ZIMBABWE REVENUE AUTHORITY and Another v ZIMBABWE REVENUE AND ALLIED WORKERS’ UNION and Others (337 of 2025) [2025] ZWHHC 337 (6 June 2025)

7 HH 337-25 HCH 2946/24 ZIMBABWE REVENUE AUTHORITY and THE MINISTER FOR FINANCE, ECONOMIC DEVELOPMENT AND INVESTMENT PROMOTION versus ZIMBABWE REVENUE AND ALLIED WORKERS’ UNION and HONOURABLE ARBITRATOR ARTHUR MARARA N.O. and HONOURABLE ARBITRATOR GEORGE MAKINGS N.O. IN THE HIGH COURT OF ZIMBABWE DUBE-BANDA J HARARE 18 November 2024 & 6 June 2025 Court application to set aside an arbitral award S Bhebhe, for the applicants B Magogo, for the 1st respondent DUBE-BANDA J: [1] This is an application to set aside part of an arbitral award in terms of Article 34(2)(b)(ii) of the Model Law, First Schedule to the Arbitration Act [Chapter 7:15]. The applicants seek an order couched as follows: Para (s) 1 and 6 of the Final Disposition of the Arbitral Award handed down by the second and third respondents on 11 April 2024 are contrary to the public policy of Zimbabwe.Para (s) 1 and 6 of the Final Disposition of the Arbitral Award handed down by the second and third respondents dated 11 April 2024 be and are hereby set aside in terms of Article 34(2)(b)(ii) of the Model Law, First Schedule to the Arbitration Act [Chapter 7:15].The first respondent shall pay the first and second applicants’ costs of suit. [2] The first applicant is the Zimbabwe Revenue Authority (“authority or ZIMRA”), a statutory body established in terms of s 3 of the Revenue Authority Act [Chapter 23:11] and is a public entity in terms of s 2 of the Public Finance Management Act [Chapter 22:19]. [3] The second applicant is the Minister of Finance, Economic Development and Investment Promotion (“Minister”). He is the Minister responsible for the administration of the Zimbabwe Revenue Authority Act. [4] The first respondent is the Zimbabwe Revenue and Allied Workers Union, (“Union”), a registered trade union representing employees of ZIMRA. The second and third respondents are arbitrators (“the tribunal”). [5] The application is opposed by the first respondent. The second and third respondents have not opposed this application, and I take it that they have taken a position to abide by the decision of the court. Factual background [6] The facts of the matter may be summarised as follows: ZIMRA and the Union (“the parties”) are members of the National Employment Council (“Council”) for the ZIMRA Undertaking. The parties entered salary negotiations for the period of July 2023 to December 2023 and reached a deadlock. Subsequent to the deadlock the matter was referred to voluntary arbitration. The second and the third respondents were appointed arbitrators, the tribunal. [7] Before the tribunal, the Union urged the tribunal to take judicial notice of the economic environment prevailing in the country. It was submitted that the economic environment has been affected by chronic and high inflation, currency volatility and general dollarization of the economy. While, the basic salary is paid wholly in local currency (“ZWL”), prices of basic goods and services are indexed to the United States dollar open market rate. It was submitted further that a collective bargaining award ought to be fair and reasonable and mitigate the cost of living for the worker, and a fair minimum wage must guarantee a worker a dignified life. The Union provided graphs and figures dealing with exchange rates, inflation developments, market transactional analysis, fuel prices, school fees, medical aid shortfalls, and a comparative analysis with other sectors in support of its claim. It emphasised that the claims were influenced by economic, social and financial conditions in the country, and sought that the claims be allowed. [8] Per contra, ZIMRA argued that the tribunal must take into account the legislative landscape which governs its capacity and scope to negotiate and agree on an appropriate salary. It was submitted that ZIMRA is a public entity and is only entitled to expenditure in terms of the budgets approved by the Minister and Parliament in respect of the relevant financial year. It was argued that the remuneration payable to employees is part of ZIMRA’s expenditure which cannot lawfully exceed approved budgets. It was emphasised that in terms of the empowering statues ZIMRA is required to submit an annual budget for approval to the Minister. The budget must include all staff costs and the wage bill, and it must not exceed 30% of its revenue and operational costs. It cannot pay staff costs which exceed the approved budget. It was submitted further that any award which required ZIMRA to exceed its approved budget for the period under review would be contrary to the provisions of the Public Finance Management Act [Chapter 22:19] (“PFMA”); Public Entities Corporate Governance Act [Chapter 10:31] (“PECGA”); and the Revenue Authority Act [Chapter 23:11] (“RAA”). [9] In addition, it was submitted that the ZIMRA employee’s remuneration packages include mortgage finance loans; 100% medical aid for employees and their dependants; transport allowance; general living allowance; housing allowance; 100% funeral cover for employees and their dependants; group life cover contributions, loans, pension contributions; NASSA contributions; and performance-based awards and remuneration. They further receive several allowances which are payable in both United States Dollars and the local currency. These were said to include general living allowance calculated at 38% of the basic salary, with 55% payable in United States Dollars; Covid-19 Allowance at US$75 per month payable in United States Dollars; housing allowance currently at US$75 per room for three rooms (US$225) which is payable at the prevailing rate; transport allowance which currently US$4 per day for twenty six days (US$104) payable at the prevailing rate; night shift allowance at 20% of the hourly basic salary (where applicable); and hardship allowance at 10% of the basic salary (where applicable). [10] It was further argued that the Union’s demand was not only contrary to statute, because it exceeded ZIMRA’s approved budget, but was also unreasonable and unjustified. It was submitted that the demand by the Union, if granted would be contrary to public policy of Zimbabwe. ZIMRA sought that the Union’s claim be dismissed. [11] The tribunal found that housing, transport, night shift allowances should remain the same, and that Covid allowance should be adjusted as submitted by ZIMRA. It granted a basic salary increment and a 13th cheque. The tribunal issued an award couched as follows: Basic salary for a grade 16 employee shall be increased by 300% effective first July 2023 based on the ZIMRA Zimbabwe dollar rate of pay in effect on the 30th June 2023. The grade differentials in pace (sic) at the present shall continue to apply. The payment shall be made in Zimbabwean Dollars. It has been accepted by both parties that COVID allowance be maintained as US$ payment but should no longer be referred to as a COVID allowance. This award therefore finds that the allowance be added to the GLA allowance payable over and above the existing GLA allowance. This award finds that the Housing and Transport allowances should remain the same, payable in Zimbabwe dollars at the prevailing inter-bank rate. This award finds that the night shift allowance should remain as it is, 20% of the basic hourly rate for those that it applies to.The award finds that the hardship allowance should remain as it is as 10% of basic pay payable in Zimbabwe dollars. This award finds that a 13th cheque should be payable in Zimbabwe Dollars as at first December each year and payable on a prorate basis for those who would have not served the full year. [12] It is against this background that the applicants launched this application seeking an order as set out in the draft. [13] The application is opposed on a preliminary point and the merits of the matter. The point taken was that the Minister has no locus standi to challenge the arbitral award. It is to this preliminary point that I now turn. Preliminary point [14] The first respondent took a preliminary point that the Minister has no standing to impugn the arbitral award, and thus his application, its ancillary affidavits and annexures should be expunged from the record. This objection is premised on the contention that the Minister did not participate in the hearing before the tribunal. The factual position is that an official from the Ministry attended collective bargaining deliberations, but neither filed any papers nor made any submissions. It was submitted that by choosing not to participate from the onset of the collective bargaining deliberations and during the arbitration proceedings, the Minister accepted the bargaining position and claims of the first respondent. It was argued that he waived his right to challenge the outcome of the arbitration process. [15] It was submitted that s 74(7) of the Labour Act [28:01] gave the Minister a chance to be involved from the bargaining stage, and not only join at the arbitration stage. It was argued that the position of the law is that what is not denied is always taken to be admitted. It was submitted that by choosing to remain silent, the Minister must be taken to have acquiesced to the claims and to the outcome of the bargaining process. It was submitted that he waived his right to challenge the outcome, in that he cannot be aggrieved by the outcome of a process that he chose to ignore. It was argued that some of the factual issues and figures that the Minister seeks to impugn the award should have been placed before the arbitrators during the proceedings. It was further submitted that because of the failure by the Minister to make written or oral submissions, the decision made is a default judgment and is unavailable for challenge by the Minister except to seek its rescission. [16] It was further submitted that the non-participation of the Minister in a case where the law endowed him with the full powers of participation is a clear breach of his statutory duties. Relying on s 75(1) of the Labour Act, it was argued that the Minister is guilty of breach of the obligation to negotiate in absolute good faith, in that he failed to disclose any information relevant to the collective bargaining proceedings before the tribunal. He is said to have wilfully breached the law. He cannot then be allowed to benefit from his unlawful conduct. It was further argued that the provisions of Article 34 of the Model Law to the Arbitration Act are unavailable to the Minister, in that he waived his right to challenge the proceedings at arbitration stage. [17] Per contra, the applicant argued that ZIMRA being a statutory body, the Minister has locus standi in all collective bargaining processes by virtue of s 74(7) of the Labour Act. It was argued further that the Minister was a party to the arbitration proceedings as required by s 74(7), and the fact that he did not file submissions cannot divest him of his standing given to him in terms of the Act. In addition, it was argued that the Minister has a direct and substantial interest in the matter, in that he is directly affected by the arbitral award. It was submitted further that the preliminary point has no merit and ought to fail. [18] The question is whether the Minister has locus standi to challenge the arbitral award in terms of the law. Locus standi relates to whether a particular litigant is entitled to seek redress from the courts in respect of a particular issue. To answer this question, I turn to s 74(7) of the Labour Act [28:01], which says: “Where a collective bargaining agreement being negotiated involves an employer which is a statutory corporation, statutory body or an entity wholly or predominantly controlled by the State, the Minister responsible for that body, corporation or entity shall be deemed to be a party on an equal footing with such employer and accordingly is a party to the negotiation of such collective bargaining agreement.” [19] The empowering provision deems the Minister part to the negotiations of a collective bargaining agreement. My view is that it is inconsequential and of no moment whether he files papers or makes oral submissions at the arbitration proceedings, he is by operation of law part of the bargaining process. In other words, he does not become part of the process because he has filed papers or made oral submissions, he becomes part of the process because the law decrees that he is part of the process. Therefore, the Minister was part of the arbitration proceedings. Having been, by operation of law part of the arbitration proceedings, he has locus standi to approach this court seeking to set aside an arbitral award in terms of the requirements of the law. To non-suit the Minister on the basis that he neither filed papers nor presented oral submissions at arbitration proceedings would be contrary to the letter and spirit of s 74(7). In other words, it would be contrary to the law. [20] In addition, the Minister has no power of waiver, the empowering provision uses the word “shall” meaning that it is peremptory. He cannot waive an obligation imposed by the law to be part to the negotiation of a collective bargaining agreement. He is part of it by operation of law. The provision uses the word “deemed” meaning even if he does not actively participate, he is still deemed to be part of the process. In other words, his being part of the process is not judged by active participation, but by operation of the law. [21] The argument that by remaining silent, the Minister must be taken to have acquiesced to the claims and to the outcome of the bargaining process is unavailing. The Minister is deemed to be part of the process, he may opt for passive participation, or active participation, but he cannot be taken to have admitted or acquiesced to the claims and to the outcome of the bargaining process. Therefore, the Minister having been by operation of the law part of the collective bargaining agreement, he can seek to set aside the award emanating from the bargaining process. [22] In the circumstances, the preliminary point that the Minister has no standing to impugn the arbitral award, and that his application, its ancillary affidavits and annexures should be expunged from the record is ill-conceived and has no merit. It is accordingly refused. Merits The applicants’ contentions [23] In summary, it was submitted that ZIMRA is a public entity which is bound by legislative provisions in respect of permissible and lawful expenditure, and it cannot exceed its approved budgeted expenditure for any given year. It was submitted further that legislation imposes restrictions and limitations on any, and all expenditure by public entities, including remuneration of employees. It was argued that the tribunal awarded the employees a salary increment of 300% based on the rate of pay as at June 2023 and a 13th cheque payable in local currency. It was argued further that that this award exceeds ZIMRA’s approved expenditure in respect of the 2023 financial year, as well as the permissible threshold for the employees’ costs vis-a-vis budget and revenue for public entities, and ZIMRA cannot lawfully implement it. It was argued further that the 2023 financial year budgets have been closed and cannot be re-opened in respect of the unapproved expenditure as ordered by the tribunal. [24] It was submitted further that the award violates fundamental principles of law, and the public finance management legislation, it creates an illegality and cannot be lawfully implemented. In that it ignored and disregarded provisions of law and as such cannot be allowed to stand. It was stressed that in terms of s 47 of the PFMA and s 26 RAA, ZIMRA is required to submit an annual or supplementary budget for approval to the Minister. The budget is submitted for approval and enacted in the Appropriation Act. In terms of s 47 (4) of the PFMA, ZIMRA’s expenditure for any given financial year cannot exceed the approved budget. It was argued that an award that imposes an obligation to pay salaries which exceed ZIMRA’s approved budget is contrary to public policy. [25] It was submitted further that the implementation of the award and payment of the award to the employees would be outside the ambit and scope of the Public Finance Management Act (“PFMA”); Public Finance Management (General) Regulations (“PFMA Regulations”), the Revenue Authority Act (“RAA”), the relevant Appropriation Act and the Constitution of Zimbabwe. It was emphasised that the award imposes an obligation on ZIMRA which is not only contrary to the public finance management laws in Zimbabwe, and would require it to act outside of the confines of law, but has the substantive effect that would have a disastrous impact on the fiscus. The award is said to be contrary to the public policy of Zimbabwe and ought to be set aside. The first respondent’s contentions [26] In summary, it was argued that ZIMRA’s position is untenable in that it is premised on that its employees are not entitled to bargain outside those amounts that are within its budgeted expenditure, and that any bargaining claim or proposal that goes outside of the bracket of budgeted expenditure, becomes unlawful to consider. In essence, it was submitted that ZIMRA’s argument is that the right to collective bargaining is unavailable to its employees, and such cannot be the correct position of the law. [27] It was submitted further that the contention that in collective bargaining ZIMRA has no room to manouvre beyond its approved expenditure is incorrect, and not in accordance with the law. In that s 65 (5)(a) of the Constitution grants ZIMRA and its employees the right to engage in collective bargaining. It was submitted that collective bargaining is fundamental human right, which is given effect to in s 74(2) of the Labour Act. It was submitted further that the law recognises collective bargaining as the avenue through which the constitutional rights in s 65(1) and s 65(5)(a) are realised. It is for this reason that Section 74(2) of the Labour Act is not made subject to any other Act but only to the Labour Act. There is no provision in the Labour Act which restricts the exercise of the right to engage in collective bargaining. Rather, Section 74(3) permissively broadens the horizon of issues that can be made the subject of collective bargaining. [28] It was submitted that the award is neither unlawful nor against the state’s legal order. In that s 74 (4) enjoins accounting authorities to ensure that expenditure of the public entities is in accordance with an approved budget. It was further argued that s 18(2) of the PFMA permits differences to be aligned, and that s 26(2) RRA provides for approval of supplementary expenditure which was not provided for in the annual budget for good reason or inadvertence. Counsel argued that ZIMRA has not submitted that post the award it made an application in terms of s 26 (2) and such an application was rejected. [29] It was submitted further that no statute can derogate from the right to collective bargaining as given in s 74 of the Labour Act, and that the statutes cited by ZIMRA do not govern collective bargaining neither do they place any limitation on the right to bargain. If anything, it was submitted, these statutes are structured in a way that gives effect to as opposed to conflicting with any process or outcome of collective bargaining. [30] It was submitted further that the reference to a 300% increase in this application ignores the fact that at the time when the award was issued, ZIMRA had unilaterally awarded a 100% increase in February and another 100% in July 2023. The exaggerated computations using a 300% increase are therefore misleading. Effectively, the tribunal awarded 100%. It was argued that the 300% granted by the arbitrators cannot be said to be contrary to public policy. [31] It was submitted that an award that sets a fair and reasonable wage as a product of collective bargaining cannot, by any stretch of imagination, be said to be contrary to Zimbabwean public policy. The first respondent sought that the application be dismissed with costs on a legal practitioner and client scale. The law [32] The law applicable to setting aside an arbitral award have been stated and re-stated in this jurisdiction. In terms of Article 34(2)(b)(ii) of the Model Law, an arbitral award is challengeable and may be set aside on the ground that it conflicts with the public policy of Zimbabwe. As a rule, the courts are generally loath to invoke this ground except in the most glaring instances of illogicality, injustice or moral turpitude. The concept of public policy has exercised the minds of the courts in several cases. In Wallen Holdings (Pvt|) Ltd v Lloyd and Another 1996(2) ZLR 383 Chinhengo J considered the question and affirmed that the courts will always be most reluctant to interfere with the award of an arbitrator. In the words of Gubbay CJ (as he then was) in the locus classicus on the subject, Zimbabwe Electricity Supply Authority v Maposa 1999 (2) ZLR 452 (S), at 465D-E: “In my opinion, the approach to be adopted is to construe the public policy defence, as being applicable to either a foreign or domestic award, restrictively in order to preserve and recognise the basic objective of finality in all arbitrations; and to hold such defence applicable only if some fundamental principle of the law or morality or justice is violated.” [33] This cautionary approach is further underscored by the learned Chief Justice in elucidating the proper test to be applied, at 466E-H: “An award will not be contrary to public policy merely because the reasoning or conclusions of the arbitrator are wrong in fact or in law. In such a situation the court would not be justified in setting the award aside. Under article 34 or 36, the court does not exercise an appeal power and either uphold or set aside or decline to recognise and enforce an award by having regard to what it considers should have been the correct decision. Where, however, the reasoning or conclusion in an award goes beyond mere faultiness or incorrectness and constitutes a palpable inequity that is so far reaching and outrageous in its defiance of logic or accepted moral standards that a sensible and fair minded person would consider that the conception of justice in Zimbabwe would be intolerably hurt by the award, then it would be contrary to public policy to uphold it. The same consequence applies where the arbitrator has not applied his mind to the question or has totally misunderstood the issue, and the resultant injustice reaches the point mentioned above.” [34] In Telone (Pvt) Ltd v Communication & Allied Services Workers’ Union of Zimbabwe 2007 (2) ZLR 262 (H) the court said: “From the cases it is trite that what the court must consider is whether the award is contrary to public policy of Zimbabwe. The concept of public policy is an elusive one depending on transient and sometimes subjective views on what is or what is not in the public benefit or what constitutes Zimbabwean public good.” [35] In Peruke Investments v Willoughby’s Investments (Pvt) Ltd & Anor 2015 (1) ZLR 491 (S) at 499G-H Patel JA (as he then was) stated that “as a rule, the courts are generally loath to invoke this ground except in most glaring instances of illogicality, injustice or moral turpitude.” [36] It is on the premise of these legal principles that this application shall be considered and determined. The application of the law to the facts [37] In my view the central issue for determination is whether the applicants have made a case for the setting aside of the award in terms of the requirements of the law. In determining this central issue, the following subsidiary issues arise for consideration: Whether the increment in the award falls outside ZIMRA’s approved allocated expenditure.Whether the grant of the non-discretionary 13th cheque can be challenged?Whether the award is contrary to legislative provisions and cannot be lawfully implemented and therefore, contrary to the public policy of Zimbabwe? Whether the substantive effect of the award makes it contrary to public policy?Whether the award has any basis or justification, and if not, whether it is contrary to public policy of Zimbabwe? Whether the increment falls outside ZIMRA’s approved allocated expenditure? [38] It is important to consider whether the salary increment, and the 13th cheque provided in the award falls outside ZIMRA’s approved allocated expenditure. This is so because the first applicant contends that the award imposes an obligation on it to pay salary increments more than the approved budget for 2023. ZIMRA contends that the implementation of the award will cost the fiscus over twelve million in local currency (ZIG 12,000,000.00) and almost nine hundred thousand United States dollars (USD$900. 000.00), over and above the current wage bill. According to the Ministry of Finance the approved ZIMRA budget amounts to ZIG 449,356,925, of which employment costs account for 67.3%. The award of a 300% on basic salary and non-discretionary bonus will increase ZIMRA expenditure to ZIG 461,388, 751 which is 2.7% higher than the overall appropriated ZIMRA budget. [39] A closer scrutiny of the Union’s case shows that it does not dispute that the award of 300% for the period July 2023 to December 2023 and non-discretionary bonus will increase the ZIMRA’s expenditure by 2.7% higher than the overall approved budget for 2023. The contention is that such cannot render the award contrary to the public policy, in that it does not take away the need for the assessment of a fair and reasonable wage. It was submitted that the fiscal entanglements of the applicants do not trump the employees’ constitutional right to a fair and reasonable wage. [40] ZIMRA’s 2023 budgets and supplementary budgets for its expenditure including employees’ remuneration was approved in accordance with s 47 of the PFMA, as read with s 26 of the RRA. The award of 300% for the period July 2023 to December 2023 and non-discretionary bonus will increase the applicant’s expenditure by 2.7% higher than the overall approved budget for 2023. Whether the award of the 13th cheque can be challenged? [41] The Union contends that ZIMRA is estopped from seeking the setting aside of the award of the 13th cheque on the premise that such was not opposed at arbitration stage. It was submitted that at arbitration, the first applicant never contested that the first respondent’s members were not deserving of the award of the 13th cheque, but that such claim could not be in United States currency. In essence, it was argued that the issue of the 13th cheque was taken as admitted, and cannot be sought to be set aside. [42] Per contra, Mr Bhebhe argued that ZIMRA did not concede to the payment of the 13th cheque. It was submitted that before the tribunal, ZIMRA stated that it already pays the employees a discretionary performance-based incentives, based on its incentive policy. However, the tribunal made the payment non-discretionary. It is on this basis that it was argued that ZIMRA can seek the setting aside of the award in respect of the 13th cheque. [43] The award shows that the tribunal noted that it had to arbitrate, inter alia on the request for payment of a 13th cheque and whether it should be paid in United States dollars. The tribunal had two issues regarding the 13th cheque to arbitrate on, first the request for its payment, and second, if the first issue was answered in the affirmative, whether it had to be paid in United States dollars. The tribunal stated that: “Having considered the points raised by both the claimant and the respondent the tribunal is persuaded that it should award payment of the 13th cheque in Zimbabwean dollars payable to employees in the employment of the respondent as at the first December each year and payable on a pro-rata basis for anyone with less than a year’s service.” [44] My view is that ZIMRA did not concede to the payment of a non-discretionary 13th cheque. It is the tribunal that awarded the employees a non-discretionary and non-performance 13th cheque. Therefore, the argument that ZIMRA is estopped from seeking the setting aside of the award in respect of the 13th cheque has no merit and is refused. Whether the award is contrary to legislative provisions and cannot be lawfully implemented and therefore, contrary to the public policy of Zimbabwe? [45] It is common cause that ZIMRA is a public entity and was established in terms of the Revenue Authority Act [Chapter 23:11]. The Act provides for financial provisions relating to the funding of the Authority. In particular, s 26 compels the Board to submit a budget showing expenditure, which it proposes ZIMRA will incur during the financial year, for approval by the Minister. The funds to finance ZIMRA are largely drawn from revenues appropriated for such purposes in terms of the Appropriation Act No. 6 of 2024. Expenditure outside the approved budget framework requires approval by the Minister. Therefore, ZIMRA cannot lawfully incur expenditure outside the approved budget without the Minister’s approval. [46] In addition, it is common cause that this application arises from salary negotiations for the period of July 2023 to December 2023. As stated above, the 2023 budgets and supplementary budgets for ZIMRA’s expenditure including employees’ remuneration was approved in accordance with s 47 of the PFMA, as read with s 26 of the RRA. The award of 300% for the period July 2023 to December 2023 and non-discretionary 13th cheque will increase the first applicant’s expenditure by 2.7% higher than the overall approved budget for 2023. At the time the Union filed its claim the 2023 budget cycle had closed. [47] Any expenditure outside the approved budget requires the approval of the Minister through a supplementary budget. The question is whether ZIMRA can apply for a supplementary budget to meet the award. This is so because, being a public entity, it cannot incur expenditure outside the parameters of the approved budget. In terms of s 26(2) of RRA during any financial year the ZIMRA may submit to the Minister for his approval a supplementary budget relating to expenditure which was not, for good reason, provided for in the annual budget; or was inadequately provided for in the annual budget due to unforeseen circumstances. The empowering provision requires the submission of a supplementary budget “during the financial year.” I do not see how ZIMRA could in 2024 make a submission for a supplementary budget for the year 2023. The 2023 budget cycle had by operation of law closed, and the remedy of a supplementary was no longer available to it. It is important that anyone dealing with the authority must appreciate that it is a public entity, and it can only do that which the law permits it to do. The award requires the authority to expend 2.7% more than the overall approved budget of 2023. Such is not possible. [48] It was somehow clear to the tribunal that the award exceeded the authority’s budget for 2023. I say so because the tribunal stated thus: “It appears illogical that if negotiations for wage adjustments for the period from first July 2023 to 31st December 2023 remain inconclusive by the end of the year, the salary should be restricted by the confines of the 2023 budget allocations. Should negotiations extend beyond the calendar year, the implementation of the award would be subject to the remaining budget for the year 2023, rendering negotiation process and the role of the arbitrators redundant. This scenario raises concerns about the efficacy and fairness of the negotiation process, as well as the role and impact of arbitration in resolving labour disputes within the public sector. The potential for budgetary limitations to overshadow the negotiation process underscores the need for a balanced approach that considers the financial constraints of the employer while ensuring fair compensation for employees in line with industry standards and legal requirements. It is crucial to navigate this delicate balance to arrive at a mutually acceptable and sustainable wage arrangements that benefits both parties involved.” [49] The above shows that the tribunal rejected the notion that the award must be limited by the budget. It considered itself at large to issue an order that goes beyond the budgetary limits, as long as it was of the opinion that it was factoring in the financial constraints of the employer and ensuring fair compensation for employees. My view is that, for whatever reason the tribunal could not at law issue an award that exceeds the budgetary limits of the ZIMRA. Such an award cannot be implemented, for the simple reason that ZIMRA has no available funds to meet it. The tribunal in dealing with a public entity must take note of the budgetary limitation, because it may end up issuing, like in casu an award that is outside the law. ZIMRA is a public entity and cannot expend outside the approved budget. In other words, as a state-owned entity it cannot expend outside the law. Its expenditure must be in terms of the requirements of the law. I take the view that an award that compels ZIMRA to pay more that its legislatively approved budget is contrary to the public policy. Whether the substantive effect of the award makes it contrary to public policy? [50] The substantive effect of the award is an important consideration in such a case, in that whether the employer has the capacity to implement it. In Telone (Pvt) Ltd v Communication & Allied Services Workers’ Union of Zimbabwe 2007 (2) ZLR 262 (H) the court said in assessing the award it is inevitable that one must consider the substantive effect of the award and determine whether it is not contrary to public policy in its effect. In Chawara Syndicate v Pickweri Mining (Pvt) Ltd & Anor 2019 (3) ZLR 1080 (S) at 1089F Mavangira JA stated that: “Although courts are not keen to pronounce an award to be contrary to public policy, I find that in this case the award falls into the class of the exceptions to this. The effect of the arbitral award issued by the second respondent was to allow the appellant, who was in illegal occupation, to derive benefit from acquired land and this is illegal. One can only derive benefit through the State, which is the holder of all rights emanating from that land.” [51] It is important to note that the Government committed to a fiscal rule whereby employment costs should be contained within 50% of revenues for a particular year. This rule enables the Government to set aside funds to finance other critical expenditure that includes social protection, infrastructure development, and other operations. The implementation of the award has the potential to contribute toward breaching the 50% threshold. The 2023 approved ZIMRA budget amounted to ZIG 449,356, 925 of which employment costs account for 67.3%. The award of a 300% increase on basic salary and non-discretionary bonus will increase its expenditure to ZIG 461,388,751 which is 2.7% high than the overall appropriated budget. The substantive effect of the award is that the authority is required to consume more than its approved budget. Even more, the authority being a public entity, the award has the potential to breach the Government fiscal rule, i.e., employment costs should be contained within 50% of revenues for a particular year. [52] On these facts, I am persuaded that even applying the public policy defence restrictively the substantive effect of the arbitral award upon the authority, and the Government in general act outside the policy framework. In such a case the conception of justice in Zimbabwe would be intolerably hurt by this substantive effect of the award. The award is in conflict with the public policy of Zimbabwe. Whether the award is justified? [53] The arbitrator's decision must be justified. See Delta Operations (Pvt) Ltd v Origen Corporation (Pvt) Ltd 2007 (2) ZLR 81 (S); Origen Corporation (Pvt) Ltd v Delta Operations (Pvt) 2005 (2) ZLR 349 (H). Although the courts generally will not review the merits of the award, however it must be justified by the evidence. In casu, the applicant submitted that the award does not actually give any basis or justification for the award. It is not apparent how was the compromise position reached and how was it appropriate in the circumstances. It is not clear what factors were considered in determining that the increment was appropriate. I agree. To cut it to the bone, there is no justification of the award, particularly considering that the undisputed facts show that in terms of remuneration, ZIMRA employees are at the top of the civil servants. The remuneration packages include mortgage finance loans; 100% medical aid for employees and their dependants; transport allowance; general living allowance; housing allowance; 100% funeral cover for employees and their dependants; group life cover contributions, loans, pension contributions; NASSA contributions; and performance-based awards and remuneration. They further receive several allowances which are payable in both United States Dollars and the local currency. These include general living allowance calculated at 38% of the basic salary, with 55% payable in United States Dollars; Covid-19 Allowance at US$75 per month payable in United States Dollars; housing allowance currently at US$75 per room for three rooms (US$225) which is payable at the prevailing rate; transport allowance which currently US$4 per day for twenty six days (US$104) payable at the prevailing rate; night shift allowance at 20% of the hourly basic salary (where applicable); and hardship allowance at 10% of the basic salary (where applicable). The award is not justified. In the circumstances, the award is arbitrary and contrary to public policy. Conclusion [54] ZIMRA is a public entity, and its expenditure is subject to legislative control. The increment in the award falls outside the approved allocated expenditure. The award is contrary to legislative provisions and it cannot be lawfully implemented and therefore, contrary to the public policy. In addition, the substantive effect of the award makes it contrary to public policy, in that it is beyond the approved allocated expenditure. Further, a closer scrutiny shows that the award has no basis or justification. In the circumstances, the award is contrary to the public policy of Zimbabwe. It is for these reasons that this application must succeed. Costs [55] The applicants have obtained the relief they sought from this court. There are no special reasons warranting a departure from the usual general position that costs should follow the result. The applicants are entitled to their costs as against the first respondent. In the result, I order as follows: Para (s) 1 and 6 of the Final Disposition of the Arbitral Award handed down by the Tribunal dated the 11th of April 2024 are contrary to the public policy of Zimbabwe. Para (s) 1 and 6 of the Final Disposition of the Arbitral Award handed down by the second and third Respondents dated the 11th of April 2024 be and are hereby set aside in terms of Article 34(2)(b)(ii) of the Model Law, First Schedule to the Arbitration Act [Chapter 7:15]. The first respondent shall pay the applicants’ costs of suit. Dube-Banda J:.................................................................... Kantor & Immerman, applicants’ legal practitioners Mafongoya & Matapura, first respondent’s legal practitioners 7 HH 337-25 HCH 2946/24 7 HH 337-25 HCH 2946/24 ZIMBABWE REVENUE AUTHORITY and THE MINISTER FOR FINANCE, ECONOMIC DEVELOPMENT AND INVESTMENT PROMOTION versus ZIMBABWE REVENUE AND ALLIED WORKERS’ UNION and HONOURABLE ARBITRATOR ARTHUR MARARA N.O. and HONOURABLE ARBITRATOR GEORGE MAKINGS N.O. IN THE HIGH COURT OF ZIMBABWE DUBE-BANDA J HARARE 18 November 2024 & 6 June 2025 Court application to set aside an arbitral award S Bhebhe, for the applicants B Magogo, for the 1st respondent DUBE-BANDA J: [1] This is an application to set aside part of an arbitral award in terms of Article 34(2)(b)(ii) of the Model Law, First Schedule to the Arbitration Act [Chapter 7:15]. The applicants seek an order couched as follows: Para (s) 1 and 6 of the Final Disposition of the Arbitral Award handed down by the second and third respondents on 11 April 2024 are contrary to the public policy of Zimbabwe. Para (s) 1 and 6 of the Final Disposition of the Arbitral Award handed down by the second and third respondents dated 11 April 2024 be and are hereby set aside in terms of Article 34(2)(b)(ii) of the Model Law, First Schedule to the Arbitration Act [Chapter 7:15]. The first respondent shall pay the first and second applicants’ costs of suit. [2] The first applicant is the Zimbabwe Revenue Authority (“authority or ZIMRA”), a statutory body established in terms of s 3 of the Revenue Authority Act [Chapter 23:11] and is a public entity in terms of s 2 of the Public Finance Management Act [Chapter 22:19]. [3] The second applicant is the Minister of Finance, Economic Development and Investment Promotion (“Minister”). He is the Minister responsible for the administration of the Zimbabwe Revenue Authority Act. [4] The first respondent is the Zimbabwe Revenue and Allied Workers Union, (“Union”), a registered trade union representing employees of ZIMRA. The second and third respondents are arbitrators (“the tribunal”). [5] The application is opposed by the first respondent. The second and third respondents have not opposed this application, and I take it that they have taken a position to abide by the decision of the court. Factual background [6] The facts of the matter may be summarised as follows: ZIMRA and the Union (“the parties”) are members of the National Employment Council (“Council”) for the ZIMRA Undertaking. The parties entered salary negotiations for the period of July 2023 to December 2023 and reached a deadlock. Subsequent to the deadlock the matter was referred to voluntary arbitration. The second and the third respondents were appointed arbitrators, the tribunal. [7] Before the tribunal, the Union urged the tribunal to take judicial notice of the economic environment prevailing in the country. It was submitted that the economic environment has been affected by chronic and high inflation, currency volatility and general dollarization of the economy. While, the basic salary is paid wholly in local currency (“ZWL”), prices of basic goods and services are indexed to the United States dollar open market rate. It was submitted further that a collective bargaining award ought to be fair and reasonable and mitigate the cost of living for the worker, and a fair minimum wage must guarantee a worker a dignified life. The Union provided graphs and figures dealing with exchange rates, inflation developments, market transactional analysis, fuel prices, school fees, medical aid shortfalls, and a comparative analysis with other sectors in support of its claim. It emphasised that the claims were influenced by economic, social and financial conditions in the country, and sought that the claims be allowed. [8] Per contra, ZIMRA argued that the tribunal must take into account the legislative landscape which governs its capacity and scope to negotiate and agree on an appropriate salary. It was submitted that ZIMRA is a public entity and is only entitled to expenditure in terms of the budgets approved by the Minister and Parliament in respect of the relevant financial year. It was argued that the remuneration payable to employees is part of ZIMRA’s expenditure which cannot lawfully exceed approved budgets. It was emphasised that in terms of the empowering statues ZIMRA is required to submit an annual budget for approval to the Minister. The budget must include all staff costs and the wage bill, and it must not exceed 30% of its revenue and operational costs. It cannot pay staff costs which exceed the approved budget. It was submitted further that any award which required ZIMRA to exceed its approved budget for the period under review would be contrary to the provisions of the Public Finance Management Act [Chapter 22:19] (“PFMA”); Public Entities Corporate Governance Act [Chapter 10:31] (“PECGA”); and the Revenue Authority Act [Chapter 23:11] (“RAA”). [9] In addition, it was submitted that the ZIMRA employee’s remuneration packages include mortgage finance loans; 100% medical aid for employees and their dependants; transport allowance; general living allowance; housing allowance; 100% funeral cover for employees and their dependants; group life cover contributions, loans, pension contributions; NASSA contributions; and performance-based awards and remuneration. They further receive several allowances which are payable in both United States Dollars and the local currency. These were said to include general living allowance calculated at 38% of the basic salary, with 55% payable in United States Dollars; Covid-19 Allowance at US$75 per month payable in United States Dollars; housing allowance currently at US$75 per room for three rooms (US$225) which is payable at the prevailing rate; transport allowance which currently US$4 per day for twenty six days (US$104) payable at the prevailing rate; night shift allowance at 20% of the hourly basic salary (where applicable); and hardship allowance at 10% of the basic salary (where applicable). [10] It was further argued that the Union’s demand was not only contrary to statute, because it exceeded ZIMRA’s approved budget, but was also unreasonable and unjustified. It was submitted that the demand by the Union, if granted would be contrary to public policy of Zimbabwe. ZIMRA sought that the Union’s claim be dismissed. [11] The tribunal found that housing, transport, night shift allowances should remain the same, and that Covid allowance should be adjusted as submitted by ZIMRA. It granted a basic salary increment and a 13th cheque. The tribunal issued an award couched as follows: Basic salary for a grade 16 employee shall be increased by 300% effective first July 2023 based on the ZIMRA Zimbabwe dollar rate of pay in effect on the 30th June 2023. The grade differentials in pace (sic) at the present shall continue to apply. The payment shall be made in Zimbabwean Dollars. It has been accepted by both parties that COVID allowance be maintained as US$ payment but should no longer be referred to as a COVID allowance. This award therefore finds that the allowance be added to the GLA allowance payable over and above the existing GLA allowance. This award finds that the Housing and Transport allowances should remain the same, payable in Zimbabwe dollars at the prevailing inter-bank rate. This award finds that the night shift allowance should remain as it is, 20% of the basic hourly rate for those that it applies to. The award finds that the hardship allowance should remain as it is as 10% of basic pay payable in Zimbabwe dollars. This award finds that a 13th cheque should be payable in Zimbabwe Dollars as at first December each year and payable on a prorate basis for those who would have not served the full year. [12] It is against this background that the applicants launched this application seeking an order as set out in the draft. [13] The application is opposed on a preliminary point and the merits of the matter. The point taken was that the Minister has no locus standi to challenge the arbitral award. It is to this preliminary point that I now turn. Preliminary point [14] The first respondent took a preliminary point that the Minister has no standing to impugn the arbitral award, and thus his application, its ancillary affidavits and annexures should be expunged from the record. This objection is premised on the contention that the Minister did not participate in the hearing before the tribunal. The factual position is that an official from the Ministry attended collective bargaining deliberations, but neither filed any papers nor made any submissions. It was submitted that by choosing not to participate from the onset of the collective bargaining deliberations and during the arbitration proceedings, the Minister accepted the bargaining position and claims of the first respondent. It was argued that he waived his right to challenge the outcome of the arbitration process. [15] It was submitted that s 74(7) of the Labour Act [28:01] gave the Minister a chance to be involved from the bargaining stage, and not only join at the arbitration stage. It was argued that the position of the law is that what is not denied is always taken to be admitted. It was submitted that by choosing to remain silent, the Minister must be taken to have acquiesced to the claims and to the outcome of the bargaining process. It was submitted that he waived his right to challenge the outcome, in that he cannot be aggrieved by the outcome of a process that he chose to ignore. It was argued that some of the factual issues and figures that the Minister seeks to impugn the award should have been placed before the arbitrators during the proceedings. It was further submitted that because of the failure by the Minister to make written or oral submissions, the decision made is a default judgment and is unavailable for challenge by the Minister except to seek its rescission. [16] It was further submitted that the non-participation of the Minister in a case where the law endowed him with the full powers of participation is a clear breach of his statutory duties. Relying on s 75(1) of the Labour Act, it was argued that the Minister is guilty of breach of the obligation to negotiate in absolute good faith, in that he failed to disclose any information relevant to the collective bargaining proceedings before the tribunal. He is said to have wilfully breached the law. He cannot then be allowed to benefit from his unlawful conduct. It was further argued that the provisions of Article 34 of the Model Law to the Arbitration Act are unavailable to the Minister, in that he waived his right to challenge the proceedings at arbitration stage. [17] Per contra, the applicant argued that ZIMRA being a statutory body, the Minister has locus standi in all collective bargaining processes by virtue of s 74(7) of the Labour Act. It was argued further that the Minister was a party to the arbitration proceedings as required by s 74(7), and the fact that he did not file submissions cannot divest him of his standing given to him in terms of the Act. In addition, it was argued that the Minister has a direct and substantial interest in the matter, in that he is directly affected by the arbitral award. It was submitted further that the preliminary point has no merit and ought to fail. [18] The question is whether the Minister has locus standi to challenge the arbitral award in terms of the law. Locus standi relates to whether a particular litigant is entitled to seek redress from the courts in respect of a particular issue. To answer this question, I turn to s 74(7) of the Labour Act [28:01], which says: “Where a collective bargaining agreement being negotiated involves an employer which is a statutory corporation, statutory body or an entity wholly or predominantly controlled by the State, the Minister responsible for that body, corporation or entity shall be deemed to be a party on an equal footing with such employer and accordingly is a party to the negotiation of such collective bargaining agreement.” [19] The empowering provision deems the Minister part to the negotiations of a collective bargaining agreement. My view is that it is inconsequential and of no moment whether he files papers or makes oral submissions at the arbitration proceedings, he is by operation of law part of the bargaining process. In other words, he does not become part of the process because he has filed papers or made oral submissions, he becomes part of the process because the law decrees that he is part of the process. Therefore, the Minister was part of the arbitration proceedings. Having been, by operation of law part of the arbitration proceedings, he has locus standi to approach this court seeking to set aside an arbitral award in terms of the requirements of the law. To non-suit the Minister on the basis that he neither filed papers nor presented oral submissions at arbitration proceedings would be contrary to the letter and spirit of s 74(7). In other words, it would be contrary to the law. [20] In addition, the Minister has no power of waiver, the empowering provision uses the word “shall” meaning that it is peremptory. He cannot waive an obligation imposed by the law to be part to the negotiation of a collective bargaining agreement. He is part of it by operation of law. The provision uses the word “deemed” meaning even if he does not actively participate, he is still deemed to be part of the process. In other words, his being part of the process is not judged by active participation, but by operation of the law. [21] The argument that by remaining silent, the Minister must be taken to have acquiesced to the claims and to the outcome of the bargaining process is unavailing. The Minister is deemed to be part of the process, he may opt for passive participation, or active participation, but he cannot be taken to have admitted or acquiesced to the claims and to the outcome of the bargaining process. Therefore, the Minister having been by operation of the law part of the collective bargaining agreement, he can seek to set aside the award emanating from the bargaining process. [22] In the circumstances, the preliminary point that the Minister has no standing to impugn the arbitral award, and that his application, its ancillary affidavits and annexures should be expunged from the record is ill-conceived and has no merit. It is accordingly refused. Merits The applicants’ contentions [23] In summary, it was submitted that ZIMRA is a public entity which is bound by legislative provisions in respect of permissible and lawful expenditure, and it cannot exceed its approved budgeted expenditure for any given year. It was submitted further that legislation imposes restrictions and limitations on any, and all expenditure by public entities, including remuneration of employees. It was argued that the tribunal awarded the employees a salary increment of 300% based on the rate of pay as at June 2023 and a 13th cheque payable in local currency. It was argued further that that this award exceeds ZIMRA’s approved expenditure in respect of the 2023 financial year, as well as the permissible threshold for the employees’ costs vis-a-vis budget and revenue for public entities, and ZIMRA cannot lawfully implement it. It was argued further that the 2023 financial year budgets have been closed and cannot be re-opened in respect of the unapproved expenditure as ordered by the tribunal. [24] It was submitted further that the award violates fundamental principles of law, and the public finance management legislation, it creates an illegality and cannot be lawfully implemented. In that it ignored and disregarded provisions of law and as such cannot be allowed to stand. It was stressed that in terms of s 47 of the PFMA and s 26 RAA, ZIMRA is required to submit an annual or supplementary budget for approval to the Minister. The budget is submitted for approval and enacted in the Appropriation Act. In terms of s 47 (4) of the PFMA, ZIMRA’s expenditure for any given financial year cannot exceed the approved budget. It was argued that an award that imposes an obligation to pay salaries which exceed ZIMRA’s approved budget is contrary to public policy. [25] It was submitted further that the implementation of the award and payment of the award to the employees would be outside the ambit and scope of the Public Finance Management Act (“PFMA”); Public Finance Management (General) Regulations (“PFMA Regulations”), the Revenue Authority Act (“RAA”), the relevant Appropriation Act and the Constitution of Zimbabwe. It was emphasised that the award imposes an obligation on ZIMRA which is not only contrary to the public finance management laws in Zimbabwe, and would require it to act outside of the confines of law, but has the substantive effect that would have a disastrous impact on the fiscus. The award is said to be contrary to the public policy of Zimbabwe and ought to be set aside. The first respondent’s contentions [26] In summary, it was argued that ZIMRA’s position is untenable in that it is premised on that its employees are not entitled to bargain outside those amounts that are within its budgeted expenditure, and that any bargaining claim or proposal that goes outside of the bracket of budgeted expenditure, becomes unlawful to consider. In essence, it was submitted that ZIMRA’s argument is that the right to collective bargaining is unavailable to its employees, and such cannot be the correct position of the law. [27] It was submitted further that the contention that in collective bargaining ZIMRA has no room to manouvre beyond its approved expenditure is incorrect, and not in accordance with the law. In that s 65 (5)(a) of the Constitution grants ZIMRA and its employees the right to engage in collective bargaining. It was submitted that collective bargaining is fundamental human right, which is given effect to in s 74(2) of the Labour Act. It was submitted further that the law recognises collective bargaining as the avenue through which the constitutional rights in s 65(1) and s 65(5)(a) are realised. It is for this reason that Section 74(2) of the Labour Act is not made subject to any other Act but only to the Labour Act. There is no provision in the Labour Act which restricts the exercise of the right to engage in collective bargaining. Rather, Section 74(3) permissively broadens the horizon of issues that can be made the subject of collective bargaining. [28] It was submitted that the award is neither unlawful nor against the state’s legal order. In that s 74 (4) enjoins accounting authorities to ensure that expenditure of the public entities is in accordance with an approved budget. It was further argued that s 18(2) of the PFMA permits differences to be aligned, and that s 26(2) RRA provides for approval of supplementary expenditure which was not provided for in the annual budget for good reason or inadvertence. Counsel argued that ZIMRA has not submitted that post the award it made an application in terms of s 26 (2) and such an application was rejected. [29] It was submitted further that no statute can derogate from the right to collective bargaining as given in s 74 of the Labour Act, and that the statutes cited by ZIMRA do not govern collective bargaining neither do they place any limitation on the right to bargain. If anything, it was submitted, these statutes are structured in a way that gives effect to as opposed to conflicting with any process or outcome of collective bargaining. [30] It was submitted further that the reference to a 300% increase in this application ignores the fact that at the time when the award was issued, ZIMRA had unilaterally awarded a 100% increase in February and another 100% in July 2023. The exaggerated computations using a 300% increase are therefore misleading. Effectively, the tribunal awarded 100%. It was argued that the 300% granted by the arbitrators cannot be said to be contrary to public policy. [31] It was submitted that an award that sets a fair and reasonable wage as a product of collective bargaining cannot, by any stretch of imagination, be said to be contrary to Zimbabwean public policy. The first respondent sought that the application be dismissed with costs on a legal practitioner and client scale. The law [32] The law applicable to setting aside an arbitral award have been stated and re-stated in this jurisdiction. In terms of Article 34(2)(b)(ii) of the Model Law, an arbitral award is challengeable and may be set aside on the ground that it conflicts with the public policy of Zimbabwe. As a rule, the courts are generally loath to invoke this ground except in the most glaring instances of illogicality, injustice or moral turpitude. The concept of public policy has exercised the minds of the courts in several cases. In Wallen Holdings (Pvt|) Ltd v Lloyd and Another 1996(2) ZLR 383 Chinhengo J considered the question and affirmed that the courts will always be most reluctant to interfere with the award of an arbitrator. In the words of Gubbay CJ (as he then was) in the locus classicus on the subject, Zimbabwe Electricity Supply Authority v Maposa 1999 (2) ZLR 452 (S), at 465D-E: “In my opinion, the approach to be adopted is to construe the public policy defence, as being applicable to either a foreign or domestic award, restrictively in order to preserve and recognise the basic objective of finality in all arbitrations; and to hold such defence applicable only if some fundamental principle of the law or morality or justice is violated.” [33] This cautionary approach is further underscored by the learned Chief Justice in elucidating the proper test to be applied, at 466E-H: “An award will not be contrary to public policy merely because the reasoning or conclusions of the arbitrator are wrong in fact or in law. In such a situation the court would not be justified in setting the award aside. Under article 34 or 36, the court does not exercise an appeal power and either uphold or set aside or decline to recognise and enforce an award by having regard to what it considers should have been the correct decision. Where, however, the reasoning or conclusion in an award goes beyond mere faultiness or incorrectness and constitutes a palpable inequity that is so far reaching and outrageous in its defiance of logic or accepted moral standards that a sensible and fair minded person would consider that the conception of justice in Zimbabwe would be intolerably hurt by the award, then it would be contrary to public policy to uphold it. The same consequence applies where the arbitrator has not applied his mind to the question or has totally misunderstood the issue, and the resultant injustice reaches the point mentioned above.” [34] In Telone (Pvt) Ltd v Communication & Allied Services Workers’ Union of Zimbabwe 2007 (2) ZLR 262 (H) the court said: “From the cases it is trite that what the court must consider is whether the award is contrary to public policy of Zimbabwe. The concept of public policy is an elusive one depending on transient and sometimes subjective views on what is or what is not in the public benefit or what constitutes Zimbabwean public good.” [35] In Peruke Investments v Willoughby’s Investments (Pvt) Ltd & Anor 2015 (1) ZLR 491 (S) at 499G-H Patel JA (as he then was) stated that “as a rule, the courts are generally loath to invoke this ground except in most glaring instances of illogicality, injustice or moral turpitude.” [36] It is on the premise of these legal principles that this application shall be considered and determined. The application of the law to the facts [37] In my view the central issue for determination is whether the applicants have made a case for the setting aside of the award in terms of the requirements of the law. In determining this central issue, the following subsidiary issues arise for consideration: Whether the increment in the award falls outside ZIMRA’s approved allocated expenditure. Whether the grant of the non-discretionary 13th cheque can be challenged? Whether the award is contrary to legislative provisions and cannot be lawfully implemented and therefore, contrary to the public policy of Zimbabwe? Whether the substantive effect of the award makes it contrary to public policy? Whether the award has any basis or justification, and if not, whether it is contrary to public policy of Zimbabwe? Whether the increment falls outside ZIMRA’s approved allocated expenditure? [38] It is important to consider whether the salary increment, and the 13th cheque provided in the award falls outside ZIMRA’s approved allocated expenditure. This is so because the first applicant contends that the award imposes an obligation on it to pay salary increments more than the approved budget for 2023. ZIMRA contends that the implementation of the award will cost the fiscus over twelve million in local currency (ZIG 12,000,000.00) and almost nine hundred thousand United States dollars (USD$900. 000.00), over and above the current wage bill. According to the Ministry of Finance the approved ZIMRA budget amounts to ZIG 449,356,925, of which employment costs account for 67.3%. The award of a 300% on basic salary and non-discretionary bonus will increase ZIMRA expenditure to ZIG 461,388, 751 which is 2.7% higher than the overall appropriated ZIMRA budget. [39] A closer scrutiny of the Union’s case shows that it does not dispute that the award of 300% for the period July 2023 to December 2023 and non-discretionary bonus will increase the ZIMRA’s expenditure by 2.7% higher than the overall approved budget for 2023. The contention is that such cannot render the award contrary to the public policy, in that it does not take away the need for the assessment of a fair and reasonable wage. It was submitted that the fiscal entanglements of the applicants do not trump the employees’ constitutional right to a fair and reasonable wage. [40] ZIMRA’s 2023 budgets and supplementary budgets for its expenditure including employees’ remuneration was approved in accordance with s 47 of the PFMA, as read with s 26 of the RRA. The award of 300% for the period July 2023 to December 2023 and non-discretionary bonus will increase the applicant’s expenditure by 2.7% higher than the overall approved budget for 2023. Whether the award of the 13th cheque can be challenged? [41] The Union contends that ZIMRA is estopped from seeking the setting aside of the award of the 13th cheque on the premise that such was not opposed at arbitration stage. It was submitted that at arbitration, the first applicant never contested that the first respondent’s members were not deserving of the award of the 13th cheque, but that such claim could not be in United States currency. In essence, it was argued that the issue of the 13th cheque was taken as admitted, and cannot be sought to be set aside. [42] Per contra, Mr Bhebhe argued that ZIMRA did not concede to the payment of the 13th cheque. It was submitted that before the tribunal, ZIMRA stated that it already pays the employees a discretionary performance-based incentives, based on its incentive policy. However, the tribunal made the payment non-discretionary. It is on this basis that it was argued that ZIMRA can seek the setting aside of the award in respect of the 13th cheque. [43] The award shows that the tribunal noted that it had to arbitrate, inter alia on the request for payment of a 13th cheque and whether it should be paid in United States dollars. The tribunal had two issues regarding the 13th cheque to arbitrate on, first the request for its payment, and second, if the first issue was answered in the affirmative, whether it had to be paid in United States dollars. The tribunal stated that: “Having considered the points raised by both the claimant and the respondent the tribunal is persuaded that it should award payment of the 13th cheque in Zimbabwean dollars payable to employees in the employment of the respondent as at the first December each year and payable on a pro-rata basis for anyone with less than a year’s service.” [44] My view is that ZIMRA did not concede to the payment of a non-discretionary 13th cheque. It is the tribunal that awarded the employees a non-discretionary and non-performance 13th cheque. Therefore, the argument that ZIMRA is estopped from seeking the setting aside of the award in respect of the 13th cheque has no merit and is refused. Whether the award is contrary to legislative provisions and cannot be lawfully implemented and therefore, contrary to the public policy of Zimbabwe? [45] It is common cause that ZIMRA is a public entity and was established in terms of the Revenue Authority Act [Chapter 23:11]. The Act provides for financial provisions relating to the funding of the Authority. In particular, s 26 compels the Board to submit a budget showing expenditure, which it proposes ZIMRA will incur during the financial year, for approval by the Minister. The funds to finance ZIMRA are largely drawn from revenues appropriated for such purposes in terms of the Appropriation Act No. 6 of 2024. Expenditure outside the approved budget framework requires approval by the Minister. Therefore, ZIMRA cannot lawfully incur expenditure outside the approved budget without the Minister’s approval. [46] In addition, it is common cause that this application arises from salary negotiations for the period of July 2023 to December 2023. As stated above, the 2023 budgets and supplementary budgets for ZIMRA’s expenditure including employees’ remuneration was approved in accordance with s 47 of the PFMA, as read with s 26 of the RRA. The award of 300% for the period July 2023 to December 2023 and non-discretionary 13th cheque will increase the first applicant’s expenditure by 2.7% higher than the overall approved budget for 2023. At the time the Union filed its claim the 2023 budget cycle had closed. [47] Any expenditure outside the approved budget requires the approval of the Minister through a supplementary budget. The question is whether ZIMRA can apply for a supplementary budget to meet the award. This is so because, being a public entity, it cannot incur expenditure outside the parameters of the approved budget. In terms of s 26(2) of RRA during any financial year the ZIMRA may submit to the Minister for his approval a supplementary budget relating to expenditure which was not, for good reason, provided for in the annual budget; or was inadequately provided for in the annual budget due to unforeseen circumstances. The empowering provision requires the submission of a supplementary budget “during the financial year.” I do not see how ZIMRA could in 2024 make a submission for a supplementary budget for the year 2023. The 2023 budget cycle had by operation of law closed, and the remedy of a supplementary was no longer available to it. It is important that anyone dealing with the authority must appreciate that it is a public entity, and it can only do that which the law permits it to do. The award requires the authority to expend 2.7% more than the overall approved budget of 2023. Such is not possible. [48] It was somehow clear to the tribunal that the award exceeded the authority’s budget for 2023. I say so because the tribunal stated thus: “It appears illogical that if negotiations for wage adjustments for the period from first July 2023 to 31st December 2023 remain inconclusive by the end of the year, the salary should be restricted by the confines of the 2023 budget allocations. Should negotiations extend beyond the calendar year, the implementation of the award would be subject to the remaining budget for the year 2023, rendering negotiation process and the role of the arbitrators redundant. This scenario raises concerns about the efficacy and fairness of the negotiation process, as well as the role and impact of arbitration in resolving labour disputes within the public sector. The potential for budgetary limitations to overshadow the negotiation process underscores the need for a balanced approach that considers the financial constraints of the employer while ensuring fair compensation for employees in line with industry standards and legal requirements. It is crucial to navigate this delicate balance to arrive at a mutually acceptable and sustainable wage arrangements that benefits both parties involved.” [49] The above shows that the tribunal rejected the notion that the award must be limited by the budget. It considered itself at large to issue an order that goes beyond the budgetary limits, as long as it was of the opinion that it was factoring in the financial constraints of the employer and ensuring fair compensation for employees. My view is that, for whatever reason the tribunal could not at law issue an award that exceeds the budgetary limits of the ZIMRA. Such an award cannot be implemented, for the simple reason that ZIMRA has no available funds to meet it. The tribunal in dealing with a public entity must take note of the budgetary limitation, because it may end up issuing, like in casu an award that is outside the law. ZIMRA is a public entity and cannot expend outside the approved budget. In other words, as a state-owned entity it cannot expend outside the law. Its expenditure must be in terms of the requirements of the law. I take the view that an award that compels ZIMRA to pay more that its legislatively approved budget is contrary to the public policy. Whether the substantive effect of the award makes it contrary to public policy? [50] The substantive effect of the award is an important consideration in such a case, in that whether the employer has the capacity to implement it. In Telone (Pvt) Ltd v Communication & Allied Services Workers’ Union of Zimbabwe 2007 (2) ZLR 262 (H) the court said in assessing the award it is inevitable that one must consider the substantive effect of the award and determine whether it is not contrary to public policy in its effect. In Chawara Syndicate v Pickweri Mining (Pvt) Ltd & Anor 2019 (3) ZLR 1080 (S) at 1089F Mavangira JA stated that: “Although courts are not keen to pronounce an award to be contrary to public policy, I find that in this case the award falls into the class of the exceptions to this. The effect of the arbitral award issued by the second respondent was to allow the appellant, who was in illegal occupation, to derive benefit from acquired land and this is illegal. One can only derive benefit through the State, which is the holder of all rights emanating from that land.” [51] It is important to note that the Government committed to a fiscal rule whereby employment costs should be contained within 50% of revenues for a particular year. This rule enables the Government to set aside funds to finance other critical expenditure that includes social protection, infrastructure development, and other operations. The implementation of the award has the potential to contribute toward breaching the 50% threshold. The 2023 approved ZIMRA budget amounted to ZIG 449,356, 925 of which employment costs account for 67.3%. The award of a 300% increase on basic salary and non-discretionary bonus will increase its expenditure to ZIG 461,388,751 which is 2.7% high than the overall appropriated budget. The substantive effect of the award is that the authority is required to consume more than its approved budget. Even more, the authority being a public entity, the award has the potential to breach the Government fiscal rule, i.e., employment costs should be contained within 50% of revenues for a particular year. [52] On these facts, I am persuaded that even applying the public policy defence restrictively the substantive effect of the arbitral award upon the authority, and the Government in general act outside the policy framework. In such a case the conception of justice in Zimbabwe would be intolerably hurt by this substantive effect of the award. The award is in conflict with the public policy of Zimbabwe. Whether the award is justified? [53] The arbitrator's decision must be justified. See Delta Operations (Pvt) Ltd v Origen Corporation (Pvt) Ltd 2007 (2) ZLR 81 (S); Origen Corporation (Pvt) Ltd v Delta Operations (Pvt) 2005 (2) ZLR 349 (H). Although the courts generally will not review the merits of the award, however it must be justified by the evidence. In casu, the applicant submitted that the award does not actually give any basis or justification for the award. It is not apparent how was the compromise position reached and how was it appropriate in the circumstances. It is not clear what factors were considered in determining that the increment was appropriate. I agree. To cut it to the bone, there is no justification of the award, particularly considering that the undisputed facts show that in terms of remuneration, ZIMRA employees are at the top of the civil servants. The remuneration packages include mortgage finance loans; 100% medical aid for employees and their dependants; transport allowance; general living allowance; housing allowance; 100% funeral cover for employees and their dependants; group life cover contributions, loans, pension contributions; NASSA contributions; and performance-based awards and remuneration. They further receive several allowances which are payable in both United States Dollars and the local currency. These include general living allowance calculated at 38% of the basic salary, with 55% payable in United States Dollars; Covid-19 Allowance at US$75 per month payable in United States Dollars; housing allowance currently at US$75 per room for three rooms (US$225) which is payable at the prevailing rate; transport allowance which currently US$4 per day for twenty six days (US$104) payable at the prevailing rate; night shift allowance at 20% of the hourly basic salary (where applicable); and hardship allowance at 10% of the basic salary (where applicable). The award is not justified. In the circumstances, the award is arbitrary and contrary to public policy. Conclusion [54] ZIMRA is a public entity, and its expenditure is subject to legislative control. The increment in the award falls outside the approved allocated expenditure. The award is contrary to legislative provisions and it cannot be lawfully implemented and therefore, contrary to the public policy. In addition, the substantive effect of the award makes it contrary to public policy, in that it is beyond the approved allocated expenditure. Further, a closer scrutiny shows that the award has no basis or justification. In the circumstances, the award is contrary to the public policy of Zimbabwe. It is for these reasons that this application must succeed. Costs [55] The applicants have obtained the relief they sought from this court. There are no special reasons warranting a departure from the usual general position that costs should follow the result. The applicants are entitled to their costs as against the first respondent. In the result, I order as follows: Para (s) 1 and 6 of the Final Disposition of the Arbitral Award handed down by the Tribunal dated the 11th of April 2024 are contrary to the public policy of Zimbabwe. Para (s) 1 and 6 of the Final Disposition of the Arbitral Award handed down by the second and third Respondents dated the 11th of April 2024 be and are hereby set aside in terms of Article 34(2)(b)(ii) of the Model Law, First Schedule to the Arbitration Act [Chapter 7:15]. The first respondent shall pay the applicants’ costs of suit. Dube-Banda J:.................................................................... Kantor & Immerman, applicants’ legal practitioners Mafongoya & Matapura, first respondent’s legal practitioners