T N Bakery v The State

The complainant, Edrine Mutizwa, was employed by the appellant company as a sales person from January 2012, earning US$255 per month. He became a permanent employee in March 2012. The appellant company closed down on 18 July 2015, and at that time owed the complainant salary and other benefits. After experiencing difficulties recovering the money, the complainant filed a complaint in the Labour Court. On 9 March 2016, the parties reached a settlement before a labour officer whereby the appellant agreed to pay the complainant a total of US$6,152.57: $2,800 would be offset by delivery of 5 Marvel Double Beds on or before 23 April 2016, and the remaining $3,300 would be paid in monthly instalments of $305 from 29 April 2016 to 28 February 2017. The appellant reneged on this agreement, leading the labour officer to issue a prosecution letter on 13 June 2016. The appellant was prosecuted under s 13(2) of the Labour Act for withholding wages without the Minister's permission. The magistrate's court convicted the appellant and imposed a fine of $400 and ordered payment of $6,152 to the complainant by 11 August 2016, with warrants of execution in default.

• Whether the settlement agreement between the parties converted their employer/employee relationship into a debtor/creditor relationship, thereby removing the matter from the ambit of the Labour Act
• Whether the appellant could be validly prosecuted under s 13(2) of the Labour Act after entering into a settlement agreement
• Whether the settlement agreement constituted a compromise agreement that novated the original claim
• Whether the sentence imposed was appropriate

Both the appeal against conviction and the appeal against sentence were dismissed. The conviction under s 13(2) of the Labour Act and the sentence (fine of $400 and order to pay $6,152 to complainant by specified date, with warrants of execution in default) were upheld.

A settlement agreement that merely provides for alternative modes of payment or time-to-pay arrangements for unpaid wages, without the employee accepting less than what is owed, does not constitute a compromise agreement and does not convert the employer/employee relationship into a debtor/creditor relationship. Where the debt remains for wages and employment benefits arising from the employment relationship, an employer who fails to comply with such a settlement agreement can still be prosecuted under s 13(2) of the Labour Act for withholding or unreasonably delaying payment of wages. The critical distinction is that a compromise agreement requires mutual concessions and each party giving ground, whereas a settlement agreement for time-to-pay or alternative payment methods (such as set-off) does not novate the original employment-related claim.

The court observed that a settlement agreement presided over by a labour officer can be compared to a Deed of Settlement in a civil matter, which is merely time-to-pay rather than a compromise. The court also noted that harsh economic conditions do not constitute a valid excuse for liability under the Labour Act, rejecting this as a defence to the criminal charge or as a ground for appeal against sentence.

This case is significant in Zimbabwean labour law as it clarifies that a settlement agreement regarding unpaid wages does not automatically convert an employer/employee relationship into a debtor/creditor relationship for purposes of the Labour Act. The case establishes that where a settlement agreement merely provides for alternative modes of payment or time-to-pay arrangements without reducing the amount owed for employment-related debts, the employer remains subject to criminal prosecution under s 13(2) of the Labour Act for withholding wages. The judgment reinforces employee protection by preventing employers from using settlement agreements as a shield against criminal liability for wage violations. It also provides important guidance on distinguishing between true compromise agreements (which involve mutual concessions) and settlement agreements that merely restructure payment terms.