This
is an appeal against the whole judgement of the Labour Court, Harare,
handed down on 6
March 2015.
BACKGROUND
The
appellant was employed by the respondent as a Finance Manager in the
year 2010. When the events that gave rise to this matter occurred, in
October 2012, he was the Acting Chief Finance Officer.
On
3 October 2012, the appellant received a phone call which was later
followed up by an email from Tetrad Investment Bank Limited (Tetrad).
In both instances, a request was made of him to write a letter of
undertaking. The letter was to be written on the respondent's
letter head. The e-mail reads:
“DD
Mining letter of undertaking…,.
Above
supplier holds an order from yourselves which we have financed. We
would be grateful if you could sign the attached letter of
undertaking to pay to Tetrad on your letterhead.”
The
email was written by one Toddy Muchongwe, General Manager, Corporate
Banking at Tetrad and was addressed to the appellant. The body of the
draft letter of undertaking that was attached to the email reads:
“Undertaking
to direct all payments to Tetrad account number…,.
Acting
under instructions received from…, and pursuant to an ongoing
contract/arrangement between ourselves and…, where we regularly
place orders of varying quantities of…, which we receive on
account, we hereby irrevocably and unequivocally undertake to direct
all payments as they fall due to the account held in your books for
all goods received in good order and accepted by ourselves.
The
details of the account to which all payments will be directed are as
follows:
Account
Name:
Account
Number:
Branch:
We
also undertake that there will not be a variation to the payment
account unless we have received written instructions from Tetrad
Investment Bank authorising such a variation.
Should
any circumstances arise to prevent or unduly delay the transfer of
any funds due for payment into the said account necessary advices
shall be given to the bank and in the absence of such advices the
bank shall be entitled to follow up and obtain any confirmations from
ourselves as may be deemed necessary.
This
letter is not transferable and will remain valid for as long as there
are outstanding payments for goods received from…, or unless
otherwise cancelled by the bank and written confirmation has been
received.”
Also
attached to the email, together with the draft letter of undertaking,
was a purchase order purporting to emanate from the respondent
company to DD Mining and General Suppliers (Pvt) Ltd for an item
described as “CE-125 PERIPHERAL PUMP” with a grand total value of
“125,625=02.”
The
appellant allegedly consulted his immediate superior, one Simbisayi
Wilfred Munemo, who gave him authority and the appellant proceeded to
put the Tetrad draft on the respondent's letter head and he signed
it. The appellant filled in the blanks in the draft Letter of
Undertaking. Having done this, the letter now reflected that the
writer was “acting under instructions received from DD Mining
General Suppliers and pursuant to an ongoing contract/arrangement
between ourselves and DD Mining and General Supplies.” He filled in
the account name as “DD Mining and General Supplies.” He also
filled in the account number and the branch name. He also filled in
the blank in the last paragraph of the draft letter with the name “DD
Mining and General Supplies”. The letter was sent to Tetrad.
Thereafter, Tetrad phoned the appellant's superior to confirm that
the letter of undertaking was in order.
In
September 2013, the appellant and his immediate superior were called
by the police to give statements in relation to an alleged fraud
relating to the financing arrangement of DD Mining and General
Supplies by Tetrad. The immediate superior apparently stated that he
had consulted with the Chief Executive Officer who saw nothing amiss
about the appellant's conduct in the Letter of Undertaking.
In
January 2014, the respondent company's auditor was called by the
police in connection with pending fraud cases relating to the
respondent. At the meeting, the auditor was briefed about the Letter
of Undertaking that was written to Tetrad. The auditor briefed the
then Acting Chief Executive Officer who then raised two charges of
misconduct against the appellant.
The
appellant was charged by the Acting Chief Executive Officer with
fraud and also with acting in a manner that is inconsistent with the
fulfilment of express or implied conditions of his contract of
employment as defined in sections 4(d) and 4(a) respectively, of the
Labour (National Employment Code of Conduct) Regulations, 2006,
S.I.15 of 2006. The letter of suspension stated, inter
alia,
that -
“The
Company (Marange Resources Private Limited) (sic) became aware, in
January 2014, that on 3 October 2012 you wrote and issued a letter of
undertaking to Tetrad Investment Bank Limited on behalf of DD Mining
and General Supplies. It is a common cause fact that you were fully
aware that the basis upon which the letter of undertaking was made
had nothing to do with Marange Resources (PVT) LTD. It is common
cause and clearly known by you that the purchase order upon which you
acted upon (sic) bears no resemblance to the Marange resources (PVT)
LTD order book/form. In your position you clearly know that Marange
Resources (PVT) LTD does not trade as Marange Diamond Fields but you
proceeded to commit the company to be tied to such an order and the
associated transaction that occurred. It is further common cause fact
that you were fully aware that at no time in the history of Marange
Resources (PVT) LTD that DD Mining and General Supplies had conducted
business with Marange Resources (PVT) LTD.”
With
specific reference to the charge preferred against the appellant in
terms of section 4(a) of the Labour (National Employment Code of
Conduct) Regulations, 2006, S.I.15 of 2006 (any act or conduct
inconsistent with the fulfilment of the express or implied conditions
of his contract of employment), the letter further stated:
“…,
your position has a contractual and legal duty to act and conduct
yourself honestly and solely in the interests of the Company. You
wrote and issued a letter of undertaking that bound the Company to a
financial transaction which had nothing to do with the Company. You
breached the express and implied term of your contract of employment
in relation to trust and integrity. You occupy a position of trust
and your act and conduct in this matter was inconsistent with the
above as you breached the trust bestowed upon you by the Company to
manage and protect its interests. Your act and conduct in this matter
has demonstrably lacked integrity to an extent of putting the company
to serious risk, disrepute and irreparable damage.”
The
matter went before a Disciplinary Committee which found the appellant
guilty of the latter charge, conduct inconsistent with express or
implied provisions of the contract of employment. The appellant was
consequently dismissed from employment.
Dissatisfied
with his dismissal, the Appellant referred the matter to a Labour
Officer for conciliation in terms of section 8 of the Labour
(National Employment Code) Regulations, 2006, S.I. 15/2006 (the
National Code of Conduct). The matter was heard by a labour officer
in terms of section 93 of the Labour Act. Following unsuccessful
conciliation, the matter was referred to arbitration in terms of
section 98 of the Labour Act.
The
arbitrator agreed that an infraction had indeed been committed by the
appellant and confirmed his conviction. He however set aside the
penalty of dismissal and replaced it with a final written warning
valid for 6 months and he reinstated the appellant.
Disgruntled
with the arbitral award, the respondent appealed to the Labour Court.
Equally dissatisfied with the award, the appellant also filed a
cross-appeal on eight grounds. These grounds of appeal are not
material to the determination of this appeal.
The
Labour Court upheld the main appeal and dismissed the cross appeal.
The arbitral award was set aside and substituted with the following;
“The
penalty of dismissal of the respondent be and is hereby confirmed and
the reinstatement of the respondent be and is hereby set aside.”
THIS
APPEAL
This
is the finding that is the subject of this appeal. Two issues arise
from the lengthy grounds of appeal relied on by the appellant. These
are:
1.
Whether or not the Labour Court was correct in confirming the finding
of guilty on the second charge preferred.
2.
Whether or not the Labour Court had a basis on which to interfere
with the decision of the arbitrator on the issue of the appropriate
sentence.
I
now deal with these questions seriatim.
1.
Whether or not the Labour Court was correct in making a finding of
guilty on the second charge preferred
The
appellant maintains that the finding by the disciplinary hearing that
he is guilty of “any act or conduct inconsistent with the
fulfilment of the express or implied conditions of one's contract
of employment” was erroneous as there was no evidence to justify
such a finding.
It
is common cause that, at the material time, the appellant was the
Acting Chief Finance Officer of the respondent. Although the
appellant's contract of employment was not produced at any stage
and is not part of the record, it is trite that all contracts of
employment contain both express and implied provisions. Every
contract of employment is hinged on a relationship of trust between
the employer and the employee. This relationship of trust is an
implied provision in any employment contract even if it may not be
expressly stated. In signing a contract of employment, an employee
undertakes to carry out the express and implied mandate of the
employer.
It
is an essential principle in employer and employee relationships that
an employee has a duty to safeguard the interests of the employer.
In
casu,
the appellant's position, as the Acting Finance Officer, imposed on
him the duty to exercise due care and diligence. During the
disciplinary hearing the appellant reportedly conceded and confirmed
that it was his duty and role to advise the respondent company's
Finance Department.
This
Court has, on a number of occasions, pronounced on an employee's
conduct that is inconsistent with the express or implied conditions
of the contract of employment. One such case is Standard
Chartered Bank Zimbabwe Limited v Michael Chapuka
SC125-04 where the following is stated…,:
“Conduct
which is found to be inconsistent or incompatible with the fulfilment
of the express or implied conditions of a contract of employment goes
to the root of the relationship between an employer and an
employee…,.”…,.
The
Appellant conceded that the letter that gave rise to the litigation
between the parties was written at Tetrad's bidding and initiative.
The contents of the letter were authored by Tetrad. The appellant was
an employee of the respondent and not of Tetrad. The appellant's
conduct, in writing the letter and signing it, amounts to him acting
in pursuance of the interests of a third party; which third party is
not included in the employer-employee relationship that he had with
the respondent. This is so because by appending his signature to the
letter of undertaking, the appellant vouched for the truthfulness of
the contents of the letter. He vouched for the correctness of the
allegations in a letter that did not emanate from or benefit his
employer. In addition, he did this without ascertaining the truth of
the contents of the letter in circumstances where other departments
of the respondent company would have been in a position to advise him
accordingly.
It
is undisputed that the appellant did not verify the contents of the
letter in question, in particular, that there was an ongoing contract
between the respondent and DD Mining and General Supplies. Appending
a signature to a letter that communicated what had not been verified
by the appellant was not only negligent conduct on his part but it
also exhibited a lack of the diligence that would be expected of an
employee of his level, and, in fact, of every employee of whatever
level. The best interests of an employer can only be achieved if
employees diligently verify any undertaking that binds their
employer. As was aptly stated in the Namibian case of Helao
Nafidi Town Council v Shivolo
[2016] NAHCMD [2016]…,:
“The
drift of Roman-Dutch and English authority is to the effect that the
employer-employee relationship imposes a duty on the employee to act
in the employer's best interest. The employee has a duty not to
work against the employer's interests. The
duty arises even though there is no express term in the contract of
employment to that effect.
As has been aptly stated in Lesotho Highlands Development Authority v
Sole, the liability for breach of a fiduciary duty is not necessarily
delictual or contractual but sui generis and will depend on the
particular circumstances of each case. At the core is the principle
that a person placed in a fiduciary duty will be in breach of his/her
duty by failing to act bona fide in the interests of the
employer.”…,.
The
question arises whether, despite the alleged assent by his superior,
the appellant ought to be said to have not acted in the best
interests of the employer when he signed the letter of undertaking
without verifying its contents.
The
answer ought to be in the negative.
By
failing to verify the contents of the letter of undertaking before
appending his signature, the appellant did not act in the interests
of the employer. It was his signature that was to be appended on the
letter and not that of his superior. There was therefore a duty on
him to verify the contents that he signed for. In any event, it was
not the appellant's case that his superior verified the contents of
the letter of undertaking.
The
fact that the appellant sought, and obtained, approval from his
immediate superior did not take away from him the duty to verify
information that had the effect of binding his employer. The
immediate superior's approval did not amount to verification of the
content of the letter.
The
following excerpt from the Disciplinary Authority's determination
is apposite insofar as it reflects how it arrived at and justified
the finding of guilty:
“2.
With respect to section 4(a), the Respondent is a Senior Manager who
acknowledges that he also has an advisory role to his Supervisors and
he should have conducted himself honestly and diligently in the
interest of the organisation:
2.1
He ought to have verified that Marange Resources had an existing
order and Contract with DD Mining;
2.2
The letter of undertaking should have had Marange Resources
References; The respondent merely printed a document without applying
his mind to it;
2.3
The fact that Mr Munemo knew about this transaction does not make it
right, and it does not absolve Mr Munemo of answering charges if the
company chooses to do so;
2.4
The Respondent should take full responsibility for the letter of
undertaking and its consequences. He cannot run away from his
signature…, the act of the respondent is tantamount to gross
negligence, in writing a Letter of Undertaking on behalf of Marange
Resources without verifying facts from other departments. In his
evidence, he failed to take Responsibility for what the letter was
stating.”
Viewed
in the light of the above, the confirmations by the arbitrator, and,
subsequently, by the court a
quo,
of the verdict of guilty by the Disciplinary Authority cannot be
faulted.
In
the result, the appellant was therefore correctly found guilty of the
misconduct of an act or conduct inconsistent with the fulfilment of
the express or implied conditions of his contract of employment. The
court a
quo
thus correctly found that it could not interfere with the finding of
guilty with which the appellant was aggrieved. It was incumbent upon
the appellant to ensure the truth of what he was signing for and in
this he failed.
2.
Whether or not the court a
quo
had a basis to interfere with the decision of the arbitrator on
sentence
It
is settled in our law that an Appellate Court must be slow in
interfering with the discretion exercised by a lower court. It must
appear that some error has been made in exercising the discretion. If
the primary court acts upon a wrong principle, if it allows
extraneous or irrelevant matters to guide or affect it, if it
mistakes the facts, if it does not take into account some relevant
considerations, then its determination should be reviewed and the
Appellate Court may exercise its own discretion in substitution,
provided always it has the material for so doing. See Barros
& Anor v Chimphonda
1999 [1] ZLR 58 [S]…,.
The
Labour Court sat as an appellate tribunal. The only basis on which it
could have interfered with the decision of the arbitrator is if the
arbitrator did not show a basis for interfering with the discretion
to dismiss that was exercised by the employer. As stated in Geza
v ZFC
1998 (1) ZLR 137 (SC), appeal courts should not lightly alter
penalties of dismissal without showing that there was gross
unreasonableness, mala
fide
or capriciousness.
In
considering the appropriate penalty to impose on the appellant, the
disciplinary authority stated, inter
alia,
that the conduct of that appellant went to the root of the contract
of employment. Furthermore, that, in terms of the law, once it is
proved that the conduct complained of goes to the root of the
contract of employment, the penalty to be imposed lies squarely at
the disposal of the employer. The appellant's plea for a written
warning was found not to meet the justice of the case. On the
strength of authorities of the Supreme Court cited in the
Disciplinary Authority's determination, the appellant was dismissed
from employment.
See
Innscor v Letron Chimoto SC06-12; Mashonaland Turf Club v George
Mutangadura SC05-12; ZB Financial Holdings v Maureen Manyarara
SC03-12.
In
considering whether the dismissal of the appellant was lawful, the
Arbitrator opined that as the appellant was a first offender, a
correctional penalty was the most appropriate. He referred to a
judgement of the Labour Court, NEI
Zimbabwe (Pvt) Ltd v Makuzva
LC/H/248/04 and quoted the following excerpt:
“I
am convinced that in providing for section 12B(4) in the Act, the
Legislature meant to ensure that employers do not rush to dismissals
merely because the acts of misconduct were dismissible…, any
disciplinary action taken must be largely corrective and reasonable.”
The
Arbitrator proceeded to state that the same principle is echoed in
section 7(1) of the National Code of Conduct which provides as
follows:
“(1)
In general, disciplinary action should, in the first instance, be
educational and then corrective. Punitive action should only be taken
when the said earlier steps have proved ineffective.”
He
further stated that this principle should have been a guiding factor
in the exercise of the respondent's discretion. Furthermore, that
the respondent had, in any event, not suffered any prejudice and that
there was nothing on the record to show that the appellant's
mitigating factors were reasonably assessed and taken into account.
He also opined that as the contract of employment was not produced
during the disciplinary hearing, the respondent's stance that the
misconduct went to the root of the contract was unreasonable as it
was based on an inference. He proceeded to highlight that that the
respondent was aware that the appellant had written the Letter of
Undertaking after receiving a call and an email from Tetrad and that
there was no finding of proof of any sinister motives linked to the
Letter of Undertaking. He therefore found that the merits of the case
do not warrant a penalty of dismissal. He proceeded to set aside the
dismissal penalty, and, instead, imposed one of a final written
warning valid for six months.
The
Labour Court set aside the Arbitrator's penalty of a final written
warning and confirmed the appellant's dismissal. It referred to the
case of Circle
Cement (Pvt) Ltd v Chipo Nyawasha
SC60-03 in which it was stated that once an employer takes a serious
view of the misconduct committed by an employee to the extent that it
considers it a repudiation of the contract, which repudiation it
accepts by dismissing the employee, then the question of a penalty
less severe than dismissal will not arise for consideration.
The
court a
quo
correctly found further guidance in the case of ZB Financial Holdings
v Maureen Manyarara SC03-12 where it was stated that even where
mitigating factors are taken into account, this would not necessarily
assist an employee where the employer considers the misconduct as one
that is so serious as to go to the root of the contract of
employment.
The
undisputed fact is that the appellant wrote a letter to Tetrad
claiming that he was acting under instructions from DD Mining and
General Supplies which had an ongoing contract or arrangement with
the respondent in terms of which the respondent regularly placed
orders. At p 5 of the judgement of the court a
quo
the learned judge aptly stated:
“The
crux of the matter is said to be that the respondent gave false
information in the letter of undertaking that there was an on-going
contract between the appellant and DD Mining and that he was acting
under instructions from DD Mining.”
By
his conduct, in writing the Letter of Undertaking that had
falsehoods, the appellant abandoned his duty of safeguarding the
interests of the respondent. He did not verify the truthfulness of
what he was signing for and thereby binding the respondent, as its
representative, in his capacity as the Acting Chief Finance Officer.
The
alleged or purported authorisation does not avail the appellant any
relief in this regard. Furthermore, Tetrad did not write the letter
on behalf of the appellant. The appellant wrote it and appended his
signature thereto. The fact that the content of the letter was
suggested by Tetrad does not take the appellant's case any further.
By his admission, that he was told what to write in the letter, the
appellant, in essence, admitted that he had abandoned the interests
and the instructions of the respondent - his employer.
The
appellant signed the letter of undertaking without due diligence,
thereby disregarding his duty to his employer. He committed an act
and conducted himself in a manner that is inconsistent with express
or implied terms of his contract of employment. This Court's
statement, in the case of Toyota
Zimbabwe v Posi
2008
(1) ZLR 173 (S), is apposite:
“It
is a common law position that commission by an employee of conduct
inconsistent with the fulfilment of express or implied conditions of
the contract of employment entitles the employer to dismiss him if
the circumstances of the commission of the offence show that the
continuance of a normal employer and employee relationship has in
effect been terminated.
Standard
Chartered Bank Zimbabwe v Chapuka
SC125-04.”…,.
The
contention by the appellant that his conduct cannot be so viewed
because the contract of employment was not produced during the
hearing only goes to confirm the appellant's unsuitability for
continued employment with the respondent.
It
is settled that the decision on what penalty to impose on an employee
is an exercise of discretion by the employer. That discretion,
however, must be exercised judiciously.
The
arbitrator's finding that the employer had not exercised this
discretion judiciously was not founded on any valid consideration.
The arbitrator seemed to labour under the mistaken belief that
mitigating factors, as provided for in section 12B(4) of the National
Code of Conduct, have the effect of altering the common law position
that allows an employer, who views an employee's misconduct as one
going to the root of their employment agreement, to exercise its
discretion and terminate the relationship.
The
following excerpt from Standard
Chartered Bank Zimbabwe Limited v Michael Chapuka
SC125-04…, now quoted more fully, is of assistance in the proper
determination of matters of this nature:
“Conduct
which is found to be inconsistent or incompatible with the fulfilment
of the express or implied conditions of a contract of employment goes
to the root of the relationship between an employer and an employee,
giving the former a prima
facie
right
to dismiss the latter.
In Clouston
& Co Ltd v Corry
[1906] AC 122 LORD JAMES OF HEREFORD remarked by way of a dictum
at p129:
'Now,
the sufficiency of justification depends upon the extent of
misconduct. There is no fixed rule of law defining the degree of
misconduct which will justify dismissal. Of course, there may be
misconduct in a servant which will not justify the termination of the
contract of service by one of the parties to it against the will of
the other. On the other hand, misconduct
inconsistent with the fulfilment of the express or implied conditions
of service will justify dismissal.'”…,.
Further,
at pages 8–9 of the judgement the following is also stated:
“In
my judgment, what was said by the Tribunal about the effect of the
misconduct committed by Chapuka against Standard Chartered would not
have been sufficient to justify interference with the judgment of the
Appeals Board. The relevance of the statement by the Tribunal that
the intention of Chapuka in committing the misconduct was not to
defraud Standard Chartered and that
no prejudice was suffered by Standard Chartered as a result of his
acts is open to doubt, because the alleged intention of a fraudulent
employee cannot be taken as a standard with which to determine
whether an employer acted reasonably in taking the view that the
misconduct was so serious in nature as to justify dismissal.”…,.
For
the reasons discussed above, the decision of the court a
quo
cannot be faulted.
In
the result, the appeal fails in its entirety. Costs will follow the
cause. It is therefore ordered as follows:
The
appeal is dismissed with costs.
