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Supreme Court outlaws Zimdollar payments

By Daniel Nemukuyu 

Workers who were awarded damages for labour disputes in Zimbabwe dollars after the introduction of the multi-currency regime will now get paid in foreign currency after the Supreme Court on Wednesday ruled against compensation in local currency that is no longer legal tender.

Supreme Court outlaws Zimdollar payments
Supreme Court outlaws Zimdollar payments

In a landmark ruling, Deputy Chief Justice Luke Malaba, sitting with Justices Paddington Garwe and Antonia Guvava, allowed an appeal by three workers unlawfully dismissed from Hunyani Paper and Packaging (Private) Limited in 2006 who were seeking payment of damages in foreign currency.

Horace Nzuma, Regis Muza and Wiseman Gara were fired from Hunyani, but the Labour Court in 2010 ruled that the dismissal was unfair and unlawful and awarded the trio Z$33 million each as damages.

The three, through their lawyers Matsikidze and Mucheche, appealed to the Supreme Court, arguing that the Zimbabwean dollar was no longer relevant in the economy and that the award amounted to unjust enrichment on the part of the company.

Deputy Chief Justice Malaba quashed the Labour Court’s decision and ruled that the workers were entitled to payment in foreign currency. The court remitted the case back to the Labour Court for quantification of the damages in foreign currency.

“It is ordered that the appeal succeeds with costs to the effect that the judgment of the court ordering the respondent to pay in Zimbabwe dollars is set aside,” he said.

“The matter is remitted to the court a quo (Labour Court) to exercise its equitable jurisdictions in determining the question of conversion of the backpay into foreign currency and applicable rate.”

A detailed judgment with reasons for the decision will be released in due course.

Parliament did not prescribe the exchange rate for the conversion of the Zimdollar to multi-currency and this has brought challenges before the courts.

Since the introduction of the multi-currency regime in 2009, the Labour Court, High Court, Supreme Court and the magistrates’ courts have been flooded with applications for conversion of claims from Zimbabwe dollars to United States dollars.

Such cases have been common in the Labour Court.

In the heads of argument filed in the matter, the former Hunyani workers argued that the Labour Court erred in awarding salary arrears and damages in Zimbabwean dollars because the appellants were at law entitled to choosing a currency that effectively compensated them for the unjustly caused loss.

They argued that awarding the damages in Zimbabwean dollars amounted to unjust enrichment on the part of the company because the Zimbabwean dollar was now valueless.

To award damages in Zimbabwean dollars under the current multi-currency system, the three argued, was as good as not awarding anything.

It was argued that the Labour Court could have quantified the damages in United States dollar component using the official exchange rates at the time in question.

The three described the Labour Court’s decision as outrageous, unjust and an unreasonable order, which violated public policy.

“This encourages anarchy and self-help and thereby threatens the very foundations on which a rule-governed society is based on,” the workers lawyers argued.

“This order amounts to unjust enrichment on the part of the employer.”

Hunyani counter-argued that the three never led any evidence regarding quantification of the damages and that they did not even invite the Labour Court to convert the backpay at the rate applicable at the material time.

To that end, the company argued that the application lacked merit and that it had to be thrown out.

In a related case, 39 Fleximail (Private) Limited workers who were awarded damages for unlawful dismissal in Zimdollars rejected the Z$12 594,77 (revalued) cheque issued by their employer in February 2009 in settlement of the amount due.

The workers argued that when they were given the money it had already become moribund.

An appeal was filed at the High Court, and a judge ruled that the 39 should be paid in US dollars since the Zimdollar was no longer in use.

The matter then spilled into the Supreme Court when Fleximail contested the High Court’s decision, arguing that compensation should be made in Zimdollars because the order for payment was made in 2007 when that currency was still in use.

The Supreme Court recently referred the matter back to the Labour Court without making a ruling.

In heads of argument filed by Fleximail at the Supreme Court, it was stated that the workers were not entitled to payment in US dollars.

Fleximail also argued that the Zimdollar was never demonitised by the legislature and that it remained legal tender in terms of the Reserve Bank Act. The Herald