This is an appeal against part of the judgment of the Labour Court (the court a quo) handed down on 26 January 2018. The appeal is against that part of the judgment which upheld the arbitrator's award granting the respondent's members an 11 percent wage increase.
FACTUAL BACKGROUND OF THE CASE
The facts giving rise to this appeal are by and large common cause. The undisputed facts are that the appellant is the owner of a group of companies whereas the respondent is a trade union representing employees of Gold Star, a trading division of the appellant.
The parties deadlocked during collective bargaining negotiations for wage increases for the period 1 January 2011 to 30 June 2011. The respondent was claiming a basic salary increase from US$157 to US$180 per month.
It did not claim any increase for housing allowance on behalf of its members.
On the other hand, the appellant objected to the respondent's members being awarded any increase pleading economic hardship.
Both parties proffered evidence before the arbitrator. Having carefully considered the evidence before him, he issued the following order:
“I herein award as follows:
(a) Basic salary is increased from US$157, by 11 percent, to US$174.27 per month for the lowest paid employee.
(b) Housing allowance is increased from US$50, by 11 percent, to US$56.50.
(c) The total award per lowest paid employee is US$230.77.”
In coming up with that award, the arbitrator took into account the employees basic needs and weighed them against the employer's economic hardship.
In exercising his discretion, he came to the conclusion, that, although the company was in economic dire straits, with proper management and re-alignment of its operations, it could afford an increase of 11 percent across the board for both wages and housing allowances.
This is what the arbitrator had to say at p2 of his award:
“The 2011 financial statement also showed a loss of US$16,375,557. Clearly, the fortunes of the company are not that bright. The cost of employment seems to be on the higher side, but, it appears the management salaries chew also a huge chunk. Those are some of (the) things that also need alignment. The other costs were for was sugar (sic) production which seems to be on the higher side.
However, the cost should be recovered from sale through proper pricing.”
In assessing the basic needs of the employees, the arbitrator accepted and took into account that it was common cause that rentals in the high density suburbs were pegged at US$60 to US$80 per month. He also found, that, it was common cause that groceries amounted to US$100 per month per person.
The arbitrator also took into account the comparative evidence placed before him, that employees in related sub-sectors earned a total of between US$250 to US$281 per month.
In conclusion, he remarked that…,.:
“For the avoidance of doubt, I have taken into consideration the harsh environment the employees are in and the company…,. However, had the company been performing, I would have awarded a US$300 basic salary increase and housing allowance of over US$100 - but that would be to bury the company.”
Aggrieved by the arbitrator's award, the appellant appealed to the court a quo with partial success.
Its complaints were that the arbitrator erred in relying on financial statements of the entire Group of companies instead of only on those of Gold Star.
It further complained that the arbitrator awarded the employees an increase in housing allowance which they had not asked for.
The court a quo upheld the appellant's complaint that the arbitrator had misdirected himself in awarding an increase in housing allowances which no one had asked for. It however dismissed the appellant's appeal against the award on wage increases of 11 percent.
The appellant's grounds of appeal raise a single issue for determination by this Court.
The sole issue for determination is whether or not the court a quo erred in upholding part of the award granting the employees an 11 percent salary increase.
ANALYSIS OF THE FACTS AND THE LAW
Whether or not the court a quo erred in upholding the arbitrator's award, of an 11 percent wage increase, is a question of fact.
It is trite and a matter of elementary law, that, for the appellant to succeed, it must prove, on a balance of probabilities, that, the award was so irrational in its defiance of logic such that no arbitrator properly exercising his or her discretion would have made such an award: see Hama v National Railways of Zimbabwe 1996 (1) ZLR 64 (S) and Sable Chemical Industries Ltd v Easterbrook 2010 (2) ZLR 342 (S)....,.
WHETHER THE ARBITRATOR'S AWARD WAS IRRATIONAL
We now turn to consider whether the arbitrator's award was irrational, as alleged by the appellant, or at all.
The appeal is premised on the argument that the award is irrational in that it was made in circumstances where the appellant was in financial distress and in no capacity to pay the salary increase of 11 percent as ordered by the arbitrator.
On the other hand, the respondent countered, that, the appellant was obliged to pay a decent living wage to its employees.
In argument, it was submitted, that, Zimbabwe, having ratified the United Nations instrument on the Universal Declaration of Human Rights 1948, it was bound by its provisions.
It is pertinent to note, that, Zimbabwe has not ratified this Universal Declaration of Human Rights. However, it is an instrument that is universally recognised and applied in this jurisdiction.
Article 23(3) of the Universal Declaration of Human Rights 1948 states that:
“Every person who works has a right to just and favourable remuneration ensuring for himself and herself an existence worthy of human dignity, and supplement, if necessary, by other means of social protection.”
Further reliance was placed on Article 11(1) of the International Covenant on Economic, Social and Cultural Rights 1966, which provides that:
“The States Parties to the present Covenant recognise the right of everyone to an adequate standard of living for himself and his family, including adequate food, clothing, and housing, and to the continuous improvement of living conditions. The States Parties will take appropriate steps to ensure the realization of this right, recognizing to this effect the essential importance of international co-operation based on free consent.”
The principles set out in the two instruments are of fundamental universal importance bidding the judiciary and tribunals to uphold and preserve human integrity and the dignity of workers.
Although acknowledging that the respondents are entitled to a living wage, the arbitrator found it imperative to balance the employees interests against the employer's capacity to pay the increased wages.
As alluded to elsewhere in this judgment, the arbitrator made a careful analysis of the facts before him and arrived at a delicate balance of the two competing interests before him. He finally came to the conclusion, that, although the appellant had made a loss, its employees were entitled to a modest 11 percent wage increase.
Comparative evidence proferred by the respondent shows that, even after the increase, its members were some of the least paid in the industry.
It appears that the appellant is labouring under a serious mis-apprehension that an employer who makes a loss cannot be ordered to pay its employees any increase in wages.
The mere fact that an employer is operating at a loss is no licence for it to pay slave wages not worthy of human dignity.
We are of the considered view, that, an employer operating at a loss may still be ordered to pay a reasonable wage increase to its employees to avoid them falling into destitution and loss of human dignity.
An employer who cannot pay decent wages pertaining to the industry has no business continuing to operate subjecting its employees to slave wages.
The appellant's plea of incapacity to pay lacks merit in circumstances where it was unable to rebut the respondent's allegation that its management were being paid huge salaries. It also failed to rebut the evidence to the effect that it could afford the increase if it were to shed excess labour in the form of casual labour.
It is also ironic that the appellant accuses the arbitrator of irrationality by suggesting that one of its subsidiaries, Country Choice, which made a profit, could prop up Gold Star. This is because Country Choice was already financially assisting another distressed unit of the respondent in Bulawayo.
This prompted the Arbitrator to remark, at p149 of the record of proceedings, that:
“The respondent submitted, that, its business is facing viability challenges since the inception of the US dollar in 2009 to the effect that its Bulawayo Plant was forced to close. The Bulawayo Plant's financial burdens are being incurred by the Harare Plant and Country Choice Foods….,.”
There is therefore no irrationality in the suggestion that Country Choice Foods could assist its distressed sister company financially.
DISPOSITION
In the result, we come to the conclusion, that, there is absolutely no merit in this appeal. Costs will follow the result.
It is accordingly ordered that:
1. The appeal be and is hereby dismissed with costs.
2. The appellant bears costs of the appeal.
