Zindoga & Ors v Minister of Public Service & Ors (HC 4791 of 2005) [2006] ZWHHC 75 (4 July 2006)

1 HH 75–2006 HC 4791/2005 ANTHONY ZINDOGA & OTHERS versus MINISTER OF PUBLIC SERVICE, LABOUR AND SOCIAL WELFARE and CURATOR OF TRUST BANK CORPORATION LIMITED HIGH COURT OF ZIMBABWE PATEL J HARARE, 11 May and 5 July 2006 Opposed Application Mr. Mamvura, for the applicants Mr. Mutsonziwa, for the 1st respondent Mr. Mutizwa, for the 2nd respondent PATEL J: This is an application for the review of a decision to retrench approved by the 1st respondent on the 30th of May 2005, in terms of section 12C of the Labour Act [Chapter 28:01]. The grounds for review are that the 1st respondent approved the retrenchment of the applicants by the 2nd respondent, firstly, while the question as to who could lawfully retrench the applicants was sub judice, secondly, without having heard the applicants on the merits of the matter and, thirdly, by failing to incorporate the issue of motor vehicles in the terms of retrenchment. The applicants seek an order setting aside the impugned retrenchment and directing the 1st respondent to reconsider the retrenchment of the applicants taking into account submissions from both parties. HH 75–2006 HC 4791/2005 The Facts On the 23rd of September 2004, the Trust Bank Corporation Ltd was placed under curatorship. Several months later, on the 4th of March 2005, the 2nd respondent, qua curator of the bank, filed a notice of intention to retrench the applicants. On the 14th of April 2005, the applicants’ legal practitioners forwarded their written submissions to the Secretary of the Retrenchment Board. They stated that the 2nd respondent had no right to retrench the applicants because he had transferred Trust Bank’s assets and business as a going concern to the Zimbabwe Allied Banking Group in January 2005. It was further stated that the 2nd respondent did not have the requisite financial resources to meet any retrenchment package. In view of these factors, it was contended that the proposed retrenchment should not be permitted. In response, the 2nd respondent’s legal practitioners filed his answering submissions on the 20th of April 2005. On the 14th of April 2005, the Retrenchment Board gave notice that the matter was set down for hearing on the 21st of April 2005 for oral submissions to be made. At the hearing before the Board, the applicants argued that the identity of their proper employer was an issue awaiting the decision of an arbitrator and they therefore declined to make any substantive representations on the question of their retrenchment. However, the 1st respondent proceeded to make his oral submissions at HH 75–2006 HC 4791/2005 that hearing as to the quantum of the proposed retrenchment package. On the 22nd of April 2005, the 2nd respondent presented his detailed submissions to the Board in writing pursuant to the Board’s specific request. The Board itself was unable to decide the question as to who was the applicants’ proper employer. As the Board was unable to determine the application on its merits and make any specific recommendations thereon within the prescribed period, it resolved on the 5th of May 2005 to refer the matter to the responsible Minister, the 1st respondent. Thereafter, the Board submitted the application to retrench, together with its supporting memorandum and minutes, to the 1st respondent for his consideration. On the 30th of May 2005, the 1st respondent approved the retrenchment of the applicants in accordance with the terms of retrenchment presented by the 2nd respondent. On the 1st of July 2005, the arbitrator heard the matter before him and then delivered his determination on the 18th of August 2005. His ruling was that the undertaking of Trust Bank Corporation Ltd had not been transferred to the Zimbabwe Allied Banking Group within the contemplation of section 16 of the Labour Act. He further ruled that the 2nd respondent was responsible for the salaries of the applicants and therefore, by necessary implication, for their retrenchment under section 12C of the Labour Act. HH 75–2006 HC 4791/2005 The Arguments Mr. Mamvura, for the applicants, submits that the identity of the proper employer was important and relevant for the purpose of determining the terms and conditions of the retrenchment package to be availed to the applicants. The 1st respondent fixed the retrenchment package before the arbitrator’s decision was delivered. In effect, he merely rubber-stamped the 2nd respondent's written offer. The applicants had made no submissions, either orally or in writing, before the 1st respondent made his decision. The applicants were entitled to be heard on all aspects of their retrenchment package, both under the common law rules of natural justice and in terms of section 12C of the Labour Act. Therefore, the 1st respondent’s failure to afford the applicants a proper hearing constitutes a reviewable irregularity. Mr Mutsonziwa, appearing for the 1st respondent, submits that the Retrenchment Board invited representations from both parties. The applicants declined to make their submissions even though it was clear that the 2nd respondent was their employer at that time. This is so because section 55 of the Banking Act [Chapter 24:20] clearly provides that the curator of a banking institution takes over its entire management, including labour matters. Although the 2nd respondent disposed of Trust Bank’s assets to the Zimbabwe Allied Banking Group, he remained the curator in charge of the the bank. The applicants did not make any substantive representations HH 75–2006 HC 4791/2005 to the Board even though they were given the opportunity to do so. In terms of section 12C of the Labour Act, the 1 st respondent was entitled to determine the question of retrenchment and the terms thereof on the papers submitted to him by the Board. Mr. Mutizwa, for the 2nd respondent, supports the position taken on behalf of the 1st respondent. The applicants only made submissions as to whether or not the 2nd respondent could retrench them. They made no submissions as to the substance of their retrenchment package to their own detriment. They should have made such submissions on the basis that, in the event that their retrenchment was approved, they should be retrenched on such terms as were presented and supported by them. The 1st respondent dealt with what was before him, to wit, the applicants’ written submissions of the 14th of April 2005, the 2nd respondent’s written submissions of the 20th and 22nd of April 2005, and the memorandum and minutes of the Retrenchment Board meeting held on the 5th of May 2005. His decision to retrench in accordance with the 2nd respondent’s submissions was entirely in conformity with the requirements of section 12C of the Labour Act. Right to be Heard Generally It is axiomatic that any party who has a right or interest that is likely to be affected by an administrative decision or which is susceptible to being prejudiced thereby must be heard before that decision is taken. This HH 75–2006 HC 4791/2005 is dictated by the time honoured precept of the common law embodied in the audi alteram partem rule and now codified in the Administrative Justice Act [Chapter 10:28]. Section 3 of that Act provides as follows: “(1) An administrative authority which has the responsibility or power to take any administrative action which may affect the rights, interests or legitimate expectations of any person shall— (a) act lawfully, reasonably and in a fair manner; and (b) act within the relevant period specified by law or, if there is no such specified period, within a reasonable period after being requested to take the action by the person concerned; and (c) where it has taken the action, supply written reasons therefor within the relevant period specified by law or, if there is no such specified period, within a reasonable period after being requested to supply reasons by the person concerned. (2) In order for an administrative action to be taken in a fair manner as required by paragraph (a) of subsection (1), an administrative authority shall give a person referred to in subsection (1)— (a) adequate notice of the nature and purpose of the proposed action; and (b) a reasonable opportunity to make adequate representations; and (c) appeal, where applicable. adequate notice of any right of review or (3) An administrative authority may depart from any of the requirements referred to in subsection (1) or (2) if— (a) the enactment under which the decision is made expressly provides for any of the matters referred to in those subsections so as to vary or exclude any of their requirements; or the departure is, under the circumstances, (b) reasonable and justifiable, in which case the HH 75–2006 HC 4791/2005 administrative authority shall take into account all relevant matters, including – (i) the objects of the applicable enactment or rule of common law; the likely effect of its action; the urgency of the matter or the urgency (ii) (iii) of acting thereon; (iv) the need administration and good governance; the need to promote the public interest.” to promote efficient (v) Right to be Heard on Retrenchment In order to properly evaluate the nature and extent of the right to be heard in casu it is necessary to set out the provisions of section 12C of the Labour Act – as they stood at the time of the events under review, viz. before the promulgation of the Labour Amendment Act 2005 (Act No. 7 of 2005). That section, in its relevant portions, provided as follows: “(6) The Retrenchment Board shall consider any matter referred to it in terms of subparagraph (iii) of paragraph (a) of subsection (1), or subsection (4), and, having regard to the factors referred to therein, 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. (7) For formulating the purpose of recommendations in terms of subsection (6), the Retrenchment Board may in its discretion invite and receive representations, whether oral or written, from any interested parties. (8) If the Retrenchment Board fails to make a recommendation within the period specified in subsection (6), the Minister shall require the Board to forward to him all documents in the matter and shall, HH 75–2006 HC 4791/2005 within two weeks, give his decision in the matter in terms of subsection (9) as if the Board had made a recommendation in terms of subsection (6). (9) The Minister shall consider without delay any recommendation submitted to him by the Retrenchment Board and, having regard to the factors referred to in subsection (11), 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 Board, the works council or employment council, as the case may be, to notify the employer and employees concerned in writing of the decision in the matter. (10) If the Minister does not make a decision pursuant to subsection (8) or (9) within the time limits there specified, the proposed retrenchment shall be deemed to be approved. (11) In deciding whether or not to approve the retrenchment of employees in terms of this section, due regard shall be paid— (a) (i) be avoided so far to the following general considerations— that the retrenchment of employees should as possible, where this can be done without prejudicing the efficient operation of the undertaking in which the employees concerned are employed; that the consequences of retrenchment to employees should be mitigated so far as possible; to the following considerations in particular (ii) (b) cases— the reasons put forward for the proposed (i) retrenchment; and (ii) the effect of the proposed retrenchment upon the employees involved, including their prospects of finding alternative HH 75–2006 HC 4791/2005 employment and the terminal benefits to which they will become entitled.” Section 12C has since been amended by section 8 of Act No. 7 of 2005, with effect from the 30th of December 2005, firstly, by the deletion of the words “within two weeks” in subsections (8) and (9) and, secondly, by the repeal of subsection (10). The import of these amendments is largely self-evident. They were obviously designed to remove the time constraints imposed upon the Minister in the decision-making process and thereby avoid the potential inequities that might flow from the hurried exercise of his or her discretion. Turning to the specific provisions of section 12C at the relevant time, it cannot be doubted that the retrenchment of an employee impinges upon his rights, interests and legitimate expectations as well as the rights and interests of his or her employer. It follows that they are both entitled to a fair hearing within the period specified or within a reasonable time as required by section 3(1) of the Administrative Justice Act. To that end, they must be afforded adequate notice of the intended hearing and a reasonable opportunity to make adequate representations in accordance with section 3(2) of that Act. Subsection (6) of section 12C of the Labour Act enjoins the Retrenchment Board to consider every application for retrenchment referred to it and to make its recommendations thereon to the Minister within a period HH 75–2006 HC 4791/2005 of two weeks. Subsection (7) empowers the Board, at its discretion, to invite oral or written representations from the interested parties for the purpose of formulating its recommendations. Where the Board fails to make any recommendation within two weeks, it must forward all the documents in the matter to the Minister in compliance with subsection (8). By virtue of subsections (8) and (9), the Minister is enjoined to give his decision in the matter within two weeks, as if the Board had made a recommendation in terms of subsection (6), by either approving or rejecting the proposed retrenchment, having regard to the factors enumerated in subsection (11). Where the Minister does not make a decision within the time limit of two weeks, subsection (10) stipulates that the proposed retrenchment shall be deemed to be approved. In my opinion, section 12C of the Labour Act is substantially consistent with the audi alteram partem rule, but falls short of that rule to the extent that it does not invariably and peremptorily require representations from all of the affected parties. On the other hand, the provision is entirely concordant with the requirements of section 3 of the Administrative Justice Act, having regard to the departures envisaged in section 3(3) of that Act. The papers that are referred to the Board, either from the employer or from the works council or employment council, form the initial basis for its deliberations. Where further representations are deemed necessary, the Board may invite written or oral HH 75–2006 HC 4791/2005 submissions from the affected parties. Thereafter, the matter is referred to the Minister who is required to make his decision on the merits of the proposed retrenchment, taking into account the interests of the employer’s business undertaking and the economic impact of redundancy on the employees. What is clear, in any event, is that the Minister is bound by the two week time-frame stipulated by section 12C. What is also clear, given that specific time limit, is that the Minister is obliged to deal with the matter solely on the papers forwarded to him by the Board. He practicably cannot be and consequently is not required to invite the interested parties to make further written or oral representations in the matter. Section 12C, taken as a whole, is framed so as to enable the efficient and expeditious handling of proposed retrenchments, having regard to the interests of employers and employees alike. The right to be heard, in terms of section 12C, is confined to the proceedings of the Board and does not, in my view, extend to the deliberations and decisions of the Minister. I should note in passing that the position now may arguably be different, following the amendment of section 12C by Act No. 7 of 2005, with respect to those applications for retrenchment that have been determined by the Minister after the 30th of December 2005 and those that will be considered by him in the future. For present purposes, however, it is not necessary for me to make any HH 75–2006 HC 4791/2005 pronouncement on the subject vis-à-vis the amended provisions of the section. Decision On the affidavits and arguments before me, it is clear that the applicant and the 2nd respondent were both invited to the hearing before the Board on the 21 st of April 2005. Even before that date, both parties had filed their written submissions to the Board as regards the proposed retrenchment. The applicants, in their prior written submissions as well as their oral submissions before the Board, confined themselves to the locus standi of the 2nd respondent to retrench and its capacity to meet the financial burden of retrenchment. They opted of their own volition not to make any substantive representations regarding the quantum of the retrenchment package that they should be awarded. It seems to me that they should have done so, notwithstanding the outstanding question as to the identity of the proper employer, by presenting and claiming an appropriate retrenchment package based on their respective ages, years of service and prospects of employment elsewhere. These were issues that they could have dealt with and presented, regardless of which employer was entitled to retrench them. They deliberately declined to address these issues and, in my view, they did so at their own peril. On the facts before me, it is clear that the applicants were given adequate notice of the nature and purpose of HH 75–2006 HC 4791/2005 the hearing before the Board. They were also afforded ample opportunity to make adequate representations, not only to the Board but also to the 1st respondent after the matter was referred to him. They decided to forego these opportunities and cannot now complain that the 1st respondent should have given them a further opportunity to make representations on the matter. The 1st respondent was obliged to make his decision on the merits of the matter within two weeks and he did so having regard to the written submissions from both parties and the relevant memorandum and minutes of the Board. The fact that he did not have before him any specific submissions from the applicants as to the quantum of the retrenchment package was due entirely to their own deliberate inaction. In any event, the view that I have taken as to the meaning and application of section 12C of the Labour Act leads to the conclusion that the 1st respondent was entitled to make his decision on the merits of the proposed retrenchment on the papers before him. Moreover, he was at liberty to do so without having to invite further representations from either of the affected parties and without having to await the arbitrator’s determination of the identity of the proper employer. It follows that the timing and manner in which the 1st respondent made his decision to approve the applicants’ retrenchment did not constitute reviewable irregularities. In the result, the application is dismissed with costs. HH 75–2006 HC 4791/2005 Scanlen & Holderness, applicants’ legal practitioners Civil Division Attorney-General’s Office, 1st respondent’s legal practitioners Chihambakwe, Mutizwa & Partners, 2nd respondent’s legal practitioners