THE BACKGROUND
The respondents are all former
employees of the appellant. In or about April 2007, upon consideration of
its financial viability due to reduced production levels, the appellant decided
to retrench the respondents so as to reduce its operational costs and notified
the respondents of its intention to do so. Negotiations then took place in
terms of the procedures laid down by the Labour Act culminating in the
approval, in terms of section 12C of the Labour Act [Chapter 28:01], of the
retrenchment, on 19 July 2007, by the then Minister of Public Service Labour
and Social Welfare, (“the Minister”). The retrenchment was approved on the
following terms and conditions:
1. Service pay 2 months' salary for
each year worked.
2. Severance pay 3 months' salary.
3. Relocation allowance 3 months'
salary.
The net effect of the Minister's
decision was that the appellant was to pay a total of ZW$28 billion to the
respondents.
On 24 July 2007, the appellant's
General Manager wrote to each of the respondents in the following terms:
“Management advises that due to the
high costs of the retrenchment, as approved by the Ministry of Labour, the
process is deferred until further notice.
As a consequence of these developments,
you are now required to report back to work on Monday 30 July 2007.
On resumption of duty, you will
revert to the previous rotational duties i.e. if you were on short time work
before proceeding on paid leave pending finalization of the retrenchment
process you will be expected to resume work on a short time basis. Please note
that paragraph two (2) of the internal memorandum notifying you of the
retrenchment exercise clearly stated that you remain an employee until the
finalisation of the exercise.”
On 30 July 2007, he also wrote to
the Secretary for Social Welfare advising that the appellant had decided to
defer the retrenchment to a later date. The relevant part of the
appellant's letter reads as follows:
“We advise that the reason for the
retrenchment is the dire situation in which the mine finds itself in as it
embarks on the rehabilitation of the plant. The situation remains critical
and the magnitude of the problem can only become worse because of the size of
the retrenchment package approved. The total bill is in excess of ZW$28
billion and unaffordable by Freda Rebecca Mine.
In view of this situation, Freda
Rebecca Mine management has decided to defer the Retrenchment to a later date.
In the meantime, all the employees
have been called to resume work while the company maps the way forward on this
matter.”
All the respondents signed
acknowledging receipt of letters requesting them to resume work. They
reported for work for about two days and declined to work thereafter, asserting
that their contracts had been terminated by reason of their retrenchment. An
Internal Memorandum from the appellant's General Manager, dated 3 October 2007,
again reminded the respondents to report for duty on 8 October 2007. On 16
October 2007, the respondents, who had not reported for duty, were summarily
dismissed in terms of the Collective Bargaining Agreement for the Mining
Industry Code of Conduct, Statutory Instrument 165 of 1992, S.I.165 of 1992. They
were charged with disobedience to a lawful order and failing to report for work
for a period in excess of five (5) days. The respondents received and
signed for their terminal benefits. Thereafter, they filed an application
in the Labour Court seeking an order in the following terms:
“IT IS ORDERED THAT:
1. Application be and is hereby
granted with the following terms:
(a) The Minister's decision of 19
July 2007 is still binding on both parties.
(b) The purported dismissal of the
Applicants by the Respondent be and is hereby declared void.
(c) The Respondent be and is hereby
ordered to pay out the retrenchment packages of each respective Applicant in
United States Dollars or its lawful equivalent in South African Rand (ZAR)
through direct deposit into Applicant's Legal Practitioners Trust Account within
20 days of this order.
2. The Respondent be and is hereby
ordered and directed to pay to the Applicant a total amount of US$1,475,055=59
or its lawful equivalent in South African Rand (ZAR).
3. The respondent to pay costs of
suit.”
The application found favour with
the Labour Court. It ruled that the respondents remained employees of the
appellant only up to the date of the Minister's approval of the retrenchment,
that is, 19 July 2007. It found that since the respondents had ceased to
be employees of the appellant on 19 July 2007, the appellant had no right to
recall the respondents to work or to institute disciplinary proceedings against
them leading to their dismissal. It further ruled that the respondents
could approach the Minister for the alteration of the quantification which was
done in United States Dollars. It issued the following order:
“1. The applicants remain
retrenchees of the respondent and are entitled to their retrenchment package as
per the Minister's decision of 19 July 2007.
2. The respondent is ordered to pay
retrenchment packages as per the Minister's decision by 31 August 2010.
3. The applicants can approach the
Minister for alteration in quantification.
4. There be no order as to costs.”
The main ground of appeal advanced
by counsel for the appellant is that the court a quo erred and misdirected itself in finding that the
Ministerial approval of the retrenchment of the respondents was the effective
retrenchment of the respondents and that it bound the appellant to such extent that
the appellant could not require the respondents to return to work.
It is my view that a determination
of this ground in favour of the appellant would dispose of the appeal. I
deal with it, hereunder, in two parts.
(i) WHETHER THE MINISTER'S LETTER
CONSTITUTED THE EFFECTIVE RETRENCHMENT AND THEREFORE A TERMINATION OF THE
CONTRACTS TO EMPLOYMENT
A contract of employment is
concluded by an employer and employee and can only be terminated by one or
other of them. The Minister, not being a party to the employment agreement,
could not terminate it.
Section 12C(9) of the Labour Act [Chapter
28:01] gives to the Minister the following powers:
“(9) The Minister shall consider, without delay, any recommendation
submitted to him by the Retrenchment Board, and, having regard to the factors
referred to in subs (11), shall -
(a) Approve the proposed retrenchment, subject to such terms and
conditions as he may consider necessary or desirable to impose; or
(b) Refuse to approve the proposed
retrenchment,
and shall cause the Retrenchment
Board, the works council or employment council, as the case may be, to notify
the employer and employees concerned in writing of the decision in the matter.”
The proposed retrenchment can either be refused by the
Minister or approved, subject to terms and conditions which the Minister deems
fit to impose. Thereafter, the Minister must cause his decision in the
matter to be conveyed to the employer and the other parties mentioned in subsection
(9).
Thus, in approving a proposed retrenchment,
the Minister is, in effect, saying; “You may proceed with the retrenchment but
only on these conditions.”
The Minister's directive is not
constitutive of the retrenchment nor does it terminate the contracts of
employment of the proposed retrenchees. It merely sets the conditions upon
which the employer, if still so minded, can proceed to retrench. The
contract is terminated by the employer when it proceeds with the
retrenchment. In this connection, the provisions of section 12C(5) of the
Labour Act [Chapter 28:01] are relevant. Section 12C(5) of the Labour Act [Chapter
28:01] provides:
“(5) No employer shall retrench any
employee without affording the employee the notice of termination to which the
employee is entitled…,.”
Accordingly, I hold the view that
where, as in this case, the employer decides not to retrench, the employment
contracts remain in force.
(ii) WHETHER THE EMPLOYER COULD
REVOKE ITS INTENTION TO RETRENCH AND RECALL THE EMPLOYEES AT WORK
It was submitted by counsel for the
appellant that where the retrenchment package set by the Minister would
have the effect of worsening the financially precarious situation of the
employer, the very purpose of the retrenchment was defeated. Further,
since the retrenchment exercise was for the benefit of the appellant, the
appellant could revoke its intention to retrench and invite the respondents
back to work.
I agree with these submissions. They
are in keeping with the spirit of sections 12C and 12D of the Labour Act [Chapter
28:01].
It should be noted that the Labour
Act [Chapter 28:01] places no obligation on an employer to retrench its
employees. Indeed, the clear intention of Parliament which emerges from sectios
12C and 12D of the Labour Act [Chapter 28:01] is that every effort should be
made to avoid retrenchment
wherever possible. Thus, section 12C(11) of the Labour Act [Chapter 28:01]
provides:
“(11) In deciding whether or not to
approve the retrenchment of employees in terms of this section, due regard
shall be paid -
(a) To the following general considerations -
(i) That the retrenchment of
employees should be avoided so far as possible, where this can be done without
prejudicing the efficient operation of the undertaking in which the employees
concerned are employed;
(ii) That the consequences of
retrenchment to employees should be mitigated so far as possible;
(b) To the following considerations in particular cases -
(i) The reasons put forward for the
proposed retrenchment; and
(ii) The effect of the proposed
retrenchment upon the employees involved, including their prospects of finding
alternative employment and the terminal benefits to which they will become
entitled.”
As I understand it, the letter
written by the appellant to the Minister was merely stating that the onerous
conditions imposed by the Minister were more detrimental, financially, to the
appellant than the retention of the employees. After all, it was to avoid
financial collapse that the appellant sought to take the drastic measure of
retrenchment in the hope that it would be able to carry on its business.
In Continental Fashions (Pvt) Ltd v Mupfuriri & Ors 1997 (2) ZLR 405 (S), the company
(the employer) had, during the course of a retrenchment exercise, sought to
withdraw the retrenchment notice. The withdrawal was not accepted by the
Principal Labour Relations Officer. McNALLY JA…, had this to say:
“The principal labour relations
officer dealing with the matter decided to ignore the 'purported withdrawal.' I
cannot understand how such an attitude can be adopted. It seems to me to
promote form above substance, procedure above reality, red tape above common
sense. The whole purpose of legislation about retrenchment is to mitigate
the effect of retrenchment upon those declared redundant. However good the
retrenchment package, it must normally be second prize. The first prize
must be a withdrawal of the redundancy notice. How an official can reject
that first prize when it is offered is incomprehensible. Did he do so on
behalf of the workers, and if so, on what authority?”
And at p407F:
“But where, as here, the purpose of
retrenchment is to avoid the collapse and liquidation of the company, the
wellbeing of the retrenchees cannot be the only consideration. The
survival of the company is the motivating consideration. The purpose of
the exercise is to save the company. In so doing, care must be taken to
cushion the blow to the workers. But to say, as the Tribunal has done in this
case, that it is almost irrelevant whether or not the company can afford the
package, is a fundamental misdirection. The immediate objective of
retrenchment remains the saving of the company and of the jobs of the remaining
employees. Clearly therefore, although it is not stated in the Regulations, the
ability of the company to pay the retrenchment package is the ultimate
criterion – the bottom line. If the company cannot pay what it is ordered
to pay, it must go into liquidation, which is what the retrenchment exercise
was designed to avoid.”
These remarks are equally applicable
to the present case where the retrenchment packages set by the Minister are
unaffordable to the employer. Clearly, in these circumstances, an employer is
not obliged to retrench, on the conditions imposed, to its financial detriment.
In my view, until the appellant
notified the respondents of the termination of their employment by virtue of
the fact that the proposed retrenchment was going to be effected by the
appellant, the respondents remained in the employ of the appellant who was
entitled to recall them back to work. Their failure to respond positively
to the command by the appellant to return to work constituted misconduct on
their part. They were accordingly properly charged with misconduct and
dismissed by the appellant.
The appeal is therefore allowed with costs.
