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Justice Ben Hlatshwayo

Mashudu Netsianda Senior Reporter
THE Supreme Court yesterday quashed a ruling by the Labour Court ordering Hwange Colliery Company (HCC) to pay its former employee more than $15, 000 in outstanding skills retention allowances accumulated over six months.

In the court papers, HCC is the appellant while Francis Zambuko, a former technical superintendent at the coal mining company, was cited as the respondent in the matter.

The judgment by Justice Ben Hlatshwayo, sitting with Justices Bharat Patel and Paddington Garwe during a Supreme Court circuit in Bulawayo, followed an appeal by HCC challenging the Labour Court decision.

The Supreme Court ruled that the appeal had merit and ought to succeed with no order as to the costs. “There’s no doubt that if the respondent could prove that the appellant through inaction or malfeasance breached the contract in question, there could be established a basis for a claim for damages. What’s impermissible in law, however, is to order specific performance of a contractual obligation that is specifically prohibited by a statute and certainly that would amount to enforcing an illegality,” said Justice Hlatshwayo.

“The appeal has merit and ought to succeed. Although, costs should normally follow the outcome, an order of costs against respondent in the circumstances would be too harsh. In my view the respondent was entitled to view with some suspicion bold and unsubstantiated claim by the appellant that it had submitted the application to the Reserve Bank of Zimbabwe (RBZ). Accordingly, the judgment of the court a quo and the arbitral award by Arbitrator M Imbayago dated January 11, 2010 be and is hereby set aside,” ruled the judge.

Zambuko, who was employed by HCC between August 2008 and July 2009, entered into a written agreement with the coal mining firm. According to the pact, HCC was to pay him a monthly retention allowance of $2,665 in pursuant to the Exchange Control (Payment of salaries by exporters in foreign currency for critical skills retention) ORDER, 2008 (Statutory Instrument 127/2008).

Section 3 (1) of the SI 127/2008 states that an exporter could seek Reserve Bank of Zimbabwe (RBZ) authority to pay salaries in foreign currency where an employee has critical skills and wishes to pay such employee in foreign currency for the purposes of retaining the services of such employee. The exporter was expected to make a written application to the RBZ through the exporter’s authorised dealer.

In the court papers, Clause 1 of the agreement between Zambuko and HCC stipulated that the retention allowance would be paid with effect from August 1, 2008 in US dollars and would be subject to the employee agreeing to remain in the employ of the appellant for 12 months after which the agreement would be subject to review at the discretion of HCC.

In its heads of argument, HCC argued it made the requisite application for approval of the agreement to RBZ but such approval was never granted until it was overtaken by events when the country adopted the multi-currency regime in February 2009.

The coal mining firm said after the introduction of the multi-currency system it abolished the retention allowances, arguing that the facility was only a temporary measure to retain skills.

After signing the agreement without RBZ approval, HCC paid Zambuko “the allowances” in the form of fuel coupons between November 2008 and January 2009. With effect from February 2009 HCC started paying its employees in US dollars and Zambuko was not paid his allowances until he was dismissed on July 30, 2009.

He unsuccessfully challenged his dismissal before he filed a labour dispute claiming payment of the retention allowances from February to July 2009 pursuant to his agreement with HCC and the arbitrator made a determination in his favour.

Dissatisfied with the arbitral award, HCC subsequently noted an appeal to the Labour Court and it was dismissed.

HCC was ordered to pay Zambuko the allowances for the period from February 1, 2009 to July 31, 2009.

HCC through its lawyer, Advocate Lucas Nkomo instructed by Esther Sarimana of Coghlan and Welsh Legal Practitioners, in its notice of appeal argued that the court a quo erred in law by interpreting and enforcing an agreement which never came into effect by reason of non-fulfilment of a suspensive condition, namely the approval of the Reserve Bank of Zimbabwe (RBZ).

He further argued that the court a quo erred by interpreting and enforcing an agreement tainted by illegality and therefore a nullity because the parties’ purported contract was in a currency that was not legal tender and without the authority of RBZ.

Zambuko, a self actor, in his heads of argument, said HCC’s actions were a violation of the country’s labour laws and prayed for the dismissal of the appeal with costs.