DISTRIBUTABLE (24)

Judgment No. SC 21/07

Civil Application No. 296/06

THOMAS MEIKLES STORES v (1) DORRIS MWAITA (2) STELLA PHIRI

SUPREME COURT OF ZIMBABWE

MALABA JA, GWAUNZA JA & GARWE JA

HARARE, FEBRUARY 12 & OCTOBER 8, 2007

L Mazonde, for the appellant

O Takaindisa, for the respondents

GWAUNZA JA: The Labour Court upheld an arbitration award in terms of which the appellant in casu was ordered to reinstate the respondents without loss of salary or benefits, or, in lieu thereof, pay them damages. The appellant was aggrieved at the decision of the court a quo and has now appealed to this Court.

The facts of the matter are not in dispute. The two respondents, who were employed by the appellant as buyers, were advised through an identical letter dated 30 September 2004 that:

1. the appellant had been forced, due to the economic downturn, to restructure various management positions and responsibilities;

2. as a result the respondents’ buying responsibilities had been re-allocated to other buyers, thereby reducing the number of buyers employed by the Central Buying Office;

3. the respondents were being given the opportunity each to move to a position of section manager in one of the appellant’s departmental stores, with effect from the following day, i.e. 1 October 2004; and

4. the respondents’ salaries would remain the same even though the new positions did not require the allocation of a motor vehicle, meaning the respondents would not be entitled to one.

The letter went on to state that should the respondents not wish to take up the offer, the appellant was prepared to award them an exit package whose details were specified in the letter. The appellant in the same letter also asked the respondents to report for work the following day, 1 October 2004, to take up their new assignments, or indicate if they wished to opt for the exit packages. The letter ended by stating that if the two did not report for duty on 1 October, 2004, it would be taken that they had opted for the exit package.

The respondents did not report for work on the 1^st of October, 2004, but addressed identical letters to the appellant on 4 October 2004. In the letters the respondents rejected both the offer of re-assignment and the exit package, alleging that both violated the relevant provisions of the Labour Relations Act. In the respondents’ view, the post of Section Manager was an undeserved demotion, while the exit package was ‘paltry’ and not in line with current market trends. The respondents made it known to the appellant that they preferred a ‘negotiable and reasonable’ retrenchment/exit package that was in line with the Labour Relations Act.

In the appellant’s response to the respondents’ letters, dated 6 October 2004, the Group Merchandise Manager, Mr SD Mesham (“Mesham”) informed the respondents that they had not been dismissed, nor retrenched, so were still employed by the appellant. They were therefore, expected to report for work on 7 October 2007 to take up their re-assignments. Mesham then invited the respondents to contact the Group Labour Relations Manager for any further amplification of the legal aspects of their situation.

The respondents duly met with the Group Labour Relations Manager, Mr Chigwedere (“Chigwedere”) on 9 October 2004. They thereafter communicated to Chigwedere what they considered to be an acceptable exit package for them. The appellant rejected the respondents’ proposed exit package and addressed letters to them, reiterating its position that the two were still employees of the appellant. The respondents were also informed that the original positions offered to them as Section Managers were still open to them. The two were, again, invited to come to work, and were given a new date for it, that is 19 October 2004.

In relation to the exit package, the appellant wrote as follows in the same letter:

“The exit package was an available alternative in the event of you thinking otherwise. It was not the intention of Thomas Meikles to offer you an exit package as a first option, hence we are not prepared to shift from our original position in our letter of 30 October 2004.”

The respondents took a very dim view of the contents of this letter and in their response dated 21 October, 2004 used strong language to register their disgruntlement. The appellant took exception to the language employed in the respondents’ letters and also their refusal to report for work as directed. It therefore instituted disciplinary proceedings against them for -

1. absence from work for more than five or more working days without leave for no reasonable cause;

2. an act, conduct or omission inconsistent with the fulfillment of the express or implied conditions of their contract in that they addressed letters to it dated 21 October 2004, whose contents the appellant described as ‘insubordinate, threatening and defamatory’.

The two were found guilty as charged and were suspended from duty with effect from 26 October 2004 without pay and benefits, pending a disciplinary hearing to be held on 25 November 2004. The hearing was duly held with the outcome that the respondents were given a final warning in respect of the first offence, and had the penalty of dismissal imposed in respect of the second.

After the respondents filed a notice of appeal to the Labour Relations Office, an attempt was made to have the dispute resolved through conciliation. When this failed, the parties agreed to submit the dispute to compulsory arbitration in terms of the Labour Relations Act. It is the award that the arbitrator made in this respect that the appellant appealed against to the Labour Court.

In casu, the appellant’s grounds of appeal are that the court a quo erred and misdirected itself in finding -

1. that the appellant’s conduct of offering the respondents alternative positions following the abolition of respondents positions was unlawful;

2. that having rejected the exit package offered to them, the respondents were entitled to reject the alternative position offered;

3. that the respondents’ conduct of authoring a letter derogatory of the appellant was induced by the appellant’s conduct; and

4. that the respondents had been constructively dismissed.

The appellant also charges that the court a quo erred in ordering the reinstatement of the respondents to positions that no longer existed in the appellant’s organization.

I will consider, first, the appellants ground of appeal relating to the court a quo’s findings that the respondents had constructively been dismissed. It is pertinent in this respect to note that, on the evidence before the court, the respondents are of the view that they were dismissed twice by the appellant. The appellant, on the other hand, maintains that the respondents were only dismissed once, that is, after disciplinary proceedings had been taken against them.

For convenience only, I shall refer to these episodes as the respondents’ first and second dismissals.

‘First Dismissal’

It is not in dispute that by its letter of 30 September 2004, the appellant, in categorical terms, gave the respondents two choices, to accept either demotion by a certain date or a pre-determined exit package. The tone of the letter suggests there was to be no negotiation over the two choices given to the respondents. That this was the intended import of the appellant’s letter is left in no doubt when regard is had to its closing paragraph, which read as follows:

“If you do not report for duty on 1^st October, 2004 I will take it that you have opted for the exit package.”

It is accordingly contended for the respondents that, since they did not report for work on 1 October 2004, the only correct position flowing from the letter is that the respondents were deemed to have been dismissed, ‘subject only to the fact that they were further deemed to have accepted the exit package’.

The respondents’ counsel, Mr Takaindisa, urged the Court in the light of this assertion, to find that, after the respondents’ non-compliance with the appellant’s ultimatum, the employment relationship was terminated.

The court a quo was persuaded by this argument and found that the appellant had, by its conduct, repudiated the respondents’ contracts. This finding, and the reasoning behind it as contained in the judgment of the court a quo, in my view cannot be faulted.

There is no doubt that, by any rules of interpretation, the appellant’s letter to the respondents of 30 September 2004, gave them only two choices, to accept demotion and start work on the 1 October, 2004, or the unilaterally pre-determined exit package. As indicated, the respondents did not report for work on 1 October 2004. Going by its letter of 30 September 2004, one would have expected the appellant to henceforth ’take it’ that the two opted for the exit package. One would have expected the appellant to take this stand even though the respondents had indicated they might reject the proposed pre-determined exit package in preference for a negotiated one. This was, however, not to be. Instead, the appellant’s response was to literally turn a deaf ear to the respondents’ categorical rejection of the proposed demotion. The respondents had, in no uncertain terms, stated in writing that they strongly objected to, and were rejecting, the proposed re-assignment of duties.

Responding as if the respondents had not rejected the two options it offered them, the appellant twice asked them to report for work on given dates, to take up the very posts they had rejected. This was because, the appellant stated, the respondents had ’neither been dismissed nor retrenched’, but were still its employees. This apparent about turn on the part of the appellant is, in my view, difficult to understand, given its position as so clearly enunciated in its letter of 30 September 2007. Even more incomprehensible was the appellant’s insistence that, by asking the respondents to report for work and take up the posts they had rejected, it was in no way deviating from its originally stated position, but was simply ’re-stating’ the essential features of the letter of 30 September 2004. The letter of 30 September 2004 quite clearly made no mention of the fact that the respondents would remain employees of the appellant, and therefore obliged to take up the reassignments imposed on them, even if they rejected the two options offered to them. Rather than re-state the position outlined in its letter of 30 September 2004, the appellant, it appears, was in fact, pronouncing a shift in its original position.

In short the appellant was attempting to force the respondents to accept demotion under the guise of ’reassignment’. This is evidenced by its response to the respondents’ counter-proposal for an exit package, contained in the appellant’s letter of 15 October 2004, which I have already alluded to above. In other words, it was the appellant’s position that the respondents, once they rejected the proposed demotion, had no other alternative but to accept the pre-determined exit package. When they refused to take up the alternative option, the appellant’s intention, as is now evident, and contrary to the specific wording of its letter of 30 September 2004, was to nevertheless force them to accept the demotion. In so doing, the appellant, as correctly noted by the court a quo, was not only repudiating the respondents’ original contracts of employment, it was also making it intolerable for the respondents to continue working for it.

That the appellant repudiated the respondents’ contracts of employment, in my opinion, cannot be disputed. The learned author, D J Joubert in his book General Principles of the Law of Contract 1 ed at p 211 defines repudiation in these terms;

“But, analysed to reveal its essentials, a repudiation is nothing more than an intentional communication by the debtor of the statement that he is not going to perform.”

Performance by the appellant, in casu, would amount to it allowing the respondents to keep their jobs as buyers for the appellant. The statement communicated to the respondents through the appellant’s letter of 30 September 2004, was that the appellant had abolished their posts and therefore made it impossible for the respondents to perform their side of the contract. In its subsequent letters to the respondents, the appellant reiterated that it stood by its letter of 30 September 2004, and demanded that the respondents report for work, not as buyers, but as Section Managers. Had the appellant invited the respondents to go back to work as buyers, one might have considered that it intended to withdraw the repudiation. However, rather than reverse its repudiation of the respondents’ contracts of employment, the appellant’s letters in effect re-emphasised it in different terms.

The respondents were therefore correct in alleging, and the court a quo in finding, that the appellant had repudiated their contracts of employment. The respondents had served the appellant for respective periods of 17 and 27 years. These periods are not insignificant. It has not been alleged that there were any adverse reports concerning their work performance. That being the case, the respondents had not done anything to warrant what amounted to summary dismissal. Their request for a negotiated exit package was under these circumstances, in my view, not unreasonable.

What falls to be determined, then, is the nature and legal effect of the respondents’ response to the repudiation of their employment contracts. Joubert, in the same book referred to above, at pp 212 to 213, variously stated as follows in this respect:

“As is the case where the debtor commits some other form of breach of contract, the repudiation doest not as such bring an end to the contract.” [See, among other authorities, Gilchrist & Co v Stone (1889) 5 HCG 353]. It only gives rise to legal remedies.”

Later on the learned author wrote –

“The paramount right flowing from the repudiation is the right to accept the repudiation and to cancel the contract [Gilchrist’s case supra]… Upon cancellation, the respective duties of the parties to perform come to an end. Each may recover his own performance. The debtor who had repudiated the contract will in addition be liable to compensate the damages of the creditor…”

On the authority of these statements of the law, it is evident that the respondents’ contracts of employment were not brought to an end by the mere fact of their repudiation by the appellant. The contracts, in my view, came to an end when, by their conduct, the respondents effectively cancelled them. This they did, in the first place, by not insisting that the appellant reinstate them to their previous positions as buyers, secondly, by not accepting demotion and reporting for duty, and thirdly, by demanding that they be paid a negotiated exit package (in effect, “compensation of damages”) as calculated by them.

Alternatively, because the appellant made it impossible for the respondents to go back to work as buyers (having abolished their posts) and went on to insist they take up inferior positions, the two were forced by the appellant to cancel their contracts of employment. It is argued for the respondents that this amounted to their constructive dismissal. The court a quo described such dismissal as unfair dismissal of the two respondents. The court relied for this on s 12(B)(3) of the Labour Relations Act which stated :

“(3) An employee is deemed to have been unfairly dismissed

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

It was submitted for the respondents, in my view correctly, that it would have been humiliating for them to go back to work for the appellant, in inferior posts to the ones they occupied. Thus, whether it was constructive or unfair dismissal, by the appellant, there is no denying that the respondents were dismissed from their employment.

The events outlined above, it is pertinent to note, happened before the respondents wrote the letter (dated 21 October 2004) that the appellant found so offensive that it was moved to institute disciplinary proceedings against them.

‘Second Dismissal’

This brings me to the issue of the respondents’ ‘second dismissal’. It is argued for them that after the respondents’ non-compliance with the appellant’s ultimatum, the employment relationship was thereby terminated. Further that, given this circumstance, it was ‘inappropriate’ to resort to disciplinary procedures that are intended to regulate relationships between employees and employers.

This argument clearly has merit. Since, as I have found, the employment relationship between the parties was terminated in the manner indicated, it was clearly no longer open to the appellant to seek to discipline the respondents for conduct that took place after such termination. As is now evident, events prior and up to the alleged acts of misconduct had effectively placed them beyond the reach of such proceedings.

This court’s finding in relation to the ‘second dismissal’ of the respondents makes it unnecessary to consider the appellant’s ground of appeal concerning the court a quo’s finding on what the appellant refers to as the ‘derogatory letter’ of 21 October 2004, authored by the respondents.

The finding concerning the termination of the respondents’ contracts of employment, disposes of the appellant’s first, second and fourth grounds of appeal.

The last ground of appeal charges that the court a quo erred in ordering reinstatement of the respondents to positions that no longer existed in the appellant’s organization. I find no merit in this ground of appeal. The dispute went to the court a quo on appeal. At the conclusion of the appeal hearing, the Court was obliged to uphold the appeal, dismiss it or make any other order it considered appropriate. The court found no merit in the appeal and properly dismissed it. The effect of such dismissal was to re-reinstate the arbitrator’s determination. No misdirection can therefore be attributed to the court a quo for the dismissal.

Likewise, the appeal now before us, given the foregoing, will not succeed. The result is that the arbitrator’s determination has final effect in this dispute. That determination clearly stated that if the re-instatement of the respondents was no longer an option, the appellant would be obliged to pay the respondents their damages in lieu of reinstatement. The arbitrator’s determination is thus capable of enforcement, one way or the other.

In the result, the appeal is dismissed with costs.

MALABA JA: I agree.

GARWE JA: I agree.

Atherstone & Cook, appellant’s legal practitioners

Musunga & Associates, respondents’ legal practitioners