This is an appeal against a judgment of the Labour Court dismissing an appeal against an award rendered by an arbitrator. That arbitral award quantified the damages payable to the appellant pursuant to an earlier award ordering his reinstatement into the service of the respondent.
Background
The respondent is a statutory body established under the Agricultural and Rural Development Authority Act [Chapter 18:01].
The appellant was employed by the respondent in January 2008 as its Chief Executive Officer cum General Manager.
On 26 February 2009 he was sent on special leave, and, on 19 May 2009 he was notified by the respondent of its decision to terminate his employment.
The matter was then referred to an arbitrator.
On 26 January 2010, the arbitrator found that the appellant had been unlawfully dismissed and ordered his reinstatement with effect from the date of his purported dismissal. Thereafter, negotiations for reinstatement having failed, the matter was again referred to the arbitrator.
On 27 October 2010, the arbitrator quantified his award for damages in lieu of reinstatement. He based his award on a monthly salary of US$1,009 in accordance with documentary evidence furnished by the respondent. He then ordered the respondent to pay the following amounts:
$19,384 as back-pay and benefits from the date of dismissal to the date of his first award;
Cash in lieu of leave;
$60,540 being sixty months salary as damages for loss of employment;
A further $60,540 being sixty months salary as punitive damages for failure to reinstate; and
Interest at the prescribed rate on all of these amounts.
The appellant, being dissatisfied with the arbitrator's award, appealed to the Labour Court on several grounds pertaining to the question of his reinstatement, the date of termination of his employment, his correct monthly salary, and his entitlement to contractual benefits.
The respondent, in turn, cross-appealed, defending the propriety of its decision not to reinstate the appellant, and challenged the arbitrator's award of punitive damages and his failure to deduct certain amounts allegedly owed by the appellant to the respondent.
Decision Appealed
The court a quo dismissed the appeal and partially allowed the cross-appeal for the following reasons:
It found, having regard to the relevant correspondence, that, the possibility of reinstatement was not part of the arbitrator's mandate. The effective date of termination of employment was 4 February 2010, when the respondent opted to pay damages, and not when the Labour Court ruled against the appellant's reinstatement. The court also found that the arbitrator's reliance on a monthly salary of $1,009 was based on irrefutable evidence and more in accordance with reason, as compared with the figure of $5,000 claimed by the appellant.
As regards the appellant's claim for contractual benefits, no documentary or other evidence was placed before the arbitrator to substantiate that claim.
Again, his claim for punitive damages was neither placed before the arbitrator nor substantiated by any supporting evidence.
Similarly, the respondent's claim to deduct certain amounts owed by the appellant was not raised before the arbitrator.
In the event, the court a quo dismissed the appeal and allowed the cross-appeal to the extent of setting aside the arbitrator's award of punitive damages.
The issues raised in the notice of appeal herein are largely identical to those before the Labour Court and may be summarised as follows:
(i) Whether the question of reinstatement was an issue before the arbitrator, in addition to the quantification of damages in lieu thereof.
(ii) What was the effective date of termination of employment? (This issue was not pursued by counsel for the appellant and appears to have been abandoned).
(iii) What was the correct amount of the appellant's monthly salary?
(iv) Was the appellant entitled to his claim for contractual benefits?
(v) Whether the claim for punitive damages was properly before the arbitrator and correctly awarded by him.
Reinstatement and Quantification of Damages
At the hearing of this matter, counsel for the appellant largely focused his argument on the question of reinstatement.
He submits, that, damages are only payable if reinstatement is not tenable. This is not a matter for the employer's election, but, as envisaged in sections 89(2)(c) and 97(2) of the Labour Act [Chapter 28:01], a matter of fact to be alleged and proved by the employer.
There must first be an inquiry as to whether reinstatement is no longer tenable, and, the employee remains employed until that inquiry is finalised.
Despite the appellant's submissions on this point, the arbitrator proceeded on the basis that he was only dealing with quantification.
Similarly, although this was raised before the court a quo, it misdirected itself in not upholding this ground of appeal.
The matter should therefore be remitted to that court to determine this question.
Counsel for the respondent submits, that, section 89(2)(c) of the Labour Act does not give the Labour Court the power to order reinstatement without damages. The same applies to an arbitrator by virtue of section 98(9) of the Labour Act.
The alternative of damages in lieu of reinstatement must be stipulated.
This codifies the common law position enunciated in Hama v National Railways of Zimbabwe 1996 (1) ZLR 664 (S).
For the purposes of this case, it only becomes necessary to consider and interpret the provisions of the Labour Act adverted to by counsel if it is found that the question of reinstatement was properly and squarely before the arbitrator in the first instance.
If it was not, there would be little point in embarking on an abstract and academic exercise of no present significance.
In addressing this aspect, it is necessary to consider the relevant correspondence between the parties legal practitioners.
This shows, that, on 4 February 2010, the respondent opted to pay damages in lieu of reinstatement because “reinstatement is no longer tenable given the clear irretrievable breakdown of the relationship between the parties.”
It took the position that “the only course that remains open is the quantification of damages.”
The appellant's lawyers replied without prejudice on 8 February 2010.
They did not challenge the respondent's assertion of irretrievable breakdown, but, instead, noted “that your client is not willing to have ours reinstated. This then brings us to the issue of damages.”
They then indicated that their client's proposals on damages would be served shortly, and that, in the meantime, the respondent should pay all of the appellant's back-pay and benefits up to 4 February 2010 “when you made an election that our client would not be reinstated.”
There followed further correspondence, without prejudice, between the legal practitioners, extending from February to May 2010.
This evinced marked disagreement between the parties as to the appellant's monthly salary, and, consequently, his entitlement to back-pay and benefits as well as the quantum of damages payable in lieu of reinstatement.
Eventually, by letter dated 24 May 2010, the appellant made a stark turnabout and disagreed that reinstatement was no longer an option. In the absence of agreement between the parties, he called for the matter to be referred to the arbitrator for adjudication.
It is clear from the foregoing, that, the appellant had initially accepted the respondent's election and taken the position that his reinstatement was not in issue.
He was perfectly happy to proceed with the matter on the basis that his entitlement to the payments due be quantified, either by agreement or by arbitration.
The fact that this position was taken in a letter written without prejudice does not detract from its significance.
The ambit of protection from the admissibility of evidence conferred by the “without prejudice” rule is not unqualified.
Thus, an admission made in correspondence without prejudice is admissible where the facts sought to be established thereby do not relate to the substance of the negotiations contained in such correspondence: see Naidoo v Marine & Trade Insurance Co Ltd 1978 (3) SA 666 (A)…, and the authorities there cited.
In the instant case, what was being negotiated, without prejudice, by the parties, was not the appellant's reinstatement but his back-pay and benefits and the quantum of damages payable in lieu of reinstatement.
The appellant only resuscitated the question of reinstatement over three months later when the negotiations between the parties failed to produce any definitive agreement.
