Alpha Madzima v Marange Resources (Private) Limited SC12/18

“It is settled in our law that an appellate court must be slow in interfering with the discretion exercised by a lower court. It must appear that some error has been made in exercising the discretion. If the primary court acts upon a wrong principle, if it allows extraneous or irrelevant matters to guide or affect it, if it mistakes the facts, if it does not into account some relevant considerations, then its determination should be reviewed and the appellate court may exercise its own discretion in substitution, provided always it has the material for so doing.”


Introduction

Alpha Madzima v Marange Resources (Private) Limited dealt with an employee charged with “act or conduct inconsistent with the fulfillment of express or implied conditions of his contract of employment” in terms of the National Code (S.I 15 of 2006). It demonstrates the fact that the act or conduct should go to the root of the employment relationship to warrant dismissal. This happens when an employee does not fulfill his or her fiduciary duty to further the interests of the employer. This case also demonstrates the discretion an employer has in dismissing an employee who acts in a manner that is incompatible with his contract of employment.

Facts

The facts which led to the current dispute can be summarised as follows:

  • The appellant was employed as a Finance Manager in 2010.
  • In October 2012, when events giving rise to the current dispute arose the appellant was acting as the Chief Financial Officer for the respondent.
  • On 3 October 2012, the appellant received a phone call from Tetrad requiring him to do a letter of undertaking on behalf of one of the company’s suppliers called DD Mining and General Suppliers.
  • A Draft Letter of Undertaking emanated from Tetrad and had the effect of guaranteeing that Marange Resources (Private) Limited will irrevocably and unequivocally direct all payments due to the supplier to the account held by Tetrad. The appellant consulted his superior who gave him the go-ahead to put the letter of undertaking on the company’s letterhead and to sign it.
  • The major problem with this whole transaction was that DD Mining and General Suppliers was never the supplier of the respondent.
  • In September 2013, the police brought to the attention of the appellant and his superior an alleged fraud relating to orders financed by Tetrad in favour of DD Mining and General Supplies.
  • The appellant was charged with fraud and acting in a manner that is inconsistent with the fulfillment of express or implied conditions of his contract of employment in terms of Labour (National Employment Code of Conduct) Regulations, 2006, SI 15 of 2006.
  • He was found guilty and dismissed for acting in a manner that is inconsistent with the fulfillment of express or implied conditions of his contract of employment.
  • An appeal was lodged with a Labour Officer and finally with an arbitrator following a certificate of no settlement. The Arbitrator found that the employee was guilty but prescribed a final warning letter.
  • Not happy with the Arbitrators finding the appellant appealed to the Labour Court. At the Labour Court, the arbitrator’s findings were set aside, and the dismissal was confirmed.
  • The decision of the Labour Court thus founded the Supreme Court Appeal.

Reasoning

The two legal questions before the Supreme Court were whether the appellant was guilty of the offense charged as well as whether the Labour Court should have interfered with the decision of the Arbitrator.

In finding that the appellant was guilty, the Supreme Court noted that employer and employee relationships are based on the principle that the employee should safeguard the interests of the employer. The appellant had a duty to advise the respondent company finance department which he failed to do competently.  The court noted that by signing a letter of commitment on behalf of a third party the employee was not acting to further the interests of his employer. The court thus remarked as follows:

“The Appellant conceded that the letter that gave rise to the litigation between the parties was written at Tetrad’s bidding and initiative. The contents of the letter were authored by Tetrad. The appellant was an employee of the respondent and not of Tetrad. The appellant’s conduct in writing the letter and signing it amounts to him acting in pursuance of the interests of a third party, which third party is not included in the employer-employee relationship that he had with the respondent. This is so because by appending his signature to the letter of undertaking, the appellant vouched for the truthfulness of the contents of the letter. He vouched for the correctness of the allegations in a letter that did not emanate from or benefit his employer. In addition, he did this without ascertaining the truth of the contents of the letter in circumstances where other departments of the respondent company would have been in a position to advise him accordingly.”

The essence of the above remark was to demonstrate the circumstances under which an “act or conduct inconsistent with the fulfillment of express or implied conditions of his contract of employment” can go to the root of the employment relationship to warrant dismissal. The appellant should not have signed the undertaking in the first place. The undertaking did not further the interests of the employer in any way. It also breached the trust and integrity required of an employee who is in the appellant’s position. The court had no option other than to confirm, that under the circumstances, the appellant was guilty as charged.

The court confirmed the legal position that the penalty to be imposed for workplace violations entails an exercise of the discretion by the employer. It set aside the ruling by the arbitrator that had found that the employer’s discretion to terminate had not been exercised in a judicial manner. In emphasising the discretion of the employer to dismiss the employee under the circumstances the court decisively noted:

“The following excerpt from Standard Chartered Bank Zimbabwe Limited v Michael Chapuka (supra) at page 7 of the judgment, now quoted more fully, is of assistance in the proper determination of matters of this nature:

 “Conduct which is found to be inconsistent or incompatible with the fulfillment of the express or implied conditions of a contract of employment goes to the root of the relationship between an employer and an employee, giving the former prima facie right to dismiss the latter.”

It was on the basis of the above reasoning that the court realised that the employee had been correctly dismissed.

Judgment

The appeal was dismissed. This meant that the appellant’s dismissal was confirmed.

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