This
is an appeal against the judgment of the Labour Court dismissing an
appeal and review application instituted by the appellant against a
decision of the Retrenchment Board (the Board). The decision was
communicated to the parties on 28 April 2017.
Background
The
respondents were employed by the appellant in various capacities.
Their contracts were terminated on three months' notice in November
2015 without the payment of any terminal benefits. They lodged a
complaint with the Ministry of Labour on 6 September 2016. The
parties filed their submissions before a labour officer and the
matter was set down for hearing on 21 February 2017. On that date,
the appellant applied for the hearing to be rolled over to 7 March
2017. This request was granted. In the intervening period, at some
stage before the end of February 2017, the appellant filed an
application with the Board for an exemption from having to pay the
minimum retrenchment packages stipulated by statute.
On
3 March 2017, the Retrenchment Board (the Board) called the parties
to notify them that the matter had been set down for hearing on 9
March 2017. The hearing was conducted as scheduled on that day and
the Board then directed the parties to file further submissions. That
directive was duly complied with by the respondents on 15 March 2017
and by the appellant on 16 March 2017. The Board made its
determination on 30 March 2017 but only communicated that decision to
the parties on 28 April 2017. It ordered the appellant to pay to each
respondent the equivalent of one month's salary for every two years
served. Half of the respective amounts due was to be paid by 30 April
2017 while the remainder was to be paid over six months from May to
October 2017.
The
appellant then noted an appeal and an application for review to the
Labour Court. The court found in favour of the respondents which
prompted the present appeal.
Labour
Court Judgment
As
regards the substance of the Retrenchment Board's determination,
the court a
quo
noted that the appellant had previously applied to retrench some of
its workforce. At that time, in June 2015, there was a letter from
the Chairman of the appellant's Works Council intimating that the
proposed retrenchment was due to a change in the appellant's
business model and strategy. The issue of its financial incapacity
was only raised in 2017.
The
court a
quo
further noted that the appellant's audited financial statements
that were on record only went up to 31 December 2013. Moreover, its
un-audited financial statements for 2014, 2015 and 2016 were not on
record. Thus, when the Board sat on 30 March 2017 to decide the
application for exemption, the appellant's financial position was
not known. In those circumstances, the appellant, having failed to
demonstrate its inability to pay the retrenchment packages as at the
time when it applied for exemption, the Board's determination could
not be faulted as having been grossly unreasonable.
The
court a
quo
also rejected the appellant's argument that its application for
exemption must be deemed to have been granted by operation of law, in
terms of section 12C(3) of the Labour Act [Chapter
28:01]
because the Board had failed to respond to the application within 14
days after it was lodged. The court found that the provision did not
require the Board to determine the application within 14 days. What
was required was that the Board should respond to the application
within that period and it had effectively done so by calling the
parties on 3 March 2017 to appear for a hearing on 9 March 2017.
The
final issue raised before the court a
quo
was an attack against the Board for having awarded packages based on
a provision contrary to the Constitution of Zimbabwe. Since this
aspect was not elaborated by the appellant in its heads of argument
or oral submissions before the court, it was considered as having
been abandoned. In the event, the court dismissed with costs both the
appeal and the review application before it for lack of merit.
Grounds
of Appeal
The
first ground of appeal challenges the constitutionality of the
provision introduced by the Labour Amendment Act No.5 of 2015
stipulating the retrospective payment of minimum retrenchment
packages to employees who were dismissed on notice.
At
the hearing of the appeal, counsel for the appellant conceded that
this ground could not be persisted with in light of the decision of
the Constitutional Court in Greatermans
Stores (1979) (Pvt) Ltd & Ors v Minister of Labour
CC02-18. She quite correctly agreed to abandon this ground.
The
second ground of appeal relates to the argument that the appellant's
application for exemption must be deemed to have been granted by
operation of law because the Retrenchment Board's response was made
more than 14 days after receiving the request for exemption. This
ground hinges on the correct interpretation of section 12C(3) and
related provisions of the Labour Act.
The
third and fourth grounds of appeal are intimately inter-related and
will be treated and dealt with accordingly. They pertain to the
appellant's financial capacity to pay the minimum retrenchment
packages. In essence, the appellant's position is that it placed
authentic evidence before the Retrenchment
Board
to demonstrate its financial incapacity and that the Board, without
demanding further proof in that regard, made a determination that was
grossly unreasonable in light of all the evidence placed before it.
Deemed
Grant of Exemption by Operation of Law
Section
12C of the Labour Act, which was introduced by section 5 of the
Labour Amendment Act No.5 of 2015, regulates the process of
retrenchment and compensation for loss of employment on retrenchment
or in terms of section 12(4a), i.e.
upon termination on notice. In subsections (3) and (4), which are
relevant for present purposes, it states as follows:
“(3)
Where an employer alleges financial incapacity and consequent
inability to pay the minimum retrenchment package timeously or at
all, the employer shall apply in writing to be exempted from paying
the full minimum retrenchment package or any part of it to -
(a)
The employment council established for the undertaking or industry;
or
(b)
If there is no employment council for the undertaking concerned, to
the Retrenchment Board; which
shall respond to the request within fourteen days of receiving the
notice (failing which response the application is deemed to have been
granted).
(4)
In considering its response to a request for exemption in terms of
subsection (3) the employment council or Retrenchment Board -
(a)
Shall, where the employer alleges complete inability to pay the
minimum retrenchment package, be entitled to demand and receive such
proof as it considers requisite to satisfy itself that the employer
is so unable, and, if so unable on the date when the notice of
termination of employment takes effect, may propose to the employer a
scheme to pay the minimum retrenchment package by instalments over a
period of time;
(b)
Shall, where the employer offers to pay the minimum retrenchment
package by instalments over a period of time, consider whether the
offer is a reasonable one, and may propose an alternative payment
schedule;
(c)
May inquire from the employer whether he or she has considered, or
may wish to consider, specifically or in general, the alternatives to
termination of employment provided for in section 12D.”
The
crisp issue for determination in
casu,
as I perceive it, is this: Do the words 'respond' and 'response',
as used in section 12C(3) as read with section 12C(4) of the Labour
Act, mean “definitively decide or determine” within the
prescribed period of 14 days, or do they mean something entirely
different in keeping with the ordinary usage of those words?
Counsel
for the appellant submits that to respond, in the context of section
12C, is to give a final answer or determination. The intention is to
ensure that every application for exemption is determined
expeditiously. Section 12C(4) highlights the factors that have to be
considered before delivering a response, i.e.
a final determination under section 12C(3).
The
language of the latter provision is peremptory and the courts cannot
allow any extension of the stipulated 14 day period.
In
the instant case, the final determination was made well beyond that
period, and, therefore, the exemption sought by the appellant must be
deemed to have been granted by operation of law.
Counsel
for the respondents submits that the ordinary meaning of respond is
that the Board must communicate its receipt of the application for
exemption.
Section
12C(4) allows the Board to demand further proof and consider other
matters. It is clear that a response means something other than a
final determination. In any event, a 14-day period is simply not
enough for all the necessary processes and decisions to be concluded.
Counsel
for the respondents also notes that the appellant responded on 16
March 2017 to the Board's directive for further submissions to be
made. The appellant thereby accepted that the directive complied with
the law. If it believed that its application had been granted, it
ought to have protested and refused to comply with the directive.
Furthermore, the appellant itself delayed its submissions to the
Board, and, therefore, cannot complain that the Board failed to
comply with the law.
The
word 'respond', in its ordinary connotation, means “to say or
do something as a reaction to something that has been said or done”
(per
the Cambridge English Dictionary). The word clearly does not denote
anything akin to a final or definitive decision on anything raised by
one person for a response to be given by another. Rather, it
signifies an exchange of words or conduct between one or more
individuals.
In
the present context, the ordinary meaning of 'respond'
necessitates that the Retrenchment
Board
should react to an application for exemption within 14 days.
In
considering its response, the Board is vested with the power to
demand and receive such proof as it considers requisite to satisfy
itself that the employer concerned is completely unable to pay the
minimum retrenchment package. It is also entitled to propose a scheme
to pay the package by instalments or an alternative payment schedule
and to request the employer to consider other available alternatives
to termination of employment.
My
reading of section 12C(4) is that it provides a guiding template for
the Board in considering its response to an application for
exemption. In my view, it does not, as is contended on behalf of the
appellant, operate to transmute the ordinary meaning of 'respond'
into one necessitating that the Retrenchment
Board
make a final and definitive determination within 14 days.
It
is trite that the words used in any statutory enactment must be given
their plain and grammatical signification, unless to do so would lead
to some manifest absurdity, inconsistency, or repugnancy.
The
interpretation of sections 12C(3) and 12C(4) that I am inclined to
adopt is entirely concordant with the plain meaning of the words
'respond' and 'response' as used in those provisions. It
certainly does not entail any absurd, inconsistent or repugnant
eventuality or outcome.
On
the other hand, the interpretation advanced on behalf of the
appellant would lead to several possible absurdities and anomalies.
First
and foremost, it would require the Retrenchment
Board
to analyze and evaluate all the relevant facts and figures pertaining
to the solvency of the employer and the relevant records of the
employees affected within a very short span of two weeks. Secondly,
the employer himself would be constrained to provide the requisite
proof of its inability to pay, if such is demanded by the Board, and
may well fail to do so to the satisfaction of the Board within that
short period. By the same token, he would certainly need more than
two weeks to meaningfully consider and react to any alternative
payment scheme or schedule or possible alternatives to termination of
employment that might be proposed by the Board.
In
the final analysis, I take the view that the legislature could not
possibly have intended that the complex processes enjoined in the
orderly and equitable implementation of section 12C should be
concluded and finalised within the limited time frame of only 14
days. To obligate both the Board and the employer concerned to make
hurried and ill-considered choices and decisions would certainly not
serve the interests of justice at the workplace as contemplated by
section 2A of the Labour Act. As I have already indicated, a liberal
and expansive interpretation of section 12C is in the best interests
not only of the employees but also of the employer.
To
conclude on this aspect, it is common cause that the Retrenchment
Board
called the parties within the prescribed period of 14 days to convene
a hearing, which hearing also appears to have taken place within that
period. It is also common cause that at that hearing the Board, as it
was entitled to do, directed the parties to file further submissions.
It follows that the Board duly complied with its obligation to
respond to the appellant's application for exemption within the
stipulated 14 days. It also follows that the application cannot be
deemed to have been granted by operation of law by dint of any
alleged failure to timeously respond to the application.
Evidence
of Financial Incapacity
The
evidence presented by the appellant to the Retrenchment Board to
establish its incapacity to pay the respondents comprises two CBZ
Bank statements and its financial statements from 2009–2015.
However, the appellant's audited financial statements only go up to
31 December 2013. For the period thereafter, only unaudited financial
statements were produced - apparently because the appellant had
failed to pay its erstwhile auditors. Moreover, before the Labour
Court, even the un-audited financial statements were not produced or
filed of record.
As
regards the appellant's bank statements, the first statement covers
the period from 1 December 2016 to 3 January 2017 and reflects a
negative balance of $1,045,267=83. The second statement ranges from 1
December 2016 to 31 January 2017 and shows a negative closing balance
of $6,960=61. According to counsel for the appellant, the appellant
claims that these statements relate to its only two bank accounts and
this claim has not been disputed.
Turning
to the appellant's financial statements, the last audited statement
for 2013 reveals an operating loss of $5,720,825=. It also shows a
bank overdraft of $6,838,990=. For the period thereafter, i.e.
from 2014–2016, there are no audited financial statements. In this
respect, counsel for the appellant contends that the Retrenchment
Board
did not ask for audited statements and that it was reasonable for the
appellant to provide what it had. The unaudited statements for
2014–2016 were placed before the Board but were rejected for having
been un-audited. As I have already indicated, these unaudited
statements do not form part of the record and counsel for the
appellant was unable to proffer any explanation for their omission
from the record.
Counsel
for the respondents submits that the CBZ Bank statements do not show
the aggregate of the appellant's assets. Furthermore, the first
statement alluded to above shows several substantial credits to the
bank account and there may have been further credits after the last
stated entry for 31 December 2016. Counsel for the respondents also
refers to a letter dated 3 June 2015 from the Chairman of the
appellant's Works Council, written to the Retrenchment Board, in
support of the proposed retrenchment of 18 employees. The reason
given then for that retrenchment was stated to be the fact that the
appellant “has totally changed its Business Strategy and Operating
Model”. There is nothing in that letter to indicate that the
appellant was unable, at that time, to pay the proposed retrenchment
packages or to viably conduct its financial affairs.
Having
regard to the totality of the evidence before us, it is abundantly
clear from the record that the appellant has dismally failed to
justify its claim of its incapacity to pay, both before the
Retrenchment Board and in the Labour Court. This is compounded by the
fact that even its unaudited financial statements for 2014 to 2016
were not availed to the court a
quo.
Worse still, they inexplicably do not form part of the appeal record.
I
fully agree with counsel for the respondents that the two CBZ Bank
statements do not in themselves support the appellant's position.
At best, they evince a temporary current account illiquidity. More
telling is the last available audited financial statement for 2013.
Although this statement reflects a significant operating loss and
large bank overdraft, it also reveals a substantial asset base vested
in the appellant. This consists of non-current assets amounting to
$131,265,466= and current assets in the sum of $14,696,626=,
rendering a grand total of $145,962,092=. This is obviously
counter-balanced, as a matter of accounting practice, by the
appellant's equity and liabilities, but that does not detract from
the appellant's considerable and sizeable assets as at the end of
2013. And there is nothing on record to indicate that those assets
have been depleted or dissipated in the intervening period leading up
to the events of 2017.
The
onus clearly lay on the appellant to show that it should be exempted
from paying the minimum retrenchment packages due to the respondents.
As I have already stated, it failed to produce any meaningful
evidence to substantiate its claim of insolvency or incapacity to pay
the paltry sum of $55,000= that was ordered by the Retrenchment Board
to be paid, partly as lump sums and partly by way of instalments. It
clearly failed to discharge the evidential onus that squarely fell
upon it.
Disposition
In
the result, I am amply satisfied that there was nothing erroneous let
alone irrational in the decision of the Retrenchment Board declining
to grant the exemption sought by the appellant from having to pay the
respondents the minimum retrenchment packages to which they were
lawfully entitled. By the same token, there is no basis for impugning
the judgement of the court a
quo
upholding the decision of the Retrenchment Board. In my view, none of
the grounds of appeal mounted by the appellant is legally or
factually sustainable.
It
is accordingly ordered that the appeal be and is hereby dismissed
with costs.
