Ronald Kandemiri and 56 Others v First Capital Bank Limited

### Preamble
Judgment No SC 22/25
1
Civil Appeal No SC 103/24
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REPORTABLE (22)

RONALD     KANDEMIRI     AND     56 ORS

v

FIRST     CAPITAL     BANK   LIMITED

SUPREME COURT OF ZIMBABWE

GUVAVA JA, MAKONI JA & CHATUKUTA JA

HARARE:  17 JUNE 2024 & 7 MARCH 2025

M. Gwisai, for the appellants

S. Bhebhe, for the respondent

CHATUKUTA JA:

This is an appeal against the whole judgment of the Labour Court of Zimbabwe (the court a quo) handed down on 30 September 2022.  The court a quo allowed an appeal by the respondent against the decision of a designated agent in which the agent had set aside the retrenchment of the appellants and ordered their reinstatement or payment of damages in lieu of the reinstatement.

FACTUAL BACKGROUND

The respondent is a company duly incorporated in terms of the laws of Zimbabwe. The appellants were employed by the respondent.  The respondent announced, at a Works Council meeting held on 05 August 2019, its intention to restructure the workplace.  On 09 August 2019, in a follow-up meeting with the Works Council, the respondent produced a list of the employees to be retrenched which included the appellants.  It thereafter served the Works Council and Retrenchment Board with a notice of intention to retrench in terms of s 12C (1) of the Labour Act [Chapter 28:01] (the Act).  The respondent issued a copy of the notice of intention to retrench to each employee on the list of those earmarked for retrenchment.

The appellants were subsequently retrenched with effect from 31 August 2019. Negotiations on the retrenchment packages commenced but no agreement was reached. The appellants however received a minimum retrenchment package. Aggrieved, the appellants approached the National Employment Council for the Banking Undertaking (‘NEC’) to challenge the retrenchment.  They contended that the retrenchment was procedurally unfair and amounted to unfair dismissal in contravention of s 12B (1) of the Act as they had not been consulted prior to the retrenchment.

The Designated Agent made the following findings:

The respondent was obliged under s 25A (5) of the Act to consult the Works Council before embarking on a retrenchment exercise.  It failed to do so.  The meetings of                     5 August and 9 August 2019 were convened by the respondent to merely convey that it was retrenching employees and not to consult the Works Council.  It was therefore a communication of a fait accompli.  Although the respondent was not obliged to embark on special measures to avert retrenchment, it failed to follow the procedure set out in the Act.  The retrenchment therefore amounted to unfair dismissal.  Consequent to his findings, the Designated Agent set aside the retrenchment of the appellants and ordered their reinstatement to their former positions or payment of damages in lieu of the reinstatement.

PROCEEDINGS BEFORE THE COURT A QUO

Aggrieved with the decision of the Designated Agent, the respondent appealed to the court a quo.  It argued that it complied with all the relevant procedures and did not unfairly dismiss the appellants. It contended that by virtue of the literal interpretation of proviso in 25A (5) of the Act, a retrenchment exercise, exceeding five employees, is exempted from s 25A (5) of the Act.  Sections 12C and 12D of the Act would apply as in the present circumstances where the retrenchment was for more than five persons.

It further argued that prior to the commencement of the retrenchment exercise, the respondent met with the Works Committee on 5 and 9 August 2019.  It was at these meetings that it informed the Works Council of its intention to retrench some employees, which it argued was adequate observance of s 25A (5) of the Act.

The respondent further contended that pursuant to s 12C of the Act, in the event that there is no agreement between the employer and employees, with respect to the retrenchment package, the employer shall proceed to pay the employee a package of one months’ salary for every two years of service.  It paid out such package.

Per contra, the appellants argued that the literal interpretation of the proviso to                   s 25A (5) is inconsistent with the history of the provision, purpose of the Act, the employee’s right to protection from unfair dismissal and right to fair labour standards. The appellants contended that a purposive interpretation should be ascribed to the proviso so that it is read in conjunction with ss 12C  and 12D. It was argued that the court a quo should consider that the purpose of s 25A (5) was to allow consultation and participation of employees in decisions affecting their interests in the workplace.  A literal interpretation of the proviso would defeat the purpose of the Act.

The appellants argued that the respondent ought to have consulted the Works Council before executing the decision to retrench employees as envisaged in the proviso and                      s 12D (1) of the Act.

DECISION A QUO

The court a quo held that the proviso in s 25A (5) of the Act is couched in clear and peremptory terms in that the retrenchment of five or more employees is removed from the ambit of the section.  The retrenchment of five or more employees now fell under                    s 12C of the Act and that the provision does not require consultation with the Works Council by the employer but simply calls for a notification.  The respondent correctly retrenched the appellants in terms of s 12C.  The Designated Agent had therefore misdirected himself as consultation with the Works Council is not mandatory in matters involving retrenchment of five or more employees in terms of s 25A (5) and s 12C of the Act.  It accordingly allowed the appeal, set aside the decision of the Designated Agent and substituted it with a dismissal of the appellants’ claim.

GROUNDS OF APPEAL

Aggrieved, the appellants noted the present appeal on the following grounds:

The court a quo erred in interpreting the proviso to s 25A (5) of the Labour Act so as to exclude the obligation on the employer to consult the works council whereas properly interpreted the effect of the proviso, is not to exclude consultation of the works council but to incorporate the additional protective provisions of s 12C and section 12D in relation to the retrenchment of five or more employees.

The court a quo erred at law in ruling that s 12C (1) of the Labour Act does not compel consultation of the works council by the employer whereas such consultation is mandatory and implied necessity under s 12C (1)(b) as read with the employees’ right to protection from unfair dismissal, to fair labour standards and to participation in decisions that affect them under the Act as well as consultation of the works council under s 5A (5) of the Act and as cumulatively read with s 65(1) of the Constitution.

PROCEEDINGS BEFORE THIS COURT

APPELLANTS SUBMISSIONS

The appellants argued that the respondent was required in terms of s 25A (5) (f) of the Act to consult the Works Council prior to implementing its decision to retrench them.  It was argued that the respondent did not consult the Work Council and therefore had retrenched them contrary to the provisions of s 25A (5) (f).  The appellants contended that the concerned employees or their representatives were not privy to the retrenchment negotiations.

The appellants further contended that the process was contrary to s 12D (2) of the Act which provides that an employer must propose measures to avoid retrenchment prior to giving a notice of intention to retrench.  The appellants also argued that the respondent did not execute bona fide negotiations on the retrenchment package as required under                 s 12(c) (1) and (2).

Counsel for the appellants submitted that s 25A (5) (f) and (6) of the Act as read with s 2A (1) of the Act imply that it is mandatory for an employer to consult the Works Council before retrenching employees.

He submitted that the Designated Agent had assessed the meetings and judiciously concluded that they were not consultations in accordance with the demands of s 25A of the Act but a mere formality that was meant to sanction a predetermined decision.

RESPONDENTS SUBMISSIONS

Counsel for the respondent submitted that the court a quo was correct in finding that                       s 25A (5) of the Labour Act does not apply to a retrenchment of more than five (5) employees by virtue of the proviso thereto.  He argued that the proviso excepts out of the provisions of s 25A (5) retrenchments of more than five employees.  He submitted that the respondent was therefore not required to consult any employee or the Work Council.  He further submitted that the retrenchment of more than five (5) employees can only therefore be done in terms of ss 12C and 12D of the Act.  He argued that the respondent was not required by the then s 12C to consult anyone.  It was merely required to give notice of its intention to retrench. It was further argued that the Works Council was notified of the retrenchment at the meetings held on 5 and 9 August 2019 prior to the retrenchment.

Per contra the respondent argued that s 25A (5) of the Act was inapplicable to a retrenchment affecting five or more employees. It submitted that ss 12C and 12D of the Act were applicable in the case at hand.  The respondent argued that the appellants had been kept abreast of the organisational and operational challenges of the company since 2017.

The respondent argued that it complied with s 12D (1) of the Act in that the appellants were made aware of the change in the ownership of the respondent in 2017 and it was obvious that the company would need to reorganise and hence retrenchment would arise. It further argued that the use of the word ‘may’ in s 12D of the Act, denotes that the provision is discretionary and thus it was not obliged to devise alternative measures to retrenchment.

The respondent also argued that it had in fact notified the Works Council of the pending retrenchment in accordance with s 12C in the meetings held on 5 and 9 August 2019 to discuss the pre-implementation of the retrenchment exercise.

ISSUE FOR DETERMINATION

One issue commends itself for determination, that is, whether or not the employer is required to consult the Works Council when it intends to retrench five or more employees.

ANALYSIS

The appellants argued that the s 25A (5) of the Labour Act imposes a duty on an employer who is retrenching five or more employees to consult with the Works Council before undertaking the retrenchment. They further argued that the proviso in the section should be given a purposive interpretation so that it is consistent with the spirit of the Act.

It is trite that, in interpreting legislation, words must be given their grammatical and ordinary meaning unless this would result in some absurdity.  In Mushoriwa & Ors v Parliament of Zimbabwe & Anor CCZ 04/23, Garwe JCC remarked at p 33 that:

“As a general rule, the principles governing the interpretation of a Constitution are basically the same as those governing the interpretation of other statutes. One must look to the words actually used and deduce what they mean within the context in which they appear. If the words used are precise and unambiguous and accord with the context, then no more is necessary than to expound them in their natural and ordinary sense. One does not depart from the literal and grammatical meaning unless this leads to such an absurdity that could not have been contemplated by the legislature.”

Section 25A (5) provides that:

“(5) Without prejudice to the provisions of any collective bargaining agreement that may be applicable to the establishment concerned, a works council shall be entitled to be consulted by the employer about proposals relating to any of the following matters:

…

…

…

…

…

the retrenchment of employees, whether voluntary or compulsory:

Provided that any matter involving the retrenchment of five or more employees within a period of six months shall be governed by sections twelve C and twelve D, unless otherwise agreed by the employer with the members of the works council representing the workers' committee.” (Own emphasis)

The question is therefore whether the wording of s 25A (5) is ambiguous by reason of the proviso warranting adoption of the purposive canon of interpretation.  In order to answer the question, it is necessary to understand the purpose and effect of a proviso.

The word “proviso” is defined in Claassen’s Dictionary of Legal Words and Phrases 2nd edition at p 133, inter alia, as:

“A stipulation introduced into a section of a statute, or into a clause of an agreement, providing that the preceding part of the section or clause is subject to the provisions of such stipulation.

The purpose of a proviso in a legislative provision was explained in the case of Mphosi v Central Board for Co-Operative Insurance Ltd 1974 (4) SA 633 (A) at 645 as follows:

“This argument altogether overlooks the true function and effect of a proviso. According to Craies, Statute Law, 7th ed., at p. 218 –

‘the effect of an excepting or qualifying proviso, according to the ordinary rules of construction, is to except out of the preceding portion of the enactment, or to qualify something enacted therein, which but for the proviso would be within it; and such proviso cannot be construed as enlarging the scope of an enactment when it can be fairly and properly construed without attributing to it that effect".” (Emphasis added)

Section 25A (5) provides that a works council shall be entitled to be consulted by the employer about its proposals relating to the retrenchment of its employees. The use of the word ‘shall’ in the section signifies the need for strict compliance with the section failure of which renders the retrenchment process a nullity.  In Unki Mines (Pvt) Ltd v Shurugwi Town Council & Anor SC 13/24 at p 9, Uchena JA aptly remarked that:

“The use of the word “shall” as opposed to “may” proves that the provisions are mandatory. The provisions have to be strictly complied with. Failure to comply with mandatory provisions of the law renders the agreement of sale a nullity.”

It therefore follows that whenever an employer intends to retrench any employees irrespective of the number of employees, it is obliged under s 25A (5) to consult the works council first.

However, the legislature saw it fit to then insert the proviso to except out of the preceding s 25A (5) of the Act five or more employees.  The use of the word ‘shall’ in the proviso signifies the need for strict compliance with the section.  It therefore follows that when a retrenchment involves five or more employees, the provisions of  s 25A (5) of the Act requiring the employer to consult the works council do not apply. As provided in the proviso, the retrenchment of five or more employees is in terms of ss 12C and 12D of the Act.

The intention of the legislator to except five or more employees from the ambit of                   s 25A (5) of the Act is bolstered by the provision in the proviso that the employer and the works council can specifically agree to the applicability of s 25A (5) to the retrenchment of five or more employees.  The use of the word “unless” in the proviso provides for the only exception to the proviso.  The retrenchment of five or more employees can therefore proceed in terms of s 25A (5) of the Act only where the employer and the Works Council agree to its application.  What this means is that the legislature intentionally considered it necessary to except out certain employees from the application of s 25A (5) and at the same time allow the employer and the Works Council  to engage and agree to proceed in terms of the main section.

As rightly submitted by the respondents, the effect of the appellants’ submissions is to invite this Court to amend an otherwise precise and unambiguous s 25A (5) by deleting the proviso and retaining the main provision. This the court cannot do as it would amount to usurping the functions of the legislature. In  Natal Joint Municipal Pension Fund v Endumeni Municipality 2012 (4) SA 593 (SCA) it was remarked at para 18 that:

“Interpretation is the process of attributing meaning to the words used in a document, be it legislation, some other statutory instrument, or contract, having regard to the context provided by reading the particular provision or provisions in the light of the document as a whole and the circumstances attendant upon its coming into existence. …………………………

Judges must be alert to, and guard against, the temptation to substitute what they regard as reasonable, sensible or business like for the words actually used. To do so in regard to a statute or statutory instrument is to cross the divide between interpretation and legislation; in a contractual context it is to make a contract for the parties other than the one they in fact made. The “inevitable point of departure is the language of the provision itself”, read in context and having regard to the purpose of the provision and the background to the preparation and production of the document.” (Own emphasis)

Section 25A (5) of the Act and its proviso are precise and unambiguous.  There is no basis to depart from the literal and grammatical meaning of the section and to adopt the purposive interpretation to the section.  The first ground of appeal therefore lacks merit.

In the second ground of appeal, the appellants challenge the court a quo’s finding that s 12(C) (1) of the Labour Act does not also require the employer to consult the works council. The retrenchment of the appellants was in 2019.  Section 12C (1) provided as follows:

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

give written notice of his or her intention—

to the works council established for the undertaking; or

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 ………….” (Own emphasis)

It is clear that the section does not require the employer to consult the works council.  The employer is required to notify the works council. The import of appellants’ submissions is that, the court a quo, in interpreting the provision should have replaced the phrase “give written notice” with the word “consult”.

The remarks made above regarding the interpretation of s 25A (5) of the Act apply with equal force to the interpretation of s 12C.  A court can only rely on other cannons of interpretation where reliance on literal interpretation of a provision leads to an absurdity. Further, it should avoid usurping the functions of the legislature.

The court  a quo made the following finding on s 12C:

“The current s 12C was introduced by Act 5 of 2015. It provides for the retrenchment of “one or more employees”. Clearly the legislature re-wrote the retrenchment law by abolishing the distinction between groups of retrenches according to their number. All retrenchments are now covered by the current s 12C. To that extent s 12A (5) [sic] has been “retrenched” by the amendments. Section 12C does not require consultation with the works council by the employer. It simply requires notification. I read into the amendments an intent by the legislature to retreat from the rigors of the previous retrenchment regime.”

As correctly remarked by the court a quo, the history of s 12C is reflective of the intention of the legislature.  The Labour Relations Amendment Act, 2002, repealed the old s 12 and introduced s 12C.  The newly inserted s 12C (1) prescribed the course to follow for the retrenchment of five or more employees. Section 12C (2) provided that a works council would attempt to secure an agreement between the employer and employees concerned or their representatives as to whether or not the employees concerned should be retrenched. The Labour Relations Amendment Act further inserted s 25A after the existing s 25.  The insertion of s 25A in subs (5) (f) introduced the current proviso in dispute.

The Labour Relations (Retrenchment) Regulations, 2003 (Statutory Instrument 186 of 2003) in s 3(1) reiterated that the retrenchment of five or more employees must be effected in conformity with s 12C of the Act.  Given that s 12C and 12D only regulated the retrenchment of five or more employees, SI 186 of 2003 was specially promulgated to govern the retrenchment of less than five employees in terms of s 3(2) of the Regulations.

The Labour Amendment Act, 2015 repealed the old s 12C and substituted it with a revised 12C wherein subs (1) explicitly governed the retrenchment of any one or more employees. Section 12C was also amended to repeal subs (2) which provided for discussions between the employer and employees concerned or their representatives with respect to whether or not the employees should be retrenched. The news 12C (2) only required notification and not consultation.

It is pertinent to note that the Labour Act was further amended by the Labour Amendment Act, 2023 which was enacted on 14 July 2023.  Section 12C (3) of the Act provides for notification and not consultation. The section provides that:

“(3) An employer who intends to retrench any one or more employees or has negotiated with his or her employees a retrenchment package better than the minimum retrenchment package (hereafter called the “agreed retrenchment package”) shall—

(a) give fourteen days written notice—

(i) of the intention to retrench in the absence of an agreed retrenchment package to the works council established for the undertaking or, if there is no works council established for the undertaking concerned or if a majority of the employees concerned agree to such a course, to the employment council established for the undertaking or industry; and

(ii) of such intention or the agreed retrenchment package, as the case may  be, to the Retrenchment Board; and

(iii) of the intention to retrench in the absence of an agreed retrenchment package to the employee or employees concerned;”.

The Legislature was therefore not mistaken but deliberately retained the provision that all that the employer is still required to do is to give notice to the works council and not to consult the Works Council.  Had the intention been otherwise, it would have expressly provided in s 12C (3) for consultation.  In fact, s 25A (5) has been retained as it was in the Act in 2019.

It follows that s 12C is precise and unambiguous. It is not necessary to use the purposive interpretation in interpreting the provision. The second ground of appeal is therefore also without merit and must be dismissed.

DISPOSITION

The Legislature has consistently provided in s 25A (5) and s 12C that the employer need only notify the works council of its intention to retrench its employees if they are five or more. The employer is not required to consult the Workers Council.

The provisions are precise and unambiguous. It is therefore not necessary to rely on any tool of interpretation other than the literal interpretation. The court a quo was correct in finding that the provisions were clear and the Designated Agent had erred in its decision.

Accordingly, it is ordered as follows:

“The appeal be and is hereby dismissed with costs.”

GUVAVA JA		:			I agree

MAKONI JA		:			I agree

Matika, Gwisai & Partners, legal practitioners for the appellants.

Kantor & Immerman, legal practitioners for the respondent