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 1^st 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.