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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