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 ...
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.
Some 10 months later, and on 9 July 2013, the respondents,
then in the employ of Rutimba Housing (Pvt) Ltd, 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 10 July 2013, the Zimbabwe Federation of Trade Unions 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.
The matter was referred to conciliation on 21 July 2013 and
a Certificate of No Settlement issued on 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 Housing (Pvt) Ltd 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.
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:
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 of terminal
benefits entitled to the claimants.”
The appellant appealed, unsuccessfully, to the Labour Court
which upheld the award.
The grounds of appeal before this Court raise three issues
for determination. They are:
(i) Whether the Arbitrator had the jurisdiction to make the
determination referred to him by the Labour Officer;
(ii) Whether the Arbitrator correctly found the appellant
to have committed an unfair labour practice;
(iii) Whether the award of terminal benefits to the
respondents was competent….,.
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 [Chapter 28:01] is section 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].”
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, section
25 of the Labour Act [Chapter 28:01] 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.
This may well be because the legislature has, in section 16
of the Labour Act [Chapter 28:01], 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 of the Labour Act [Chapter 28:01], which is set
out below, provides that assurance;
“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.”…,.
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 section 25 of the Labour Act [Chapter 28:01].
As stated…, 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.
In my view, any consultation done before the agreement was
signed on 20 September 2012 would have been done before the transfer.
Whether the award of terminal
benefits to the respondents was competent
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 section 16 of the Labour Act [Chapter
28:01], the respondents were transferred to Rutimba Housing (Pvt) Ltd 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 Housing (Pvt) Ltd to whom all grievances
concerning their employment were to be addressed. Rutimba Housing (Pvt) Ltd,
the new employer, stepped into the shoes of the former employer for all
purposes.
The respondents continued in the employment of Rutimba
Housing (Pvt) Ltd, and, as at the date of their approach to the Labour Officer
for the institution of these proceedings, were employees of Rutimba Housing
(Pvt) Ltd.
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;…,.”…,.
Once the respondents moved from one employer to the other,
the latter, in terms of both the contract and section 16 of the Labour Act
[Chapter 28:01], assumed all responsibility for the respondents. Rutimba
Housing (Pvt) Ltd, being the new employer, was obligated by section 16 of the Labour
Act [Chapter 28:01] 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
Housing (Pvt) Ltd - not against the appellant.
While section 16(2)(c) of the Labour Act [Chapter 28:01]
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.
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.
The appeal is, therefore, upheld….,. It is ordered as
follows:
1. The appeal is
allowed.
2. The judgment of the
Labour Court is set aside and substituted as follows:
“1. The appeal is
allowed with costs.
2. The award of the arbitrator is set aside.”
