Olivine Industries (Private) Limited v Caution Nharara

The respondent (Nharara) was wrongfully dismissed by the appellant (Olivine Industries). In judgment No. LRT/H/238/2002 dated 26 September 2002, the Labour Relations Tribunal ordered the respondent's reinstatement without loss of salary and benefits, or alternatively, payment of damages in lieu of reinstatement with quantum to be agreed or determined by the Tribunal. The appellant paid back-pay but refused reinstatement, claiming the employment relationship had soured, and also refused to pay damages in lieu of reinstatement. The parties could not agree on quantum and returned to the Labour Court. The Labour Court subsequently made an order awarding: (1) back-pay from 4 July 1997 to 11 October 2001 with all benefits; (2) interest on back-pay; (3) eighteen months' salary at "today's rates" as damages for premature loss of employment; (4) deduction of $1,052,010.00 already paid; and (5) each party to bear own costs. During the period of unemployment, the respondent earned money repairing cellphones and selling tomatoes, though no specific details were provided.

• Whether the Labour Court erred in awarding both back-pay and damages, thereby over-compensating the respondent
• Whether an award of damages at 'today's rates' was appropriate or too vague
• Whether the Labour Court made an award that was neither asked for nor supported by the parties
• What principles apply to the calculation of damages in lieu of reinstatement for wrongful dismissal
• Whether income earned by the dismissed employee during the period of unemployment should be taken into account in calculating damages

The appeal succeeded in part. The Supreme Court ordered: (1) Paragraph 3 of judgment No. LC/H/55/2004 (the damages award) was set aside; (2) The order for costs was set aside; (3) The matter was referred back to the Labour Court to hear evidence on the period the respondent would reasonably have been expected to obtain alternative employment with due diligence, and the amount he earned from repairing cellphones and selling tomatoes; (4) The Labour Court was directed to award damages at the rates prevailing at the relevant time and not at "today's rates"; (5) No order as to costs of the appeal.

Where an employee succeeds in proving wrongful dismissal but is not reinstated, they are entitled to damages rather than back-pay. The damages should be assessed by reference to the back-pay lost, but limited to the period from the date of wrongful dismissal to the date by which the employee could, with reasonable diligence, have obtained alternative employment. Damages must be calculated at the rates prevailing at the time of dismissal, not at current or future rates. Any income earned by the dismissed employee during the period of unemployment must be taken into account when calculating damages. An award of damages at "today's rates" or some unspecified future rate is vague and inappropriate.

The Court observed that reinstatement is normally ordered where an employee is found to have been wrongfully dismissed, but provision is made for damages to be paid instead where reinstatement is no longer desirable because relations between the parties have soured. The Court noted with approval previous cases establishing this principle, including Gauntlett Security Services (Pvt) Ltd v Leonard 1997 (1) ZLR 583 (S), Chegutu Municipality v Manyora 1996 (1) ZLR 262, BHP Minerals Zimbabwe (Pvt) Ltd v Cranny Takawira SC 81/99, and Leopard Rock Hotel Co (Pvt) Ltd v Hilary van Beek SC 6/2000. The Court also observed that there was no reason for the Labour Court to have changed the costs order from the original judgment without explanation.

This case provides important guidance on the calculation of damages in wrongful dismissal cases in Zimbabwean labour law. It clarifies the distinction between back-pay (associated with reinstatement) and damages in lieu of reinstatement. It establishes that damages must be calculated at historical rates prevailing at the time of dismissal, not at current rates, to ensure proper compensation without over-compensation. The judgment emphasizes that damages should be limited to the period during which the dismissed employee could reasonably have been expected to find alternative employment, and that any income earned during unemployment must be taken into account. The case reinforces the principle that courts must have proper evidentiary foundations for making awards and cannot make vague or uncertain orders.