The appellant (Posts and Telecommunications Corporation) held annual negotiations with the respondent Workers' Union regarding salary increases and benefits under section 74 of the Labour Relations Act. In March 1999, the appellant's Board decided employees should be paid on the median quartile of the market (as opposed to the lower quartile). Following negotiations, an agreement was reached and published in Statutory Instrument No. 26 of 2000, with effect from 1 October 1999. The appellant paid the new salaries from October 1999 to March 2000. In March 2000, the appellant advised it could no longer pay according to S.I. 26/2000 as the salary bill exceeded its means. The respondents took collective job action. The matter was referred to a Labour Officer, then the Minister of Labour and Social Welfare. When the appellant refused to pay according to the agreement, the respondents approached the High Court to enforce payment. The second and third respondents were voluntary retirees who sought payment of salary differences for the backdated period when they were still in service.
The appeal was dismissed with costs. The High Court's order that the appellant pay respondents' salaries and allowances in accordance with S.I. 26 of 2000 was upheld.
The binding legal principles established are: (1) A party cannot resile from a collective bargaining agreement embodied in a statutory instrument on the basis of unilateral mistake where that party's own experts prepared the figures, the party accepted them, and concerns about affordability were raised during negotiations but ignored. (2) For an error to constitute justus error entitling a party to resile from a contract, the party must not have been to blame by conduct leading the other party, as a reasonable man, to believe the first party was binding itself. Negligence in failing to assess financial implications defeats a claim of justus error. (3) A Minister cannot effectively vary or amend a statutory instrument by administrative directive; proper amendment procedures under the enabling legislation must be followed. (4) Once a collective bargaining agreement is reached, approved by the National Employment Council, and published as a statutory instrument, it is binding on all parties (employer and employees) and cannot be unilaterally varied by the employer. (5) Employees who leave service during a backdated implementation period of salary increases are entitled to receive the difference for the period they were in service.
The court observed that a proper opportunity to address the salary bill problem was missed when the matter was referred to the Minister - had the Minister acted in terms of her statutory powers, the agreement could have been amended. The court also noted that another opportunity for the appellant to mitigate its problem was lost when parties were asked to re-negotiate, as minutes showed the respondents offered certain compromises which the appellant did not take advantage of. The court emphasized that the appellant had previously commissioned consultants (Lorimak) to produce figures but then abandoned those figures in favor of its own experts' calculations, further undermining any claim of error. The court remarked that it was inconceivable the appellant and its experts would agree on new salaries without calculating the resultant salary bill, especially given explicit warnings during negotiations about the Corporation's ability to pay and that the payable burden would increase by 85%.
This case is significant in Zimbabwean (and potentially relevant to South African) labour law and contract law for establishing that: (1) an employer cannot unilaterally resile from a collective bargaining agreement published as a statutory instrument merely because it proves financially burdensome; (2) the doctrine of justus error requires more than mere regret over financial consequences - there must be no negligence or conduct leading the other party to believe in the binding nature of the agreement; (3) administrative authorities (like the Minister) cannot effectively amend statutory instruments by directive without following proper amendment procedures; (4) where an employer's own experts prepare figures for negotiations and the employer accepts them, it cannot later claim error when the agreement proves disadvantageous; and (5) employees who retire after an agreement is reached but during a backdated implementation period are entitled to benefit from that agreement. The case reinforces the sanctity of collective bargaining agreements and the limitations on resiling from contracts based on unilateral mistake.