Court name
Supreme Court of Zimbabwe
Case number
SC 121 of 2002
Civil Appeal 292 of 2001

Retrenched Employees of National Breweries Ltd. as represented by Mudondo v National Breweries Ltd. and Another (92/01) (SC 121 of 2002, Civil Appeal 292 of 2001) [2003] ZWSC 121 (05 March 2003);

Law report citations
Media neutral citation
[2003] ZWSC 121










REPORTABLE
ZLR (107)


Judgment
No. SC 121/02


Civil
Appeal No. 292/01








RETRENCHED
EMPLOYEES OF NATIONAL BREWERIES LIMITED as
represented by NATHAN MUDONDO





v
(1) NATIONAL BREWERIES LIMITED


(2) THE
MINISTER OF PUBLIC SERVICE, LABOUR AND
SOCIAL WELFARE N.O.








SUPREME
COURT OF ZIMBABWE


SANDURA  JA,
CHEDA JA & GWAUNZA AJA


HARARE,
SEPTEMBER 24, 2002 & MARCH 6, 2003








H
Zhou
,
for the appellant





P
Nherere
,
for the first respondent





No
appearance for the second respondent





CHEDA
JA: Although several grounds of appeal were given in the notice of
appeal, at the hearing of this appeal the parties agreed
that the
grounds fell under the following two heads –






1. Whether there is one or more
retrenchees before the court.







2. Whether the retrenchment was
lawful.






Mr Zhou,
for the appellants, conceded that he could not challenge the decision
on which retrenchee is before the court.






The issue of
the representation of the parties was dealt with in detail by the
court
a quo
in its judgment of 5 September 2001.





In
his founding affidavit Nathan Mudondo (“Mudondo”) said he
was bringing the application for and on behalf of the employees
of
the first respondent who were retrenched at the end of April 1999.
He attached a list of the employees concerned whom he said
appointed
him to make the affidavit on their behalf. He said he was also
bringing the action in his capacity as chairman of the
workers’
committee which represented the employees concerned in the run up to
the purported retrenchment.






There is not even a single
supporting affidavit from any of the employees concerned. It is
just his word to that effect. This
is certainly insufficient.
There should be a proper mandate to represent parties in an action of
this nature.





The
trial court pointed out that even under the provisions of rule 89
of the High Court Rules, 1971, he should produce evidence
to
establish his claim that he is properly authorised to represent the
parties concerned. This is very essential, especially where
the
authority to represent another party is challenged, as in this case.
In addition, the court must be satisfied that such party
authorised
the other to represent it, as an order for costs could be made
against the losing party, including the party that is represented.






In challenging
Mudondo’s authority, the first respondent points out that the
employees accepted their packages and left, while others
actually
retired. This makes it even more important for Mudondo to prove his
mandate. He has not done so. How could the two
people who have
retired authorise him to represent them in challenging the
retrenchment which is not applicable to them? There
should have
been affidavits from each employee, even brief ones; as stated by
BARTLETT J in
Barry
Thomas Prosser and Thirty-Five Ors v Zimbabwe Iron and Steel Company

HH-201-93.






I
should point out that this is different from a class action, and that
even in a class action one cannot just allege that he or she
has been
authorised by others to represent them. The authority to represent
others will have been given by a judge in a court application.






In the absence
of proof, the court
a quo
was correct in holding that only Mudondo was before the court.






Turning
now to the retrenchment, it has been submitted that the first
respondent unlawfully retrenched the employees concerned.





The
Labour Relations (Retrenchment) Regulations, 1990, (“the
Regulations”) set out the procedure to be followed when retrenching
employees. “Retrench” is defined in the Regulations as follows:





“’retrench’
in relation to an employee, means to terminate the employee’s
employment for the purpose of reducing expenditure or
costs, adapting
to technological change, re-organising the undertaking in which the
employee is or was employed, or for similar reasons”.





The
Regulations then set out the steps to be followed. I understand this
retrenchment to be a move taken by an employer against the
employees
and discussed with the various organs referred to before it is
effected.





In
this case, it is clear that the steps set out in the Regulations were
not followed.





The
workers did not leave employment according to the above arrangement.
In fact, where there is retrenchment, the consent of
the employee or
employees is not the controlling factor. What is important is to
follow the procedure laid down and obtain the
necessary authority,
because while an attempt to reach agreement with the employees
concerned should be made, the retrenchment does
not depend on their
consent or refusal.





The
Labour Relations (General Conditions of Employment) (Termination of
Employment) Regulations, 1985, provides as follows:






“Termination
of contract of employment





2 (1) No
employer shall, summarily or otherwise, terminate a contract of
employment with an employee unless –





(a) …






(b) he and the employee mutually
agree, in writing, to the termination of contract; or …”.





This
is a completely different situation from retrenchment. In other
words, if an employer and an employee decide and agree to part,
for
whatever reasons, and the agreement is in writing, then retrenchment
procedures fall away. There is no need to go through the
steps laid
down for retrenchment. There is no need to obtain the authority of
the various organs referred to, including the Minister
of Public
Service, Labour and Social Welfare. In this matter the Minister’s
authority was given.





According
to the papers, this is what happened in this case. Even if
initially the employer intended to retrench but failed to
follow the
laid down procedures, once the employees concerned decided to resign
the need to follow the retrenchment steps fell away.
The employees
concerned made written applications for voluntary resignation. The
matter had been discussed at meetings. Circulars
had been
distributed to them. They were made aware of how the packages were
to be calculated. They were represented at the meetings
held.
Mudondo attended the various meetings.





The
documents that were signed by the employees concerned stated as
follows:





“I
(name) acknowledge receipt of your memorandum of 19 February
1999, which I have read and understood. I therefore wish to
be
considered for voluntary retrenchment on the Voluntary Retrenchment
Package offered by the Company.





Subject
to the acceptance of my application by Management, I hereby freely
tender my resignation from National Breweries with effect
from 1 May
1999.”





Mudondo
signed a similar document, opting for the resignation and citing
medical grounds.





In
my view, this is exactly the situation referred to in the Regulations
contained in Statutory Instrument 371 of 1985. The resignation
became effective once the employer accepted or granted the
application by the appellant for resignation.





I
do not consider it open to Mudondo in such a situation to turn around
and claim that he was retrenched unlawfully. He tendered
his
resignation from the first respondent freely, as stated in the
document, and collected his package. That ended his employment
with
the first respondent.





There
was certainly no basis for appealing on the ground that the
retrenchment was unlawful. Otherwise, the appeal was based on
a
point that was conceded.






The court a
quo

conceded that the employer did not follow the retrenchment procedure.
In other words, if the employees were retrenched, the retrenchment
would have been held to be unlawful.





However,
the court pointed out, and determined the matter on the basis, that
the employees concerned resigned.





I
find no merit in the appeal and it is dismissed with costs.














GWAUNZA
AJA: I agree.














SANDURA  JA:
I have read the judgment prepared by CHEDA JA but respectfully
disagree with it. In this matter,
an application by the appellants
for an order setting aside their retrenchment by the first respondent
was dismissed with costs by
the High Court.





The
background facts are as follows. At the relevant time the
appellants were employees of the first respondent (“Natbrew”).

On 19 January 1999 Natbrew’s managing director (“Nhete”)
issued a memorandum to all Natbrew employees, informing them
that
because of the prevailing economic situation in the country the
company would be restructured and some of the employees would
be
retrenched.





A
month later, on 19 February 1999, Nhete issued another
memorandum, advising the employees of the progress in the
restructuring
exercise, and informing them that those employees who
were not accommodated in the new structure were being offered a
voluntary retrenchment
package in order to minimise the adverse
effects of losing their jobs. The details of the package were set
out in a document annexed
to the memorandum, and payment of the
package was to be made on 30 April 1999 when the employees in
question were to be retrenched.





Thereafter,
on 23 February 1999, a meeting was held at Kadoma to clarify
various issues pertaining to the voluntary retrenchment
package and
the restructuring exercise. The meeting was attended by the members
of Natbrew’s national workers committee and national
salaried staff
committee. Various concerns over the retrenchment package were
expressed but the chairman did not deal with them
because he said
that the purpose of the meeting was to clarify issues, and not to add
to or delete anything from the package.





Subsequently,
about three hundred and sixty-eight employees (including the
appellants) who had not been accommodated in the new
structure, and
whose employment was to be terminated on 30 April 1999, were
asked to apply for a voluntary retrenchment package
by completing an
application form, which was in the form of a letter prepared by
Natbrew. The application form, in relevant part,
is set out below:





“Dear
Sir,





APPLICATION
FOR VOLUNTARY RETRENCHMENT





“I,
… acknowledge receipt of your memorandum of 19 February, 1999,
which I have read and fully understood. I therefore wish
to be
considered for voluntary retrenchment on the Voluntary Retrenchment
Package offered by the Company.





Subject
to the acceptance of my application by Management, I hereby freely
tender my resignation from National Breweries with effect
from 1 May
1999.





Yours
faithfully,





……………………………………………





Approved/Declined
by Management.”





After
completing the application forms and submitting them to Natbrew, the
appellants consulted their lawyer who, on 30 April
1999, wrote
to Nhete informing him that the purported retrenchment was a nullity
because the Labour Relations (Retrenchment) Regulations,
1990,
published in Statutory Instrument 404 of 1990, (“the Regulations”)
had not been complied with. The letter, in relevant
part, reads as
follows:





“We
are … instructed that despite your memorandum referring to a
voluntary retrenchment scheme, the reality on the ground has in
fact
been different as your organisation unilaterally proceeded to draw
(up) a list of the reorganised structure which excluded those
employees you wished to discard. … In effect, you proceeded to
compulsorily retrench the affected employees by excluding them
from
the company structure without their consent and without following the
laid down procedures relating to compulsory retrenchment.
…





We
are instructed that the employees have already completed the forms
provided by yourselves but as no formal acceptance has been
provided
by the company, there is yet to be a formal contract and it is the
employees’ wish that consideration of the forms be
suspended
pending negotiations on the outstanding issues.





Should
your organisation seek to proceed without taking into account our
client’s sentiments as set out above, it is their intention
to
accept whatever packages you will offer on a without prejudice basis
whilst compliance with the Regulations governing compulsory
retrenchment is sought …”.





The
above letter did not provoke an immediate response from Nhete.
Nevertheless, the reply eventually came from Natbrew’s lawyer
in a
letter dated 9 June 1999. The letter, in relevant part, reads
as follows:





“… we
advise that our client offered packages to those employees who had
been identified as being redundant and who were prepared to
accept
firstly their redundancy and secondly the packages offered.





All
the employees who accepted packages –






1. made written applications for
voluntary retrenchment pursuant to the offer made by our client.





2. The
applications were considered by our client and all of them were
approved in writing.





3. The
employees in writing expressed their acceptance of the packages. …”







In the
circumstances, Natbrew was of the view that the appellants had been
retrenched in terms of the law. Consequently, the appellants
filed
a court application in the High Court against Natbrew and the
Minister of Public Service, Labour and Social Welfare (“the
Minister”), in his capacity as the Minister responsible for the
administration of the Labour Relations Act [
Chapter 28:01]
(“the Act”), seeking the following order:






“1. That the retrenchment of
the employees set out in Annexure ‘A’ be and is hereby set aside.







2. That the respondents pay the
costs of this application.”







When the
application was heard, the learned judge in the court
a quo
identified the following as the issues for determination:






“(a) whether or not condonation
should be granted for filing of this application out of time;






(b) whether
or not the applicant (i.e. Nathan Mudondo) can represent the
other applicants in terms of Rule 89 of the High
Court Rules;





(c) whether
or not the applicants were retrenched in accordance with the
provisions of the Labour Relations (Retrenchment) Regulations,
SI 404/90. … If not, did they resign from employment?”.






The
first issue was determined in favour of the appellants, and the delay
in filing the application was condoned. This is not
an issue in
this appeal.





The
second issue was determined in favour of the respondents, and the
learned judge ruled that the only applicant properly before
him was
Nathan Mudondo. Although the appellants indicated in their
notice of appeal that this ruling would be challenged,
their counsel
in this Court conceded the correctness of the learned judge’s
ruling. It is, therefore, not an issue in this appeal,
and
consequently there is only one appellant before us.





The
third issue was determined in favour of the appellant, in that the
learned judge ruled that the purported retrenchment was null
and void
because the Regulations had not been complied with. However,
notwithstanding that finding, the learned judge dismissed
the
application with costs on the ground that, in his view, the appellant
had resigned from his job. Aggrieved by that decision,
the
appellant appealed to this Court.





The
main issue in this appeal is whether the appellant resigned from his
job or was retrenched. If what happened was a retrenchment,
then,
as the learned judge correctly found, the retrenchment was a nullity,
and the learned judge ought to have granted the order
sought.





However,
before determining that issue, I would like to deal with two matters.
The first concerns the meaning or meanings of “resign”
and
“retrench”; and the second is the purpose of the Regulations.






Although the
word “resign” is not defined in the Act or Regulations, the
Concise
Oxford Dictionary of Current English

8 ed, gives several meanings of the word. In my view, the most
appropriate meaning in the context of the present appeal is:
“give
up office, one’s employment, etcetera”. It goes without saying
that the resignation must be voluntary and not due to
pressure
exerted by the employer on the employee.





The
word “retrench” is defined in the Regulations as follows:





“’retrench’
in relation to an employee, means to terminate the employee’s
employment for the purpose of reducing expenditure or
costs, adapting
to technological change, re-organising the undertaking in which the
employee is or was employed, or for similar reasons”.





I
now wish to state the purpose of the Regulations. The Regulations
were made by the Minister in terms of s 17(1) of the
Act for the
purpose of affording protection to employees by regulating and
restricting the circumstances in which employers may retrench
their
employees.





In
this regard, s 10 of the Regulations provides that any
retrenchment of an employee which does not comply with the
Regulations
will be a nullity. It reads:





“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.”





In
view of the purpose of the Regulations, if what the employer wants to
do is to retrench his employee or employees he is obliged
to follow
the procedure set out in the Regulations. He cannot circumvent that
procedure by resorting to some other device.





That
issue came before this Court in
Mutare
Board and Paper Mills (Pvt) Ltd v Kodzanai

2000 (1) ZLR 641 (S). The facts of that case and this Court’s
decision in the matter are accurately stated in the headnote, which
reads as follows:





“The
management of the appellant company decided that it had to reduce its
workforce. 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.”





In
the present case, Natbrew made it clear right from the beginning of
the exercise that it intended retrenching some of its employees.

That point was made in the two memoranda issued by Nhete and which
were addressed to all Natbrew employees. It was also made
at the
meetings which were held for the purpose of explaining the voluntary
retrenchment exercise and the retrenchment package being
offered.
In the circumstances, the termination of the appellant’s employment
should have been in terms of the Regulations.





However,
the learned judge found that the appellant had resigned from his job,
and dismissed the appellant’s application on that
basis. He said
the following:





“The
applicant signed Annexure ‘L’ (the application for voluntary
retrenchment). In my view, the Regulations do not render null
and
void a resignation from employment by an employee in consideration of
a package which, in essence, is what the applicant did.
He
consulted a legal practitioner before signing the document. He must
have been advised by his legal practitioner that the retrenchment
was
a nullity by reason of the retrenchment exercise’s failure to
comply with s 3 of the Regulations. With this knowledge
he
signed a document which explicitly states he was voluntarily
resigning from the first respondent with effect from 1 May 1999
in consideration of the payment of a package.”





In
my view, the learned judge erred in finding that the appellant signed
the application for voluntary retrenchment after consulting
a legal
practitioner. Quite clearly, that was not the case. As can be
seen from the letter to Nhete written by the appellant’s
lawyers on
30 April 1999, which I have already set out in this judgment,
the appellant signed the application for voluntary
retrenchment
before consulting his lawyer. In that letter the appellant’s
lawyer said:





“We
are instructed that the employees have already completed the forms
provided by yourselves …”.





The
forms referred to were the applications for voluntary retrenchment.





However,
the major error was the finding by the learned judge that by signing
the document in question the appellant had in fact
resigned as
opposed to being retrenched.





What
happened in this matter was not really in dispute. It was in fact
set out in Natbrew’s opposing affidavit as follows:





“… those
employees who had been rendered redundant through the creation of the
new structure had an option either to apply for a voluntary
retrenchment package or to contest the retrenchment exercise in
accordance with the relevant regulations. …”





In
addition, it was common cause that a decision had been taken by
Natbrew that those employees who had been identified as no longer
needed by the company, and the appellant was one of them, were to be
retrenched on 30 April 1999, whether they liked it or not.

That decision was taken long before the appellant signed the document
in question “applying” for the voluntary retrenchment
package and
tendering his resignation. Quite clearly, the document was a
smokescreen designed to disguise Natbrew’s unlawful
retrenchment
exercise.





In
the circumstances, when the appellant was offered a retrenchment
package, what in effect he was being told was - “If you do
not
accept the package and tender your resignation, you will,
nevertheless, be retrenched on 30 April 1999”. In my view,
this is akin to being told - “If you do not resign, you will be
dismissed on 30 April 1999”.





In
considering whether the appellant resigned or was retrenched, the
issue to determine is whether the contract of employment was
terminated by the appellant or by Natbrew. As SIR JOHN
DONALDSON, M.R. stated in
Martin
v MBS Fastenings (Glynwed) Distribution Ltd

[1983] IRLR (Industrial Relations Law Reports) 198, when the matter
came before the Court of Appeal:





“The
Industrial Tribunal had to make up its mind whether, on the evidence,
the reality of the situation was that the employer terminated
Mr Martin’s employment or that Mr Martin did. Plainly
the fact that Mr Martin signed a letter of resignation is
a
factor and an important factor in reaching a conclusion on this
issue, but it cannot be conclusive. … whatever the respective
actions of the employer and employee at the time when the contract of
employment is terminated, at the end of the day the question
always
remains the same, ‘Who really terminated the contract of
employment?’.”





See
Labour Law: Cases and
Materials
by
Benedictus and Bercusson at pp 301-2.





Similar
opinions have been expressed by a number of authors of textbooks on
labour law.





Robert
Upex has this to say at p 35 of
Termination
of Employment
2 ed:





“A
resignation will be treated as a dismissal if the employee is invited
to resign and it is made clear to him that, unless he does
so, he
will be dismissed.”





Similarly,
Selwyn says the following at p 272 of
Law
of Employment
7 ed:





“The
fact that the employer invited the employee to resign may, however,
constitute a dismissal, for the alternative may be expressed
or
implicit in the request. In
Robertson
v Securicor Transport Ltd

[1972] IRLR 70, the applicant had broken a company rule by signing
for a container which had not been received. When this was
discovered,
he was given the alternative of resigning or being
dismissed, and he chose the respectable course. It was held that he
had been
dismissed nonetheless.”





I
find the above authorities very persuasive and, therefore, intend to
apply the principles set out therein in the determination
of this
appeal.





Applying
these principles to the facts of the present case, there can be no
doubt that the appellant’s contract of employment
was terminated by
Natbrew and not by the appellant. That is so because when the
appellant was offered the retrenchment package
and asked to resign,
it was made clear to him that if he did not accept the package and
resign, he would, nevertheless, be retrenched
on 30 April 1999,
as the decision had already been made.





Consequently,
as the termination of the appellant’s contract of employment was
not in accordance with the Regulations, it was
a nullity and the
learned judge ought to have granted the order sought.





In
line with this Court’s decision in
Mutare
Board and Paper Mills (Pvt) Ltd v Kodzanai
,
supra,
it follows that the other employees unlawfully retrenched by Natbrew
when the appellant was retrenched, and who are not parties
to these
proceedings, should obtain the same relief as the appellant.





In
the circumstances, I would have made the following order –





1. The
appeal is allowed with costs.






2. The order of the court a quo
is set aside, and the following is substituted –






“The application is granted
with costs”.















Kantor &
Immerman
,
appellant's legal practitioners


Gill,
Godlonton & Gerrans
,
first respondent's legal practitioners