Mandas Marikanda v Ticharwa Kagu, Sheltersol Finance (Private) Limited, Sheltersol Holdings (Private) Limited, Chairman of the Retrenchment Board, and Minister of Public Service, Labour and Social Welfare

### Preamble
Judgment No. SC 90/20
1
Civil Appeal No. SC 962/17
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REPORTABLE:   (79)

MANDAS     MARIKANDA

v

TICHARWA     KAGU     (2)     SHELTERSOL     FINANCE     (PRIVATE)     LIMTTED     (3)     SHELTERSOL     HOLDINGS     (PRIVATE)     LIMITED     (4)     CHAIRMAN     OF     THE     RETRENCHMENT     BOARD     (5)     MINISTER     OF     PUBLIC     SERVICE,     LABOUR     AND     SOCIAL WELFARE

SUPREME COURT OF ZIMBABWE

GWAUNZA DCJ, GUVAVA JA, MAKONI JA

HARARE: JANUARY 22, 2019

B Ngwenya, for the appellant

T Mpofu, for first – third respondents

GUVAVA JA:   This is an appeal against the judgment of the Labour Court dated 14 July 2017 which dismissed an application for review mounted by the appellant.  After reading the documents and hearing counsel, we dismissed the appeal with costs and indicated that reasons would be availed in due course.  These are they.

BACKGROUND FACTS

The appellant was employed as a Managing Director of the second respondent on 29 February 2016.  In terms of her contract of employment she was on probation for three (3) months.  On 15 June 2016 the appellant was advised that she had successfully completed her probationary period. On 27 September 2016, the appellant was served with a notice of retrenchment.  The notice was given in terms of s 12C (1) of the Labour Act [Chapter 28:01] (hereinafter referred to as the Labour Act).  The reason for retrenchment was that second respondent indicated that it was facing economic challenges and the business was making a loss.

On 5 October 2016, the parties met in order to discuss a settlement. On 13 October 2016, the first respondent wrote to the appellant and offered a proposed settlement.  On 2 November 2016 the appellant made a counter offer.  She also complained that she had not been paid her October 2016 salary.  On 8 November 2016, the respondents advised the appellant that they were referring the matter to the Retrenchment Board as there was no prospect of a settlement.  On 5 December 2016 the appellant wrote to the Secretary of the Retrenchment Board and requested audience in order to make representations before the Board considered the respondents’ application.

On 29 December 2016, the respondents advised the appellant that they had deposited into her account the minimum retrenchment package of US$ 15 922.71 payable in terms of s 12C of the Labour Act.  The appellant was further advised that as of 31 December 2016 she would cease to be in the respondents’ employee.

Aggrieved, the appellant filed an application for review before the Labour Court.

PROCEEDINGS BEFORE THE LABOUR COURT

The appellant, in her application for review, submitted that the fourth respondent ought to have facilitated negotiations between the parties.  She further submitted that the withholding of her salary from 1 October 2016 until her retrenchment was malicious and finally, that her purported retrenchment was malicious, null and void as it had not followed the procedures as set out in the Labour Act.

The respondents opposed the application. The first respondent raised a point in limine that he had been improperly cited in his personal capacity.  He applied for his name to be removed from the proceedings.  As regards the grounds for review, counsel for the respondent submitted that the applicant had been properly retrenched in terms of the law, and paid her retrenchment package.

On the preliminary point raised that the first respondent was not properly joined as a party as he should have been cited in his official capacity as the CEO instead of being cited in his personal capacity, the parties consented to the removal of the first respondent as a party to the proceedings.

On the merits the court a quo found that, although the respondents had submitted that they had served the notice of retrenchment on the Retrenchment Board, the copy in the record did not indicate that service had been made.  It however noted that by 8 November 2016, the Board had been duly notified.  The court referred to the Retrenchment Board`s letter dated 16 January 2016 which stated that the Board had considered and confirmed the appellant`s proposed retrenchment in terms of s 12C (2) of the Labour Act.  The court a quo held that in terms of s 12C (2) of the Labour Act as amended by Act No. 5 of 2015, negotiation of retrenchment terms were to be made purely between the employer and employee.  The court further held that s 12C (2) only applies when the negotiations do not yield a minimum package.  It was further held that, in terms of s 12C (2), there was no requirement for the Retrenchment Board to facilitate negotiations between the parties.  The court therefore held that there was nothing wrong with the appellant`s retrenchment. On the above basis the application for review was dismissed. The appellant, dissatisfied with the outcome, launched the present appeal.

PROCEEDINGS ON APPEAL

The appellant attacked the judgment on the following grounds of appeal.

“ 1.  The court a quo erred in law in finding that the employer complied with the procedures   for retrenchment set down by the Labour Amendment Act when no evidence was produced to show such and with the Honourable Judge admitting that the notice was not sent to the Retrenchment Board.

The court a quo erred in law in finding that the Retrenchment Board has no role to play in the process of negotiations notwithstanding the provisions of s 12C (1)(a)(iii) of the Labour Act which provides for it to play a facilitative role in the absence of an employment council or works council as was the case in casu.

The court a quo erred in law in finding that there is no longer a requirement for formal negotiations in the retrenchment laws contrary to the provisions of s 12C (2) of the Labour Act cited by the court.

The court a quo erred in law in finding that the effective date of retrenchment could arrive before negotiations are concluded with the involvement of the retrenchment board.”

At the hearing, Mr Mpofu, for the first to third respondents, raised a preliminary point to the effect that the first respondent was not supposed to have been cited in the appeal proceedings. He therefore moved that the first respondent be removed from the proceedings. Counsel for the appellant, Mr Ngwenya conceded the point and, by consent, the first respondent was removed with the appellant paying first respondent’s costs.

Undoubtedly the point in limine by Mr Mpofu was correctly raised on appeal as it had been resolved before the court a quo and an order granted by consent of the parties. It was highly irregular for the appellant to again cite the first respondent in the notice of appeal before this Court. The concession by Mr Ngwenya, with an appropriate tender of costs, was therefore proper.

ISSUES FOR DETERMINATION

It seems to me that, from the grounds of appeal, two issues fell for determination. These are:

whether or not the appellant was procedurally  retrenched, and

whether the appellant had waived her right to challenge the retrenchment process by accepting the $15  922,17.

SUBMISSIONS BY COUNSEL

Mr Ngwenya, for the appellant argued that the second respondent had not complied with the procedure for retrenchment as laid out under s 12C of the Labour Act. He argued that subs (1) of s 12C had not been complied with and, therefore, the whole process was a nullity.

The appellant contended that, in terms of the Labour Act, the employer was supposed to give written notice to the Retrenchment Board of its intention to retrench the appellant. The appellant argued that it was common cause that such notice was never given. As a result, the whole retrenchment process was a nullity.

It was further submitted that the acceptance of the retrenchment package by the appellant did not mean that she had waived her right to take the matter further.

Mr Mpofu, for the respondents, argued that the appellant had been paid her retrenchment package in terms of the Labour Act. He submitted that the retrenchment process is a statutory process set out under s 12C of the Labour Act which is clear and unambigious.  Once an employer has paid the statutory minimum, the Retrenchment Board has no role to play in the matter.

Having paid the statutory minimum, it was not necessary for the appellant to notify the Retrenchment Board.

Mr Mpofu further submitted that in any event the appellant had accepted the retrenchment package paid to her and utilized the same. This amounted to waiver, and as such the appellant could not argue that the retrenchment process was a nullity. In making these submissions he relied on the case of Chidziva & Ors v Zimbabwe Iron & Steel Company Ltd 1997(2) ZLR 368 (S).

I propose to deal with each of the issues raised in turn.

WHETHER OR NOT THE APPELLANT WAS RETRENCHED IN ACCORDANCE WITH THE LABOR ACT

It is not in dispute that the procedure for retrenchment of an employee is laid down in s 12C of the Labour Act which provides as follows:

“12C Retrenchment and compensation for loss of employment on retrenchment or in terms of section 12(4a)

(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 or a person appointed by the Board to perform such functions on its behalf; and

(b) provide the works council, employment council or the Retrenchment Board, as the case may be, 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 one month’s salary or wages for a lesser period of service) shall be paid by the employer as compensation for loss of employment (whether the loss of employment is occasioned by retrenchment or by virtue of termination of employment pursuant to section 12(4a)(a), (b) or (c)),no later than (sic) date when the notice of termination of employment takes effect.”

The appellant argued that the court a quo erred in finding that retrenchment procedures were followed when no notice of retrenchment was sent to the Retrenchment Board. A perusal of s 12C(1)(c) indeed shows that the notice of retrenchment ought to have been sent to the Board. In this regard, the court a quo commented thus:

“In casu, the notice of 27 September 2016 was not addressed to the Retrenchment Board but to the applicant. On 8 November the respondents indicated that they would be referring the matter to the Retrenchment Board and thereafter each party was copying the Retrenchment Board into their correspondence.”

It is therefore common cause that the initial notice of retrenchment was not sent to the Retrenchment Board as is required by law. The question for determination is whether this irregularity vitiates the appellant’s retrenchment. I agree with the court a quo that it does not do so. In any event the Retrenchment Board was subsequently notified of the intended retrenchment and it duly approved it.

The appellant also submitted that her retrenchment was a nullity because the Retrenchment Board was not involved in the negotiation process as is required by s 12C of the Labour Act. She concedes that though the Board no longer has a final decision, its involvement in the negotiation process is indispensable.

A perusal of s 12C (2) of the Labour Act, as quoted above, reveals that the retrenchment process is now entirely between the employer and the employee, with the Retrenchment Board’s involvement being limited to being notified of the intended retrenchment process.

It seems to me that the appellant was arguing from the legal position that existed before the Labour Amendment Act No. 5 of 2015. Prior to the amendment, s 12C (2) read as follows:

“(2) A works council or employment council to which notice has been given in terms of subsection (1) shall forthwith attempt to secure agreement between the employer and employees concerned or their representatives as to whether or not the employees should be retrenched and, if they are to be retrenched, the terms and conditions on which they may be retrenched, having regard to the considerations specified in subsection (11).”

This section is materially different from the section that is currently in force. The old s 12C provided for the involvement of the Retrenchment Board in attempting to secure a suitable retrenchment package for the employee. As the law currently stands, that is no longer the case.

In terms of s 12C, in the absence of an agreement with regards the retrenchment package, the employer is only obliged to pay the prescribed minimum package. In casu, the parties had haggled over the retrenchment package that was due to the appellant and it was clear that no consensus would be reached. The various letters exchanged between the parties filed of record are evidence of this absence of agreement between the parties. In the absence of such consensus, the respondents were therefore entitled to pay the minimum package as provided by the law.

It is not in dispute that the minimum package was paid by the respondent and accepted by the appellant.

WHETHER OR NOT THE APPELLANT WAIVED HER RIGHTS

The respondents submitted that the retrenchment package was paid into the appellant’s bank account and it has not been returned or accepted on a without prejudice basis. The respondent therefore submitted that the appellant’s acceptance of the retrenchment money meant that she had waived her right to challenge the process. In the case of Chidziva & Ors v Zimbabwe Iron & Steel Company Ltd supra at pages 382-383 it was held that:

“The retrenchees, inclusive of the appellants, had the legal right to reject, and not receive, the proposed retrenchment package offered to them by the respondent…In the present case, the conduct of the majority of the retrenched employees, by accepting the retrenchment package was inconsistent with the enforcement of the right to have the matter referred, in terms of s 3 (6) of the Regulations, to the retrenchment committee, and clearly evinced an intention to surrender that right. The respondent acted upon their intention to accept the retrenchment package and paid to them the benefits of the agreed package. With acceptance of such payments the rights of the appellants perished.”

In casu it is therefore apparent that the appellant, in accepting the retrenchment package, waived her right to subsequently challenge the procedure by which she received the same package.

It seems to me that the issue raised is for all intents and purposes identical to the Chidziva case. In the Chidziva case, (supra), the employer had failed to follow the correct procedure for retrenchment but however the court held that those employees who had accepted the retrenchment packages had waived their rights to challenge the failure to follow the proper procedure.

Similarly, in casu the failure to serve the retrenchment notice on the Retrenchment Board is a procedural irregularity that is not fatal to the retrenchment proceedings. This is so because, as at 8 November 2016, the Board was notified of the intended retrenchment. Furthermore, as already noted, the acceptance of the package by the appellant negated all her rights arising from the unprocedural retrenchment.

Ordinarily, once the retrenchment package is paid, the employment relationship is terminated. However, in this case, the appellant was advised that the employment relationship would terminate on 31 December 2016, therefore this is the effective date of retrenchment.

DISPOSITION

The appellant was arguing from a legal standpoint that was no longer extant in that she was attempting to invalidate her retrenchment because of the deliberate non-involvement of the Retrenchment Board in the negotiating process leading up to her retrenchment. That is no longer the position of the law following its amendment.

The retrenchment process is now between the employer and the employee and failure to agree on a better package means that the employer must pay the statutorily prescribed minimum package.

The irregularity of failing to timeously notify the Retrenchment Board is not fatal to the retrenchment proceedings in the light of the appellant`s acceptance of the retrenchment package.

In view of the above the court a quo cannot be faulted in any way for coming to the decision it arrived at.

On the issue of costs, it was our view that the respondents, having been successful, were entitled to their costs.

The appeal clearly had no merit. It was for the above reasons that it was dismissed with costs.

GWAUNZA DCJ	:                         I agree

MAKONI JA		:                           I agree

Chinawa Law Chambers, appellant’s legal practitioners

Matsikidze and Mucheche, first - third respondents’ legal practitioners