REPUDIATION OF A CONTRACT OF EMPLOYMENT

1.    Introduction

In this section, we outline the rules of contract that determine and explain the repudiation of a contract of employment. Repudiation occurs when a party to a contract shows, by omission or conduct, that they are no longer willing to be bound by a contract duly concluded by the parties.[1] It is a breach of contract.[2] The principle emanates from the common law rules upholding the sanctity of any contract.[3] In terms of these common-law rules, persons are bound by the contract that they have with others and as such contractual obligations, as a general rule, cannot be regened from. In Latin words, the rule states “pacta sunt servanda” loosely translated to agreements must be honoured.[4] It is an important aspect of employment law that one cannot afford to ignore. The discussion will also outline some of the common law principles that have been upheld in the course of judicial decision making.

2.    Intention is an important element of repudiation

It has already been mentioned that repudiation occurs when conduct or omission by one party shows an unwillingness to be bound by a contract of employment. The intention not to be bound by a duly agreed contract is thus an important element of this kind of breach. We submit that a mistake on the part of the accused party cannot lead to the repudiation of a contract. The act or conduct in question should leave a reasonable person objectively concluding that a contracting party is no longer willing to be bound by a contract of employment.[5]

The intention element of repudiation on the part of the employer is correctly captured under section 12B(3)(a) which provides for circumstances where an employee is deemed to have been unfairly dismissed. The section states that:

“An employee is deemed to have been unfairly dismissed—

  • if the employee terminated the contract of employment with or without notice because the employer deliberately made continued employment intolerable for the employee…”

The intention element is captioned by the words, “deliberately made” highlighted above. The test is objective, and a reasonable person should conclude that the employer’s actions or omissions went to the core of the employment relationship to warrant the conclusion that repudiation has occurred. It is only when this happens that one is deemed constructively dismissed.

Several court judgements have elaborated on the circumstances that qualify as a repudiation of a contract of employment. These judgements are discussed next.

3.    Tel-One (Private) Limited v Kuyumani Zulu[6]

The major principle emerging from this case is that an employee who is on suspension and who proceeds to accept a job elsewhere repudiates his contract with the employer that suspended him or her.

In terms of the facts, Kuyumani Zulu was put on suspension on 21 February 1996. On 1 September 1997, he was employed by ZIMNAT and was employed there until he was dismissed on 12 February 1998. ZIMNAT terminated the Zulus contract upon being advised that he was still an employee for Telone. Meanwhile, Telone unlawfully dismissed him from employment, founding litigation that culminated in the awarding of damages in favour of Kuyumani Zulu. Dissatisfied with the damages the Supreme Court was called upon by the employer to adjudicate the dispute. In its decisive remarks, the Supreme Court argued:

“Firstly, the Tribunal failed to appreciate the distinction between an employee who is on suspension and an employee who has been dismissed, whether unlawfully or lawfully, and the different legal obligations pertaining to the different employees. An employee who is on suspension is under a legal obligation to avail himself for duty to his employer during the period of suspension and that if such employee takes employment during the period of suspension, he repudiates his contract of employment. See Zimbabwe Sun Hotels (Pvt) Ltd v Lawn 1988 (1) ZLR 143 (S).   In that case, GUBBAY JA (as he then was) said at p 150:”

As a function of the law, therefore, an employee on suspension does not have a duty to mitigate his or her loss by seeking alternative employment. If this happens, on the day he or she takes up new employment, repudiation happens with the effect of ending the contract. According to Tel-One (Private) Limited v Kuyumani Zulu SC 110/04, mitigation of loss is only available to an employee who has been dismissed. As to the effect on the damages payable to the employee who would have repudiated a contract of employment, the court ruled that the employee is entitled to damages from the time his employment was unlawfully terminated to the time he or she repudiated the contract of employment.

4.    Thomas Meikles Stores v Dorris Mwaita and Stella Phiri[7]

This case demonstrates the fact that repudiation also occurs when an employer makes continued employment intolerable for the employee. This may happen because of an unfair demotion effected on an employee.

The employees were buyers for the applicant company and in September 2004, they were advised of a restructuring exercise being implemented by the employer. In terms of this exercise, their responsibilities had been subsumed by other buyers in the company and they had to move to new positions dubbed section manager. In terms of the suggested changes, the employees’ salaries would remain the same. They would however not be entitled to a motor vehicle. They were also advised that if they were unwilling to take up the new positions the employer would pay them an exit package. Aggrieved, the employees refused the new positions and the exit package. Several communications were exchanged between the parties culminating in one letter sent to the employer whose language the employer took exception to. Both employees were charged and dismissed. The Labour Court found that the employees had been constructively dismissed and ordered their reinstatement. Aggrieved, the employer appealed to the Supreme Court.

In concluding that the employer had repudiated the employee’s contracts, the court accepted that the letter that was given to the employees on 30 September 2004 gave the employees only two choices, “to accept either demotion by a certain date or a pre-determined exit package”. No negotiations were to be undertaken. The court further accepted that since they did not report for duty as required, they were deemed to have been dismissed. It realised that the employer was attempting to force the employees to accept a demotion on the pretext of reassignment. The court also made an important finding that given the wording of the letter dated 30 September 2004, disciplinary action against the employees was no longer lawful because they had already been dismissed.

The two cases discussed above provide an insight into the various forms repudiation of an employment contract can happen. Several circumstances other than those already discussed above qualify as a repudiation of a contract of employment. On the employee’s side, repudiation can occur when the employee deserts employment or when the employee deliberately refusing a lawful instruction, to mention a few of such instances.

On the employer’s side, repudiation of a contract can take the form of failing to pay the employee the agreed wages and salaries, withdrawing a contractual benefit without consent, unilateral changes to an employee’s role. Indeed, as noted above, repudiation on the part of the employer may be a ground for constructive dismissal.

5.    Options available when repudiation occurs

Repudiation does not automatically end a contract.[8] On the part of the employee, should an employer show the unwillingness to be bound by the contract two options are available as stated in Tel-One (Private) Limited v Kuyumani Zulu. The employee can decide can enforce his or her rights without leaving employment or can accept the repudiation, end the contract, and sue for damages. In Thomas Meikles Stores v Dorris Mwaita and Stella Phiri, the court cited Joubert, General Principles of the Law of Contract, in which it is also argued that repudiation does not end a contract of employment. The one affected by the repudiation has an option to end the contract and seek legal redress.

On the part of the employer, it is our considered submission that once repudiation happens the employer must accept the repudiation and proceed to follow the necessary procedures in terms of the applicable code of conduct. This may entail engaging in disciplinary action as provided by the applicable code of conduct. In the case of an employee who would have deserted, the employer can still engage in disciplinary action. In such cases, a hearing notification should be sent to the employees last known address and thereafter a disciplinary action can be held in absentia.

6.    Conclusion

It is summarised from the overview above that the repudiation of a contract of employment happens when either an employee or an employer shows an unwillingness to be bound by an employment contract appropriately agreed by the parties. The action or omission by either party should be such that it goes to the root of the employment contract to show that continued employment is no longer tenable. The Labour Act (Chapter 28.01) provides that an employee is deemed unfairly dismissed if the employer makes continued employment intolerable for the employee. It goes without saying that an employee who is under the employ of one employer repudiates his or her contract of employment if he or she gets employed by another employer. This is so even when the employee is on suspension.


[1]           Visser & Potgieter’s Law of Damages 3ed (Juta 2012).

[2]           Hutchison & Pretorius (eds) The Law of Contract in South Africa 3rd ed (2017) Oxford, Cape Town p.

[3]           Hutchison & Pretorius (eds) The Law of Contract in South Africa 3rd ed (2017) Oxford, Cape Town.

[4]           Hutchison & Pretorius (eds) The Law of Contract in South Africa 3rd ed (2017) Oxford, Cape Town.

[5]           Hutchison & Pretorius (eds) The Law of Contract in South Africa 3rd ed (2017) Oxford, Cape Town.

[6]           Tel-One (Private) Limited v Kuyumani Zulu SC 110/04

[8]                Tel-One (Private) Limited v Kuyumani Zulu SC 110/04

2,412 Views

IMPACT OF STATUTORY INSTRUMENT 33 OF 2019 ON DAMAGES IN LIEU OF REINSTATEMENT

QUERY:

“I have a labour matter in which I was constructively dismissed in 2016 and the labour officer made a ruling in my favour and in March 2019 I made a claim for quantification of damages and a ruling was made on 1 August 2019. I had made a claim in USD, but the labour officer went on to make a ruling with only a “$” sign. I had opposed its confirmation and prayed for an alteration that the award should be USD not ZWL and that the damages would then be converted from USD to ZIM$ at prevailing interbank rates when payment is made but the court was of the reasoning that in the absence of such specification of USD the amount can only be ZWL and also SI33/2019 (4)(d) would apply in this instance regardless of the fact that the assessment of the damages was made after the promulgation of the statute. As for considerations to equity, the court overlooked its implication. My question is whether I have a basis for appealing the court’s decision. because the assessment of the damages was made after SI33/19   with reference to my USD salaries as such the claim was not within the ambit of the statute and the matter of considerations to equity.”

RESPONSE:

Introduction

There are two major hurdles in this instance. The labour Officer made a mistake in not mentioning that the values were not in USD but this does not change the current legal position. The said Statutory Instrument and subsequent amendments to the Finance Act now provide that all debts and monies owed prior to the SI should be converted to ZWL at 1:1.

SI 33 OF 2019 Provisions

The SI clearly provides under section 4(1)(d) that:

“…that, for accounting and other purposes, all assets and liabilities that were, immediately before the effective date, valued and expressed in United States dollars (other than assets and liabilities referred to in section 44C(2) of the principal Act) shall on and after the effective date be deemed to be values in RTGS dollars at a rate of one-to-one to the United States dollar;”

Finance Act Amendment

The amendments to the finance act now clearly indicate that court judgements and obligations created prior to the coming in of the act should also be converted at the same rate. In this regard, The Finance (No. 2) Act, 2019 now provides under section 22(4)(a) that:

“.. it is declared for the avoidance of doubt that financial or contractual obligations concluded or incurred before the first effective date, that were valued and expressed in United States dollars (other than assets and liabilities referred to in section 44C(2) of the principal Act) shall on the first effective date be deemed to be values in RTGS dollars at a rate of one-to-one to the United States dollar;”

Zambezi Gas Zimbabwe (Pvt) Ltd v N.R. Barber (Pvt) Ltd & Another

The second hurdle is the recent Supreme Court judgement that affirmed the position that all debts and judgements before the SI should be converted at the rate of 1:1. In terms of the judgement in Zambezi Gas Zimbabwe (Pvt) Ltd v N.R. Barber (Pvt) Ltd & Another SC3 20, the following is the contemporary position:

“Once a conversion of the value of an asset or liability denominated in United States dollars is made to the value of RTGS dollars, the converted value remains the same, as the two different currency denominations both carry value. No exchange rate can be applied as the judgment debt remains a judgment debt with a value after it is converted to the local currency. The RTGS dollar has the value given under the one-to-one rate and it remains on that value even after the effective date.”

Conclusion

As a result of these authorities, it is doubtful, in my view, if any court would award damages in USD.

3,068 Views

Agricultural and Rural Development Authority (ARDA) v Francis Baureni and 18 0thers SC 12/19

“In the final analysis, I take the view that the legislature could not possibly have intended that the complex processes enjoined in the orderly and equitable implementation of s 12C should be concluded and finalized within the limited time frame of only 14 days. To obligate both the Board and the employer concerned to make hurried and ill-considered choices and decisions would certainly not serve the interests of justice at the workplace as contemplated by s 2A of the Labour Act. As I have already indicated, a liberal and expansive interpretation of s 12C is in the best interests not only of the employees but also of the employer.”

Introduction

Act 5 of 2015 brought about a minimum retrenchment package payable to employees whose contracts are terminated on notice among other grounds.  This minimum retrenchment package was also applicable to a certain class of employees whose contracts were terminated on notice following the infamous Zuva Petroleum judgment. ARDA v Francis Baureni and 18 0thers is peculiar, in my view, because it relates to the interpretation of section 12C which section has been misunderstood since inception. This case also deals with the evidentiary burden in instances were an employer alleges that it has an incapacity to pay the minimum retrenchment package.

Background

The employees, in this case, had their contracts terminated on notice in December 2015. Whilst a claim to determining the fairness of their dismissal was pending an inquiry by a labour officer, the employer made an application for exemption from paying the minimum retrenchment package. The application was lodged with the retrenchment board. On hearing the dispute, the Retrenchment Board determined that the employer should pay the full retrenchment package. It was ordered that the payment will be in the form a lump sum as well as instalments spanning over a period of six months. The employer was not happy. An appeal was lodged against the decision of the Retrenchment Board. On hearing the appeal, the Labour Court dismissed it. The decision of the Labour Court then resulted in the current appeal dispute.

Findings and the law

In its first ground of appeal, the employer challenged the constitutionality of the retrospective application of the minimum retrenchment package that has come with Act 5 of 2015. This ground had to be correctly abandoned considering the Gratermans Case (2018) which had found nothing unconstitutional about the retrospective application of the Act.

The most important aspect of this judgement is, in my view, the interpretation of section 12C (3) and related provisions. This section holds that when an application for exemption is brought before the retrenchment board is must be “responded” to within 14 days, failure of which it will be deemed to have been granted in favour of the applicant. The applicant company argued that the word “respond” means that the board would have dealt with the matter and finalised it within the requisite period. The argument went on to state that, because the board had not determined the matter within 14 days, the matter must be decided in favour of the applicant company. The court did not agree. The Court made use of the ordinary grammatical meaning of the word “respond” and came to a finding that such a word did not mean that the board would have to conclude the matter within 14 days. It remarked as follows:

“The word “respond”, in its ordinary connotation, means “to say or do something as a reaction to something that has been said or done” (per the Cambridge English Dictionary). The word clearly does not denote anything akin to a final or definitive decision on anything raised by one person for a response to be given by another. Rather, it signifies an exchange of words or conduct between one or more individuals”

 It also argued that a period of 14 days it too little a time to completely deal with issues relating to incapacity to pay a retrenchment package. It determined that “respond” should be deemed to mean action taken by the board upon receipt of the application for exemption. In the court’s view, such action includes inviting parties to the hearing.

Further, the court made a finding that the applicant company had continued to take part in the proceedings called upon by the board even after the period of 14 days had elapsed. This meant that the applicant accepted that the proceedings were still valid.

In as far as evidence of incapacity to pay was concerned the court noted that the applicant company failed to place evidence before the court to show its inability to pay. The company had referred to unaudited financial statements, but such statements were never placed before the court. In addition, the bank statements that it had sought to rely on were deemed to be not enough proof of incapacity. The court had no other option, it decisively remarked;

“The onus clearly lay on the appellant to show that it should be exempted from paying the minimum retrenchment packages due to the respondents. As I have already stated, it failed to produce any meaningful evidence to substantiate its claim of insolvency or incapacity to pay the paltry sum of $55,000.00 that was ordered by the Board to be paid, partly as lump sums and partly by way of installments. It clearly failed to discharge the evidential onus that squarely fell upon it.”

Final determination

The appeal was dismissed with costs. The matter was thus decided in favour of the respondent.

Own comment

The Supreme Court is commended for taking the opportunity to bring clarity to Section 12 as amended by Act 5 of 2015. Most people, including me, thought that if an exemption matter before a retrenchment board is not resolved within 14 days it will have to be decided in favour of the applicant. This is clearly not the case as the word “respond” was given its dictionary meaning which means the boards reaction to the application. The court also brought clarity to the type of evidence that is required to satisfy a court of the incapacity of a court in paying the minimum retrenchment package. This is important for those contemplating such an application.

1,149 Views

Verukai Emilton N/O v TM Supermarket (Pvt) Ltd and Itai Nkomo and Thembinkosi Nyathi LC/MT/37/18

“I  feel compelled  to  respectfully state  that  Act  5 of 2015 was a knee jerk reaction to the aftermath of  the  Zuva judgment and so not much thought was put into the  drafting of  the amendment resulting in poor  draftsmanship which  has  caused  interpretation nightmares  to litigants, Labour  Court judges  and legal practitioners alike.”

Introduction

I find the principles of law discussed in this case interesting. This matter pertained to an application for confirmation of a draft ruling in terms of section 93 of the Labour Act as amended in 2015.  The case explores various claims put forward by two ex-employees. Issues to do with overtime, shares emanating from an ownership scheme and compensation for loss of employment were subject of contention in this case. The reasons put forward by the court in coming up with the final judgment are exciting and will be summarised in this instance.

Background

The brief facts of the matter are that the employees were dismissed in December 2016 after breaching company rules. They then decided to put forward various claims before the Ministry of Labour, Labour Officer. As mentioned above, these claims entailed overtime payment, a claim for shares as well as compensation for loss of employment in terms of the amended provisions of the Labour Act. The Labour Officer to whom the dispute was referred decided in favour of the former employees. It was this draft ruling that the labour officer sought to have confirmed by the Labour Court.

Reasons for the judgment

For ease of reference, I will breakdown the reasons for the judgment under small headings inline with the matters before the court.

Overtime claim

The court did not support the claim for overtime. For starters, it found that the employees did not produce evidence for the claim. It reinforced the rule that the one who claims should provide the proof of the claim. The court further made a finding that the biometric system that the employer used was reliable and that its results had always been used to pay the employees overtime or to give them time off in lieu of overtime. The fact that the employees failed to adduce evidence supporting their overtime, therefore, meant that there was no supportable claim. The court also supported the company’s argument that the overtime ought to have been authorized before being existent. Failure to provide such proof proved disastrous for the employees.

In addition to the above, the court made a finding that the Labour Officer failed to show the basis for the computations he had inserted in the draft ruling. The Labour Officer went on to admit that he had erred in as far as the computations were concerned. It was for these reasons that the court could not support the claim put forward and had no option other than not to confirm this part of the draft ruling.

Shares

The employees were contributing to a share ownership scheme in line with the country’s indigenization policy. The money for this scheme was deducted from the employee’s salaries and remitted to this scheme. The employee’s contention was in connection with a payout that had been made. They argued that because the employer was the one deducting these monies the employer ought to compensate them.

The court did not support the employee’s argument. It noted that the administration of the scheme was in the hands of trustees. These are the persons the employees ought to have confronted if they had an issue with the payout which had been made. It pointed out that the employer would only come into the picture if the deducted amounts had not been remitted to the scheme.

The court failed to support this claim.

Compensation for loss of employment

The employee sought to claim compensation in terms of section 12(4a) which came as a result of the 2015 amendment. The court had a problem with the argument that the employees having been dismissed were entitled to compensation for loss of employment. It realized that that section 12 (4a) applied to instances were an employee lost his employment as a result of termination through giving notice. It argued that the employees in casu had been dismissed. Such a dismissal was in terms of section 12B and as a result, section 12 (4a) could not apply.

The court decisively reasoned as follows:

“A dismissal letter is just that, it can never be equated to notice given where termination is on notice. To suggest so would be tantamount to saying once disciplinary proceedings have ended and the employee is found guilty and the penalty of dismissal is meted out,  the employer then serves the employee with a notice, informing them of the decision but giving them notice that such dismissal will take place on some future date”.

As a result of the above findings, the court concluded that the employees were not entitled to the compensation for loss of employment. It thus also failed to confirm this part of the draft ruling.

Court Decision

The court failed to confirm the whole draft ruling.

Own comment

The courts reasoning is this case is much-admired. The issue of compensation for loss of employment was well reasoned. There is no reason why an employee who has been dismissed should be compensated. Such an employee would have breached company rules for starters. Why then should someone be compensated for going against company rules?

Further, the judgment is also commended for upholding the need for employers to approve and authorize overtime before its worked and paid. This avoids a situation where an employee deliberately prolongs work at the expense of the employer. It also did not support instances were labor officers insert figures in their awards without any legal basis.

1,172 Views

Mike Chiruma v Delta Bevarages LC/MT/74/18

“I do not  intend  to consider whether  the principles applicable in  quantification of  damages in lieu  of  reinstatement can be imported  to  the  compensation  for loss  of employment  provided  for  in  S12 C (2)  of  the  Act,  a point  which  deserves  serious  thought  but  better  left  for appropriate  argument  should it be  raised  in  future  litigation…”

Introduction

This case involved an application for quantification of damages in lieu of reinstatement. I liked the way the court defined back-pay and how it then used the back-pay period as a yardstick for computing all the damages/claims that were applicable. The legal conclusion reached in determining whether an employee is entitled to cash-in-lieu of notice in the process of quantification damages in lieu of reinstatement is also thought-provoking.

I lament that the court decided not to pronounce on an important question as to whether the principles behind the quantification of damages in lieu of reinstatement can be imported to the compensation for loss of employment provided for in S12 C (2) of Act 5 of 2015. This question has been subjected to controversy and commentators do not entirely agree on this matter. The court had an opportunity to bring clarity to this matter and unfortunately, this was left for another day.

Facts

What is important to note is that an employee was dismissed from Delta Beverages’ employ whereupon an appeal was lodged to the Labour Court. Internal appeals had been unsuccessful. At the Labour Court, the appeal was successful following a default judgement. Reinstatement failed and with the consent of all the parties, an order for payment of damages was granted leading to the current application.

Reasons for Judgment

Back-pay

The court agreed with the respondent’s argument that back pay should be calculated from the date of unfair dismissal and up to the day of order of reinstatement. This means that the backpay cannot be calculated beyond the period of reinstatement. The effect of this period is that all other claims/damages will be calculated using this period of back pay. Cash in lieu of leave, production bonus among others, were computed with this period of back pay in mind.

 When determining what the employee was entitled in terms of all the claims the court did not go beyond the period of back pay. It is submitted therefore that the back-pay period is instructive in terms of the quantum of the damages. The period of back-pay can only be altered after taking into consideration the efforts made by the employee in finding alternative employment to mitigate the loss emanating from the wrongful dismissal.

Cash in lieu of leave

The period of cash in lieu of leave will be determined by the period of back pay. The court noted that the entitlement to cash in lieu of leave emanated from the fact that if it was not for the unfair dismissal the employee would have accrued paid vacation leave.

Cash in lieu of notice

The court argued that the employee was not entitled to any cash in lieu of notice because his employment never revived. It found this claim to be contradictory in the sense that the current application was for quantification for damages because reinstatement had failed. That if he had been reinstated then the application for quantification of damages would have been unnecessary. Having not been reinstated the employee, the court argued, was not entitled to cash in lieu of notice.

Production Bonus

It was agreed that but for the unfair termination, the employee would have been entitled to a production bonus. The court argued that the production bonus to be awarded to the employee should fall within the period of back pay, above.

Compensation for loss of employment

The employee had his employment terminated on the 30th of April 2015 and thus the court did not see merit in the argument that the compensation in terms of act 5 of 2015 would apply to the employee.  It would seem like the court was prepared to accept the argument by the respondent that this compensation would amount to two separate awards, the damages in lieu of reinstatement as well as compensation for loss of employment. The court did not consider it necessary to determine whether compensation for loss of employment can be applied to the principles for quantification of damages in lieu of reinstatement.

Mitigation of loss

The court explored the various efforts made by the employee to secure alternative employment in order to mitigate the losses deriving from the wrongful termination. Such efforts are always taken into consideration to determine whether the period of back pay should be shortened or increased. Issues like the employee’s age, health, qualifications are all important in determining the efforts made by the employee in finding alternative employment.

Medical Aid

The employee wanted to claim the money that would have been payable to his medical aid company. The court did not agree that the employee was entitled to medical aid payments. The courted was quick to mention that the employee would have been entitled to a refund of medical expenses that he had incurred during the period of unfair termination.

Punitive Damages

The court argued that these can be claimed separately and despite the award of other claims. These would not amount to “double damages” a situation where an employee is compensated twice for the same act of unfair termination. From the court’s remarks, these damages are awarded when the employer deliberately and with no reasonable cause made reinstatement impossible.

Non-monetary Benefits

The notable principle here is that an employee is entitled to all the benefits he would have been entitled to, but for the unfair termination.  The court found that the employee was entitled to soap and beverages that he would be entitled to in the course of his employment. The monetary value of such benefits was calculated mindful of the period of back-pay as mentioned above.

Own comment

As mentioned above, I believe an opportunity was lost when the court decided not to determine whether the principles applicable in the quantification of damages in lieu of reinstatement can be imported to the compensation for loss of employment provided for in  S12 C (2) of the Act. When Act 5 of 2015 was promulgated and compensation for loss of employment there was a lot of debate on this subject with some arguing that damages in lieu of reinstatement had been replaced by this compensation. The court should have therefore provided some direction as to how the two are related if they are.

1,756 Views

QUANTIFICATION OF DAMAGES IN LIEU OF REINSTATEMENT.

The legal principles behind the quantification of damages in lieu of reinstatement have been clearly ascertained by our courts. The Labour Act (Chapter 28:01) provides for various forms of reliefs in cases of unfair labour practices. The reliefs include, but are not limited to, an order for back pay, damages for prejudice suffered because of the unfair labour practice and reinstatement (Section 89 (2) (C) of the Act) […]


Introduction
The legal principles behind the quantification of damages in lieu of reinstatement have been clearly ascertained by our courts. The Labour Act (Chapter 28:01) provides for various forms of reliefs in cases of unfair labour practices. The reliefs include, but are not limited to, an order for back pay, damages for the prejudice suffered because of the unfair labour practice and reinstatement (Section 89 (2) (C) of the Act). The relief of reinstatement is only awarded provided that a court or tribunal stipulates that damages are also payable as an alternative to an employee’s reinstatement or employment. The main aim of this article is thus to outline the law that operates in the sphere of quantification of damages as an alternative to reinstatement. I start with a review of the Labour Amendment Act (2015) and will then look into the various principles of damages in lieu of reinstatement, which principles have been developed by our courts.

Labour Amendment Act (2015) and Damages In lieu of Reinstatement
Some legal writers have commented that, by enacting section 12C of the Labour Amendment Act (2015), the legislature, has come up with a legal way of computing damages in lieu of reinstatement1. The section 12C of the Labour Amendment Act provides for a minimum retrenchment package that is payable to an employee whose termination is occasioned by a retrenchment exercise, mutual agreement and upon expiry of a contract. The authors go on to argue that getting the minimum retrenchment package as well as the “traditional damages” can be seen as “double dipping”. I do not share the same views. In this section, I will point out that the minimum retrenchment package, as well as the damages in lieu of reinstatement, are two different aspects of our labour law and that the legislature did not do away with what may be termed as traditional damages in lieu of reinstatement. The discussion will not go into whether or not the compensation contemplated by Section 12C is fair or not.

The starting point of my argument is that the Labour Amendment Act (2015) did not repeal section 89(2) (C) (iii) of the Act2 which empowers the Labour Court to order reinstatement upon a finding of wrongful dismissal. I submit that an inquiry into whether a dismissal was fair or not is independent of whether or not someone received compensation for loss of employment. It is further argued that receiving the compensation for loss of employment cannot be interpreted as “full and final settlement” of payable damages in lieu of reinstatement. Such an interpretation would mean that every dismissal/termination is presumably unfair and that the employee is supposed to receive damages in lieu of reinstatement. It would also mean that upon a finding that an employee has been unfairly dismissed such employee is entitled to nothing having received compensation in terms of section 12C of the Labour Amendment Act. I believe that such an interpretation would be absurd.

Secondly, the golden rule of statutory interpretation dictates that words in an enactment should be given their ordinary grammatical meaning3 unless this would lead to absurd results4. There is nothing in the wording of section 12C that suggest that the section replaced damages in lieu of reinstatement with the compensation of loss of employment. In any case, it is argued that damages in lieu of reinstatement are only available to employees whose termination is wrongful and compensation for loss of employment is available to every employee whose termination is lawful.

Period of Damages in lieu of reinstatement
The starting point for the computation of these damages is the date of wrongful dismissal5. The date of unfair/wrongful dismissal has been seen by our courts as “fixed and immutable” and that it is “not capable of being shifted, even metaphorically6”. Whilst the starting date for computing the damages can be easily ascertained, the end date can be a subject of controversy and debate. The last date for the computation of the damages is complicated by a need to mitigate any loss arising from the wrongful dismissal, which obligation falls on every unfairly dismissed employee. In Ambali v Bata Shoe Co Ltd7 the court pointed out that,

“I think it is important that this Court should make it clear, once and for all, that an employee who considers, whether rightly or wrongly, that he has been unjustly dismissed, is not entitled to sit around and do nothing. He must look for alternative employment. If he does not, his damages will be reduced. He will be compensated only for the period between his wrongful dismissal and the date when he could reasonably have expected to find alternative employment.


It follows, therefore, that employees are under an obligation to look for alternative employment upon being dismissed. In determining the period within which the employee can “reasonably have expected to find alternative employment” a court is bound to make use of evidence adduced by the parties to the dispute (see Hongyu Enterprises V Phillip Mafoti 8 and Delta Beverages (Pvt) Ltd v Murandu9). In the absence of such evidence, a court is bound to refer the matter back to the court that entertained the dispute in the first instance. This is exactly what happened in Hongyu Enterprises case.


Employees are therefore under an obligation to look for alternative employment upon being dismissed. In determining the period within which the employee can “reasonably have expected to find alternative employment” a court is bound to make use of evidence adduced by the parties to the dispute (see Hongyu Enterprises V Phillip Mafoti 8 and Delta Beverages (Pvt) Ltd v Murandu9). In the absence of such evidence, a court is bound to refer the matter back to the court that entertained the dispute in the first instance. This is exactly what happened in Hongyu Enterprises case.

When considering “the period between his wrongful dismissal and the date when he could reasonably have expected to find alternative employment” for the purpose of computing the damages, various factors are taken into account. Such factors include reasonable attempts by the employee to find alternative employment, the skills of the employee10 and the performance of the whole economy to mention a few.

Computation of Damages
The actual computation of the monetary values of the damages is not an easy task. A court can direct that parties to a dispute agree on an amount payable as damages11. In the event of a
disagreement ensuing the court may direct the parties to revert to it for a determination (See James Mataga v The Commissioner of Prisons and The Director (SSB))12. Most cases of wrongful termination have ended up reverting to the courts or arbitration tribunals so that damages in lieu of reinstatement can be established.

The computation of damages, like the period within which an employee is reasonably expected to have found employment, should be supported by evidence13 adduced by the parties to the dispute. In Erickson Mvududu v Agricultural and Rural Development Authority14, the court rightfully set aside an award of damages to the tune of sixty month’s salary solely because these damages were not supported by any evidence adduced by the parties to the dispute. It was in this regard that the court remarked as follows;

“Although it is trite that damages need not be quantified with mathematical precision, there must be some evidentiary basis for calculating damages, even if they be punitive damages.”

Our courts have been seized by litigation that spanned over the period between the Zimbabwe dollar era as well as the multi-currency regime. In such cases, the courts had no option but to award reliefs that were just. University of Zimbabwe v Sibanda15 is a case in which the court pointed out that;

“The Zimbabwean dollar is no longer in use since the beginning of the multicurrency system. For the Arbitrator to give the award in Zimbabwe dollars the social justice which the Labour Act is seeking to address will not be done. Such orders will only be academic and will not meet the justice of the case.”

The court went further to pronounce that awarding damages in lieu of reinstatement in values that were in the United States Dollar is proper and legal under the circumstances. Earlier judgements had realised the need to award damages in a currency that is functional at the time of the order16.
It has also been determined that the jurisdiction to covert damages from the old currency (Zimbabwean Dollar) to the United States Dollar is that of the Labour Court17 and not any other court or tribunal. This authority is found in terms of 2A of the Labour Court Act which provides for the advancement of social justice and democracy in the workplace by securing the just, effective and expeditious resolution of disputes and unfair labour practices18.

Mindful of the fact that converting a currency from Zimbabwe Dollar to US Dollar is not an easy task, the court in Madhatter Mining Company v Marvellous Tapfuma recommended the appointment of an expert. The court thus mentioned;

“I would accordingly venture to suggest to the Labour Court that it considers enlisting the services of an appropriately qualified expert in financial matters, in order to work out a formula for calculating the damages in question”

It is submitted that the computation of damages in lieu of reinstatement is not an easy task. Employees are under an obligation to find alternative employment and to avoid banking on a claim that is before a court. The process, like any court process, must be supported by evidence and it is important to point out that such evidence must be, as far as possible, written evidence.

Circumstances that will lead to awarding of the damages
The Act stipulates that such damages are only awarded when the employment relationship “is no longer tenable”. The Act does not suggest a direction as to what may constitute an employment relationship that is no longer tenable. The Courts have since shed more light on the circumstances that will lead to the awarding of the damages. The purpose of awarding damages, as an alternative to reinstatement, is to protect the employer from being forced to reemploy an employee in situations were normal relations between the employer and the employee had broken down19.

In Elvis Ndlovu v Higher Learning Centre20 an employee was awarded a relief of reinstatement but the employer refused to comply with the award and further refused to pay any outstanding salaries. The employee was subsequently awarded relief in the form of damages since reinstatement had failed.

Damages may also be awarded when an employer or his representative expressly stipulate that a reinstatement is no longer an option. This case was a subject of debate in Mvududu v Agricultural and Rural Development Authority where the employer had written to the employee legal representative that the employer was preferring payment of damages in lieu of reinstatement. Even though the communication was made “without prejudice” the Court noted that this was an indication that damages in lieu of reinstatement were proper.

Further, a consent order can also provide for damages in lieu of reinstatement. A consent order emanates from an agreement between parties to a dispute which is recorded as an order of a court. In Telecel Zimbabwe Private Limited v Sibangani Mabore such as consent order was the subject of the dispute. Parties to a labour dispute may also mutually agree that the employee is entitled to damages in lieu of reinstatement upon a finding of unfair dismissal21.

Enforcement of Damages
Damages in lieu of reinstatement can be enforced, in terms of section 98 (4) of the Act in the case of an arbitration award, and in terms of section 92B (3) of the Act, in the case of Labour Court Judgement, by registering the award either in High Court or The Magistrates Court.

For an award of damages to be enforceable, it must have a specific amount. In Khumalo v Ingwebu Breweries22 the High Court refused an application for the registration of an award because “the arbitrator should have done the calculation and arrived at a specified amount…”.

The court further pointed out that the authority for quantification of damages is that of the Labour Court or Arbitration Tribunal.

Conclusion
It is reemphasized that the quantification of damages in lieu of reinstatement is not an easy matter. Various legal principles have been laid out by the courts. The important principle is that an employee should mitigate his or her loss by finding alternative employment. If the employee does not endeavor to look for employment he or she will face a reduction in his or her damages. The quantification of damages may at times be complicated by the fact that a dispute occurred between the Zimbabwe dollar era as well as the multi-currency era. In some cases, financial experts have been recommended by the courts. It is always important for parties to a dispute to avoid plucking figures from the air and ensure that tangible proof backs their submissions.

Sources
2 Labour Act (Chap 28.01)
3 Nyamande & Another v ZUVA Petroleum (Pvt) Ltd (SC 281/14)
4 Botha CJ 2012 Statutory interpretation: an introduction for students 5 ed Juta
5 Madhatter Mining Company v Marvellous Tapfuma (SC 51/14)
6 Madhatter Mining Company v Marvellous Tapfuma (SC 51/14)
7 1999 (1) ZLR 417
8 SC 43/07
9 SC38/15
10 Telecel Zimbabwe Private Limited v Sibangani Mabore (SC 50/13)
11 Hongyu Enterprises v Phillip Mafoti (SC 43/07)
12 HC11064/01
13 Redstar Wholesalers v Edmore Mabika (SC 52/05)
14 SC 58/2015
15 LC/H/905/12
16 Gift Bob David Samanyau & Ors v Fleximail (Pvt) Ltd (HH 108 – 11)
17 Madhatter Mining Company v Marvellous Tapfuma (SC 51/14)
18 Madhatter Mining Company v Marvellous Tapfuma (SC 51/14)
19 Mtetwa v Business Equipment Corporation (SC 25/04)
20 HC 583/09
21 Tendai Zizhou v Barclays Bank (LC/H/57/14)
22 HC 2972/13

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