EMPLOYER’S RIGHT TO RETIRE AN EMPLOYEE ON MEDICAL GROUNDS WITHOUT CONDUCTING A HEARING

The purpose of this article is to explain the judgment of the Supreme Court of Zimbabwe in Thandekile Zulu v ZB Financial Holdings (Private) Limited SC 48/2018.

BRIEF FACTS

Zulu was employed as a clerk by ZB Financial Holdings (Private) Limited (ZB) from 2 September 1991 to 31 October 2009. In January 2009, she fell ill and was granted paid sick leave from 22 January 2009 to 8 February 2009. Thereafter, the leave was extended by 15 days covering the period from 10 February 2009 to 24 February 2009. After submitting another sick leave application for an indefinite period from 24 February 2009, Zulu was granted another sick leave. By August 2009, she had not yet reported for duty. Her medical doctor had recommended that she had to take bed rest from February 2009 onwards. As at 30 October 2009, Zulu’s cumulative period of absence amounted to 251 days. On 2 December 2009, ZB unilaterally terminated Zulu’s employment contract.

THE LAW THAT WAS INVOKED IN TERMINATING ZULU’S CONTRACT

The termination of Zulu’s employment contract was done in terms of section 14(4) of the Labour Act [Chapter 28:01], as amended (‘’the Act’’).

The section provides;

            ‘’If, during any one-year period of service, the period of aggregate periods of sick leave exceed-

1. ninety days’ sick leave on full pay; or

2. subject to subsection (3), one hundred and eighty days’ sick leave of full and half pay:
   

the employer may terminate the employment of the employee concerned.’’

ZULU’S REACTION TO THE TERMINATION

She sued for unlawful dismissal. Her claim was dismissed at arbitration. The arbitrator found, among other things, that the termination was lawful in terms of section 14(4) of the Act. Zulu then filed an appeal to the Labour Court. One of her arguments was that the termination was not done procedurally in that she was not given an opportunity to show cause why she should not be retired on medical grounds. In other words, her argument was that the principle: audi alteram partem (meaning ‘’hear the other side’’) which is a fundamental principle of natural justice was not observed in line with section 2A of the Act. That section provides that before any decision that is likely to affect the interests of an employee is implemented, that employee must be allowed to make representations. The general principle of natural justice can be traced back to biblical times when God sought and questioned Adam before banishing him from the Garden of Eden.

The Labour Court dealt with two issues:

1. the interpretation of the phrase ‘’any one-year period of service’’ under section 14(4) of the Act. The Labour Court interpreted this to mean one calendar year and dismissed Zulu’s appeal on the basis that she had exceeded the prescribed number of sick leave days; and

2. whether or not ZB had an unfettered right to automatically terminate the employment contract on the expiry of the 180 sick leave days. In this regard, the Labour Court ruled that section 14(4) does not impose an obligation on an employer to hear an employee concerned before terminating an employment contract.

Zulu was aggrieved with the decision of the Labour Court. She appealed to the Supreme Court. The Supreme Court dismissed Zulu’s appeal. While dismissing the appeal, the Supreme Court however disagreed with the Labour Court’s interpretation of the phrase ‘’any one-year period of service.’’ The Labour Court had interpreted the phrase to mean one calendar year i.e. January to December.

The Supreme Court said that interpretation would lead to an absurd situation. For instance, if an employee falls sick on 1 July and takes their 180 days of sick leave on full and half pay till 31 December, he or she would still be entitled to apply for sick leave again on 1 January the following year because they would have entered another sick leave cycle. The number of days that the employee would thus spend on sick leave would amount to a period of one year or 365/366 days- a period more than twice the statutory 180 days and, certainly, a situation which could never have been intended by the lawmakers.

Using the rules of interpretation of statutes, the Supreme Court held that the most appropriate interpretation of the phrase should be that a reference without qualification to a year should be construed as a reference to a period of twelve months. It further stated that it is logical to hold that the year in section 14(4) means a period of twelve months from the date on which the employee fell sick.

On whether an employer enjoys an unfettered right to retire an employee on medical grounds with conducting a hearing, the court held that section 14(4) of the Act is silent on the requirement for the employer to give notice to the employee before terminating employment. In that regard, the court held that in the absence of such a requirement, to hold that ZB ought to have afforded Zulu a chance to be heard before the retirement would be tantamount to altering the clear language of the section in question.

The court also held that the said provision codifies the common law principle that an employer is entitled to terminate an employment contract due to incapacity, and that it would be a gross miscarriage of justice to impose an onerous obligation on the employer when the language of the statute is clear and does not impose such an obligation.

CONCLUSION

Section 14(4) does not require an employer that wishes to retire an employment on medical grounds to conduct a hearing first. As long as the employer has all the medical records that warrant such a retirement, the employer can terminate the employment contract unilaterally.

However, if the employment contract provides that before such a retirement is resorted to, a hearing must be conducted, parties will be bound by that provision. In other words, a hearing must be conduct before retiring an employee on medical grounds, under those circumstances. This is because parties would have agreed to provide more favourable terms in their employment contract, in keeping with their right to freedom of contract. Section 14 (1) of the Act confirms this position.

It provides;

‘’ Unless more favourable conditions have been provided for in any employment contract or in any enactment, sick leave shall be granted in terms of this section to an employee who is prevented from attending his duties because he is ill or injured or undergoes medical treatment which was not occasioned by his failure to take reasonable precautions.’’

This was the case in Zimasco v Marikano SC 6/14. In that case, the company purported to retire Marikano on medical ground in terms of section 14(4) of the Act, without conducting a hearing first.

‘’If, during the absence of an employee on sick leave at half pay, it is determined that he/she should be retired on the grounds of being permanently disabled, from illness, immediate steps must be taken to secure early retirement or to have the employee medically boarded.’’

The company failed to follow the procedure mentioned in that clause. Marikano sued. The Supreme Court agreed with him. It stated that the words “unless more favourable conditions have been provided for in a contract of employment” in section 14(1) are wide and unambiguous.  In other words, where more favourable conditions have been agreed to, those conditions will take precedence over the periods provided for in s 14(4) and will need to be complied with before any termination is contemplated by the employer.

The provisions of para 2.1.4. of Zimasco’s Group Policy and Procedures were not complied with.  In the circumstances Zimasco could not proceed as if that provision did not exist.  It was a provision that the company itself had inserted into the Group Policy and Procedures and which had been incorporated into the contract of employment.  That provision certainly provided more favourable terms than would normally be the case.  Zimasco was, therefore, under obligation to look at the question of early retirement or medical boarding.

The insertion of more favourable terms in Marikano’s contract was what distinguished his case from that of Zulu. The Supreme Court in both cases held that if an employer was proceeding in terms of section 14 (4) of the section only and terminated an employment contract without notice or conducting a hearing, that would be lawful. However, it becomes unlawful when there is a term in an employment contract obliging an employer to conduct a hearing first. Therefore, employers need to bear in mind this critical aspect when proceeding in terms of section 14 (4) of the Labour Act.

PREPARED BY: F. MAHERE & B. ZIWA

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Trade mark infringement and counterfeiting in Zimbabwe: Is your brand safe?

Do these brands look familiar?

On a trip into Harare's CBD, one marvels at the variety of goods on offer; from branded groceries to cellular phones, clothing and fashion accessories.  All you have to do is pay and carry off the goods of your choice. 

For example; “Adidas”, “Polo”, “Nike” and “Louis Vuitton” are just some of the many brands of clothing and fashion accessories on offer.  One wonders whether the shareholders of “Louis Vuitton” and other global entities know that there is an expansive market in downtown Harare, and many other places in Zimbabwe that rely on their brands to sell their goods!

Yes, we have called it out: many traders rely on well established brands to sell their versions of the same or similar goods.  For example, a “polo” handbag from the “POLO” store in Johannesburg costs around R850+/(US$80+) whereas a similar “polo” branded handbag in Harare ranges in price from US$20-US$60 (negotiable and on offer to purchase in bond, Eco cash or other currency you may have!).  Few would rather buy the more expensive polo handbag, if given the chance. What sells the bag (and other goods) is quite clearly the brand.

Many proprietors may be aware that they have to register their trade marks.  However, most neglect the enforcement aspect of their intellectual property.  As intellectual property law legal practitioners, we cannot protect a client's brand without a mandate.  As such, we encourage you, the intellectual property rights holders to contact us for assistance in enforcing your rights, protecting and building your brands and getting relief where necessary.  Both civil and criminal remedies are available to clients.  In addition, the Intellectual Property Tribunal, which is located at the High Court, has also started hearing intellectual property disputes.

What is Trade Mark Infringement and Counterfeiting?

The Trade Marks Act (the Act)[1] defines trade mark infringement as the unauthorized use of a same or similar trade mark in relation to goods or services in respect of which the trade mark is registered.  The use of the trade mark should be likely to deceive or cause confusion and the infringement may be likely to cause injury or prejudice to the proprietor of the trade mark.[2]

The Trade-Related Aspects of Intellectual Property Rights Agreement (TRIPS) to which Zimbabwe is party, defines “counterfeit trademark goods” as any goods, including packaging,  bearing without authorization a trademark which is identical to the trademark validly registered in respect of such goods, or which cannot be distinguished in its essential aspects from such a trademark, and which thereby infringes the rights of the owner of the trademark in question under the law of the country of importation.[3]

Our Act does not provide a separate definition for counterfeiting.  Instead, the definition of counterfeiting is encompassed in the definition of infringement provided above.  For this reason, we refer to infringement and counterfeiting inter-changeably herein.

That said, the Act further states that an infringement action can only be brought in respect of a registered trade mark.  This means that an unregistered trade mark cannot be infringed.[4]

However, an exception is made for well-known trade marks which may not be registered in Zimbabwe, at the time of infringement.[5]

Problems that result from trade mark infringement:

Trade mark infringement may lead to any or all of the following:

                     i.       Dilution of your trade mark- This often occurs where the infringer uses your established trade mark to sell other goods and/or services that your business is not known to trade in.  This results in confusion regarding the origin and quality of the goods. 

                   ii.       Disparagement: This occurs when a deliberate effort is made to minimize the marketing value or worth of your trade mark. 

                 iii.        Tarnishment: This occurs when your trade mark is used without your authorization and the mark is linked to inferior goods.

                 iv.        Blurring – This occurs when your trade mark is used in a completely different market or enterprise from that which you intended.

In addition, when others pass off their goods or services as yours (infringement), any problems that might result from the actions of the infringer attach to your business and this may negatively affect your company’s goodwill and reputation.  This is especially problematic where the health of the public is at stake or where the quality of the goods is of importance.  

Trade mark infringement is also a form of unfair competition.  It is contrary to honest practices in industrial or commercial dealings.[6]

In the event of a lack of action against infringers, the proprietor’s inaction may be viewed as disinterest in the trade mark or acquiescence and this may make it difficult to enforce trade mark rights in the future.  As such, we encourage and assist our client’s to take action to stop infringers and/or license their trade marks timeously.

The importance of branding and registering your trade mark:

Your trade mark is your property.  Whether you create the trade mark or buy it; you own it and you deserve to benefit from it.

A trade mark distinguishes your goods and services in the market from those of other traders.  It is a badge of origin, distinction and quality.  It identifies your business in the market and what it stands for.

Trade marks, like other intellectual property rights are territorial.  As such, protection needs to be sought in each country where the trade mark may be used.

Zimbabwe is a first to file jurisdiction.  This means that a proprietor who files a trade mark application first is deemed to be the owner of that trade mark.

Benefits of registering your trade mark(s):

1. Trade mark protection lasts for ten years and after the ten year period has lapsed, the trade mark can be renewed for a further ten years.
2. Having a registered trade mark allows the owner to license the mark and thus spread the reach of the brand.
3. It also allows the trade mark owner the right to restrain others from using the trade mark as many may attempt to ride on the goodwill and reputation attached to the mark.
4. Trade marks allow the market to identify goods/services and where they originate.  In essence, the trade mark serves as a badge of origin.
5. A trade mark also distinguishes one set of products from the next. 
6. It can also serve as a badge of quality.
7. That said, the trade mark allows the market to identify your brand and set of goods and services from those of other players in the trade.

We are excited about your brand, so let us help you protect, build and benefit from it.  In the meantime, we will continue marveling at those ADEDAS, FELA, YUESS and other such brands; or did we get the names wrong?

Should you require further information regarding trade marks and other intellectual property issues, feel free to contact:

·         Khalifa Mahomed – kmahomed@ggg.co.zw 

·         Dorothy Pasipanodya – dpasipanodya@ggg.co.zw

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