Payment of damages in forex

multiple currency regime.
Damages awarded during the Zimbabwe dollar era, but some employers delayed payment and are now required to pay them in forex.
As a result a number of companies and organisation are in legal battle with former employees on payment of damages.
An example is the case of Mr Shepherd Ndarowa who was dismissed by the University of Zimbabwe on February 25, 2005. On July 29, 2005, an arbitrator ordered his reinstatement.
The University appealed against the award to the labour tribunal but the Labour Court dismissed the appeal on March 30, 2007. During this period, the legal tender in the country was the Zimbabwean dollar hence the damages were supposed to be paid in that currency. In 2009, the country moved to multiple currency system.
In 2010, Mr Ndarowa referred the matter to an arbitrator for assessment of his damages. In July that year, Honourable Paul Bvumbe made an award in terms of which he ordered UZ to pay Mr Ndarowa an amount of US$15 845 as damages for loss of employment.
UZ then appealed for the second time to the Labour Court against the award. It argued that the arbitrator erred in finding that Mr Ndarowa was entitled to payment of back pay from the date of unlawful dismissal and to damages in lieu of reinstatement in United States dollars. The institution submitted that this was contrary to existing principles of law to the effect that damages must be for actual loss suffered. It further argued that the arbitrator had not addressed the issue of whether or not the principles of mitigation of damages applied to Mr Ndarowa in this matter. This was taking into account the three-year delay by the respondent in seeking quantification of damages. The main issue was whether the arbitrator erred in awarding damages in US dollars to cover a period when such currency was not legal tender.
The issue of mitigation is really an amplification of the same argument. It was argued that if Mr Ndarowa sought his damages before 2009, he would have been awarded same in Zimbabwe dollars, in which case an award in US dollars would not arise. In fact, UZ declared that the award should have an amount of Z$1 305 instead of US$15 845. The answer lies in a reading of our law in conjunction with International Labour Standards.
The applicable provisions at international law are set out in the Termination of Employment Convention, 1982 (No. 158). Its article 10 provides as follows: “If the bodies referred to in Article 8 of this Convention find that termination is unjustified and if they are not empowered or do not find it practicable, in accordance with national law and practice, to declare the termination invalid and/or order or propose reinstatement of the worker, they shall be empowered to order payment of adequate compensation or such other relief as may be deemed appropriate.”
Zimbabwe is a member of the ILO, but has not ratified the Convention. Section 89 (2) of the Labour Act, Chapter 28:01 gives the Labour Court power to order reinstatement or employment in a job. This is provided that any such determination shall specify an amount of damages to be awarded to the employee concerned as an alternative to his reinstatement or employment.
Should damages be awarded instead of reinstatement or employment as a result of an untenable working relationship arising from unlawful or wrongful dismissal by the employer, punitive damages may be imposed. The Act show that our Legislature intended an award damages to serve as an alternative to the loss of employment. An alternative is effectively equivalent. This is why the Legislature went further to provide extra damages in the form of punitive damages where the employer’s conduct renders reinstatement untenable.
Our Legislature had in mind the provisions of the aforesaid ILO Convention when it provided for damages for loss of employment.
The Act’s reference to damages as an alternative must have envisaged the adequate compensation provided by the Convention. Though the Convention has not been ratified, its provisions have been incorporated into the Act. In any event, adequate compensation is the equitable remedy, which must be favoured by the Labour Court. This accords with the standing of the Court as a Court of both law and equity. Hence, UZ’s submission that the award of Z$1 403 is an alternative to Mr Ndarowa’s loss of employment is unacceptable.
It is against this background that Labour Court president Mr Godfrey Musariri found that UZ’s appeal had no merit, and dismissed it with costs.