THE EASE OF DOING BUSINESS
IN ZIMBAWE: EMPLOYER REPRESENTATION IN THE LABOUR COURT
BY CEPHAS MAVHONDO
Zimbabwe is said to be ranked low in the ease of doing
business index. I do not wish to look into the strengths and weaknesses of this
index. In any event, I am writing this article as a labour lawyer and not as an
economist. The ease of doing business
index is an index created by the World Bank Group. Higher rankings (a
low numerical value) indicate better, usually simpler, regulations for businesses
and stronger protections of property rights. The research funded by the World
Bank to justify their work shows that the economic growth impact of improving
these regulations is strong. According to Wikipedia, Singapore is currently
(2016 Report) ranked at number 1 while Eritrea is at the bottom number 189.
Where is Zimbabwe? Zimbabwe is there at number 171.
Linking the ease of doing business with labour laws,
among other factors that the index takes into account, is a conception that the
easier it is to deal with employment disputes, the stronger the economic growth
of a nation. This idea is commonly called labour market flexibility. In my view
labour market flexibility should not mean regulations that are more favourable
to the business owners only. It should mean regulations that are, in as far the
business owners and workers are concerned, balanced, fair and focused on
improving the national economy at large.
The moment the regulations favour business owners more than the workers,
the workers will be disgruntled and end up protesting legally or illegally.
The Parliament and the President of Zimbabwe recently
enacted what is called the General Laws Amendment Act, 2016 (Act 3 of 2016),
(hereinafter called ‘Act 3 of 2016’). Act 3 of 2016 was published in the
Government Gazette on 1st July 2016. In terms of section 9 of Part
CXIV of Act 3 of 2016, it is now expressly stated, inter alia, that certain
company officials can now represent their companies in any proceedings before
the Labour Court. Another landmark achievement by the employers! Probably, this
is a way to improve the country’s capacity to attract foreign direct investment
(FDI). This surely appears to be a welcome development for companies as before
Act 3 of 2016, the Labour Act [Chapter 28:01] (herein after called “the Act”) was silent as
to whether or not companies could be represented and appear by their
company officials in Labour Court proceedings. This was a grey area in the Act.
However, the trend in the Labour Court was to lean towards allowing any person
who is a company official to represent and appear on behalf of the company as
long as he is so authorised. This is the same position in the Magistrates Court
by virtue of that court’s rules. It is however not the position in the superior
courts which only allow a company to be represented and appear by its company
official in very exceptional circumstances. In most cases only registered legal
practitioners are allowed to appear on behalf of companies in the superior
courts. One may ponder whether or not this position in the superior courts is
constitutional.
Before the advent of Act 3 of 2016, the
law in terms of section 92 of the Act was that a party to a matter before the
Labour Court might appear in person or be represented and appear by a legal
practitioner registered in terms of the Legal Practitioners Act [Chapter 27:07]; or an official or
employee of a registered trade union or employers’ organization of which the
party is a member. There was a lacuna in the Act as it was silent as to whether or not companies
could be represented and appear by their company officials in Labour Court
proceedings.
This issue of company representation was dealt with
before in some other courts. Mc Nally JA, in the Supreme Court case of Agramac (Pvt) Ltd v Chisvo and Another 1991
(2) ZLR 185 stated that a company, being a fictitious person, and incapable
of appearing in court in person can only be represented in the High Court or
Supreme Court by a legal practitioner. However, the court found that, by virtue of the provisions of the
Magistrates Court Rules, 1980, a director or officer of a company can institute
or defend and carry on to completion any legal proceedings in the Magistrate’s
Court.
In the case of Zimbabwe
Banking Corporation Limited vs Pindi Electrical (Pvt) Ltd and Others HH-146-98, Mubako J took a contrary
view to that adopted by the Supreme Court in the Agramac case. It was stated
that the rule that a company director or officer could only act in the
Magistrate’s Court was outdated. In arriving at that decision, the judge relied
on section 9 (2) (c) of the Legal Practitioners Act (Chapter 27:07). This
provision permits a company or partnership to self-act in any court through its
director, or officer in its sole employment, and such director or officer must
not charge a fee for his work.
Clearly the Legal Practitioners Act permits any
director or officer to represent a company in legal proceedings be it in the
Magistrate’s Court, in the Labour Court, High Court or Supreme Court. Section 9
of the Legal Practitioners Act clearly gives directors a right to sue or defend
on behalf of their companies to the completion of the case. A company can
however, at its sole discretion, employ the services of a legal practitioner or
company legal advisor to assist if it deems it necessary.
In a more recent case of Lee’s Import and Export P/L v Zimbank 1999(2) ZLR 36 (SC), it was
held that the common law rule of practice that companies can only be
represented by legal practitioners in the High Court still stands. It is only
in very exceptional cases of alter egos that the court, using its discretion to
regulate its proceedings, may allow the alter ego to represent the company in
the High Court. In interpreting proviso to section 9 (2) of the Legal
Practitioners Act, the court held that the effect of the proviso was to simply
allow authority to be given to a director or officer of a company to do what is
reserved for legal practitioners only. The court went on to say that the
authority can be provided in the rules of court. Hence , the court went on, the
Magistrates Court Rules by authorizing a director or officer of a company to do
what is reserved for lawyers, are
covered by the proviso and are
not inconsistent with section 9 (2) of the Legal Practitioners Act.
Following Lee’s case, the authority of certain
company officials to appear on behalf of a company has been provided in the
amendment to section 92 of the Act just like how such authority was provided in
the Magistrates Court Rules. Section 92 of the Act as amended is therefore
covered by the proviso to section 9 of the Legal Practitioners Act and is not
inconsistent with section 9 (2) of the Legal Practitioners Act. Act 3 of 2016 has amended
Section 92 of the Act by adding another
list of persons that can represent and appear on behalf of an employer in the
Labour Court namely; “A company
director, company secretary, company legal advisor or person in charge of human
resources or personnel management on behalf of an employer.” The
implication of this amendment is that it is now clearer as to who has the legal
right to represent and appear on behalf of an employer company in the Labour
Court. As a company is an artificial person with no physical existence, it
needs the services of human beings to act on its behalf.
It
is clear from the above that a company, being a separate legal person from its
shareholders, cannot be represented in a legal suit by a person who has not
been authorised to do so. It means a company resolution must be present where
necessary. This is a well-established legal principle, which the courts cannot
ignore. The general rule is that directors of a company can only act validly
when assembled at a board meeting to act on such a way. A
copy of the resolution giving authority may be sufficient evidence to confirm
company authorization. If court papers fail to comply with these procedural
requirement the litigation may be rendered irregular to the detriment of
the company’s interests. It must be emphasized that cognizance must always be
taken of the need to prove that one is acting legally or with due authority by
making sure that a copy of the company resolution is available before any
action is taken, so as not to fall foul of the law.
In the case of African Banking Corporation of Zimbabwe Limited
t/a BancABC v PWC Motors (Pvt) Ltd & 3 others HH-123-13,
MATHONSI J held as follows;
“I am
aware that there is authority for demanding that a company official must
produce proof of authority to represent the company in the form of a company
resolution. However, it occurs to me that that form of proof is not
necessary in every case as each case must be considered on its merits: Mall (Cape) (Pvt) Ltd v Merino Ko-Opraisie BPK 1957 (2) SA
345 (C). All the court is required to do is satisfy itself that enough
evidence has been placed before it to show that it is indeed the applicant
which is litigating and not the unauthorized person.
To my mind the attachment
of a resolution has been blown out of proportion and taken to ridiculous
levels. Where the deponent of an affidavit states that he has the
authority of the company to represent it, there is no reason for the court to
disbelieve him unless it is shown evidence to the contrary [but] where no such
contrary evidence is produced the omission of a company resolution cannot be
fatal to the application …”
The constitutionality of the common law position
that a company must always be represented by a legal practitioner in the
superior courts was tested in Lee’s case. The Court held that, applying the
alter ego doctrine and organic theory together with the purposive
interpretation of the Constitution, this common law practice offended against
section 18 (9) (right to fair trial) of the Constitution then certainly to the
extent that it denies the duly authorized organ or alter ego of the company the
right to appear in the person of the company. In other words the
fundamental right to a fair hearing includes the right of a corporate body to
appear through its alter ego. Given a clear distinction between a hearing and a
trial, a reading of section 69 and 86 of the current Constitution of Zimbabwe
reveals that the position in Lees’ case still holds good.
In conclusion, it is now crystal clear that a
company can now appear in the Labour Court through certain company officials as
long as the official in question is duly authorized by way of a company
resolution. This amendment brings into
picture the government of Zimbabwe’s drive on the ease of doing business in the
country. This is so because it serves the company legal costs especially in
simple cases where the services of a legal practitioners are not necessary. I
do not see anything unfavorable to the workers over this amendment. It is
balanced, fair and focused. However, where the dispute is complicated, the
company has an option to use the services of a legal practitioner.
