APPEAL
FROM A DECISION OF THE LABOUR COURT
ZIYAMBI
JA:
[1]
It appears that the respondents named in the proceedings both in the Labour
Court and before this Court are L Tendere and 17 Others. The names listed in the proceedings differ
from those listed in Annexure A which is the list submitted by the Trade Union. Only 18 of the respondents listed in Annexure
A are named in these proceedings. This judgment relates to those 18
respondents. For avoidance of doubt
their names are listed in the addendum to this judgment.
[2]
The respondents are former employees of the appellant. In terms of an agreement
signed on 20 September 2012, the appellant sold its timber building supplies
division, T S Timbers, to Rutimba Housing (Pvt) Ltd (“Rutimba”), as a going
concern. It was expressly stated in the
agreement that the transfer of the undertaking would be on terms not less
favourable to the employees than those enjoyed by them as employees of the appellant. It was further stated that the transfer would
be effective from 1 June 2012.
[3]
Some 10 months later and on 9 July 2013, the respondents, then in the employ of
Rutimba, and acting through the Zimbabwe Federation of Trade Unions, (ZFTU), registered
a complaint with the labour inspectorate of the Ministry of Public Service Labour
and Social Welfare, alleging a case of 'alleged unlawful transfer of
undertaking'. Thereafter, on the 10 July
2013, the ZFTU wrote to the Minister of Labour requesting an investigation and
inspection of:
“a
transfer of undertaking alleged to have taken place between (TSL) CHEMCO
HOLDINGS and RUTIMA HOUSING between June and September 2012 in order to stop
the suffering the workers are being subjected to.”
They alleged:
“What
has prompted us to make this application is the way workers are being treated
by Rutima Housing. They are being arbitrarily dismissed, reshuffled and demoted
which is a contravention of section 16 of the Labour Relations Act Chapter
28:01.
Efforts
to engage Rutima Housing in an effort to look into the workers' grievances have
yielded nothing as the company is not forthcoming and does not attend hearings.
They have even attempted to have the employees sign new contracts commencing 1st
day April 2013 without terminating the existing contracts see Annexure B.
All
former TSL (CHEMCO) employees have had some allowances and conditions they used
to enjoy scraped (sic) without explanation and yet Rutima Housing has improved
conditions or increased salaries/wages for other employees except former CHEMCO
(TSL) Holdings employees…”
Clearly the grievance of the employees,
(the respondents), was against their new employer. However, that
notwithstanding, proceedings were instituted against their former employer, the
appellant.
[4] The matter was referred to
conciliation on the 21 July 2013 and a certificate of no settlement issued on
the 21 August 2013. It was then referred to an arbitrator for compulsory arbitration.
The arbitrator's terms of reference were
stated to be:
“(1)
Whether or not the transfer of undertaking by TS TIMBERS was lawful;
(2) To determine the appropriate remedy.”
The terms of reference contained an
inaccuracy. It is common cause that TS Timbers was a trading division of the
appellant and was sold to Rutimba in terms of the agreement. The terms
of reference incorrectly stated the
transfer to have been made by TS Timbers.
The transferor was the appellant.
[5]
The arbitrator found that the transfer was unlawful for failure to consult the respondents
before it took place. He said:
“The
effective date according to evidence at hand was the 1st of June
2012. For this reason alone based on the
claimants' grievance of not being consulted, the respondent was supposed to
consult the claimants regarding their status in line with the transfer.
The
minutes of the meeting held by the works council held on the 24 July 2012
cannot be taken seriously for the following reasons: -
i.
The meeting took place after the effective date of sale between the
purchaser and the seller.
ii. The minutes were not signed by the works
council thereby making them questionable and put the respondent to the
strictest proof regarding the authenticity of those minutes.
It
is absurd for an employer to consult employees after the transfer. The very act of unilateral act (sic) of
invoking section 16 of the Labour Act [CAP 28:01] by the respondent constitutes
unfair labour practice.”
He
awarded:
“AWARD
Wherefore
after reading documents filed of record and submissions of both parties it is
ordered that:
1. The
claimant's claim is hereby considered in the context that respondent Chemco
Holdings (Pvt) Ltd committed unfair labour practice and it is the opinion of
this tribunal that the respondent is severally liable for the employees. In
light of this, parties to negotiate quantum of terminal benefits due to the
claimants up to the date of unlawful transfer, failure of which either party to
approach this tribunal for quantification for of terminal benefits entitled to
the claimants.”
[6]
The appellant appealed, unsuccessfully to the Labour Court which upheld the
award.
[7]
The grounds of appeal before this Court raise three issues for determination. They are:
-
Whether the Arbitrator had the jurisdiction to make the determination referred
to him by the Labour Officer;
-Whether
the Arbitrator correctly found the appellant to have committed an unfair labour
practice;
-Whether
the award of terminal benefits to the respondents was competent;
Whether
the Arbitrator had the jurisdiction to make the determination referred to him
by the Labour Officer
[8]
It was submitted on behalf of the appellant that in making a declaration as to
the lawfulness or otherwise of the transfer the Arbitrator exceeded his
jurisdiction. Mr Chiwashira for the
respondent, however submitted that the arbitrator acted within his jurisdiction
and the appeal ought to be dismissed for lack of merit.
The
jurisdiction of an arbitrator appointed in terms of the Labour Act is confined
to determining disputes or unfair labour practices in terms of s 93 of the
Labour Act [Chapter 28:01] (“the
Act”). With regard to such disputes s
98(9) of the Act provides:
“(9) In hearing and
determining any dispute an arbitrator shall have the same powers as the Labour
Court.”
It
seems to me that the Arbitrator's error stemmed from the terms of reference
issued by the Labour Officer. In essence what was being requested of him was to
review the procedure by which the transfer of the undertaking was effected and
to make a declaration as to the legality of the transfer.
It has been held that the Labour Court does
not have the jurisdiction to issue a declaratory order. That jurisdiction is reposed in the High
Court. It follows that the
arbitrator did not have the jurisdiction to pronounce on the alleged lawfulness
or otherwise of the transfer.
[9] In any event, I hold the view that the
arbitrator's finding that the transfer of the undertaking was a nullity is
wrong. This finding was based on the
alleged lack of consultation with the works council before transfer of the
undertaking. The relevant provision in the Labour Act is s 25(5). It
provides:
“(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—
(a)
the
restructuring of the workplace caused by the introduction of new technology and
work methods;
(b)
product
development plans, job grading and training and education schemes affecting employees;
(c)
partial or total plant closures and mergers and transfers of ownership;
(d) …
(e) …
(f) …
(6) Before an
employer may implement a proposal relating to any matter referred to in
subsection (5), the employer shall—
(a) afford the members of the works council
representing the workers' committee a reasonable opportunity to make
representations and to advance alternative proposals;
(b) consider and respond to the representations
and alternative proposals, if any, made under paragraph (a) and, if the
employer does not agree with them, state the reasons for disagreeing;
(c)
generally,
attempt to reach consensus with the
members of the works council representing the workers' committee on any matter
referred to in subsection (5).
[Section inserted by section 15 of Act 17
of 2002]”.
[10]
The provision requires the employer intending to transfer ownership to afford,
to members of the works council representing the workers committee, an opportunity
to make representations and advance alternative proposals. The employer is placed under no obligation to
accept the proposals. He simply has to give reasons for disagreeing with them. No
power of veto is given by the statutory provision to the works council or to
the employees. That is to say, s 25 does
not authorise the works council or the employees to stop the transfer of
ownership. It does not nullify a transfer which has taken place in the absence
of consultation. It imposes no sanction
for non- compliance.
[11]
This may well be because the legislature has, in s 16 of the Labour Act,
provided adequate recourse for employees affected by a transfer of an undertaking.
In the end, the aim is to ensure that
the tenure and conditions of employment enjoyed by the employees under their
former employer are not reduced or diminished by the new employer without their
consent. Section 16 which is set out
below, provides that assurance.
[12] “16 Rights of employees on
transfer of undertaking
(1) Subject to
this section, whenever any undertaking in which any persons are employed is
alienated or transferred in any way whatsoever, the employment of such persons shall,
unless otherwise lawfully terminated, be deemed to be transferred to the transferee
of the undertaking on terms and conditions which are not less favourable than
those which applied immediately before the transfer, and the continuity of
employment of such employees shall be deemed not to have been interrupted.
(2)
Nothing in subsection (1) shall be deemed—
(b)….
(c) to
affect the rights of the employees concerned which they could have enforced
against the person who employed them immediately before the transfer, and such
rights may be enforced against either the employer or the person to whom the
undertaking has been transferred or against both such persons at any time prior
to, on or after the transfer;
(3) It shall be an unfair labour practice to
violate or evade or to attempt to violate or evade in any way the provisions of
this section.” (My emphasis)
[13]
Further, it is apparent from the record that the issue of non-consultation was
wrongly resolved in favour of the respondents.
The arbitrator appeared to be labouring under the view that the
consultation alleged to have been done by the appellant was done after the
transfer. By this he meant after the
effective date as set out in the agreement of transfer. That was his main reason for holding that the
consultation did not comply with s 25.
[14]
As stated above, the agreement of transfer was signed on 20 September 2012. The
date on which the contract was signed was the date on which its provisions took
effect. This includes the clause which
stated the effective date to be 1 June 2012. As at that date, it appears negotiations were
still in progress and, according to the appellant, its employees were being
consulted and advised of their rights.
[15]
In my view any consultation done before the agreement was signed on 20
September 2012 would have been done before the transfer.
2. Whether the Arbitrator correctly
found the appellant to have committed an unfair labour practice
[16]
The arbitrator was required to enquire
into the lawfulness of the transfer and the remedy. He found the transfer to be unlawful and void
and declared the appellant to be guilty of an unfair labour practice. In my
view he exceeded his terms of reference which terms did not require him to
determine whether or not an unfair labour practice had been committed.
[17]
In any event, as discussed above, unlike the position which obtains with a
breach of s 16, a failure to observe s 25 is not, in terms of the Act, an
unfair labour practice. Actions constituting unfair labour practice are set out
in ss 8 and 16(3) of the Act. There was
no finding, and indeed the record reveals no evidence, that the appellant had
violated, evaded, or attempted to violate or evade any of the provisions of s 16.
The award was premised solely on a finding of failure to consult in terms of s 25
of the Act. In my view, no unfair labour
practice was shown to have been committed by the appellant and the Labour Court
erred in law when it confirmed the finding by the arbitrator that the appellant
had committed an unfair labour practice.
3. Whether the award of terminal
benefits to the respondents was competent.
[18]
Quite clearly the respondents were transferred, with the undertaking, to
another employer. Their employment was
not terminated. In terms of the contract
and also by operation of s 16 of the Act, the respondents were transferred to
Rutimba on terms not less favourable than they enjoyed in the employ of the
appellant. At the very least, they were transferred on
the same terms. From the date of transfer,
they were employed by Rutimba to whom all grievances concerning their
employment were to be addressed. Rutimba,
the new employer, stepped into the shoes of the former employer for all
purposes.
[19]
The respondents continued in the employment of Rutimba and, as at the date of
their approach to the Labour officer for the institution of these proceedings,
were employees of Rutimba.
In
the letter of complaint addressed to the Department of Labour it was alleged:
“What has prompted us to make this
application is the way workers are being treated by Rutima Housing. They are
being arbitrarily dismissed, reshuffled and demoted which is a contravention of
s16 of the Labour Act [Chapter 28:01]”
Their submissions to the arbitrator as
articulated on 24 September 2013 by the Trade Union which represented them,
read, in part: -
“They (the respondents) had some
allowances scrapped and conditions changed by the new employer without
any explanation;
There was 'arbitrary dismissal of workers'
by the new employer;..”.
(My
emphasis)
[20]
Once the respondents moved from one employer to the other the latter, in terms
of both the contract and s 16 of the Act, assumed all responsibility for the
respondents. Rutimba, being the new employer, was obligated by s 16 to ensure
that the conditions of service enjoyed by the respondents were no less
favourable than those they enjoyed with their former employer, the
appellant. The respondents' cause of
action, if any, lay against Rutimba, not against the appellant.
[21]
While Section 16 (2) (c) of the Act grants the right to the respondents to
proceed against both the former and current employers, this right can only be
exercised in respect of a cause of action which arose, and could have been
enforced against the former employer, before the transfer of ownership took
place. However, in this case, the respondents'
alleged claim arose after the transfer of ownership. The option to proceed against their former
employer was therefore not available to them.
[22]
It follows from the above that no legal basis existed for the award made by the
arbitrator and the Labour Court erred in upholding the award which was
evidently wrong.
[23] The appeal is, therefore,
upheld. No order for the costs
of this appeal was prayed
in the Notice of Appeal and no order
of costs will be made.
[24] It is ordered as
follows:
1.
The appeal is allowed.
2.
The judgment of the Labour Court is set aside and substituted as follows:
“The
appeal is allowed with costs.
The
award of the arbitrator is set aside.”
GWAUNZA JA: I
agree
MAVANGIRA
JA: I agree
C
Kuhuni Attorneys, appellant's legal practitioners
L
Tendere & 24 Ors c/o J Mtausi, Zimbabwe Federation of Trade Unions, respondents' legal practitioners
A D D E N D U M
CHEMCO HOLDINGS (PRIVATE) LIMITED
v
L TENDERE & 24 ORS
LIST
OF RESPONDENTS
L
TENDERE 1st
RESPONDENT
ARGINERO
M 2nd
RESPONDENT
CHIHWIZA
J 3RD
RESPONDENT
GAKAKA
I 4TH
RESPONDENT
KUHUDZEWE
M 5TH
RESPONDENT
KWARAMBA
M 6TH
RESPONDENT
MACHANJA
R 7TH
RESPONDENT
MACHEKA
M 8TH
RESPONDENT
MAFUSINI
O 9TH
RESPONDENT
MAHARA
U 10TH
RESPONDENT
MAROWA
T 11TH
RESPONDENT
OLOMANI
S 12TH
RESPONDENT
MEYA
P 13TH
RESPONDENT
MISHI
H 14TH
RESPONDENT
MUCHEMWA
E 15TH
RESPONDENT
MUROIWA
G 16TH
RESPONDENT
MUTERO
K 17TH
RESPONDENT
WHITE
M 18TH
RESPONDENT
