Tel-One (Pvt) Limited v Communications and Allied Services Workers Union of Zimbabwe

Tel-One (Pvt) Limited and the Communications and Allied Services Workers Union of Zimbabwe were engaged in salary and wage negotiations. Since 2003, Tel-One had a policy of reviewing salaries and wages quarterly based on the Median Market Quarterly (MMQ) or cost of living adjustment. Between 28 January 2004 and 12 February 2004, the parties met on at least eight occasions but reached a deadlock over whether the MMQ was a forecast or represented actual salary increments. The dispute was referred to the National Employment Council (NEC), which appointed an arbitrator. The arbitrator made an award on 29 March 2004 without inviting the parties to set out joint issues for determination. Tel-One contended that the award was ambiguous and could be interpreted as requiring either an 83% or 266% salary increase across all grades. The 266% interpretation, which the Union advocated, would require Tel-One to commit 130% of its income to salaries and wages, potentially driving it into insolvency. Tel-One's income was regulated by state-controlled tariffs, and its application for a tariff increase had been rejected.

• Whether the arbitral award should be set aside in terms of section 34(2)(b)(ii) of the UNCITRAL Model Law as incorporated into domestic law by the Arbitration Act [Chapter 7:15]
• Whether the arbitral award violated the public policy of Zimbabwe
• What constitutes public policy in the context of labour arbitration awards
• Whether an award that could drive an employer into insolvency is contrary to public policy

The application was granted with costs. The arbitral award dated 29 March 2004 was set aside in terms of Article 34(2)(b)(ii) of the Model Law.

An arbitral award in a labour dispute that would require an employer to pay salaries and wages exceeding its income capacity, thereby driving it into insolvency, is contrary to the public policy of Zimbabwe and liable to be set aside under section 34(2)(b)(ii) of the UNCITRAL Model Law. Public policy in the context of labour arbitration requires that awards preserve the employer-employee relationship and contribute to mutual benefit and economic stability. Salaries and wages must be limited by an employer's ability to pay, and awards that fail to consider this fundamental principle violate public policy by threatening to destroy the economic fabric of the nation and defeat the very purpose of collective bargaining.

The court observed that the concept of public policy is an elusive one, depending on transient and sometimes subjective views on what is or is not in the public benefit or what constitutes the Zimbabwean public good. The court noted that the spirit of collective bargaining between employer and employee is to arrive by consensus or, if that fails, by arbitration, at what a fair wage is, with the idea being to preserve the employer-employee relationship. The court commented that the employee makes his labour available for a fair fee, and the employer engages the employee on acceptable terms and conditions, with the employer employing his resources to ensure that the arrangement continues for their mutual benefit. Society expects these mutually beneficial outcomes so that the economy thrives and the community generally, and its members in particular, benefit.

This case is significant in Zimbabwean labour and arbitration law as it establishes important limitations on arbitral awards in labour disputes. It clarifies that arbitral awards must consider the public policy implications of their substantive effect, particularly the employer's ability to pay. The case affirms that while courts are reluctant to interfere with arbitral awards, they will set aside awards that threaten to drive employers into insolvency, as such awards are contrary to public policy. The judgment recognizes that the purpose of collective bargaining is to create mutually beneficial outcomes that preserve employment relationships and contribute to economic stability, not to destroy them. This case provides important guidance on balancing workers' rights to fair wages against the sustainability of businesses and the broader economic fabric of the nation.