Unilever Zimbabwe (Private) Limited v Simbarashe Matsheza (SC16/17)

 “In my view, the rights of the respondent are embodied in the contract which he signed. He cannot look outside the contract to add to its terms. The act of generosity by the appellant in awarding him an increase in his allowance cannot by any stretch of imagination be deemed to be an acknowledgement that the respondent was entitled to more than was agreed to in terms of the contract.”

Introduction

This case illustrates the legal implications associated with a mutual separation agreement validly agreed upon and signed between an employer and an employee. In terms of the National Code of conduct, an employer and an employee can mutually agree in writing to end a contract of employment.

The major question before the court was “whether the respondent was entitled to a higher retrenchment package than that agreed to in the retrenchment agreement concluded by the parties”. It was argued that once this agreement is put in place; no party can renege. All parties will be bound by the terms and conditions of what would be contained in the document governing the separation.

Facts

On 15 October 2015, the employer and the employee mutually agreed to end their employment relationship. The package given to the employee was in full and final settlement of all claims, present or future arising from the employment. When the mutual separation with the respondent employee had been finalised, the employer reviewed the basic salaries for the rest of its employees. It also increased the respondent’s retention allowance. The respondent appreciated the gesture but later he demanded that his package be reviewed in tandem with the reviews that had been received by the other employees. The employer did not agree. Aggrieved, the respondent employee brought the matter to the attention of a labour officer. Conciliation failed and this led to arbitration. The arbitrator argued that the retrenchment package had to be reviewed as per the employee’s demand. Labour court dismissed the appeal against the arbitrator’s decision leading to the current proceedings.

The court’s reasoning

Sanctity of contracts

The Supreme Court’s ruling was premised on the principle that contracts validly entered between parties should be respected. The court noted:

“A party who signs a contract is bound by its terms. That is trite. He cannot blow hot and cold by accepting his benefits under the contract and thereafter, as an afterthought, demanding benefits outside the contract. Once he signed the retrenchment package thus accepting its terms, he was no longer an employee of the appellant and was not entitled to any benefits awarded to the appellant’s employees.”

One cannot look elsewhere for conditions defining his or her separation from the employer if these are contained in a document validly signed and agreed upon by both parties.

Own Comment

The Supreme Court, in this case, confirmed the doctrine found in Magodora & Others v CARE International Zimbabwe[1] wherein the court argued that it was not the duty of the courts to rewrite a contract. Employers and employees remain bound by what they would have agreed upon for as long as the said agreement did not result from fraud or duress or any other element that attacks the consensus between the parties.

This case must be read together with the Ashanti Golf Fields case discussed below, Both cases relate to the importance of abiding by a contract duly agreed upon by the parties. The law does not tolerate litigants that renege from contracts that they would have appropriately entered into.


[1]           Magodora & Others v CARE International Zim (SC 191/13).

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