MATHONSI
JA: This
is an appeal against the whole judgment of the Labour Court handed
down on 1 June 2018 dismissing, with costs, an appeal made by the
appellant against an arbitral award made by an arbitrator on 18 July
2017.
FACTUAL
BACKGROUND
The
appellant is a holding company with subsidiaries which include
Ballantyne Butchery (Private) Limited t/a Dan Meats and Triple C
(Private) Limited. From August 2007, it employed the respondent as
the Finance Manager of Ballantyne Butchery (Private) Limited t/a Dan
Meats. About January 2009 the appellant reassigned the respondent to
another subsidiary, Colcom Trading (Private) Limited, as Finance
Manager on the same employment conditions. He was again moved to
Colcom Services (Private) Limited on the same conditions in 2011.
The
fortunes of the appellant took a down turn about March 2013. As a
result, a restructuring exercise was undertaken the effect of which
was to include the respondent in a list of those who were to be
retrenched from employment. Thereafter the parties haggled for some
time about the terms of retrenchment. During the course of that
exercise, an opening occurred when the Finance Manager of Triple C
(Private) Limited, another subsidiary of the appellant, immediately
resigned leaving the post vacant.
The
appellant seized the opportunity and by letter dated 11 March 2013,
it offered the post to the respondent. As the position was the same
grade as that held by the respondent, the transfer to Triple C
(Private) Limited was said to be a lateral one. The offer letter
written to the respondent made it clear that the appellant would
gladly “clarify any clause in the contract” which the respondent
felt needed clarification.
The
employment letter containing the terms and conditions of employment
was attached and a request was made for the respondent to signify his
acceptance by signing an acceptance slip at the end of the letter.
The respondent had misgivings, about the terms contained in the
letter and endorsed his reservations of what he termed “varied
terms and conditions” in long hand at the bottom of each page of
the appointment letter. Notwithstanding his reservations, the
respondent signed the “acceptance of new contract” slip
on
23 May 2013. He however indicated that he would continue reporting
at his old station “under protest.”
The
respondent was advised to report for duty at Triple C (Private)
Limited on 27 March 2013. He did not do so insisting on remaining at
his former station from where he had been transferred. In fact he
lodged a complaint of an unfair labour practice with a Labour
Officer. By letter dated 27 May 2013, the group Human Capital
Director of the appellant put the respondent on terms to report for
duty at his new employment station. The letter reads in relevant
part:
“RE:
YOUR FAILURE TO REPORT FOR DUTY AT TRIPLE C
It
has come to our notice that you have not reported for duty at Triple
C as per the letter of transfer which you signed for in
acknowledgment of receipt on 23rd
May 2013 and indicated therein that you were to report for duty as
required of you but under 'protest.' Your 'protest' arises
from what you term 'variation of terms and conditions' of your
employment.
While
we were in the process of attending to the 'issues' you raised as
alleged variations of terms and conditions of employment, we note
with regret that you have already lodged a claim of unfair labour
practices with the office of a Labour Officer on the same issues. In
the circumstances, our due consideration of your 'concerns' has
been rendered irrelevant by you.
However,
in the meantime, please note that we expect you to report at Triple C
and exercise your duties as Finance Manager than to sit idle in your
office as you are doing. Should you fail to do so by 0800 hours on
29th
May 2013, your conduct will be a repudiation of your employment to
which we will accept your wishes and pay you your terminal benefits.
Please
therefore be guided accordingly.
Kind
regards
Z.Matsika
Group
Human Capital Director.”
The
respondent again defied the order to report for duty at Triple C
(Private) Limited. The appellant then served the respondent with a
notice of termination of the employment contract on 30 May 2013. He
was advised that his terminal benefits together with three months'
notice pay would be processed and paid into his bank account.
The
respondent was unhappy with that turn of events. He had already
reported a case of unfair labour practice by the appellant alleging
material variation of his contract, repudiation of the employment
contract and non-payment of benefits and arrears. In due course the
Labour Officer issued a certificate of no settlement. Resultantly,
the dispute was referred to arbitration.
The
arbitrator found in favour of the respondent. In the arbitral award
issued on 18 July 2017 the arbitrator found that the appellant was
the respondent's employer.
He
found that the employment contract had been unlawfully terminated and
that there had been a unilateral variation of its terms.
Reinstatement or damages in
lieu
of it were ordered in the event that reinstatement was no longer
possible. The arbitrator also ordered the appellant to pay damages
for contractual breaches in the sum of US$29,686,39 for profit share
and reimbursement of US$1,200,00 in school fees.
The
appellant was aggrieved and took to the Labour Court on appeal.
The
appellant contended that the respondent's failure to report for
duty as directed amounted to a repudiation of the contract of
employment and that there was no unilateral variation of the contract
on its part.
It
was the court a
quo's
finding that the appellant unlawfully terminated the employment
contract which it had unilaterally varied. The fact that no
disciplinary hearing was conducted violated the respondent's right
to be heard. The appeal was dismissed.
It
is against that judgment of the court a
quo that
this appeal was lodged.
GROUNDS
OF APPEAL
The
appellant raised the following grounds of appeal.
1.
The court a
quo
(erred) in not finding that the respondent had sued the wrong party
as his employer and accordingly that the arbitrator had, in not
finding that Triple C (Private) Limited was the respondent's
employer, committed an error in law.
2.
The court a
quo
erred in coming to the conclusion that there had been an unlawful
variation of the terms of respondent's contract of employment and
so erred in not considering the circumstances under which he had been
transferred and also the fact that an employment relationship cannot
remain static.
3.
The court a
quo
erred in not coming to the conclusion that respondent had, by not
reporting for duty after his transfer, repudiated his employment and
that the acceptance of such repudiation by the employer did not
constitute unfair dismissal.
4.
A fortiori
the court a
quo
erred in coming to the conclusion that appellant ought to have
brought disciplinary proceedings against the respondent.
At
the commencement of the hearing of the appeal Mr Mpofu,
who appeared for the appellant, abandoned the first ground of appeal.
He indicated that he would motivate the appeal on the basis of the
remaining three grounds. Accordingly the first ground is struck
out and
will not be related to in this judgment.
ISSUE
FOR DETERMINATION
While
there are still three grounds of appeal, they all dovetail to only
one issue for determination in this appeal. It is whether or not the
respondent's contract of employment was lawfully terminated.
SUBMISSIONS
ON APPEAL
Mr
Mpofu
submitted that the respondent's employment was lawfully terminated
on notice after he refused to assume duty at Triple C (Private)
Limited. He submitted that there is a distinction between a
dismissal from employment which follows disciplinary proceedings and
a termination of employment on notice. Both the court a
quo
and the arbitrator, so the argument goes, fell into grave error in
making a finding that the appellant was required to institute
disciplinary proceedings against the respondent before terminating
his employment.
It
was further argued on behalf of the appellant that the offer to
employ the respondent at Triple C (Private) Limited came in the
context of retrenchment proceedings which were ongoing at the time.
Indeed, according to the minutes of a meeting held by the parties on
25 March 2013 to negotiate a retrenchment package, it is the
respondent himself who made a proposal “to be given right of first
refusal of new jobs if they arise.” The respondent had made the
request because, according to him, “there (were) no jobs out
there.” When the Finance Manager of Triple C (Private) Limited
resigned, an opportunity presented itself to avoid retrenching the
respondent by offering him the job as requested.
According
to the appellant, the respondent accepted the offer of the job,
albeit
under protest. His concerns were still being looked into but he was
expected to report for duty. He refused to do so preferring to
remain idle. Mr Mpofu
submitted that the stance taken by the respondent left the appellant
in a quandary
because it had nowhere else to deploy him. It was the intransigence
of the respondent in continuing to report at his former station where
there was no work to be performed which invited the termination of
his contract of employment on notice. Mr Mpofu
maintained that the appellant was entitled at law, to terminate the
employment on notice. He placed reliance on a number of authorities
to make that submission.
Mr
Chimhofu,
who appeared for the respondent, took the view that there are two
issues that are dispositive
of the appeal. The first one is whether or not the appellant
unilaterally varied the employment contract. In that regard he made
reference to the letter of transfer dated 21 May 2013 which made it
clear that the transfer was a lateral one. This meant that the
respondent would continue to enjoy the same benefits he enjoyed prior
to being transferred.
The
view taken by the respondent is that the appellant tinkered with the
conditions of his employment thereby repudiating it.
The
second one is whether the subsequent termination was lawful.
In
that regard, the court a
quo
correctly found that the employment contract was unlawfully or
unfairly terminated. In fact the court a
quo
was of the view that a disciplinary hearing should have been
conducted in terms of the appellant's code of conduct. In arriving
at that position the court a
quo
relied on section 12B(1) of the Labour Act [Chapter
28:01]
which provides that an employee is unfairly dismissed if the employer
fails to show that he, she or it dismissed the employee in terms of
an employment code.
ANALYSIS
It
is common cause that no disciplinary proceedings were instituted
against the respondent and that he was not charged with any act of
misconduct for which he could be dismissed from employment. It is
also common cause that when the parties reached a deadlock about the
respondent assuming duty at a new base to which he had been
transferred, the appellant served him with a notice of termination of
employment. The issue for determination is the lawfulness of that
course of action.
In
considering the lawfulness of the appellant's actions, it is
important to start from the standpoint that upon the respondent being
transferred to Triple C (Private) Limited, he signed the letter of
appointment on the space provided for “acceptance of new contract.”
He then registered his concerns with the appellant as he was
entitled to do. The respondent also went on to report a dispute to a
Labour Officer. This was also proper and the dispute would have been
dealt with according to the law. His biggest undoing was the dogged
refusal to report for duty assigned to him. It meant that the
parties could not contractually move forward together.
The
appellant did not opt to charge the respondent with misconduct and
certainly did not dismiss him for misconduct.
I
agree with Mr Mpofu
that termination of employment does not amount to dismissal all the
time and that while dismissal results in termination of employment
there may be termination without dismissal.
Dismissal
ordinarily arises from disciplinary proceedings while termination may
be done on notice.
Indeed
section 12 of the Labour Act [Chapter
28:01]
deals with “Duration, particulars and termination of employment
contract” while, on the other hand section 12B is on “Dismissal.”
That, on its own means a lot. The two sections provide for two
different methods of bringing an employment contract to an end. The
first method is through termination while the second, is through
dismissal.
It
is now settled in our jurisdiction that despite the provisions of
section 12B of the Act dealing with dismissal of an employee from
employment in terms of an employment code of conduct, an employer
retains the right to terminate employment on notice as provided for
under the common law. Section 12B does not concern itself with the
general termination of employment by means other than in terms of a
code of conduct be it an employer's code of conduct or the national
code of conduct.
It
is section 12(4) which deals with the concept of termination of
employment on notice.
It
regulates the period of notice to be given for such termination. In
Chirasasa
v Nhamo N.O. and Anor
2003 (2) ZLR 206 (S), the court upheld the termination of employment
where the parties had failed to agree on new conditions of
employment. It was stated:
“In
this case, the appellants agreed that there was no act of misconduct
alleged against them. The parties had failed to agree on the new
terms and conditions of employment proposed by the second respondent
to meet the operational requirements of its business. The second
respondent had a right to terminate the contracts of employment with
the appellants by giving them one calender months' notice and could
exercise it without obtaining prior written approval of the
Minister.”
The
above reasoning was followed by this Court in Colcom
Foods Limited v Kabasa SC12/04
where the following passage appears:
“In
this case it was conceded that there was no allegation of misconduct
levelled against Kabasa. He was not being retrenched. It was his
refusal to accept that his status was that of Human Resources Manager
that caused the decision to terminate his employment with Colcom on
notice. On the authority of Chirasasa's
case supra,
Colcom was entitled to terminate Kabasa's employment on notice.”
The
court went on to state in that case that as it was not an act of
misconduct for the employee to refuse to accept the change in his
conditions of service, the employer was not bound to terminate his
employment in terms of the disciplinary procedure laid down in the
employment code of conduct.
On
the basis of that authority, it is clear that the court a
quo
was wrong in drawing the conclusion that the appellant should have
conducted a disciplinary hearing following the respondent's refusal
to report for duty. There was no need to proceed in terms of a code
of conduct.
Quite
recently in the case of Nyamande
and Anor v Zuva Petroleum (Private) Limited
2015 (2) ZLR 186 (S), this Court reiterated the correctness of the
assertion that an employer has the right to terminate employment on
notice. CHIDYAUSIKU CJ endorsed it in these words at p 188B -
“The
respondent appealed to the Labour Court. The Labour Court allowed
the appeal. In its judgment the Labour Court had this to say:
'In
my view, therefore, the submission that section 12B came to do away
with the possibility of terminating a contract of employment on
notice is a misunderstanding of the law as it stands. In an event,
the provisions of section 12(4) of the Act are clear and allow no
ambiguity as also the provisions of section 12B. None of the
sections have the effect of doing away with the termination of a
contract of employment on notice.'
In
essence, the Labour Court came to the conclusion that neither section
12B nor section 12(4) of the Act abolished the employer's right to
terminate employment on notice. I respectfully agree with this
conclusion.”
The
learned Chief Justice went on at p 190 A-B to make the following
pronouncement:
“As
I have already stated, it is common cause that once upon a time both
the employer and the employee had a common law right to terminate an
employment relationship on notice. That common law right in respect
of both the employer and the employee can only be limited, abolished
or regulated by an Act of Parliament or a statutory instrument that
is clearly intra
vires
an Act of Parliament. I am satisfied that section 12B of the Act
does not abolish the employer's common law right to terminate
employment on notice in terms of an employment contract for a number
of reasons.”
Having
come to the conclusion that the appellant was entitled to terminate
the employment without invoking the employment code of conduct by
giving the respondent notice of termination, it becomes superfluous
to relate to the issue of the alleged variation of the terms and
conditions of employment. The authorities I have cited make it clear
that a deadlock in negotiations over new terms of employment may
entitle the employer to terminate on notice. See Colcom
Foods
Limited, supra.
I
have said that the respondent shot himself in the foot by refusing to
comply with transfer instructions especially after he had accepted a
new contract by signing it. If he was aggrieved by what he regarded
as a unilateral alteration of his contract, he should have pursued
his grievance while reporting for duty. By his intransigence he
opened himself up for termination on notice. On the other hand, the
appellant had a lawful right to abandon discussions with the
respondent and opt for termination on notice. There was no
requirement for a disciplinary hearing because it was not an act of
misconduct for the respondent to refuse to take up the new
employment.
The
judgment of the court a
quo
is wrong. It ignores all the rich authorities on the subject of
termination on notice. It ought to be vacated.
Regarding
the issue of costs, I see no reason why the costs should not follow
the result.
In
the result, it is ordered that:
1.
The appeal succeeds with costs.
2.
The judgment of the court a
quo
be and is hereby set aside and in its place be substituted the
following:
“The
appeal is hereby allowed and the arbitral award set aside with
costs.”
GWAUNZA
DCJ:
I agree
GUVAVA
JA:
I agree
Chinawa
Law Chambers,
appellant's legal practitioners
Matsikidze
Attorneys-At-Law,
respondent's legal practitioners
