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PG Industries (Pvt) Ltd. v Mabhena (63/02)  ZWSC 44; SC44/03 (28 November 2003)
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Judgment No. SC 44/03
Civil Appeal No. 363/02
P G INDUSTRIES (PRIVATE) LIMITED v NKULULEKO MABHENA
SUPREME COURT OF ZIMBABWE
SANDURA JA, MALABA JA, GWAUNZA JA
HARARE, OCTOBER 2 & NOVEMBER 28, 2003
E Matinenga, for the appellant
T Biti, for the respondent
MALABA JA: The respondent (“Mabhena”) was employed by the appellant (“P G Industries”) on a contract of service which provided that it was terminable by either party on one month’s notice. Mabhena alleged that he was employed as a sales and marketing manager but PG denied his claim, alleging instead that he was employed as a customer service manager. For the purposes of this appeal I shall proceed on the basis that he was employed as a customer service manager.
By letter dated 8 May 2000 Mabhena was given notice of termination of his employment with PG Industries on 31 July 2000. The letter written by the Chief Executive Officer read:
“1. As a result of the reorganised structures and your performance, we are unable to place you within our operations.
2. You are therefore put on notice to terminate your services with PG Industries (Zimbabwe) Limited on 31 July 2000.”
On 7 July 2000 Mabhena commenced review proceedings in the High Court, challenging the lawfulness of the decision to terminate his contract of employment on notice. He contended that PG Industries should have terminated his employment in terms of its registered code of conduct which applied to him. He also claimed an order against PG Industries for the payment of an amount of $3 192 803.00 which he said he ought to have received as salary and bonus when he allegedly was promoted to the position of sales and marketing manager.
PG Industries denied that Mabhena was promoted to the position of sales and marketing manager. It denied any indebtedness to him in the amount claimed. On the termination of his contract of employment PG Industries contended that the decision to terminate was lawful as it was an exercise of a contractual right.
The lawfulness of the decision by PG Industries to terminate the contract of employment with Mabhena on notice was questioned before the High Court because of the effect of s 1A of the Labour Relations (General Conditions of Employment) (Termination of Employment) Regulations, SI 377/90 on ss 2 and 3 of the Labour Relations (General Conditions of Employment) Regulations SI 371/85.
Statutory Instrument 371/85, enacted in December 1985, provided that:
“2 (1) No employer shall, summarily or otherwise, terminate a contract of employment with an employee unless -
(a) he has obtained the prior written approval of the Minister to do so.
3 Where an employer has good cause to believe that an employee is guilty of:
(Acts of misconduct listed):
the employer may suspend such employee without pay and other benefits and shall forthwith apply to a labour relations officer for an order or determination terminating the contract of employment”.
The cases of Art Corporation Ltd v Moyana 1989 (1) ZLR 304 (S) at 308G–309B and Commercial Careers College (1980) (Pvt) Ltd v Jarvis 1989 (1) ZLR 344 (S) at G-H had decided that the effect of subs (1)(a) of s 2 of SI 371/85 was that a contract of employment could not be terminated by giving the requisite notice in accordance with the terms of a contract of employment without obtaining prior written approval of the Minister.
On 7 December 1990 SI 371/85 was amended by the insertion of s 1A through SI 377/90. It provided that:
“Sections 2 and 3 shall not apply to employees to whom the provisions of an employment Code of Conduct registered in terms of section 3 of the Labour Relations Act (Employment Codes of Conduct) Regulations 1990 apply.”
PG Industries’ case in the High Court was that the effect of s 1A of the Regulations was that it had a contractual right to terminate the contract of employment with Mabhena provided it gave him the requisite month’s notice.
The learned judge held that the appellant had in its letter of termination given poor performance or incompetence on the part of Mabhena and reorganisation as the reasons for its decision to terminate the contract of employment. As PG Industries was terminating Mabhena’s employment on allegations that he was unable to do the work he held himself capable of doing satisfactorily, the court a quo held that it had to follow the procedure for the termination of employment prescribed in the Code of Conduct.
The court a quo held that terminating an employee’s contract of employment because of the re-organisation of the business was retrenchment. It considered the effect of s 10 of the Labour Relations (Retrenchment) Regulations SI 404 of 1990 which provided that:
“For the avoidance of doubt, it is declared that any purported retrenchment of an employee which is carried out otherwise than in accordance with an approval in terms of these regulations shall be of no effect whatsoever.”
It was common cause that PG Industries had not followed the procedure laid down in SI 404/90 in terminating Mabhena’s employment. The learned judge held that the termination was unlawful.
On the claim for the payment of the amount of $3 192 803 the court a quo found that there was a dispute of facts which Mabhena should have foreseen before proceeding by way of an application. The claim was dismissed instead of being referred to trial.
The order granted was that:
“1. The respondent’s decision to terminate the applicant’s contract of employment be and is hereby declared to be null and void.
2. The applicant be reinstated without loss of salary and benefits from 1 June 2000 to the date of reinstatement.
3. The applicant’s claim for payment of the sum of $3 192 803 being in respect of underpayment of salary and bonuses be and is hereby dismissed.
4. The respondent is to pay 50% of the applicant’s costs”.
PG Industries appealed against the part of the order declaring its decision to terminate the contract of employment with Mabhena null and void.
Mabhena cross-appealed against the part of the order dismissing his claim for the payment of the sum of $3 192 803. He alleged that the appropriate order should have been a referral of the claim to trial.
Before this Court Mr Biti conceded on the authority of Mashingaidze v Mashingaidze 1995 (1) ZLR 219 (H) that the question whether to dismiss an ill-founded application or refer it to trial was a matter entirely within the discretion of the court seized with the application. In Mashingaidze’s case supra ROBINSON J held that it was sometimes necessary for a court to dismiss such an application to discourage:
“… the too often recurring practice whereby applicants, who know or should know that real and substantial disputes of fact will arise or are likely to arise on the papers, nevertheless resort to application proceedings on the basis that, at worst, they can count on the court to stand the matter over for trial”.
Although he did not abandon the cross-appeal, Mr Biti indicated that he could not press the point that the learned judge erred in dismissing the application for an order for payment of the amount claimed as underpaid salaries and bonuses. The cross-appeal had no merit.
I turn to consider the main appeal. Mr Matinenga cited the recent judgment of this Court in Chirasasa and Ors v Nhamo N.O. and Anor S-135-02 as authority for the submission that the learned judge erred in holding that the decision by PG Industries to terminate Mabhena’s contract of employment was null and void and ordering his re-instatement. A full bench of this Court held in Chirasasa’s case supra that the effect of s 1A of the Regulations was to remove the obligation on an employer to obtain prior written approval of the Minister as a procedural requirement for the termination of a contract of employment on notice where there was a registered employment Code of Conduct applicable to the employee, thereby creating two distinct methods of termination; one on notice in terms of the contract of employment and the other in terms of the Code of Conduct.
At pp 10–11 of the cyclostyled judgment it is stated:
“So, when it removed the obligation to obtain the prior written approval of the Minister as a procedural requirement for the termination of a contract of employment on notice, s 1A of the Regulations introduced the procedure contained in the employment Code of Conduct as the method of termination of the contract of employment where the disclosed or undisclosed reason thereof was misconduct on the part of the employee.
Where there was no allegation of misdemeanour, the effect of s 1A of the Regulations was that the employer had a right to terminate the contract of employment on notice, as long as the employee was one to whom the provisions of the registered code of conduct applied. The legal effect of s 1A of the Regulations was that a contract of employment could be terminated on notice for any reason other than those relating to misconduct.”
At p 14 it is stated:
“It is clear from the incorporation of the Code of Conduct into the procedural requirements for the termination of contract of employment that the intention of the legislature was that where misconduct was involved, or the decision to terminate was of a disciplinary nature, the employer was bound to comply with the disciplinary procedure prescribed in the code of conduct.”
We cannot ignore the letter of termination of Mabhena’s employment. PG Industries gave as one of the reasons for the termination the alleged incapacity on the part of Mabhena to perform his duties satisfactorily. It had made a finding of fault in the performance of his duties and acted on it as the reason for terminating his employment. Not only was PG Industries casting aspersions against the reputation of the employee but went on to invoke a procedure for termination of employment which did not give him an opportunity to defend himself against accusation of incompetence.
The parties agreed that the Code of Conduct in question made it an act of misconduct for an employee to hold himself as being in possession of skills he did not have. Mr Biti argued that in accusing Mabhena of poor performance PG Industries was in effect alleging that he held himself to be in possession of skills he did not have.
I agree with Mr Biti that on the authority of Chirasasa’s case supra PG Industries was bound to follow the disciplinary procedure provided for in its Code of Conduct. That procedure secured for Mabhena the right to be heard in defence of his reputation. The facts on which PG Industries concluded that he was incapable of performing his duties satisfactorily had to be disclosed to him so that the reasonableness of its attitude could be tested. The learned judge was correct in holding that the decision to terminate Mabhena’s contract of employment on notice was in the circumstances unlawful. The decision was not based on the exercise of a contractual right to terminate on notice but on the finding that Mabhena was not capable of doing the work he contractually bound himself to do.
Mr Matinenga was unable to argue that terminating an employee’s employment because of the re-organisation of the undertaking did not constitute retrenchment. It is common cause therefore that Mabhena would have been retrenched without the mandatory procedure prescribed in SI 404/90 having been complied with. Section 10 of SI 404/90 makes it very clear that retrenchment of an employee outside the statutorily prescribed procedure shall be of no effect whatsoever. The termination of Mabhena’s contract of employment would have been unlawful for the reason of non-compliance with the mandatory retrenchment procedure.
Mr Matinenga argued that the learned judge erred in ordering the reinstatement of Mabhena. He said she should have granted damages in lieu of reinstatement. I do not agree. At common law the question whether or not reinstatement of an employee should be ordered is a matter for the discretion of the court. The discretion has, of course, to be exercised judiciously in accordance with the circumstances of the case. The learned judge was alive to the guiding principles stated in Commercial Careers College (1980) (Pvt) Ltd v Jarvis supra; Winterton, Holmes & Hill v Patterson 1995 (2) ZLR 68 (S). After citing these authorities the learned judge said:
“There is in this matter no averment of a breakdown in the relationship between the applicant and the respondent such that there is no degree of trust or respect remaining on either side. The applicant has expressed his desire to be reinstated. There is no evidence to show that the blame for his dismissal is attributable to the applicant. The respondent has spoken of a monetary settlement. There is no suggestion on the papers that reinstatement would not be practicable in the circumstances.”
I can find no fault with the reasoning of the learned judge for the exercise of the discretion vested in her.
The main appeal is accordingly dismissed with costs. The cross-appeal is also dismissed with costs.
SANDURA JA: I agree.
GWAUNZA JA: I agree.
Atherstone & Cook, appellant's legal practitioners
Honey & Blanckenberg, respondent's legal practitioners