REPORTABLE ZLR (65)

Judgment No. SC. 77/05

Civil Appeal No. 143/05

STANBIC BANK ZIMBABWE LIMITED v

ARTHUR T.M. CHARAMBA

SUPREME COURT OF ZIMBABWE

CHIDYAUSIKU CJ, SANDURA JA & CHEDA JA

HARARE, NOVEMBER 14, 2005 & JANUARY 30, 2006

E T Matinenga, for the appellant

S V Hwacha, for the respondent

SANDURA JA: This appeal arose out of a labour dispute which was decided by the Labour Court in favour of the respondent on 13 May 2005.

The background facts in the matter may be tabulated conveniently as follows –

1. The respondent (“Charamba”) joined the appellant (”the Bank”) as a junior employee on 1 August 1988, and thereafter rose through the ranks to the position of assistant general manager, strategic planning.

2. On 28 February 2002, the Bank’s managing director, Mr G R Brackenridge (“Brackenridge”), wrote to Charamba as follows:

“Following on from the restructuring of the Bank to meet the challenges of competing in the marketplace I regret to advise you that your post has become redundant with effect from 28 February 2002. The Bank is not in a position to offer you alternative employment and Human Resources Department will be contacting you during the week ending 8 March 2002 to negotiate your package.”

3. On 5 March 2002 Charamba wrote to Brackenridge as follows:

“I acknowledge receipt of your letter dated 28^th February 2002, and note your unilateral decision to retrench me and to offer me an exit package.

Regrettably, I must advise that it is not lawful for you to purport to have terminated my employment with effect from the 28^th of February 2002. The retrenchment regulations provide that a retrenchment is void if not in accordance with the regulations as set out.

In the event, I remain an employee of the Bank and entitled to all salary, benefits and or other allowances until the matter is determined. I reserve all rights in this regard.

Besides, I wish to place on record that your decision to retrench me is not justified … .”

4. On 21 March 2002 Mr S Z Kazhanje (“Kazhanje”), the assistant general manager, human resources, wrote to Charamba giving him the details of the proposed severance package.

5. On 2 April 2002 Charamba wrote to Brackenridge. In that letter he referred to the letter he had received from Kazhanje, and reiterated that the retrenchment was void because it was not in accordance with the provisions of the Labour Relations (Retrenchment) Regulations, 1990 (Statutory Instrument 404 of 1990) (“the Regulations”) (now repealed). In addition, he made counter proposals in respect of the severance package, in the event that the retrenchment became compulsory. As Brackenridge was no longer the Bank’s managing director, Charamba’s letter was placed before the new managing director, Ms P Nyandoro (“Nyandoro”), who immediately wrote to Charamba informing him that she would respond to his letter in due course.

6. On 24 June 2002 Nyandoro, having obviously realised that Brackenridge had not complied with the Regulations when he purported to retrench Charamba on 28 February 2002, wrote to Charamba as follows:

“Please be advised that having examined previous correspondence with regard to your situation, I now advise that based on the provisions of Statutory Instrument 404 of 1990, subsections 2 and 3 (sic) and Statutory Instrument 252 of 1992, subsection 3(ii)(a) (sic), the Bank gives one month’s notice of its intention to retrench you. The retrenchment will be with effect from 31 July 2002.

As a continuous process, the Bank re-examined its structures and re-organised its operations to meet the challenges of competing in a shrinking market with increasing players. Consequently, the post of Assistant General Manager, Strategic Planning, could not be accommodated in the new structure and thus became redundant. The Bank examined all possible areas for re-deployment within the Bank, in particular marketing at Corporate and Personal Banking levels and Risk Management. It is unfortunate that the Bank concluded that you could not be re-deployed elsewhere in the Bank. It is therefore on the basis of abolition of post that the Bank seeks to retrench you.

As required by the above-mentioned legislation, by copy of this letter the Bank has notified the Secretary of the Retrenchment Committee of its intention. Appendix I, attached, gives the Bank’s separation package for discussion and agreement, after which the agreement will be submitted to the Retrenchment Committee for approval as soon as possible. It is the Bank’s wish that such negotiations be expeditiously and amicably concluded.”

7. On 4 July 2002 Charamba responded to Nyandoro’s letter and stated that he did not believe that there was a genuine need for retrenching him. He added, however, that he was prepared to discuss the matter further with her.

8. On 9 July 2002 the Bank held a meeting with Charamba to discuss the Bank’s offer in respect of the severance package. Charamba rejected the offer out of hand.

9. On 16 July 2002 Nyandoro wrote to the secretary of the retrenchment committee as follows:

“… The Bank, having issued the requisite notice, a meeting was convened on 9 July 2002 to discuss the Bank’s offer with Mr Charamba who strongly felt that the offer was derisory and, therefore, unacceptable.

The Bank is, therefore, left with no choice but to seek that the Retrenchment Committee adjudicate on the package and finalise the matter.”

10. On 1 August 2002 the retrenchment committee held a meeting, which was attended by the parties, and at which the parties made their submissions. No minutes of that meeting were kept. However, after hearing the submissions made by the parties, the retrenchment committee was of the view that the parties had not spent enough time negotiating and trying to reach a settlement on the matter. Accordingly, it adjourned the meeting and directed the parties to go and negotiate and try to reach a settlement.

11. On 5 December 2002 the retrenchment committee held another meeting with the parties after the parties had failed to reach a settlement. The relevant part of the minutes of that meeting reads as follows:

“The parties appeared before the Retrenchment Committee in an earlier meeting and made submissions. It was clear at that moment that the parties had not given enough time to negotiations. They agreed to go back to the negotiating table. They however came back to the Committee after failing to reach an agreement. …

He (i.e. Charamba) is not in total agreement with the idea of the retrenchment, so the Committee needs to decide whether or not retrenchment is necessary and, if it is necessary, the size of the package.

On the first issue the Committee observed that Charamba has made proposals on the retrenchment, and he must have realised that retrenchment was inevitable. … The Committee also observed from the record that the relationship between the parties had deteriorated to a point where working together would be impossible. The Committee decided that retrenchment should go ahead. … The Committee decided to recommend the following package …”.

12. On 30 January 2003 the retrenchment committee wrote to the Minister of Public Service, Labour and Social Welfare (“the Minister”) recommending that Charamba be retrenched on the basis of a certain severance package.

13. On 4 March 2003 the Minister approved Charamba’s retrenchment, but made some alterations to the severance package, in favour of Charamba.

14. On 17 March 2003 the Bank noted an appeal to the Labour Court against the severance package, whose value the Bank considered to be excessively high. A few days later, Charamba filed a cross-appeal against the retrenchment and the terms and conditions on which he had been retrenched.

15. On 7 February 2005, when the parties appeared in the Labour Court for the hearing of the appeal and cross-appeal, the Bank withdrew its appeal stating, inter alia, that as the full severance package had already been paid to Charamba there was no longer any need for challenging it. However, Charamba persisted in his cross-appeal. The matter was then argued, and the Labour Court reserved its judgment.

16. On 13 May 2005 the Labour Court set aside Charamba’s retrenchment on the ground that the retrenchment had not been carried out in accordance with the Regulations. In its judgment the Labour Court made it clear that if the Bank still intended retrenching Charamba it should do so in accordance with the Regulations.

Aggrieved by that result, the Bank appealed to this Court.

In my view, the Labour Court’s decision was undoubtedly correct. An examination of the relevant provisions of the Regulations will indicate that that is so. I shall set out the provisions in question in extensio. They are sections 3, 5, 6, 7, 8A and 10 which, in relevant part, read as follows:

“3. (1) An employer who wishes to retrench any employee shall –

(a) give written notice of his intention –

(i) to the works council established for his undertaking; or

(ii) if there is no works council established for his undertaking or if a majority of the employees concerned agree to such a course, to the employment council established for his undertaking or industry; and

(b) provide the authority referred to in subparagraph (i) or (ii) of paragraph (a) with details of every employee whom he wishes to retrench and detailed reasons for the proposed retrenchment; and

(c) send a copy of the notice to the retrenchment committee.

Provided that, if there is no works council or employment council established for the undertaking concerned –

(a) the employer shall give written notice of his intention to retrench the employees concerned to the retrenchment committee; and

(b) the retrenchment committee, or a person authorised thereto by the retrenchment committee or the Minister, shall undertake the functions of an authority in terms of this section;

and this subsection and subsections (2) to (6) shall apply, mutatis mutandis, accordingly.

(2) An authority to which notice has been given in terms of subsection (1) shall forthwith attempt to secure agreement between the employer and employees concerned, or their representatives, as to whether or not the employees should be retrenched and, if they are to be retrenched, the terms and conditions on which they may be retrenched.

(2a) Without derogation from the generality of subsection (2), an authority shall attempt to secure agreement on the following matters –

(a) the possibility of implementing measures to avoid the retrenchment of employees … .

(3) An authority shall have regard to the factors referred to in section 7 when attempting to secure an agreement on the matters referred to in subsection (2).

(4) An authority shall keep proper minutes of its proceedings and deliberations in attempting to secure an agreement on the matters referred to in subsection (2).

(5) …

(6) If, within one month after receiving a notice in terms of subsection (1), an authority has failed to secure an agreement between the employer and employees concerned, or their representatives, on the matters referred to in subsection (2), the authority shall refer the matter to the retrenchment committee by sending the retrenchment committee written notice … together with copies of all documents which the employer and employees concerned may have submitted to the authority, and copies of the minutes of (the) authority’s proceedings and deliberations.

4. (1) to (9) …

5. (1) The retrenchment committee shall consider any matter referred to it in terms of subsection (6) of section 3 and, having regard to the factors referred to in section 7, shall, within two weeks of the matter being referred to it, recommend to the Minister in writing whether or not the proposed retrenchment should be permitted and, if so, the terms and conditions upon which it should be effected.

(2) …

(3) If the retrenchment committee fails to make a recommendation in regard to any retrenchment within the two-week period prescribed in subsection (1), the Minister shall require the committee to send him all the documents in the matter, and shall give his decision in the matter as if the committee had made a recommendation in terms of subsection (1).

6. (1) The Minister shall consider without delay any recommendation submitted to him by the retrenchment committee in terms of subsection (1) of section 5 and, having regard to the factors referred to in section 7, shall within two weeks –

(a) approve the proposed retrenchment, subject to such terms and conditions as he may consider necessary or desirable to impose; or

(b) refuse to approve the proposed retrenchment;

and shall cause the retrenchment committee, the authority, the employer and the employees concerned to be notified in writing … of his decision in the matter.

(2) …

7. In deciding whether or not to approve the retrenchment of employee(s) in terms of these regulations, an authority, the retrenchment committee and the Minister shall pay due regard to the following general considerations –

(a) that the retrenchment of employees should be avoided so far as possible, where this can be done without prejudicing the efficient operation of the undertaking in which the employees concerned are employed;

(b) that the consequences of retrenchment to employees should be mitigated as far as possible;

and, in particular cases, they shall have regard to –

(i) the reasons put forward for the proposed retrenchment; and

(ii) the effect of the proposed retrenchment upon the employees involved, including –

A. their prospects of finding alternative employment; and

B. the terminal benefits to which they will become entitled.

8. …

8A. Notwithstanding any agreement to the contrary, no employer shall retrench any employee unless he has given the employee not less than one month’s notice of the retrenchment.

9. (1) to (3) …

10. 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 granted in terms of these regulations, shall be of no effect whatsoever.”

Before indicating in what respects the Regulations were not complied with, I wish to state that it appeared to be common cause that at the relevant time the Bank did not have a works council or an employment council which catered for managerial employees, and that the Bank, acting in terms of the proviso to s 3(1) of the Regulations, properly sent the notice of its intention to retrench Charamba dated 24 June 2002 (“the notice”) to the retrenchment committee.

Having said that, I proceed to deal with the failure to comply with the peremptory provisions of the Regulations. There were a number of respects in which the Regulations were completely ignored.

In the first place, the retrenchment committee did not appreciate that when it received the notice the retrenchment committee, or a person authorised thereto by the retrenchment committee or the Minister, was obliged to undertake the functions of an authority in terms of s 3(1) of the Regulations, because the Bank did not have a works council or an employment council which catered for managerial employees.

In terms of s 3(2) of the Regulations, after receiving the notice the retrenchment committee, acting as the authority in terms of s 3(1) of the Regulations, was obliged to “forthwith attempt to secure agreement” between the Bank and Charamba, as to whether or not Charamba should be retrenched and, if he was to be retrenched, the terms and conditions on which he was to be retrenched.

In my view, it is clear from the wording of s 3(2) of the Regulations that the authority is obliged to play an active rôle, and not a passive one, in attempting to secure an agreement between the parties concerned. Its rôle is that of a mediator, i.e. a person who tries to get an agreement between parties disagreeing with each other.

As already stated, the minutes of the meeting of the retrenchment committee held on 5 December 2002 indicate that when the retrenchment committee held its first meeting with the parties on 1 August 2002, the retrenchment committee formed the opinion that the parties required more time to negotiate a settlement, and therefore directed them “to go back to the negotiating table”. There is no evidence in the minutes which shows that the retrenchment committee attempted to secure an agreement between the parties on the issues in question. The same applies to the meeting held on 5 December 2002.

In the circumstances, the retrenchment committee, acting as the authority in terms of s 3(1) of the Regulations, did not do what it was obliged to do in terms of s 3(2) of the Regulations.

Secondly, after receiving the notice, the retrenchment committee was obliged to act forthwith. In Standard Chartered Bank Zimbabwe v Matsika 1996 (1) ZLR 123 (S), this Court considered the meaning of the word “forthwith”. At 131 C-E GUBBAY CJ said:

“It seems to me beyond question that having suspended Matsika without pay and other benefits on 3 August 1992 the Bank, either by design or oversight, failed to apply forthwith to a labour relations officer. The word ‘forthwith’, though not as peremptory as ‘immediately’, means ‘as soon as is reasonably possible in the circumstances’. See R v West & Wild 1953 SR 199, 1953 (2) SA 677 (SR) at 677-678; Sleightholme Farms (Pvt) Ltd v National Farmers’ Union Mutual Ins Soc Ltd 1966 RLR 467 (G) at 471 H-I; Zulu v Sterling Products International Ltd 1988 (2) ZLR 110 (H) at 114 in fine – 115A. The delay of six weeks between the suspension and the application rendered the suspension inoperative.”

In the present case, assuming that the notice was received by the retrenchment committee on 24 June 2002, the retrenchment committee delayed for about thirty-seven days before holding its first meeting with the parties on 1 August 2002. In my view, and applying the meaning of the word “forthwith” set out in the Standard Chartered Bank case supra, the retrenchment committee did not act forthwith as it was obliged to do in terms of s 3(2) of the Regulations.

Thirdly, in terms of s 3(2a) of the Regulations the retrenchment committee, acting as the authority in terms of s 3(1) of the Regulations, was obliged to attempt to secure agreement on the possibility of implementing measures to avoid Charamba’s retrenchment. There is nothing in the minutes of the meeting held on 5 December 2002 indicating that this peremptory provision was complied with.

Fourthly, in terms of s 3(3) of the Regulations the retrenchment committee, acting as the authority in terms of s 3(1) of the Regulations, was obliged to have regard to the factors referred to in s 7 of the Regulations when attempting to secure an agreement on whether or not Charamba was to be retrenched. Once again, there is nothing in the minutes of the meeting held on 5 December 2002 which indicates that the retrenchment committee complied with this peremptory provision.

Fifthly, in terms of s 3(4) of the Regulations the retrenchment committee, acting as the authority in terms of s 3(1) of the Regulations, was obliged to keep proper minutes of its proceedings and deliberations in attempting to secure an agreement on whether Charamba was to be retrenched and, if so, the terms and conditions on which he was to be retrenched. It was common cause that no such minutes were kept in respect of the meeting held on 1 August 2002.

Sixthly, in terms of s 3(6) of the Regulations, after receiving the notice the retrenchment committee had only one month within which to secure an agreement between the parties. If it failed to secure an agreement within that period, it had another two weeks, in terms of s 5(1) of the Regulations, within which to recommend to the Minister in writing whether or not Charamba’s retrenchment should be permitted and, if so, the terms and conditions on which it was to be effected.

The retrenchment committee, therefore, had a total of six weeks before recommending to the Minister whether or not Charamba should be retrenched and, if he was to be retrenched, the terms and conditions of such retrenchment.

Assuming that the retrenchment committee received the notice on 24 June 2002, the last day on which the retrenchment committee could have recommended to the Minister in writing whether or not the proposed retrenchment of Charamba should be permitted was 5 August 2002. The appeal record indicates that the retrenchment committee did not meet that deadline. Instead, it was on 30 January 2003, nearly six months after the deadline, that the retrenchment committee recommended to the Minister that the proposed retrenchment should be permitted. The peremptory provision in s 5(1) of the Regulations was not, therefore, complied with.

Seventhly, in terms of s 5(2) of the Regulations if the retrenchment committee failed to make a recommendation to the Minister on the proposed retrenchment of Charamba within the two week period already referred to, the Minister was obliged to require the retrenchment committee to send him all the documents in the matter in order for him to determine whether or not the proposed retrenchment should be permitted. Once again, this peremptory provision was not complied with.

Finally, in terms of s 6(1) of the Regulations the Minister is obliged to consider, without delay, any recommendation on retrenchment submitted to him and, within two weeks, to approve or refuse to approve the proposed retrenchment. According to the record before this Court, the recommendation made to the Minister on 30 January 2003 was approved by the Minister on 4 March 2003, long after the expiration of the two week period.

There were, therefore, many respects in which the peremptory provisions of the Regulations were completely ignored. It follows that Charamba’s retrenchment was not carried out in terms of the Regulations, and that in terms of s 10 of the Regulations the purported retrenchment is of no effect whatsoever.

In the circumstances, the appeal is dismissed with costs.

CHIDYAUSIKU CJ: I agree.

CHEDA JA: I agree.

Atherstone & Cook, appellant's legal practitioners

Dube, Manikai & Hwacha, respondent's legal practitioners