Benham G. Mombeshora v IAC (Zimbabwe) (SC 72/17

“A reading of s 12B of the Labour Act and s 175 of the Companies Act shows that the provisions are inconsistent as they are mutually exclusive. Section 175 of the Companies Act seeks to limit the dismissal of a director in accordance with the procedure set out in that section i.e., by special resolution. On the other hand, the Labour Act provides for the dismissal of employees in terms of a code of conduct”.

Introduction

This case deals with situations where an individual is both an employee and a director of a company. It is common for companies to appoint an individual as a managing director and at the same time have the same person on a contract of employment. The question that then follows is whether the procedure in the Companies and Other Business Entities Act, 2019 or the Labour Act should be utilised in the event of separation. This case also dealt with the effect of handling a disciplinary hearing beyond the prescribed period in terms of the National Code.

The Facts

The appellant was engaged as the Managing Director for the respondent company. He was suspended and a disciplinary hearing was held in terms of the National Code.[2] He did not attend the disciplinary hearing which proceeded in his absence. He was found guilty and dismissed in absentia. Appeals to the appellate authority, arbitrator and the Labour Court failed to yield the desired results leading to the Supreme Court appeal.

The Law

The initial finding of the Supreme Court was that the appellant could not challenge the composition of a disciplinary hearing because he had not attended the hearing.

On whether the Companies Act or Labour Act should apply in the circumstances the court found that Labour Act took precedence over the Companies Act.  This was mainly because the appellant was an employee who had a contract of employment. He also earned a salary because of this contract.

The Supreme Court also made a finding that the hearing was conducted outside the 14 days provided in the National Employment Code of Conduct. The court found that such a delay does not end the disciplinary hearing. It only gives an employee the right to demand that the hearing be done. It rightly made use of the remarks of the court in the case of Air Zimbabwe v Mnesa & Anor SC 89-04, where the court remarked:

“A person guilty of misconduct should not escape the consequences of his misdeeds simply because of a failure to conduct disciplinary proceedings properly by another employee. He should escape such consequences because he is innocent.”

Conclusion

As a result of the above, the court concluded that the appellant was guilty of the offence charged and upheld the decision of the Labour Court.

Own Comment

This matter was determined at a time when the Companies Act (Chapter 24.01) was still operational. In 2019, the legislature introduced the Companies and Other Business Entities Act (Chapter 24:31). A perusal of this law shows that the section on the removal of directors is almost identical to the one that was in the now-repealed Companies Act. Besides the new legislation, the remarks of the court, in this case, are still watertight. If an individual is under a contract of employment the Labour Act determines how the relationship with the employer is to end.


[1]           Benham G. Mombeshora v Institute of Administration and Commerce (Zimbabwe) SC 72 – 17.

[2]               Statutory Instrument 15 of 2006.

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