Chinese run Maxmind Investments bites the dust in fixed contract termination case

By Staff Reporter

The Labour Court has dismissed an appeal, upholding an arbitrator’s decision that a Chinese company, Madmen Investments’ termination of a fixed-term employment contract was unlawful, in a decisive ruling that could reshape the interpretation of labour contracts in the country.

The judgment, delivered by Justice Bianca Makwande, has reaffirmed the centrality of statutory protections in employment contracts, rejecting the employer’s reliance on a pre-existing termination clause.

Maximind had terminated the employment of Fumisai Murehwa, a human resources manager, citing Clause 12 of his employment contract, which allowed for termination with three months’ notice.

The company argued that the clause constituted a pre-agreed method of termination, permissible under Section 12 (4a) of the Labour Act.

Justice Makwande disagreed, stating, “There was no mutual termination agreement entered into by the parties at the time of the termination.

“The appellant cannot seek to rely on Clause 12 of the employment contract, which simply states that termination shall be on three months’ notice.”

The court ruled that the three-month notice clause merely set out a minimum notice period and did not grant an unfettered right to terminate employment.

Justice Makwande cited legislative amendments that restrict employers from terminating contracts unilaterally, emphasising that termination must either result from mutual agreement, a verified breach, or other legally justified grounds.

“Clause 12 subjects itself to the provisions of the Labour Act as amended, meaning that it is subject to Section 12 (4a),” the judge said.

The case arose after Murehwa’s contract, which was to run until June 2026, was abruptly terminated in April 2025.

Dissatisfied with the termination, Murehwa sought recourse through arbitration, where he was awarded damages totalling US$56 835,84 for the unexpired period of his contract.

The arbitrator found the termination to be an unfair labour practice, ordering compensation for lost salaries, allowances and benefits.

Maximind contested the award, arguing that the arbitrator had erred in both law and fact.

The company claimed that the damages awarded were unjustified and that Murehwa had failed to mitigate his losses.

However, the court dismissed these arguments, finding that the arbitrator’s calculations were supported by documentary evidence, including pay slips and contractual entitlements.

On the issue of mitigation, Justice Makwande noted that Murehwa had made reasonable efforts to secure alternative employment and had even ventured into farming, albeit unsuccessfully.

“The respondent did not sit on his laurels but attempted to look for alternative employment and also ventured into farming. Both attempts failed,” the court observed.

The court also rejected Maximind’s claim that the arbitrator had improperly exercised discretion in awarding damages.

Justice Makwande said the arbitrator had correctly applied legal principles, including the calculation of damages based on the unexpired period of the fixed-term contract.

“The amounts claimed by the respondent were duly justified by the pay slips and documentary evidence that formed part of the record,” the judge said.

Ultimately, the court upheld the total award of US$56 835,84, which included compensation for net salaries, fuel, airtime, medical aid, and pension contributions.It also ordered Maximind to pay Murehwa’s legal costs on an ordinary scale.

The ruling underscores the significance of the Labour Act’s amendments in curbing unilateral terminations and reinforces the principle that contractual termination clauses must align with statutory requirements.

For employers, the judgment serves as a stark reminder that termination agreements must be contemporaneous, explicit, and mutually agreed upon to withstand legal scrutiny.

Advocate Caleb Mucheche of CM and Partners Law Chambers represented Murehwa, while Mr Jacob Tuso of Tavenhave and Machingura Legal Practitioners acted for Maxmind Investment.