MADHATTER MINING COMPANY v TAPFUMA 2014 (2) ZLR 125 (S)

Flynote

Employment — Labour Court — decisions by — application of equitable principles — court's duty to secure equity and social justice

Employment — wrongful dismissal — damages — duty of employee to mitigate loss by seeking other employment

Practice and procedure — judgment — judgment sounding in foreign currency — losses suffered in local currency — how damages to be calculated

Headnote

Where a person is wrongfully dismissed and successfully petitions the court for reinstatement or, where that is no longer possible for any reason, damages in lieu of reinstatement, such damages would consist of salary arrears or wages for the relevant period, reckoned from the date of the wrongful dismissal, and may also include compensation for any loss of any entitlement which he was deprived of as a result of the wrong termination. Damages in lieu of reinstatement become due and are to be reckoned from the date of an employee's wrongful dismissal, not from the date of reinstatement. Further, in relation to the period from and during which the damages are to be assessed, no distinction is made between the salary arrears and benefits, on the one hand, and damages proper, on the other. All must be assessed within the same period, albeit varying time periods and considerations peculiar to the assessment in question may apply.

The losses that a wrongfully dismissed employee might suffer would include housing and transport allowances forfeited by virtue of his wrongful dismissal. Where the unlawful termination occurred before the employee could complete skills training, the fact that the training was not completed would constitute a lost opportunity that appropriately qualifies as a "loss" for purposes of damages in lieu of re-instatement. The probabilities are that, had he gone into the employment field armed with a skills-based qualification, the employee would have been able to secure alternative (and better paying) employment within a reasonable time and probably in a shorter time than it might have taken him to secure any unskilled employment.

The employee is legally obliged to mitigate his loss by looking for a job from the date of his unlawful dismissal.

In casu, the lower court ordered payment of damages in US dollars, although the loss took place during the period of hyper-inflation, when only Zimbabwe dollars were legal tender. The court ordered that the amount of Zimbabwe dollars assessed as damages should be converted at the official rate prevailing at the date of reinstatement.

Held, that the court failed to consider whether the resultant United States dollar amount would have given true value, to the employee, of the damages that he was entitled to, a value that would neither over-compensate him, nor inadequately do so. At the time there were two main Zimbabwe dollar to United States dollar exchange rates in force, the official and the unofficial rates. The former rate had much smaller denominations compared to the latter. Had the official rate been used to convert the Zimbabwe dollar amount awarded to the employee as damages, an inflated amount with no relationship to the appropriate and meaningful compensation due to him would have been the result. Such an outcome would clearly have been both unrealistic and a mockery of justice.

Held, further, that it is the Labour Court, not the Supreme Court, which is endowed with jurisdiction to apply principles of equity in its determination of labour disputes. The Labour Court's jurisdiction to determine labour disputes on the basis, inter alia, of equity can be gleaned from the import of s 2A of the Labour Act [Chapter 28:01], which states that one of the purposes of the Act is to advance social justice and democracy by, inter alia, securing the just, effective and expeditious resolution of disputes and unfair labour practices. The principles of equity and social justice, as well as the imperative for the Labour Court to secure the just and effective resolution of labour disputes, are all called into question when it comes to determining the basis and formula for computing a debt (e.g. damages) suffered in Zimbabwe dollars but claimed in foreign currency. This is particularly so where such damages, being owed to an employee, can no longer be paid in Zimbabwe currency realistically or in a way that gives due value to the employee. The undeniable fact is that a debt is not wiped out by the mere fact that there has been a change to the realisable currency. Equity would demand that a formula be found to give effect to the employee's entitlement to payment of, and the employer's obligation to pay, the debt in question.

Held, further, that the complexity of the exercise to compute the damages that should be awarded to the respondent in this appeal should not be under-estimated. The Labour Court should consider enlisting the services of an appropriately qualified expert in financial matters, in order to work out a formula for calculating the damages in question. Such formula should give fair value, in USA dollars, to the damages, denominated in Zimbabwe dollars, that were awarded.