KADIR & SONS (PVT) LTD V PANGANAI & ANOR

KADIR & SONS (PVT) LTD v PANGANAI & ANOR 1996 (1) ZLR 598 (S) Division: Supreme Court, Harare Judges: Gubbay CJ, McNally JA & Muchechetere JA Subject Area: Civil appeal Date: 13 & 30 May 1996 Judgment Number: S-79-96

Practice and procedure — review — time within which to be noted — failure to comply with time limit — condonation — relief sought in form of declaratory order — no extension of time limit required Employment — contract — termination — retrenchment — approval by Minister of retrenchment — whether can be given retrospectively In March 1993, the Minister of Labour, Public Service and Social Welfare, purportedly acting in terms of s 5 of the Labour Relations (Retrenchment) Regulations 1990, gave retrospective approval to the first respondent’s being retrenched, along with other employees, by the appellant company in September 1992. The National Employees Council’s retrenchment committee had only been prepared to accept retrenchment if the appellant agreed to eight months’ severance pay. The appellant retrenched the employees and paid two months’ severance pay. The first respondent only became aware in May 1994, when so advised by her legal practitioners, that such retrospective approval was ultra vires. She brought the Minister’s action on review in the High Court. The judge a quo condoned the first respondent’s non- compliance with the provisions of r 259 of the High Court Rules 1971, which requires that a decision should be brought on review within 8 weeks of having been made. Held, that as the relief sought by the first respondent was in the form of a declaratory order, no extension of time was required. In any event, the first respondent, until advised otherwise, thought the Minister’s decision was valid. She had not remained supine in the knowledge of her rights. The reason for her delay was understandable. Page 599 of 1996 (1) ZLR 598 (S) Held, further, that the Regulations made it clear that the Minister could only approve a recommendation for a proposed retrenchment submitted to him by the retrenchment committee. The Minister has no power to approve a retrenchment retrospectively. Until the Minister’s decision has been reached, the employees must remain on the payroll. If the Minister does approve the retrenchment, the employer may then give one month’s notice. The fact that the employer ceases business does not remove his obligation to pay wages and the first respondent and the other employees remained on the payroll until one month after the Minister’s approval had been given. Cases cited:

CONTINENTAL FASHIONS (PVT) LTD v MUPFURIRI & ORS 1997 (2) ZLR 405 (S) Division: Supreme Court, Harare Judges: Gubbay CJ, McNally JA & Ebrahim JA Subject Area: Civil appeal Date: 30 September & 16 October 1997 Judgment Number:S-161-97

Employment — contract — termination — retrenchment — dispute as to the severance package for retrenched employees — how severance package is to be assessed The Labour Relations (Retrenchment) Regulations 1990 (SI 404 of 1990) govern the retrenchment of employees by employers. If an agreement cannot be reached on retrenchment or the amount of the retrenchment package, the dispute is referred to a retrenchment committee. This committee makes recommendations to the Minister. The Minister’s decision is appealable to the Labour Relations Tribunal. The appellant company, which was in serious financial trouble and was on the verge of liquidation, sought to retrench some of its employees. It was accepted that retrenchment was necessary. The only dispute was over the quantum of the retrenchment package. The dispute was referred to the retrenchment committee and the Minister accepted its recommendations. The matter was then taken on appeal to the Labour Relations Tribunal. Dissatisfied with the determination of the Labour Relations Tribunal, the appellant company then appealed to the Supreme Court. Held, that retrenchment in this context is the cutting back of expenditure on the employment of workers by reducing their number. Where the purpose of retrenchment of workers is to avoid the collapse and liquidation of a company, the survival of the company is the immediate motivating consideration and the purpose of the exercise is to save the company and to save the jobs of the remaining workers. But there is also a need to mitigate the consequences to the employees being retrenched. Held, further, that before retrenching employees the employer must to consult with the employees and give them information, but not where, for instance, the disclosure of the information would harm the employer’s business interests for reasons other than its relevance to the consultation process. Held, further, that where, as in the present case, the employer seeks to withdraw its application for retrenchment, this withdrawal should normally be accepted by the labour officials dealing with the matter, as the first prize is to retain the employees in employment if this is still possible. Held, further, that when hearing an appeal in terms of ss 89 and 91 of the Regulations the Labour Relations Tribunal must hold a full rehearing of the case. Held, further, that the Regulations do not provide guidelines or criteria on how the basis of which the quantum of a retrenchment package is to be assessed. Although not stated in the Regulations, the ability of the company to pay the retrenchment package is the ultimate

MUTARE BOARD AND PAPER MILLS (PVT) LTD v KODZANAI 2000 (1) ZLR 641 (S) Division: Supreme Court, Harare Judges: Gubbay CJ, Ebrahim JA & Muchechetere JA Subject Area: Civil appeal Date: 18 May & 1 June 2000 Judgment Number: S-48-00 Employment — contract — termination — retrenchment —- employees being placed in early retirement by employer — stated reason being need to reduce strength of workforce — effective retrenchment of employees — need for employer to follow procedures laid down in respect of rentrenchment The management of the appellant company decided that it had to reduce its work force. This decision was considered to be necessary as a cost-cutting measure that was essential to maintain the financial viability of the company. It decided that it would reduce the workforce by retiring all its male employees who were 55 years of age, or over. The respondent, along with several other employees of the appellant, was compulsorily retired after reaching the age of 55 years. The rules of the pension fund provided that normal retirement was at the age of 65, but an employee could elect to retire early or be retired at the employer’s instance. The respondent argued that what was being effected was retrenchment and the procedures applicable to retrenchment should have been followed. Held, that even though an employer might have the right under the pension fund regulations to terminate employment, if the object and effect of termination is to retrench, then the regulations governing retrenchment must be complied with. An employer who wants to retrench employees cannot defeat the essential purpose of the retrenchment regulations by purporting to terminate the contracts of workers by requiring them to take early retirement under the pension fund rules. Held, further, that it was clear that retrenchment was the object in the present case. This was shown by the fact that the employer suddenly and simultaneously required large numbers of employees of the same class by age to proceed on early retirement, and the fact that the reason given for this step was the need to reduce the strength of the workforce. Cases cited: Badenhorst v G C Baars (Pty) Ltd (1995) 14 ILJ 1596 (IC) Commissioner of C & E v Randles Brothers & Hudson Ltd 1941 AD 369 Metal & Allied Workers Union of SA & Ors v Screenex Wire Weaving Mfrs (Pty) Ltd (1985) ILJ 75 (IC) Sehume v Atteridgeville City Council & Anor 1992 (1) SA 41 (A) van Eck & van Rensburg NNO v Etna Stores 1947 (2) SA 984 (A) Page 642 of 2000 (1) ZLR 641 (S) P Nherere, for the appellant V M Mazengero, for the respondent GUBBAY CJ: At a works council meeting, held on 14 November 1997, a management representative of the appellant announced that as a cost-cutting measure, alleged to be essential for the business of the appellant to remain financially viable, the decision had been taken to reduce the number of the workforce by retiring all those male employees who were fifty-five years of age, or over. No less than thirty-eighty employees, including the respondent, were affected. Five days later, the employees so identified received official notifications that the operative retirement date was 1 January 1998. Their objections were to no avail, and on 21 December 1997 the appellant issued a directive prohibiting them from reporting for duty and from setting foot upon its premises. In proceedings brought before the High Court, the respondent protested that, in retiring him and the other employees, the appellant had failed to comply with the requirements and procedures of the Labour Relations (Retrenchment) Regulations 1990, SI 404 of 1990. These Regulations, he claimed, were applicable because “early retirement” under the appellant’s Pension Fund Rules (“the Rules”) — admittedly part of the conditions of service of the employees — was to all intents and purposes a retrenchment. He further contended that “early retirement” could only be effected with the consent of the employee concerned; and none of the thirty-eight had consented. In the event, the respondent sought an order: (i) declaring the termination of his employment to be invalid; (ii) reinstating him in employment; and (iii) that he be paid salary and other benefits to which he was entitled, until such time as he was retrenched in terms of the applicable Regulations. Clause 5:1 of the Rules contains the following provisions: “An annual pension shall become payable to a member on: (i) retirement at the normal retirement date. (ii) retirement before the normal retirement date (early retirement). A member who has attained age 55 (or 50 in respect of a female member participating hereunder immediately prior to 1 July 1976) and has completed five years of continuous service with the employer (unless the employer waives this requirement) may, with the employer’s consent or at the instance of the employer, retire or be retired from the service of the employer on the first day of any month prior to his normal retirement date.” The rules were framed in compliance with the Pension and Provident Fund Regulations 1991, SI 323 of 1991, s 15 of which reads in relevant part: “(1) The rules of a pension fund or provident fund shall specify the normal retiring age for all its members, which shall not be less than fifty-five years or more than seventy years: Page 643 of 2000 (1) ZLR 637 (H) Provided that – (i) if in a particular trade or occupation it is customary that the normal retiring age is less than the fifty-five years, a lower age may, with the approval of the Registrar, be provided; (ii) the rules may provide that if the normal retiring age is the age on an anniversary of the date of entry or the date of the end of a policy year, the earliest normal retiring age shall be that date which is nearest to the fifty-fifth anniversary of the birthday; (iii) … (2) The rules of a pension fund or provident fund may provide for the early retirement or late retirement of a member: Provided that subject to the proviso to subsection (1), they shall not permit a member to retire before his fifty-fifth birthday or after his seventieth birthday.” It is clear that these Regulations require a pension or provident fund to specify a normal retiring age of between fifty-five years and seventy years for all its members. What is optional is that the fund may also make provision for the early or late retirement of its members, save that retirement before the age of fifty-five years or after the age of seventy years is not permissible. The appellant’s argument was that the respondent’s contract of employment was one the duration of which had been fixed by mutual agreement at his attaining the age of fifty- five years. For that was the earliest age at which the appellant could either grant consent to a male employee retiring from its service, or exercise the right to require him to do so. Thus, between the ages of fifty-five and the normal retirement date (specified as the attainment of age sixty-five) the male employee was accorded no enforceable right to retire on annual pension. He had to obtain the appellant’s consent; on the other hand, he could be required to retire prior to the normal retirement date even if desirous of continuing in the service of the appellant. Only upon reaching the normal retirement date, that is at age sixty-five, did the employee acquire an absolute right to retire. In her rejection of the argument, the learned judge reasoned as follows: “It is for the purpose of the present case important to make a clear distinction between normal retiring age which is 65 and early retirement age which is 55 to 64 years. The normal retiring age is the only clear life of the employment contract and is, in my view, the contractual retiring age. The normal retirement age is not synonymous with the pensionable age. I have not been able to trace any statutory provision which excludes the right to a retrenchment package for workers in the position of the applicant and would consider the correct position to be that an employee is excluded from being considered for a retrenchment package only if he or she has reached the normal retiring age. For the employer to enforce an early retirement, reasons must be given to support the decision to terminate employment, otherwise an unfair labour practice will have been committed. The employee must be incapable of performing his duties to the required standards for whatever reason for the employer to invoke this. On the other hand, the employee can elect to go on early retirement. Page 644 of 2000 (1) ZLR 637 (H) If one were to accept … that because there is no statutory provision that the reasons for early retirement to be investigated … are irrelevant to early retirement, the effect would be contrary to the intention and spirit of the labour laws. The result would be that the employer would be entitled to hold employees at his beck and call for ten years, ie between the ages of 55-65 years old, and could literally ‘dismiss’ them at will whether or not they are good employees. To allow this would be to discriminate against this group of employees, denying them job security and the normal protection of the law. It would appear that the spirit of the law is best served if early retirement is by mutual consent between the employer and the employee. In my view, the effect of an early retirement initiated by the employee is that it is a resignation with early retirement benefits accruing because of age. If initiated by the employer the effect is that of a dismissal and reasons must be given.” Consequently, Her Ladyship held that the action taken by the appellant was simply an attempt to retrench the thirty-eight employees. And, since it did not comply with the Labour Relations (Retrenchment) Regulations, it was invalid as amounting to an unfair labour practice. At the outset, the fundamental question to be decided is the proper meaning to be given to clause 5:1(ii) of the Rules, which was binding upon the thirty-eight employees. I do not think that a rational distinction can be drawn between agreeing a “normal retiring age” (which under the Pension and Provident Fund Regulations may be set at an age between fifty-five and seventy years), and agreeing a range in ages between which the right to opt for, or to be placed on, retirement applies. Both situations fix the duration of the contract of service. Recognising the one, yet not the other, is not supportable. In each instance, the occurrence of the event brings about the termination of the contract by effluxion of time and does not constitute a retrenchment or unfair labour practice. See Metal & Allied Workers Union of South Africa & Ors v Screenex Wire Weaving Manufacturers (Pty) Ltd (1985) 6 ILJ 75 (IC) at 88E-G; Badenhorst v G C Baars (Pty) Ltd (1995) 14 ILJ 1596 (IC) at 1601A-E. The provisions of clause 5:1(ii) are thus to be seen as creating a contract of fixed term, commencing with the date of employment and terminating with the date of normal or early retirement. So if sixty-five is the specified normal retiring age, the contract of employment is terminated by effluxion of time when the employee attains that age. But where it has been agreed that between the ages of fifty-five and sixty-five the employer may place the employee on early retirement, the contract remains one of fixed duration, even though the termination point for individual employees may vary within the age parameters of fifty-five to sixty-five, or whatever age less than seventy has been specified as the normal retiring age. In terms of s 17 of the Labour Relations Act [Chapter 28:01] the Minister Page 645 of 2000 (1) ZLR 637 (H) is empowered to make regulations dealing with both retirement and retrenchment. The two concepts are separate and distinct, albeit each results in a termination of the contract of employment. This does not mean, however, that where an employer has decided to effect a needed retrenchment of a body of employees, but is not desirous of following the procedures laid down and be subject to the scrutiny and delays inevitably to be incurred, he may proceed to terminate their service contracts by requiring them to take early retirement pursuant to the applicable pension or provident fund rules. For to adopt such a device would be to defeat the essential purpose of the Retrenchment Regulations. Although it is legitimate conduct to avoid the provisions of a statute by deliberately keeping outside its reach (see Commissioner of Customs and Excise v Randles Brothers & Hudson Ltd 1941 AD 369 at 395), the position is different where the resultant effect is the achievement of that prohibited or curtailed by law. It is thus my view that, even though an employer may have the right to resort to termination, founded on the authority of the Pension and Provident Fund Regulations, if the object and effect of such action is to retrench, then the applicable Regulations must be complied with. See van Eck and van Rensburg NNO v Etna Stores 1947 (2) SA 984 (A) at 997 and 998; Sehume v Atteridgeville City Council & Anor 1992 (1) SA 41 (A) at 57J- 58A. Put differently, the right to require early retirement remains exercisable, but is curtailed by the requirement that whenever exercised it must not amount to, or be used to effect, a retrenchment. How then would one be able to distinguish, in a given case, if an employer was legitimately and genuinely exercising a right to retire some employees, or was in fact retrenching them? The particular circumstances would surely reveal the true purpose. If large numbers of employees of the same class by age or type of occupation were suddenly and simultaneously required to proceed on early retirement then, in the absence of a convincing explanation, their retrenchment would be inferred. That is precisely the situation in this matter, if not even clearer, because the thirty-eight employees were advised that the reason for requiring them to take early retirement was the need to reduce the strength of the workforce. In the result the exercise by the appellant of the right under the Rules to place the thirty-eight employees on early retirement was curtailed by the Labour Relations (Retrenchment) Regulations. While respectfully differing from the approach of the learned judge, I am satisfied, nonetheless, that the order granted was correct and must be confirmed. It follows that the remaining thirty-seven employees, albeit Page 646 of 2000 (1) ZLR 637 (H) not parties to the proceedings, should obtain the same relief as the respondent. The appeal is accordingly dismissed with costs.

CHIDZIVA & ORS v ZIMBABWE IRON & STEEL CO LTD 1997 (2) ZLR 368 (S) Division: Supreme Court, Harare Judges: Korsah JA, Ebrahim JA & Muchechetere JA Subject Area: Civil appeal Date: 24 July & 6 October 1997 Judgment Number:S-137-97

Employment — contract — termination — retrenchment — failure to follow correct procedure laid down in regulations governing retrenchment — employees accepting retrenchment package and delaying in enforcing rights — whether had thereby waived their rights under regulations Waiver — statutory right — failure by employer to follow correct procedure laid down in regulations governing retrenchment — employees nevetheless accepting retrenchment package and delaying in enforcing rights — whether had thereby waived their rights under regulations A parastatal corporation had retrenched large numbers of its workers. All but two of the workers had accepted termination of employment and had accepted the money paid under the retrenchment package. The procedures that have to be followed before a company can retrench workers are laid down in the Labour Relations (Retrenchment) Regulations 1990 (SI 404 of 1990). The workers contended that that the proper procedures had not been followed before the workers in question were retrenched and that the retrenchment exercise was therefore null and void. Held (by Ebrahim JA and Korsah JA), that assuming that there had been a failure on the part of the company to follow the correct procedures for retrenchment, the workers who had accepted the benefits under the retrenchment package had waived their legal rights arising out of the failure to follow procedures and that the two workers who had not accepted the benefits had also waived their rights by unreasonably delaying in seeking to enforce their rights. The requirements for waiver had been satisfied. The defendant must prove a decision on the part of the plaintiff to abandon his rights. Waiver can be by express or implied abandonment. The decision must usually be conveyed to the defendant but where the defendant engages in conduct which is indicative of abandonment of rights, the plaintiff can act on the basis of that conduct. Failure to take action to remedy the breach within a reasonable time after knowledge of the breach can be evidence of waiver. Although the defence of waiver should normally be pleaded, in exceptional circumstances the court can consider this defence even in the absence of proper pleadings. Held (by Muchechetere JA, dissenting) that there had been a whole series of breaches of the Retrenchment Regulations and that the failure to comply with the Regulations had rendered the whole retrenchment exercise illegal and void. The workers were entitled to the relief they sought as they had not waived their rights. The clear intention of the Regulations is to prevent unnecessary and wholesale retrenchments of employees. The Page 369 of 1997 (2) ZLR 368 (S) process of retrenchment must be carried out in a fair and transparent manner. Especially where retrenchment of large numbers of workers is sought, many of whom had spent most of their working lives with the company seeking retrenchment, there must be strict compliance with the Regulations. The fact that the employer was a company funded by the taxpayer further demanded transparency and strict compliance with the Regulations. As regards waiver, there is a strong presumption against waiver and the onus is on the party asserting waiver to prove it. The allegation of waiver must be specially pleaded, which it was not in the present case. A person can only abandon his rights if he has full knowledge of his rights. It is clear that the workers were not aware of their rights and their legal implications. It took the hearing and decision of the court to identify and confirm their rights. The delay in bringing proceedings was not unreasonable when regard was had to the legal complications of the case, the financial constraints faced by the workers and the ignorance of the law on the part of the workers. Cases cited:

FUNGURA & ANOR v ZIMNAT INSURANCE CO LTD 2000 (1) ZLR 379 (H) Division: High Court, Harare Judges: Gillespie J Subject Area: Civil application Date: 18 November 1999 & 22 March 2000 Judgment Number: HH-67-00

Employment — contract — termination — retrenchment — retrenchment package agreed upon according to procedures established by regulation — whether individual worker may reject package The respondent company had, after merging with another company, found it necessary to retrench a number of employees. After protracted negotiations, agreement was reached by the retrenchment committee on the retrenchment package for the employees. The applicants were the sole workers to object to the package, claiming that they were entitled to a better package. In their court application they argued that an agreement reached by the retrenchment committee was not binding unless it was ratified by every worker affected. Held, that although it might appear that there is some support in the decided cases for the proposition advanced by the applicants, properly understood, these cases do not support this position. Held, further, that an agreement reached in works council by workers’ representatives about a retrenchment package is binding on the workers, provided that the formal requirements of the regulations are complied with and provided that the representatives have the authority of the workers for whom they act to give consent. Individuals amongst the body of workers who dissent from the package properly agreed by authorised representatives will nevertheless be bound by the will of the majority so represented. This applied in the present case and the application must therefore be dismissed. Held, further, that a works council cannot represent and bind the retrenchees when the retrenchees have not been notified of their position and could not have mandated the workers’ representatives on the works council in these negotiations. The position is different where the works council has been properly mandated by the workers. Cases cited: