as it is not too way out of applicant’s debt liquidation strategy.

In the result, it is ordered that;

The application for review be and is hereby dismissed.

The terms and conditions of retrenchment approved by the Minister on 24 August 2015 be and are hereby upheld, save for the period of payment, which is hereby varied from 6 months to 12 months.

Each party bears its own costs.

Bere Brothers, appellant’s legal practitioners

Civil Division of the Attorney General’s Office, 1st respondent’s legal practitioners

Chibaya & Partners, 2nd – 52nd respondents’ legal practitioners