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[2022] ZAECMHC 24
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Ngcangula v Mhlontlo Local Municipality and Others; Nqekeho v Mhlontlo Local Municipality and Others (1343/2021;1466/2021) [2022] ZAECMHC 24; (2022) 43 ILJ 2398 (ECM); [2022] 12 BLLR 1177 (ECM) (16 August 2022)
IN
THE HIGH COURT OF SOUTH AFRICA
[EASTERN
CAPE LOCAL DIVISION, MTHATHA]
[Not
reportable]
CASE
NO: 1343/2021
Heard
on: 19/05/2022
Delivered
on: 16/08/2022
In
the matter between:
GCINIKHAYA
NGCANGULA
Applicant
and
MHLONTLO
LOCAL MUNICIPALITY
First Respondent
THE
SPEAKER: MHLONLTO LOCAL MUNICIPALITY
Second Respondent
THE
MUNICIPAL
MANAGER
Third Respondent
WITH
WHICH IS CONSOLIDATED:
CASE
NO: 1466/2021
In
the matter between:
MALIBONGWE
NQEKEHO
Applicant
and
MHLONTLO
LOCAL MUNICIPALITY
First Respondent
THE
SPEAKER: MHLONTLO LOCAL MUNICIPALITY
Second Respondent
THE
MUNICIPAL
MANAGER
Third Respondent
JUDGMENT
NHLANGULELA
DJP
[1]
In these consolidated proceedings brought by Mr Ngcangule and Mr
Nqeketho, the applicants,
a relief is sought declaring as unlawful
the decision made by Mhlontlo Local Municipality, the respondent,
reducing the basic salaries
and essential use allowances of the
applicants. The applicants seek a further relief that, in the event
that the declarator is
granted, their remuneration be re-instated.
[2]
The common cause facts are the following: Both applicants are the
employees of the
Municipality, Mr Ngcangula holding the position of
the Chief Traffic Officer and Mr Nqeketho holding the position of
Deputy Director:
Local Economic Development. They have been so
employed since 01 November 2013 and 01 April 2014 respectively. Their
employment
is contractual in nature, which contracts were concluded
in writing and on the dates as aforementioned. The applicants were
paid
a basic salary and essential use allowance (car allowance) at
R65 068,62 and R22 774,02 per month respectively. On 25
January 2020 the applicants’ remuneration was reduced to
R61 453,70 (basic salary) and R21 508,80 (car allowance)
respectively and has remained at that amount since then. The decision
of the Municipality to reduce the remuneration of the applicants
was
communicated by means of letters dated 24 November 2020.
[3]
It is apparent from the letters as aforementioned that the
communication was made
pursuant to the Municipal Council Resolution
Number 01-18/19 dated 25 March 2019. In terms of those letters the
reduction of applicants’
remuneration is described as
overpayment which is calculated at the rate of 2.5% increment on the
salary notch and the back-pay
made by the Municipality to the
applicants from March 2019 to December 2020. During the interaction
between the parties that was
triggered by a letter of demand for a
refund of overpayment, the Municipality stated that the decision to
recover monies with which
the applicants were overpaid was lawful.
The applicants deny those allegations. In amplification of this claim
the Municipality
stated on affidavit that the applicants were not
entitled to the 2,5% notch increment because they had not been put to
a salary
scale and they had not reached a top salary scale. The
Municipality stated further that to qualify for the notch increment
the
applicants had to undergo job evaluation in terms of the TASK JOB
EVALUATION program applicable to the Municipality which, though
it
has commenced to be applied over the entire workforce, it is not yet
complete. As an alternative to this program, the Municipality
stated
that the applicants may be entitled to the notch increment upon the
conclusion of the wage curve collective agreement between
the SALGBC
(the Bargaining Council) and the SALGA.
[4]
The nub of the applicant’s case as stated on affidavit is that
they were not
given a hearing at any time before the deduction begun,
there was no legal basis for the reduction of their remuneration and
that
any loss allegedly suffered by the Municipality was through no
fault on their part. On these bases they contended that they have
no
legal obligation to refund any portion of their remuneration because
the reduction of their remuneration was a breach of their
contractual
rights that are protected in terms of the provisions of ss 34 (1) and
34 (2) of the Basic Conditions of Employment
Act 75 of 1997 (the
BCEA), which read as follows:
“
(1)
An employer may not make any deduction from an employee’s
remuneration unless –
(a)
subject to subsection
(2), the employee in writing agrees to the deduction in respect of a
debt specified in the agreement; or
(b)
the deduction is
permitted in terms of a law, collective agreement, court order or
arbitration award.
(2) A
deduction in terms of subsection 1 (a) may be made to reimburse an
employer for loss or damage only if
–
(a)
the loss or damage
occurred in the course of employment and was due to the fault of the
employee;
(b)
the employer has
followed a fair procedure and has given the employee a reasonable
opportunity to show why the deductions should
not be made;
(c)
the total amount of the
debt does not exceed the actual amount of the loss or damage; and
(d)
the total deductions
from the employee’s remuneration in terms of this subsection do
no exceed on-quarter of the employee’s
remuneration in money.
[5]
On a closer examination of the facts, it seems to me that there is no
real dispute
of fact in this matter. Nevertheless, the common cause
facts need not be dispositive of the relief sought as the applicants
have
asked the court to make a declaration of contractual rights. In
substance, the case advanced on behalf of the Municipality is that
although it granted the 2.5% notch increases since 20 February 2019,
the current salaries and car allowances of the applicants
should not
have been increased by reason that they did not meet the conditions
prescribed under the grant. For these reasons the
Municipality
asserts that the reduction of the remuneration of the applicants does
not constitute a deduction as contemplated in
ss 34 (1) and 34 (2) of
the BCEA. But the Municipality does not place reliance on any
provision of law, agreement or a court order.
[6]
Ms Haskins
, counsel for the respondents raised numerous
special defences to the applicant’s claims, which are the
following:
(i)
The High Court lacks
jurisdiction;
(ii)
Contractual entitlement
has not been pleaded by the applicants;
(iii)
The applicant’s
claim for a declaratory is not competent in that they must have
sought a remedy of review against the decision
of the Municipality
reducing the remuneration;
(iv)
The applicant’s
claim for re-instatement of their remuneration should have been
brought under the remedy of an interdict,
the requisites of which
have not been pleaded.
[7]
I first deal with the objection that this Court lacks jurisdiction to
hear the application. This objection implicates the provisions
of ss
77 (1) and (3) of the BCEA, which read:
“
(1)
Subject to the Constitution and the jurisdiction of the Labour Appeal
Court and except where this Act provides
otherwise, the Labour Court
has exclusive jurisdiction in respect of all matters of this Act,
(2)
…
(3)
The Labour Court has concurrent jurisdiction with the civil courts to
hear and determine any matter
concerning a contract of employment,
irrespective of whether any basic condition of employment constitutes
a terms of this Act.”
[8]
Ms Haskins
submitted
that the Labour Court has exclusive jurisdiction as envisaged in s 77
(1) of the BCEA for the reason that the applicants’
pleadings
do not invoke the jurisdiction of the High Court. Reliance was made
on the cases of
The
National Prosecuting Authority v Public Servants Association
on
behalf of
Meintjies
And Others; Minister of Justice & Correctional Services &
Another v Public Servants Association
on
behalf of
Meintjies
& Others
2022
(1) SA 409
(SCA) (17 November 2021) at para 58, and
Gcaba
v Minister of Safety & Security And Others
2010
(1) SA 238
(CC) at para 75. The legal principle that is enunciated in
these cases, which is trite, is that the High Court will be seized
with
jurisdiction to determine a labour dispute if it concerns a
breach of contractual right(s) that has been specifically pleaded on
affidavit. It will help to quote the statements made in
The
National Prosecuting Authority v Public Servants Association obo
Meintjies and Others; The Minister of Justice and Correctional
Services and Director-General: Department of Justice and
Constitutional Development v Public Servants Association obo
Meintjies
and Others,
which
read as follows at para 58:
“
In
Gcaba
v Minister of Safety and Security
[2009]
ZACC 26
;
2010
(1) SA 238
(CC);
2010
(1) BCLR 35
(CC),
the Constitutional Court made it clear that an assessment of
jurisdiction must be based on an applicant’s pleadings.
At para
75, the following was said:
‘
.
. . In the event of the Court’s jurisdiction being challenged .
. . the applicant’s pleadings are the determining
factor. They
contain the legal basis of the claim under which the applicant seeks
to invoke the court’s competence. While
the pleadings –
including in motion proceedings, not only the formal terminology of
the notice of motion, but also the contents
of the supporting
affidavits – must be interpreted to establish what the legal
basis of the applicant’s claim is, it
is not for the court to
say that the facts asserted by the applicant would also sustain
another claim, cognisable only in another
court. If however the
pleadings, properly interpreted, establish that the applicant is
asserting a claim under the LRA, one that
is to be determined
exclusively by the Labour Court, the High Court would lack
jurisdiction. . .’”
[9]
On the other hand it was submitted by
Mr Grogan
, for the
applicants, relying on s 77 (3) of the BCEA, that the applicants’
contracts of employment, as well as the breach
thereof, are set out
on the founding affidavit. Further, it was submitted that disputes
concerning deductions from employees’
remuneration have already
been entertained by the High Courts, such as in
Cagwe And Others v
MEC for the Department of Social Development – Eastern Cape
,
Case No. 436/2020 dated 08/09/2020 (per Lowe J).
Gqithekhaya v
Amatole District Municipality,
Case No. EL 601/2021 dated
27/05/2021 (per Hartle J); and
Ngalwana v MEC for the Department
of Rural Development And Agrarian Reform
, Case No. 822/2018 dated
19/11/2021 (per Smith J). I am in agreement with these submissions.
[10]
In these proceedings the founding affidavits deposed to by the
applicants show that there were
contracts of employment concluded
between the applicants and the Municipality respectively, the
material terms of which were that
a basic salary and allowances would
be paid by the Municipality for services rendered by the applicants.
In February 2019 the Municipality
effected the 2.5% notch increment
on salaries and allowances by monthly payments until on 25 January
2020 when the notch increment
was taken away retrospectively to
February 2019. As stated in a plethora of cases dealing with
contractual breaches involving the
employer and its employees it
often happens that various causes of action emerge out of a single
breach regardless of the fact
that the same breach attracts the
jurisdiction of the Labour Court. One of those cases is
Lewarne v
Fochem International (Pty) Ltd
[2019] ZASCA 114
where the
following was said at para 8:
“
Generally
in instances where the dispute relates to, is linked to, or is
connected with an employment contract, s 77(3) of the BCEA
which
confers concurrent jurisdiction on the civil courts and the Labour
Courts applies. In the present matter, the appellant’s
action
arose
out of and related to the contract of employment between her and the
respondent. It
was
for payment of money due to her in terms of her employment
contract.
It
was this action that was before the court and on which it had to
decide whether it had the necessary jurisdiction
.
It
was thus not necessary for the court to place any reliance on the
appellant’s reference, in her founding affidavit, to
the
respondent’s professed reasons for withholding her
remuneration, and the fact that that was in contravention of
s
34 of the BCEA
.
These allegations were simply a summary of relevant facts but they
did not alter the essential nature of the appellant’s
action.
They amounted to what this court termed, in
Fedlife
Assurance Ltd v Wolfaardt
[2002
(1) SA 49
(SCA) para 21] as ‘mere surplusage.”
[11]
Further, in the case of
Cagwe, supra,
where the employees’
salaries in
lieu
of an alleged absenteeism were reduced, the
High Court entertained an application for interdict brought by the
employees to stop
the deductions on the basis that they offended the
provisions of s 34 (1) of the BCEA. I see no reason why the approach
in
Cagwe
should not apply in these proceedings
.
[12]
The submission that contractual entitlement to the 2.5% notch
increment and the breach thereof,
were not pleaded by the applicants
is not correct. The contractual breaches pleaded by the applicants
read together with the evidence
show that 2.5% increment was applied
to all the employees of the Municipality and actually paid the
increased remuneration over
a considerable period of time, which in
my view amounts to the acceptance by conduct on the part of the
Municipality that payments
were lawful. I also find comfort in
regarding the payments as lawful because there was no legislation
against the contractual agreement
between parties that prevented the
benefits of the notch increment. The unilateral change of mind to
stop the payment and recover
same as overpayments retrospectively
does not justify the description of those payments as illegal.
Further, the allegation that
the applicants did not qualify for
payments received is not proved if regard is had to the admission by
the Municipality that it
has not been able to complete the TASK
grading system which commenced in 2012, with the result that it is
not for the fault of
the applicants that they were not placed on a
grade. In the final analysis, the fact of the matter is that the
deductions were
effected without regard to the applicants’
right to be heard as envisaged in s 34 (2)
(b)
of BCEA.
[13]
The submission that a declaratory order should have been pursued
under review proceedings incorporating
an interdict cannot be
sustained because the present application for a declaratory relief,
as a cause of action, is in and of itself
a competent remedy. It
might well be good to re-iterate the point that the declaratory
relief has been properly pleaded, namely
that the applicants have a
right to be paid an agreed salary and car allowance; and the
Municipality had no right to unilaterally
reduce the remuneration of
the applicants.
[14]
In summary, this Court is seized with jurisdiction to determine the
dispute between the parties
for the reason that the essential nature
of the applicants’ claims is an unlawful breach of employment
contracts. The fact
that the Labour Court has concurrent jurisdiction
together with this Court does not deprive this Court of competence to
determine
the relief sought. The residual legal objections advanced
on behalf of the respondents; which have been discussed above, do not
have a basis. Finally, all the legal objections raised to thwart the
validity of the applicants’ claims fall to be dismissed.
[15]
It remains for the Court to determine the merits of the applicants’
claims. In so far as
the evidence, already evaluated, proves that
there are subsisting contracts of employment between the applicants
and the Municipality
entitling them to payment of salary and car
allowance; the Municipality effected unilateral reduction of the
applicants’
remuneration. The defence that the continued
payment of remuneration is against the law cannot be sustained. The
Municipality is
not authorised by any law to reduce applicants’
remuneration without due process of law having been followed. The
fact that
it was through no fault on the part of the applicants that
the TASK grading system has not been implemented by the Municipality
the applicants does not disentitle the applicants from enjoying the
benefits of the 2.5% notch increment.
Mr Grogan
referred,
correctly so, to the case of
Public Servants Association obo Ubogu
v Head of the Department of Health, Gauteng And Others
(2018) 39
ILJ 337 (CC) in which the Constitutional Court dealt with
circumstances that are similar to those obtaining in the present
proceedings. In that case the following was stated appositely at para
66:
“
The
deductions in terms of that provision constitute unfettered self-help
– the taking of the law by the state into its own
hands and
enabling it to be the judge in its own cause in violation of section
1
(c)
of the Constitution.”
[16]
The applicants have succeeded to make a case for the grant of a
declaratory order and, as a consequence,
the re-instatement of the
terms and conditions of the employment contract in the terms that are
not different from those that obtained
prior to the deductions of the
applicants’ remuneration. The costs must follow the result. But
more must be said about the
issue of costs. There was no legal reason
for the Municipality to reduce the remuneration of the applicants.
For that reason, the
inevitable conclusion to be drawn from such
conduct is that the respondents resorted to taking the law into their
own hands. In
the meantime, the applicants were put into the position
of having to find resources,
albeit
at the time when they were
being financially drained by the unlawful reduction of their
remuneration, to seek protection of the
courts. Having been put out
of pocket unnecessarily so, an ordinary costs order cannot
meaningfully mitigate the litigation costs
that they have incurred.
Since the applicants have at the outset of these proceedings asked
for an order of costs on attorney and
client scale, the respondents
would hardly be heard to complain that they are ambushed by a costs
order of a higher scale than
the ordinary party and party scale
costs.
[17]
In the result t
he
following order shall issue:
1.
The decision of
the Respondents that the applicants were over-paid is unlawfully and
of no force and effect;
2.
The Respondents’
decision to reduce the Applicants’ basic salaries and essential
use allowances from R65 068,62
to R61 453,70; and
R22 774,02 to R21 508,80 respectively per month is
unlawful;
3.
The Respondents
are directed to re-instate the applicants’ basic salary and
essential use allowance to R65 068,62 and
R22 774,02
respectively immediately, and with retrospective effect to the date
the reduction was effected;
4.
The Respondents
to pay the costs of this application jointly and severally on the
attorney-client scale, the one paying, and the
others being absolved
from liability.
Z
M NHLANGULELA
DEPUTY
JUDGE PRESIDENT OF THE HIGH COURT, MTHATHA
Counsel
for the applicants:
Adv. J. G. Grogan
Instructed
by
: Ntshinga Attorneys Inc
MTHATHA.
c/o W. Mdlangazi
Attorneys
EAST LONDON.
Counsel
for the Respondents:
Adv. L. Haskins
Instructed
by
: Mvuzo Notyesi
Incorporated
MTHATHA.