This is an appeal against the judgment of the Labour Court confirming, with an amendment, a ruling by a Labour Officer that the appellant was guilty of an unfair labour practice and that the appellant pays to each of the respondents arrear compensation due to them for the period March 2011 to September 2015.
The appellant seeks an order setting aside the confirmation, and, in its place, another order dismissing the application for confirmation with no order as to costs.
Having gone through the papers filed in this matter, and after hearing counsel, I am not persuaded that the Labour Court was, except for part of its order, wrong in confirming the ruling by the Labour Officer.
BACKGROUND FACTS
The first respondent herein, Fungai George Mutasa, is a Labour Officer to whom an allegation of unfair labour practice was referred by the second to the eleventh respondents (“the respondents”) (A.B. Morar, A.J. Bosch. E. Eston, E. Gavaza, A.J. Van Rensburg, R.T. Karidza, L. Mabika, D.I. Mackintosh, I. Middleton and Mushoriwa).
He unsuccessfully attempted to settle the matter by conciliation following which he then heard the parties in order to come up with a draft ruling in terms of section 93(5)(c) of the Labour Act [Chapter 28:01] (“the Act”).
The respondents are employed by the appellant and fall in what the appellant calls the E Band employment grade. The appellant is a wholly-owned subsidiary of Tongaat Hullett, a South African company.
In addition to the benefits they enjoyed in Zimbabwe, in terms of their conditions of employment commensurate with their grade, the respondents also enjoyed membership of the Tongaat Hullett Pension Fund, a South African registered pension fund as well as the Discovery Essential Saver Plan, which enabled them to access medical services in South Africa.
On 21 February 2011, the respondents were advised of the intention to terminate their entitlement to both the Pension Fund and the Discovery Essential Saver Plan with effect from 28 February 2011.
It was indicated, in that communication, that, the respondents would each be paid accrued benefits in cash or alternatively such benefits would be transferred to a retirement annuity or pension preservation fund held in each employees name with a registered entity of the employee's choice in South Africa. It was further indicated that the cost related to the current monthly fund contributions would be incorporated into each employee's monthly United States Dollar package in Zimbabwe with effect from 1 March 2011.
As regards the Discovery Essential Saver Plan, compensation was to be paid by incorporating the monthly member contributions, which translated to a hundred per cent contribution by Tongaat Hullett, into each employee's monthly United States Dollar package in Zimbabwe.
The exchange of correspondence between the parties reveals that the respondents made several follow-ups to have the compensation paid and the contributions incorporated into their cash packages.
This was to no avail.
The papers further show that the appellant demanded that the respondents move from the Triangle Senior Staff Pension Fund (TSSPF) to the Money Plan Pension Scheme to enable these benefits to be processed.
Owing to the stalemate, the respondents approached the High Court, and, in an order dated 26 February 2015, the court determined that the Triangle Senior Staff Pension Fund (TSSPF) remained valid and binding and that there was no obligation on the respondents to migrate to the Money Plan. The court consequently ordered the appellant to commence making its contributions and to actuate the Triangle Senior Staff Pension Fund (TSSPF). The appellant was further ordered to pay the costs of the application.
That order remains extant as it was not appealed against.
Notwithstanding that order, the appellant did not pay compensation or incorporate the monthly contributions into the employee's monthly United States Dollar package.
In their statement of claim before the Labour Officer, the respondents averred, that, in addition to benefits accruing in Zimbabwe, their conditions of service also provided for contractual entitlements to the Tongaat Hullett Pension Fund and the Discovery Essential Saver Plan, both of which were operational in South Africa.
They further averred, that, it was the appellant that undertook to pay to each employee the accrued fund benefits or to transfer such fund to a retirement pension preservation fund and to incorporate the monthly fund contributions into the cash packages in Zimbabwe.
They averred, further, that, the pension fund and Saver Plan were open to all employees in the E Band regardless of the nature of one's pension in Zimbabwe.
The decision not to pay the respondents was a punitive measure because the respondents had dared to assert their rights to membership of the Triangle Senior Staff Pension Fund (TSSPF) in the High Court.
The respondents further alleged, that, the appellant had accepted its obligation to compensate the respondents when it communicated its decision to terminate the two benefits.
The appellant had then proceeded to pay those employees who had agreed to join the Money Plan Pension Scheme in Zimbabwe but had then withheld compensation to the respondents.
They therefore submitted, that, by withholding the compensation, the appellant and its directors were guilty of an unfair labour practice.
They therefore asked for a ruling directing the appellant to cease the unfair labour practice and to pay the arrear compensation. They further averred that the amounts should be paid “without any additional tax losses” by them.
In its response to the complaint, the appellant stated that the benefits which formed the subject of the matter were availed as a measure to cushion the employees from the harsh economic situation obtaining in Zimbabwe at the time and that these benefits were being administered by Tongaat Hullett, a South African company and the holding company of the appellant.
The benefits did not become vested in the contracts of employment of the respondents and remained discretionary on the part of the holding company. Therefore, so the appellant argued, whatever obligations the holding company created pursuant to the grant of these benefits do not bind the appellant. The benefits were paid and administered by Tongaat Hullett, and, consequently, the appellant, as a subsidiary, had no obligation to actuate those benefits.
The appellant further submitted, that, any claims that had arisen more than two years before the hearing of the matter were prescribed in terms of section 94 of the Labour Act. In other words, if it was found that an unfair labour practice resulting in the underpayment of the respondents had taken place, then the monthly underpayments would constitute separate causes of claim.
In his analysis of the evidence and submissions made on behalf of the parties, the Labour Officer found that the letter of 21 February 2011 unequivocally placed an obligation on the appellant to compensate the respondents and to incorporate the monthly fund contributions and member contributions into the respondents United States Dollar cash package in Zimbabwe with effect from 1 March 2011.
He further found, that, the fact that the pension fund was administered by another agency other than the appellant itself did not mean the employees were employed by that agency.
He therefore concluded that the payment of compensation of accrued benefits was a right.
This was moreso given the fact that the other employees in the same grade as the respondents, who had migrated to the Triangle Money Plan, have accessed their pension fund contributions and have had their Saver Plan incorporated into their monthly cash package in Zimbabwe.
On the question of prescription, he found, that, as the parties had been communicating over the issue, the matter was of a continuous nature and therefore the claim had not become time-barred.
Lastly, he found, that, when the appellant's Managing Director wrote to the respondents, at no stage did he indicate that he was not writing on behalf of the appellant and that he was doing so on behalf of the holding company.
Consequently, he concluded, that, by withholding the benefits, the appellant was guilty of an unfair labour practice. He therefore ordered that the appellant cease such unfair labour practice and pay individual arrear compensation to each of the respondents.
PROCEEDINGS BEFORE THE LABOUR COURT
Having made the above draft ruling, the Labour Officer referred the same to the Labour Court for confirmation in terms of section 93(5)(a) of the Labour Act.
In its submissions before the Labour Court, the appellant argued that the Labour Officer had grossly erred in finding that the benefits, the subject of this matter, had become vested in the contracts of employment entered into by the respondents. The benefits remained discretionary on the part of Tongaat Hullett.
It further argued that whatever obligations Tongaat Hullett may have created were not binding on the appellant, a mere subsidiary.
Lastly, the appellant submitted that the Labour Officer had misdirected himself in not finding that some of the claims by the respondents had prescribed.
Having submitted their complaint to the arbitrator in September 2015, the respondents would only have succeeded on those claims that had arisen after September 2013, i.e. within the period of two years from the date when the unfair labour practice or dispute arose. The monthly underpayments would have constituted separate causes of action. Therefore, the pensions claimed from March 2011 to September 2013 would have become prescribed.
In their submissions before the Labour Court, the respondents stated as follows:
The appellant was attacking findings of fact made by the Labour Officer. There was no allegation that such findings were irrational.
On prescription, they submitted that the unfair labour practice was continuing at the time the matter was referred to the Labour Officer and that, in terms of section 94(2) of the Labour Act, the claims had not prescribed.
The Labour Court agreed with the Labour Officer, but for a different reason; that the unfair labour practice was continuing and therefore the claim was not prescribed in light of section 94(2) of the Labour Act.
The court agreed with the other factual findings made by the Labour Officer but was of the view that the order directing the Managing Director and Board of Directors to effect payment was irregular as they had not been heard before the order was made.
The court accordingly confirmed the draft ruling but amended it to remove the reference to the Managing Director and Board of Directors from the order.
PROCEEDINGS BEFORE THIS COURT
Unhappy with the outcome of the confirmatory proceedings, the appellant noted an appeal to this Court. It alleged that the Labour Court had erred:
(i) In determining that the respondents claim was not prescribed.
(ii) In confirming the finding by the Labour Officer that the appellant had an obligation to pay the respondents when it was apparent that the benefits claimed had arisen from an agreement to which the appellant had not been a party.
(iii) In making a finding as regards the respondents attendant tax obligations and placing an obligation on the appellant to pay any ensuing tax penalties.
(iv) In assuming review and/or appellate jurisdiction during the confirmation proceedings when the court has no such power.
In its heads of argument before this Court, the appellant has submitted as follows:
Section 94 of the Labour Act provides for a prescriptive period of two years from the date when the dispute or unfair labour practice first arose. Having submitted their claim to the arbitrator on 9 September 2015, any claims by the respondents prior to 9 September 2013 would have become prescribed as each monthly underpayment constituted a separate cause of action.
The appellant further submitted, that, the benefits were initially offered by Tongaat Hullett, its South African holding company, which subsequently terminated the benefit. Its own attempts to incorporate the benefits into the respondents contracts of employment were not accepted by them and consequently never became a contractual entitlement. The benefits could therefore be extinguished without the consent of the respondents.
It further submitted, that, not being privy to the agreement between the respondents and Tongaat Hullett, it had no obligation to pay any of the benefits, and, consequently, no unfair labour practice has been perpetrated by it.
On the order directing the appellant to pay ZIMRA tax penalties, it was its submission that this was a declarator which the court a quo had no jurisdiction to make. The court had determined a contingent right, being the contingent tax penalty which had not arisen and may not arise at all.
Lastly, it submitted that the Labour Court misconstrued its powers during confirmation proceedings. It could not, in terms of the law, rehear the matter. Nor could it amend the ruling to remove reference to the Managing Director.
The respondents pray that the appeal be dismissed with costs. They have submitted as follows:
In terms of section 94(2) of the Labour Act, prescription does not apply to a dispute or unfair labour practice which is continuing at the time it is referred to a Labour Officer. The appellant continues to discriminate against the respondents and has refused to pay them their monthly dues. The wrong was a continuous one and the respondents claim was therefore not prescribed.
The respondents have further submitted that they had no relationship with Tongaat Hullett outside of their employment contracts, which contracts entitled them to the benefits now the subject of this matter. The appellant had at all times accepted its obligation to pay the benefits.
They further argue, that, the order directing the appellant to pay tax penalties was proper and that the court a quo correctly exercised its confirmatory jurisdiction.
During oral argument, counsel for the respondents raised an objection to the submission by the appellant's counsel, that section 94(2) of the Labour Act did not arise because the matter between the parties was a dispute and not an unfair labour practice.
She submitted that this was a new point being taken on appeal for the first time.
The effect of that submission was that section 94(2) of the Labour Act would not arise because the issue before the Labour Officer was a dispute and not an unfair labour practice. At no point had the appellant taken the position that the matter between the parties was a dispute and not an unfair labour practice.
She submitted, that, in any event, regard being had to section 6(1)(e) of the Labour Act, the appellant's conduct constituted an unfair labour practice as the latter had withheld the benefits due to the respondents as punishment for having sought recourse in the High Court. This conduct, in addition to the failure to pay the benefits, falls squarely within the ambit of an unfair labour practice as defined in section 8 of the Labour Act.
Moreover, the challenge in the first ground of appeal is whether or not the unfair labour practice was continuous and not whether the conduct was an unfair labour practice in the first place.
Counsel for the appellant denied that it had changed its submission on the question of prescription, thereby taking the respondents by surprise.
He submitted, that, it was the appellant's primary position, that, there was no unfair labour practice and that even if it were so, the two year prescriptive period would still apply. The respondents cause has always been that the conduct by the appellant, of withholding compensation, was their basis for alleging an unfair labour practice. The appellant has always argued that the claims were prescribed and that no reliance could be placed on section 94(2) of the Labour Act. What the court a quo determined was the time when the dispute arose. On a proper appreciation of the common cause facts, the respondents claims for compensation were prescribed.
ISSUES FOR DETERMINATION
From the foregoing, it seems to me that four issues arise for determination by this Court:
(i) The first issue relates to the question whether the matter referred by the respondents to the Labour Officer was referred as a mere dispute or an unfair labour practice, and, concomitantly whether the claim by the respondents had become prescribed.
(ii) The second issue is whether the court a quo was correct in confirming the Labour Officer's ruling that the appellant had an obligation to pay the benefits.
(iii) The third is whether the court a quo correctly confirmed the order directing the appellant to pay additional tax losses by the respondents.
(iv) The last is whether the court a quo could, in confirmation proceedings, re-hear submissions and amend the ruling....,.
THE ORDER TO PAY ADDITIONAL TAX LOSSES
The appellant submits that the order for the appellant to pay additional tax losses was declaratory in nature. It submits that the court a quo had no jurisdiction to make such an order.
During oral submissions, counsel for the respondents explained that what was envisaged were penalties to be imposed by ZIMRA owing to delays in the payment of tax by the respondents.
I agree with the appellant that the court a quo made a determination on a contingent right, namely, additional tax. Such tax penalty had not arisen and it is anyone's guess whether it ever will be imposed. Neither the court a quo nor the labour officer provided the basis, in law, upon which this order was made.
It is common cause neither party had made submissions on it.
In any event, it is difficult to see how additional tax liabilities would arise, it being common cause that no payment had been made to the respondents. As I understand the law, the liability to pay tax would arise once the respondents were paid their benefits and not before. It is difficult to imagine ZIMRA imposing penalties on the respondents in respect of benefits that were the subject of court proceedings and which, to date, remain unpaid.
