Court name
Supreme Court of Zimbabwe
Case number
SC 84 of 2004
Civil Appeal 101 of 2003

NEI Zimbabwe (Pvt) Ltd. v Brown and Others (01/03/01) (SC 84 of 2004, Civil Appeal 101 of 2003) [2004] ZWSC 84 (04 October 2004);

Law report citations
Media neutral citation
[2004] ZWSC 84







DISTRIBUTABLE (67)











Judgment No
SC 84/04


Civil Appeal No 101/03

















NEI
ZIMBABWE (PRIVATE) LIMITED v ZANE BROWN AND
TEN OTHERS











SUPREME COURT OF
ZIMBABWE


CHIDYAUSIKU CJ,
MALABA JA & GWAUNZA JA


HARARE SEPTEMBER 9 &
OCTOBER 5, 2004








T. Biti, for the
appellant





B. Mujeyi, for
the respondents












CHIDYAUSIKU CJ: The appellant in this case is a private
limited liability company registered in terms of the laws of Zimbabwe
and enjoys the status of a legal persona. The respondents
were employed by the appellant at the material time. In 1999 the
then shareholders of the appellant sold their
entire shareholding in
the appellant to senior management staff of the appellant. The
respondents, together with other employees
who are not part of these
proceedings, did not believe that the future of the appellant was
secure with the new shareholders. Some
of the employees entertained
the belief that indigenous persons could not be shareholders in a
company that could remain a growing
concern.





It is clear from the
affidavits of some of the employees, that some of them also held the
view that shareholders and management
are one and the same thing.
There is no doubt that these employees failed to appreciate that the
company was run by management
which is a separate and distinct entity
from the shareholders. Some of these employees also held the view
that the change in shareholding
in the appellant constituted a change
in who their employer was and adopted the stance that they were not
prepared to work under
the new employer. They demanded that they
should be retrenched by their previous employer, Rolls Royce, and
should not be transferred
to the new employer. The long and short
of it is that some of the employees of the appellant did not want,
for one reason or another,
to continue in the employment of the
appellant because of the change in the shareholding of the appellant.





The appellant, on its
part, sought to convince the disgruntled employees that their
employer, the appellant, was still the same
person and that all that
had changed was the shareholding. The appellant also assured the
employees that their employment and conditions
of service would
remain the same.






When the appellant realized that it was not making any headway in
changing the stance taken by some of the employees, it accepted
their
desire to terminate their employment and offered payment of certain
sums of money to these employees. The employees accepted
the
termination payment and signed letters of resignation. They
received the money and went away. After a while some of these
employees approached the appellant contending that the proper
procedures for retrenchment in terms of the Labour Relations Act
[Chapter
28:10] (the Act) and Labour Relations (Retrenchment)
Regulations, Statutory Instrument 404,(the Regulations) were not
followed.






The appellant took
the view that there was no retrenchment in terms of the Act and that
the employees had voluntarily resigned.
The matter was taken to a
Senior Labour Relations Officer for adjudication. The Senior Labour
Relations Officer concluded that
the termination of employment of the
respondents was a retrenchment in terms of the Act and that the
employer had not complied with
the statutory requirements. The
appellant was not satisfied with that decision and appealed to the
Labour Relations Tribunal (now
the Labour Court). The Labour
Relations Tribunal upheld the decision of the Senior Labour Relations
Officer that the termination
was a retrenchment and not a voluntary
resignation or mutual termination and that retrenchment procedures
should have been followed.






The appellant was, once
again, dissatisfied with the decision of the Labour Relations
Tribunal and now appeals to this Court upon
the grounds set out in
the Notice of Appeal. The Notice of Appeal sets out the following
grounds:-






“1. The court a quo grossly erred as a question of law in
not finding that the employees in question had resigned in writing
and therefore they were
to be held to the legal implications of their
resignation.







  1. The court a quo erred grossly in law in holding that the
    decision was one of retrenchment governed by the Labour Relations
    (Retrenchment) Regulations,
    S.I. 404/90 when this was a simple case
    of voluntary termination on a consensual retrenchment package.








3. Further the court a quo ignored grossly and unreasonably
the following facts and their meaning thereof at law:-







    1. that
      the resignation was in writing;










    1. that
      the respondents accepted their benefits and only returned to haunt
      their employer once those packages had been exhausted;









    1. that
      there were other employees who accepted those packages rightly and
      morally never sought to have a second bite of the cherry.”














It would appear to me that the critical issue in this case is whether
there was a mutually agreed termination of employment between
the
employer and the employee or a retrenchment of the respondents in
terms of the Act.





In determining that
issue the starting point of the enquiry is, of course, what
constitutes retrenchment in terms of the Act. In
section 2 of the
Act, retrenchment, is defined as follows:-






“Retrench, in relation to an employee, means terminate the
employee’s employment for the purpose of reducing expenditure or
costs,
adapting to technological change, reorganizing the undertaking
in which the employee is employed, or for similar reasons, and
includes
the termination of employment on account of the closure of
the enterprise in which the employee is employed.”









One of the cardinal principles of interpretation is to give the
words of the enactment their primary or ordinary meaning. It
is
very clear from the plain language of the above section that
termination of employment in a retrenchment exercise is by the
employer
and not the employee. On the evidence of this case it was
the employees and not the employer that sought termination of
employment
and for a purpose that has nothing to do with what is
provided in section 2 of the Act.






It is also clear from the wording of section 2 that retrenchment is
termination of employment in clearly defined circumstances.
That is
to say retrenchment means termination of an employee’s employment
for the purpose of reducing expenditure or costs.
The termination
of employment in casu was not for the purposes of reducing
expenditure or costs. Retrenchment also means termination of
employment for the purposes adapting
to technological change.
Again, termination in casu had nothing to do with
technological change. Retrenchment can also be effected for
the purposes of reorganizing the undertaking in which the employee is
employed. Here again,
there is no reorganization that has taken
place. All that has happened is that the shareholding in the
appellant company has changed
hands. Everything else has remained
the same.





In my view the
reorganization envisaged in section 2 of the Act does not mean or
include the change of shareholding in a company.
Retrenchment can
also be effected for reasons similar to the above and includes
termination of employment on account of the closure
of the enterprise
in which the employee is employed. Again, this is not what happened
in casu.





In the present case the
employees wished to terminate their services because they had no
faith in the new shareholders of the appellant.
There is nothing in
the wording of the Act which leads me to the conclusion that where an
employee wishes to terminate his employment
because of a change in
shareholding of the company that employs him such an employee is
retrenched in terms of section 2 of the Act.
It is on this basis
that I am satisfied that the learned member of the Labour Relations
Tribunal totally misdirected herself when
she concluded as follows:-






“From the submissions of Mr Zhou, the employees stated that
they had no confidence in the new management and wanted to instead be
retrenched. The employer had initially
assured the workers that
their jobs were secure but the workers wanted to be retrenched. As
a result, gratuitous payments were
made. I am not persuaded by this
argument. The workers did not resign. The undertaking was being
reorganized in that Rolls
Royce were pulling out and Senior Managers
were taking over.





Retrench is defined to
include the termination of employment arising out of the
reorganization of an undertaking in which an employee
is or was
employed. Mr Zhou argued that retrenchment is not initiated
by employees. There is no basis for this submission. Employees
can opt to be retrenched.
It will then be up to the employer to
accept to retrench them or not.





In this case the
employees made a proposal that they be retrenched and the employer
accepted this proposal. All this was in view
of the reorganization
of the company.





Had the employer not
wanted to retrench, it could merely have told the workers to resign
if they so wished but it was not going to
retrench. As it is, it
agreed to retrench the workers.





A perusal of the record
clearly shows that the parties were negotiating a retrenchment
package. Never once did the employer advise
the employees that he
would be making an ex gratia payment in view of the fact that
the workers were resigning. The parties knew that they were
negotiating a retrenchment package.
That was the understanding
between the parties. It was never resignation or voluntary
resignation.”









It is clear from the remarks of the learned member that she failed
to appreciate the difference between the appellant as a separate
legal persona and the individual shareholder and management of
a company. The sale of shares in a company does not, for the
purpose of section
2 of the Act, amount to reorganization. Indeed,
if that were so it would lead to chaos in the corporate world as
shares are exchanged
on a daily basis on the stock exchange.





In my view the
learned member misdirected herself and I agree with the submission
that on these facts there was no reorganization
of the appellant
giving rise to retrenchment. The employees wanted to terminate
their employment with the appellant, that was their
prerogative but
they were not entitlement to retrenchment packages in terms of
section 2 of the Act and the Regulations. The employer
offered them
some payment, which I might add, it was not obliged to pay in terms
of the law. The employees accepted the payment
offered. They
received the payment and resigned, squandered the payment and now
claim that they are entitled to more money or re-instatement
in terms
of the Act. That claim is not sustainable.





In my view the
respondents’ claim for reinstatement or payment of damages is
totally without merit. The appeal should be allowed.





In the result the
appeal succeeds and the order of the Labour Relations Tribunal for
reinstatement of the respondents is set aside
and substituted with
the following:-






“The respondents’ claim for re-instatement or payment of damages
is dismissed with costs.”


















MALABA JA: I agree























GWAUNZA JA: I agree
















Honey & Blanckenberg, appellant's legal practitioners


Gollop & Blank,
respondent's legal practitioners