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[2021] ZAECELLC 24
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Vumazonke v Municipal Manager and Another (EL 595/2018) [2021] ZAECELLC 24 (15 December 2021)
NOT
REPORTABLE
IN THE HIGH COURT
OF SOUTH AFRICA
(EASTERN
LONDON CIRCUIT LOCAL DIVISION)
Case
No. EL 595/2018
In
the matter between:
ZOLILE
VUMAZONKE
Applicant
and
MUNICIPAL MANAGER
First Respondent
BUFFALO CITY
METROPOLITAN
MUNICIPALITY
Second Respondent
JUDGMENT
HARTLE
J
[1]
This
matter came before me on the trial roll.
[2]
The
applicant, an erstwhile legal advisor in the employ of the Buffalo
City Metropolitan Municipality, issued out an application
to compel
the respondents to pay certain leave benefits due to him as per his
contractual entitlement after his resignation from
the municipality
at the end of February 2018. He included a prayer for an
accounting of the amount after learning that what
was owed to him was
being withheld on the basis of a claim that certain monies were
instead owing by him to the second respondent
because he had
purportedly been overpaid whilst in the municipality’s employ.
[3]
The
respondents opposed the application. Although they admitted
that a nett sum of R26 423.10 was due to the applicant
as leave
pay, they justified their entitlement to have retained this amount
because he allegedly owed the second respondent an
amount of
R109 448.32 based on the overpayment to him during his tenure as
acting Head: Governance Compliance and Internal
Audit on incorrect
TASK Grade 18 instead of TASK Grade 17.
[4]
According
to the respondents they had sought to engage with the applicant in
order to recover the overpayment which had resulted
from being
remunerated on the incorrect TASK grade even before his resignation
and soon after his acting appointment had come to
an end, but to no
avail. The end result of these discussions is that he was not
prepared to agree to repay the amount back in monthly
instalments as
had been asked of him.
[5]
The
reason for this, so the applicant clarified in his replying
affidavit, is that from his point of view there had been no mistake
made in paying him on TASK Grade 18 during his acting stint because
the second respondent had especially contracted with him to
act on
this pay level, which offer he had accepted. Further, leaving
aside the issue of his contractual entitlement to be
paid on the
agreed pay grade, he submitted that the second respondents’
retention of his benefits, or set off of them against
the monies due
to him, could also not be brought within the ambit of the provisions
of section 34 (5) of the Basic Conditions of
Employment Act, No. 75
of 1997 (“BCEA”) especially since he had not agreed in
writing to any deductions from his remuneration
neither was there any
court order in place that might have authorized the set off, as it
were, against the leave pay due to him.
[6]
In
a late supplementary affidavit filed with the leave of the court, he
put up copies of correspondence and documentation which
ostensibly
confirms his appointment in the acting position of Head: Governance
Compliance and Internal Audit for the relevant period
on TASK Grade
18. A memorandum from the Acting City Manager to the Head of
Department: Corporate Services, which predates
his acting
appointment, authorizes him to act in the relevant capacity with
effect from 1 February 2016 until further notice and
recommends that
he be paid an acting allowance in the said position. It does
not specify the pay grade but in the letter
of appointment addressed
to him by the first respondent dated 6 February 2016 it is confirmed
that he is authorized to act “in
the capacity of Head:
Governance, Compliance and Internal Audit
on
Task Grade 18
with effect from 1 February 2016 until further notice”.
Other miscellaneous acting allowance forms showing payment
calculations similarly reflect the task grade level for the acting
allowance as “18”.
[7]
The
respondents contemporaneously with their answering affidavit filed a
counter application in which they pray for an order:
“
1.
That the respondent
(applicant
in
casu
)
be held liable
to the second applicant
(second
respondent in the main application)
for
the amount of R109 448.32;
2.
that the respondent be ordered to repay the amount of R109 448.32
to the
second applicant within thirty (30) days of the granting of
this order by the above Honourable Court.
3.
that the respondent pay the costs of this application.”
[8]
There
is no pertinent
causa
stated for the relief sought. The counterapplication was
supported by an affidavit of the first respondent which merely
asserted that during the applicant’s employment with the second
respondent he had acted in a position in respect of which
he was paid
on TASK Grade 18 instead of 17, which resulted in the overpayment.
(In the respondents’ answering affidavit
to the main
application the first respondent coincidentally attributes the
overpayment to “reason unbeknown to (him) and
the second
respondent”. Of further significance is that in
addressing the issue of the supposed overpayment of the
acting
allowance with the applicant in writing, in correspondence dated 11
October and 2 November 2017 respectively, the second
respondent only
recorded the conclusion that a mistake had occurred but failed to
elucidate what that mistake was.) Nothing
else is asserted in
the founding affidavit that would justify the remedy claimed by the
respondents that the applicant simply “be
held liable to the
second (respondent) for the amount of R109 448.32”,
although the apparent motivation for the counterapplication
was that
the first respondent, in his capacity as accounting officer, has a
“legislative and contractual duty to ensure that
public funds
are utilized in a proper manner”; that the municipality has
been “prejudiced by the failure of the (applicant)
to repay the
money,
which
he clearly owes in respect of the overpayment made to him during his
acting stint”
and that, if he is not ordered to repay the amount claimed as “an
overpayment” (as is claimed in the counterapplication)
the
second respondent will suffer irreparable harm.
[9]
The
first respondent repeats the allegation in the founding affidavit
that several attempts were made to elicit the applicant’s
acknowledgement of the overpayment (and error implicit therein)
without any success. Evidently, on the assumption that they
were entitled to have applied set off, they appear to have done
exactly that.
[1]
Reading
between the lines though they took no formal legal steps to vindicate
the second respondent’s manifestly compromised
position (on
their evidence), or to recover the alleged overpayment due to it,
over and above retaining the applicant’s leave
monies that were
due to him. The counterapplication before this court represents the
sum total of their earnest endeavours in this
respect and even in
this respect they appear confused as to the basis for their alleged
entitlement.
[10]
The
main and counterapplication were postponed on a number of occasions
for various reasons that are not relevant for present purposes.
On 7 February 2019 the court made an order referring the “issues”
for the hearing of oral evidence and reserved the
question of costs.
The terms of reference dictated by the court for the referral are
stated as follows:
“
1.
Oral evidence be heard on
1.1
whether
or not the applicant was correctly paid an acting allowance on TASK
Grade 18 during the period from 1 February 2016 to 31
May 2017;
[2]
1.2
if
it is found that he should have been paid on TASK Grade 17 and
accordingly overpaid by R109 448.32, whether the respondents
can
rely on the provisions of section 34 (5) of the Basic Conditions of
Employment Act, 1997 (Act No. 75 of 1997);
[3]
2.
the affidavits filed of record to date serve as pleadings;
3.
any deponent of the affidavits filed of record may appear personally
to testify;
4.
the application be and is hereby postponed
sine die
;
5.
the costs occasioned by the postponement are reserved.”
[11]
Later,
on 6 October 2020, the court ordered the parties to prepare a stated
case which order appears to have been based on a consensual
draft
order.
[12]
A
stated case was filed on 27 January 2021.
[13]
In
it, the parties record that they have reached agreement on all the
facts relevant for a determination of the application.
They
request that the application be determined
on
the basis of those agreed facts
.
[4]
[14]
The
simple background facts outlined in the stated case are as follows:
“
3.1
The Applicant Mr Zolile Vumazonke was employed by the 2
nd
Respondent in the Legal Services Division. He was employed as
the Legal Advisor. His Task Grade at the time relevant
to this
matter was Task Grade 14.
3.2
On or about February 2016, an offer was made by the Respondents to
applicant to be appointed
(in) an acting capacity as Head: Governance
and Internal Audit. The terms of the offer made to the
Applicant were as follows:
3.2.1 To
appoint the Applicant to act as the Head: Governance, Compliance and
Internal Audit Department;
3.2.2 The
acting period was from 01
st
February 2016 – 29
th
February 2016, with a possibility of extension thereof as and when it
is required and at the discretion of the 2
nd
Respondent;
3.2.3 The level
for acting allowance which was offered to Applicant at the time was
Task Grade 18;
3.3
The offer to act (in) the position as well as the proposed terms of
acting in the position
was duly accepted by the Applicant.
3.4
The acting appointment, as well as the level of acting allowance was
also confirmed by the
Acting Municipal Manager in a memorandum
addressed to the Applicant dated 20
th
February 2016.
3.5
The applicant duly acted (in) the position as per agreed terms.
He acted from the
01
st
February 2016 until 31
st
May 2017, his contract of acting in the position having been extended
in writing by the 2
nd
Respondent periodically.
3.6
On the 11
th
October 2017, the Applicant was notified by
the Respondents that he has been overpaid by the acting allowance.
The Respondents
stated that according to the payroll system records,
he erroneously was paid an acting allowance on Task Grade 18, instead
of Task
Grade 17 and that this has resulted in the overpayment in the
sum of R109 448.32 on the acting allowance.
3.7
The Applicant has disputed any indebtedness towards the 2
nd
Respondent. The applicant has refused to repay the 2
nd
Respondent, on the basis that the acting allowance which he had
received from the 2
nd
Respondent, was in terms of the offer that was made and accepted by
him. He duly acted (in) the position on this basis.
That
the contract of acting by the Applicant has now run its course.
3.8
The Respondents have opposed the Application and have filed a Counter
Application for an
order compelling the Applicant to repay the
difference between the salary which was overpaid, and the salary he
ought to have been
paid.
3.9
The Respondents allege that the Applicant was overpaid, in that he
was paid at a salary
scale, which exceeds the position which the
Applicant was employed in, whilst acting.”
[15]
The
terms of reference for the referral of the matter to the trial court
for the hearing of oral evidence envisaged, so I suppose,
that some
evidence would be forthcoming to justify a finding that the applicant
had “incorrectly” been paid an acting
allowance on TASK
Grade 18, but the respondents’ case sadly disappointed even
after the filing of the stated case.
At the end of the process
nothing was offered by the respondents at all regarding the alleged
basis on which they hoped for a declarator
to be made that an over or
error in payment had been made to the applicant except the reference
in paragraph 3.9 of the stated
case above to the effect that the
scale on which the applicant had been paid exceeded the position in
which he was employed while
acting. This is however nothing more than
an oblique allegation in the stated case that was not given any flesh
in the respondents’
founding affidavit filed in support of the
counterapplication. The respondents failed to adduce any
evidence to refute the
applicant’s allegation that the parties
had deliberately contracted on the basis contended for by the
applicant, namely that
he had been offered the opportunity to act in
the position of Head: Governance and Internal Audit on TASK Grade
18. No reason
whatsoever is suggested why the offer made to the
applicant on its terms should not have been regarded as a lawful one,
neither
was a basis laid for the offer to be reviewed and set aside
under the principle of legality.
[5]
[16]
In
the stated case under the heading “Respondent’s
contentions” the respondents for the first time suggested that
the reason for the error is that the municipality’s organogram
does not have a TASK Grade 18 for the acting position in which
the
applicant acted. This fact on its own (even assumed to be
correct) does not really assist the respondents’ case
given the
applicant’s unchallenged assertion that the parties
deliberately intended to settle upon an acting allowance founded
on
TASK Grade 18.
[17]
The
proper approach to be adopted in matters where issues have been
referred for the hearing of oral evidence has been helpfully
stated
in Lekup Prop Co. No. 4 (Pty) Ltd v Wright
[6]
as
follows:
“
A
referral to trial is different to a referral to evidence on limited
issues. In the latter case, the affidavits stand as evidence
save to
the extent that they deal with dispute(s) of fact; and once the
dispute(s) have been resolved by oral evidence, the matter
is decided
on the basis of that finding together with the affidavit evidence
that is not in dispute.”
[18]
There
is after an examination of the evidence nothing really to advance the
respondents’ case that the appointment of the
applicant on TASK
Grade 18 was irregular or that the agreement for this reason was
constitutionally invalid.
[19]
Mr.
Malunga who appeared for the respondents conceded that the
respondents had “in-eloquently” (sic) pleaded their case
yet prevailed upon the court to come to the assistance of the second
respondent on the basis of the authority (Sic) provided for
in
section 34 (5) of the BCEA for them to have withheld the salary
benefits due to the applicant, on the basis that a factual premise
exists or existed for the invocation of this provision. He
submitted that this was a classical case where these provisions
should apply.
[20]
Before
testing this proposition, I point out that the parties were not even
on the same page concerning the supposed premise for
the respondents’
reliance on the provisions of section 34 (5) of the BCEA, if these
provisions are applicable at all.
[21]
This
is best demonstrated by the following excerpts from the transcript of
the arguments placed before the court:
“
MR
MALUNGA: … the respondents case is that the applicant, and I
thought this was common cause between the parties, the applicant
was
offered a position at task grade 18. And the position at which
the applicant was acting in, M'Lady, is task grade 17.
The
organogram of the respondent does not have a task grade 18 for that
position and the only party who has a task grade 18 at
the respondent
is the municipal manager. Then with that background, M'Lady, it
is the respondent’s contention that
the very offer itself of
task grade 18 is the error which resulted in the erroneous payment or
overpayment of the salary.
And M'Lady, this was previously done
by an acting municipal manger, as is evident from all the annexures
given by the applicant.”
[22]
Reminded
by the court that there had been no antecedent enquiry into the
supposed illegality in the contract (from which to deduce
that there
had been an incorrect payment in consequence) Mr. Malunga evidently
skipped ahead to the assumption that the payments
that had been made
to the applicant on TASK grade 18 were erroneous:
“
MR
MALUNGA
:
But I thought this is the common cause – if I may just quickly
take – yes, M'Lady. I cleared that up.
It is common
cause between the parties that the position in which the party was
acting in is in fact task grade 17 and not 18.
And the only
other task grade 18 within the organogram of the municipality is the
municipal manager. That is common cause.
So that is then
the error upon which the respondent relies on, M'Lady. And if
Her Ladyship is then with the respondent that
that error itself of
the task grade created the overpayment then 35 or 34(5) would then be
the provision which the respondent relies
on.
COURT
:
But can I just ask you to backup and tell me was there in fact an
overpayment or is this all still just …[intervenes]
MR
MALUNGA
:
No, no, no, there indeed was an overpayment in that – I think,
M'Lady, to best explain this, the position which the
applicant acted
in, it is common cause it is task grade 17 and it is common cause
that the only party that is task grade 18 is
the municipal manager.
Now having been offered task grade 18 as opposed to 17 that is what
created the overpayment, M'Lady.
Because the position ought to
have been at 17 and the payment ought to have been at 17
…[indistinct] was at 18. But
if Her Ladyship is not with
me there, then I think everything else then crumbles and falls to the
wayside. If her Ladyship
is with me that that initial offer
created the error then 34(5) is the administrative error that created
the payment.”
[23]
Asked
how the error contended for by the respondents (that is having been
made the offer on the wrong TASK grade level) ought to
be corrected,
he insisted that section 34 (5) of the BCEA would be that remedy.
Put to him that the invocation of the section
would on its own also
require some factual substratum that brings it within the ambit of
the respondents’ claimed entitlement
to have withheld the
monies due to the applicant or applied a set off (assuming a scenario
in either subsection (1) (a) or (b)
to also exist), he went on to
submit that:
“…
it
would be the respondent’s contention on that issue that upon
the parties agreeing that that position does not hold task
grade 18
the parties then are ad idem that the applicant ought to have been
paid at 17 as opposed to 18. And that is the
administrative
error that created the overpayment.”
[24]
On
the basis of his belief that the applicant’s consent would not
have been necessary before effecting the deduction (or applying
a set
off as it were),
[7]
he suggested
that the issue was “quite crisp”:
“
M'Lady,
it is quite a – this matter is quite crisp. If Her
Ladyship finds or is with the respondent finds that the error
in the
offer for task grade 18 constitutes an error and so as to kick in 35
– 34(5) then the respondent ought to succeed.
But if Her
Ladyship finds that that error of the offer of task grade 18 is
not one that constitutes the – the error
as envisaged in 35 –
34(5) then the applicant ought to succeed, M'Lady. It is as
simple as that.
(The)
Respondent’s case is that there is no such position. The
offer to the applicant created that error and as such
now the
municipal manager who now …[indistinct] place as the
accounting officer noted that error and having noted that error
then
brought this counter application, M'Lady. And if Her Ladyship
is with the applicant that there is no such error, or
the task grade
18 does not constitute an error Her Ladyship could find for that.”
[25]
Mr.
Nduli who appeared for the applicant reminded the court that in the
applicant’s view, there was nothing wrong with the
calculation. Instead, it had been within the terms of the
contract. He appeared to concede however that what seems
to
have been “wrong” was the actual offer made to the
applicant, which the latter had accepted, but in this respect,
he
contended that it was up to the second respondent, if it was so
minded, to have sought a judicial self-review of the appointment
before a basis could exist to justify the deduction from his
outstanding benefits.
[8]
[26]
Indeed,
he went further in explaining why the applicant submitted that the
respondents could not succeed in relying on the provisions
of section
34 (5) of the BCEA, even assuming benevolently in their favour that a
basis (which they had not pertinently alluded
to in their papers)
could be extrapolated from the convenient facts agreed between the
parties, as follows:
“
Just
one last issue that I would want to make in respect of the cases that
we have been referred to. M’Lady, there is
one threat on
those particular cases, the fact that the parties have had an
agreement and in the calculation of the remuneration
to be made in
pursuant of that particular agreement, that is where the deviation
had actually happened. And this is not what
we are actually
dealing with where a deviation would be at the time when the
calculation is made. The calculation, there
is nothing wrong
with it. The calculation is quite correct. The
calculation is in terms of the contract. What
seems to have
been wrong was an offer that was made by the applicant – by the
respondents to the applicant. And all
that the applicant is
actually seeking is for the Court to return and uphold the sanctity
of the contract between the parties.
If the
Court just to bear with me. The other issue that my client has
actually instructed me to admit is the fact that yes,
it is indeed
correct that task grade 18 was not available for this particular
position, it was task grade 17. However, it
is not that task
grade 18 does not obtain in the – in the municipality
organogram, it actually does obtain. Thank you.
COURT
:
Sorry, Mr Nduli, can I ask you just to clarify that last point.
So you are – you are in agreement that your
client should have
been paid on task grade 17 or that was not possible?
MR
NDULI
:
I am sorry, M'Lady?
COURT
:
Are you – are you admitting or conceding rather that your
client should have been reimbursed on task grade level 17
and not 18?
MR
NDULI
:
No.
COURT
:
Not.
MR
NDULI
:
We are not conceding on that, we are actually saying that he was made
an offer and he was actually paid in terms of that
particular offer.
In fact to put the same set of facts the other way around would be to
say had the municipality in fact
paid him on task grade 17 they would
have been in breach of the contract that they entered into with him.
COURT
:
Okay.
MR
NDULI
:
Regardless of the fact that they would be doing correct thing in
terms of the organogram of the municipality. But
in terms of
the contract of offer and agreement that had – offer and
acceptance that had happened between the parties it
would have been
incorrect, they would have been in breach of the contract had they
paid him on task grade 17.”
[27]
It
is apparent from the foregoing submissions that the respondents
misconceived the nature of the mistake and what was required
to be
addressed in the evidence antecedently before it could even be
suggested that there had been an error of the kind envisaged
by the
section 34 (5) (a) of the BCEA. The respondents also appear to have
missed the fact that the only way to get to that point
(of justifying
the premise of an erroneous overpayment as envisaged in section 34
(5) (a)), was for the respondents to have first
sought an appropriate
declarator in the counterapplication reviewing and setting aside the
Municipality’s agreement with
the applicant on the basis that
the offer to have paid him on TASK grade 18 was irregular or legally
invalid. The applicant’s
stance though was that the parties
deliberately contracted on the basis that he would be paid on TASK
grade 18. The respondents
appeared to be in agreement with him
in this respect but reading between the lines their standpoint is
that an administrative error
was perpetrated when the offer was made
to the applicant. This stance is unfortunately not
pertinently pleaded in the
counterclaim. Evidently the
applicant’s concession that the offer to him to pay him in the
acting position on a pay
grade that may not have been applicable or
administratively correct was at all times conditional on his view
that the respondents
ought first to have applied to review and set
aside his appointment on TASK Grade 18 before they could legitimately
call on him
to refund the alleged overpayment.
[28]
But
even assuming both errors (in appointing him on the wrong grade and
then the error in consequence by the overpayment), I am
not convinced
that section 34 of the BCEA provides the panacea in the respondents’
contemplation to have withheld the applicant’s
leave benefits
that were due to him when they fell to be paid.
[29]
Section
34 of the BCEA provides as follows:
“
34
Deductions and other
acts concerning remuneration
(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 required or 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 not exceed one-quarter of the
employee's
remuneration in money.
(3)
A deduction in terms of subsection (1) (a) in respect of any goods
purchased by the employee must specify the nature and quantity
of the
goods.
(4)
An employer who deducts an amount from an employee's remuneration in
terms of subsection (1) for payment to another person must
pay the
amount to the person in accordance with the time period and other
requirements specified in the agreement, law, court order
or
arbitration award.
(5)
An employer may not require or permit an employee to –
(a)
repay any remuneration except for overpayments resulting from an
error in calculating the employee’s remuneration.
(b) acknowledge receipt of an
amount greater than the remuneration actually received.”
[30]
The
BCEA is concerned with fair labour practices. Its object is stated as
follows:
“
To
give effect to the right to fair labour practices referred to
in
section
23 (1)
of
the
Constitution
by
establishing and making provision for the regulation
of basic conditions of employment; and thereby
to
comply with the obligations of the Republic as a member state of the
International Labour Organisation; and to provide for matters
connected therewith..”
[31]
Section
34 promotes fair labour practices by regulating deductions from an
employee’s remuneration which he/she would ordinarily
be
entitled to be paid together with other benefits whilst in service
and when his/her earnings and benefits are due. (In
this
instance the leave monies claimed by the applicant fell to be paid
within seven days of the applicant’s resignation
from the
Municipality.)
[9]
[32]
The
section underpins the employee’s entitlement to receive his
full remuneration for which he has worked. It achieves
the
objective of fairness by setting forth protection and by rendering
illegal any deductions against his earnings and benefits
unless he
has agreed to it in respect of a specified debt, or unless deductions
are required or permitted in terms of a law, collective
agreement,
court order or arbitration award.
[10]
(An example of a permissible deduction given in
Workplace
Law
by John Grogan would be one for the payment of an employee’s
unions dues in terms of section 13 of the Labour Relations Act.)
[11]
[33]
It
can fairly be stated that the applicant did not agree to any
deductions
in
casu
.
The questions remains then whether the provisions of subsection (1)
(b) carry the day. Certainly there was no court
order in place
that sanctioned the deduction at the time it was made.
[34]
Deductions
may be effected to reimburse an employee for loss or damage caused by
the employee in the course of their employment,
but only, apparently,
with the employee’s consent and under the strict conditions
outlined in subsection 2 (b)– (d),
evidently to ensure
fairness.
[12]
That situation
is certainly not applicable here either.
[35]
Section
34 (5) (a) does not on its own permit a unilateral deduction unless
in the two instances made provision for in subsection
(1), even if
brought within the exception contemplated in subsection (5) (a).
In my view it merely establishes the premise
that an employee cannot
expect the same protection against deductions where he has been
overpaid due to an error in calculating
his remuneration. It
follows logically that if there has been no error in calculating
remuneration due to him, he cannot
be required or permitted to repay
any amounts paid to him as remuneration as that would violate the
protection afforded to him
by the section. He is entitled to his
unadulterated remuneration. A different situation pertains though if
the exception referred
to in subsection (5) (a) is established on the
factual premise. A historical mistake in calculating his
remuneration, which I believe
may notionally arise even where he was
thought to have been on a higher level and paid in excess of what the
actual position warrants,
may ground a fair request to repay the
alleged overpayment previously made to him.
[36]
But
the section does not, as Mr. Malunga suggests, provide a
causa
in itself or a remedy to recover the alleged overpayment. If the
employee does not agree as is provided for in subsection (1) (a)
to
repay the amount paid to him in error, then the next step is for the
employer to recover the alleged overpayment in legal proceedings
as
is provided for in subsection (1) (b). For the moment leaving aside
what I find in respect of the counterapplication, there
would have
been no legal justification for the second respondent to have
retained the leave benefits due to the applicant when
they fell due
to him, or to have applied set off. It was simply put
ultra
vires
the protection afforded to the applicant by the section.
The reason why that is, is because the deduction was arbitrarily
made. It was, firstly, not sanctioned by the applicant’s
consent, which consent appears to be prospectively required
before
such a deduction can be made. The applicant had made it
abundantly plain that he was not prepared to agree that any
mistake
had been made at all. Secondly, there was no other law,
collective agreement, arbitration award or court order in
place at
the time that permitted the deduction. To the contrary there remains
a dispute between the parties concerning whether
there was any
overpayment at all. It is that dispute that he was entitled to the
benefit of a hearing in respect of (with a judicial
pronouncement or
award arising therefrom in the second respondent’s favour)
before the respondents could claim to have been
acting within the
prescripts of section 34 (1) by holding over, withholding, or
applying set off.
[37]
In
Public Servants
Association
of South Africa obo Ubogu v Head of the Department of Health, Gauteng
and Others
[13]
the
Constitutional Court confirmed
that
the provisions of subsections (1) and (5) of section 34 of the BCEA
do not authorize arbitrary deductions.
[38]
The
Court had reason in confirmation proceedings before it to refer to
the provisions of section 34 of the BCEA as providing a more
constitutionally justifiable alternative to the provisions of section
38 (2)(b)(i) of the Public Service Act, No. 103 of 1994 (“PSA”)
which (before the court’s confirmation of the labour court’s
order declaring the section unconstitutional) allowed
the State to
recover monies wrongly paid to an employee out of state coffers
without recourse to a court of law.
[39]
In
holding up the provisions of section 34 (1) of the BCEA in comparison
to section 38 (2)(b)(i) of the PSA, the court stated in
this regard
that:
“
There
can be no doubt that the recovery of monies overpaid by the state
engages multi-faceted interests. Section 34(1) of the BCEA
may be a
point of reference when the defect in the impugned legislation is
remedied.
This
section prohibits an employer from making deductions from an
employee’s remuneration unless by agreement or unless the
deduction is required or permitted in terms of a law or collective
agreement or court order or arbitration award. It bears mentioning
that section 34(5) read with section 34(1) of the BCEA does not
authorise arbitrary deductions.
”
[14]
(Emphasis
added)
[40]
Against
this understanding of the impact of section 34 of the BCEA, absent
the applicant’s consent to any deductions in respect
of the
alleged overpayment or any court order or arbitration award that
authorized the purported set off against his leave benefits
when they
fell due to be paid, the deduction against the applicant’s
remuneration
in
casu
can only have been arbitrary and therefore unlawful.
[41]
Mr.
Malunga sought to persuade this court that the respondents’
obligations as responsible stewards of public funds to recover
any
ostensible overpayments would constitute “the law” that
gave them the necessary authority to recover the alleged
overpayments, but I am not convinced that this proposition is a sound
one. Even the argument in PSA obo Ubogu that section
38
(2)(b)(i) of the PSA constituted “the law” for the
purposes of section 34 (1) (b) of the BCEA as a basis to have
exempted the impugned provision from the limitation imposed in terms
of section 34 (5) of the BCEA, did not fly. Further,
how can
that be “the law” where the applicant
in
casu
has disputed that the offer to him to act on TASK Grade 18 was a
mistake?
[15]
[42]
A
court, as was stated in PSA obo Ubogu, is expected to respect the
employee’s fair trial rights referred to in section 34
of the
Constitution which guarantees everyone the right to “have any
dispute that can be resolved by the application of law
decided in a
fair public hearing before a court”.
[43]
The
mischief to be guarded against, where the employee disputes liability
for the alleged overpayments in the first place, is that
his/her
entitlement to judicial redress to determine that dispute cannot be
compromised by a perceived mechanism for recovery,
even one that
undergirds the second respondent’s general obligations to guard
public funds.
[44]
The
significance of the fair trial right was at the heart of the court’s
reasoning in PSA obo Ubogu for confirming the declaration
of the
invalidity of section 38 (2) (b) (i) of the PSA as follows:
“
[61]
The foundational values of the Constitution include the supremacy of
the Constitution and the rule of law.
This supremacy connotes
that “law or conduct inconsistent with [the Constitution] is
invalid, and the obligations imposed
by it must be fulfilled.”
[62]
In any event, to the extent that it is necessary to deal with the
limitation of the right to
have judicial redress as self-help
denotes, section 34 of the Constitution guarantees everyone
the right “to have
any dispute that can be resolved by the
application of law decided in a fair public hearing before a court”.
This section
not only guarantees everyone the right to have access to
courts but also “constitutes public policy” and thus
“represents
those [legal convictions and] values that are held
most dear by the society.” As this Court has repeatedly
said before,
the right to a fair public hearing requires “procedures
. . . which, in any particular situation or set of circumstances,
are
right and just and fair”. Notably, none of the
respondents has suggested that the limitation of the right to have
judicial redress is reasonable and justifiable in an open and
democratic society based on human dignity, equality and freedom.
[63]
Regarding the principle of fair procedure, this Court remarked in De
Lange:
“
[a]t
heart, fair procedure is designed to prevent arbitrariness in the
outcome of the decision. The time-honoured principles that
no-one
shall be the judge in his or her own matter - and that the other side
should be heard [
audi
alteram partem
]
- aim toward eliminating the proscribed arbitrariness in a way that
gives content to the rule of law. They reach deep down into
the
adjudicating process, attempting to remove bias and ignorance from
it. . . .
Everyone
has the right to state his or her own case
,
not because his or her version is right, and must be accepted, but
because, in evaluating the cogency of any argument, the arbiter,
still a fallible human being, must be informed about the points of
view of both parties in order to stand any real chance of coming
up
with an objectively justifiable conclusion that is anything more than
chance. Absent these central and core notions, any procedure
that
touches in an enduring and far-reaching manner on a vital human
interest . . . points in the direction of a violation”.
[64]
Although section 38(2)(b)(i) is a statutory mechanism to ensure
recovery of monies wrongly paid
to an employee out of the state
coffers, the provision gives the state free rein to deduct whatever
amounts of money allegedly
wrongly paid to an employee without
recourse to a court of law. The alleged indebtedness here is
R675 092,56. The state
determined, arbitrarily, the amount of
the monthly instalments so as to avoid what it believed was the
necessity for Treasury approval
of an instalment plan over 12 months.
Given that the alleged indebtedness was R675 092,56, the monthly
deduction was in the
sum of about R56 257,72 from Ms Ubogu’s
gross salary of R62 581,42. It meant that, even at the rate of
her
downgraded gross salary of R40 584,85, Ms Ubogu could not
afford to pay the alleged debt.
[65]
The effect of the provision is to impose strict liability on an
employee. The deductions may
be made without the employee concerned
making representations about her liability and even her ability to
pay the instalments.
The impugned provision also impermissibly allows
an accounting officer unrestrained power to determine, unilaterally,
the instalments
without an agreement with an employee in terms of
which the overpayment may be liquidated.
[66]
Section 38(2)(b)(i) undermines a deeper principle underlying our
democratic order. The deductions
in terms of that provision
constitute an unfettered self-help − the taking of the law by
the state into its own hands and
enabling it to become the judge in
its own cause, in violation of section 1(c) of the
Constitution. Self-help, as this
Court held in
Chief Lesapo
,
“is inimical to a society in which the rule of law prevails, as
envisaged in section 1(c) of our Constitution.”
Although there may be circumstances when good reasons exist −
justifying self-help − this is however not a case
of that
kind.
[67]
By aiding self-help, the impugned provision allows the state to
undermine judicial process −
which requires disputes be
resolved by law as envisaged in section 34 of the
Constitution. This provision does not
only guarantee access to courts
but also safeguards the right to have a dispute resolved by the
application of law in a fair hearing
before an independent and
impartial tribunal or forum. It is not insignificant
that section 31 of the Act envisages
recovery of money, in
the case of unauthorised remuneration, “by way of legal
proceedings”. The Minister of Public Service
argues
that Ms Ubogu’s section 34 right was not violated
because that protection applies only to disputes that
are capable of
resolution by application of law. This contention is flawed. The
Minister does not explain why the existing dispute
was not capable of
resolution by the application of law in a fair public hearing before
a court. The mechanism through section
38(2)(b)(i), as currently
formulated, is clearly unfair. It promotes self-help and imposes
strict liability on an employee in respect
of overpayment
irrespective of whether the employee can afford the arbitrarily
determined instalments and was afforded an opportunity
for legal
redress.
[68]
On those bases, section 38(2)(b)(i) does not pass constitutional
muster.”
(Footnotes
omitted.)
[45]
The
court went further and denounced as flawed the contention that a
deduction under section 38 (2)(b)(i) of the PSA regulates the
common
law right of set off, as follows:
“
[69]
Before I deal with the remedy, it is necessary to address the
question whether the section 38(2)(b)(i) deductions
regulate set-off.
The appellants submit that section 38(2)(b)(i) regulates the
right of set-off, which is not self-help, arbitrary
or unfair. The
underlying premise to the argument that common law set-off does not
amount to a form of self-help, is not correct.
[70]
The doctrine of set-off is recognised under the common law. The
Appellate Division, as the
Supreme Court of Appeal was then
known, pointed out in
Schierhout
that:
“
When
two parties are mutually indebted to each other, both debts being
liquidated and fully due, then the doctrine of compensation
comes
into operation. The one debt extinguishes the other
pro
tanto
[only
to the extent of the debt] as effectually as if payment had been
made”.
[71]
In
Harris
, Rosenow J remarked that the “origin of
the principle appears rather to have been a common-sense method of
self-help”.
In my view, the mechanisms in the impugned
provision are not comparable to set-off under the common law. The
doctrine of set-off
does not operate
ex lege
(as a
matter of law). Besides, there are no mutual debts. Here, the
deductions in terms of section 38(2)(b)(i) are made from an
employee’s salary. The dispute regarding whether the
translation of her position as Clinical Manager: Medical affected her
starting package on the new position remains unresolved. Therefore,
the parties cannot be said to be mutually indebted to each
other. It
is arguable that the alleged debt can, in the circumstance, be said
to be fully due.
[72] The
doctrine cannot be invoked to defeat the employee’s claim in
relation to her salary. Particularly, where a dispute
surrounding the
translation of her position that, allegedly, did not affect her
starting package, had not been resolved by the
application of law in
a fair hearing before a court. At the risk of repetition, the
mechanism in the impugned provision constitutes
self-help. As the
Labour Appeal Court correctly observed in
Western
Cape Education Department
, the state has an obligation to
exercise its power under section 38(2)(b)(i) reasonably and with
regard to procedural fairness.
Indeed, the notions of fairness
and justice inform public policy − which takes into account the
necessity to do simple justice
between individuals. The
contention that a deduction under section 38(2)(b)(i) regulates the
right of set-off is, in the
circumstance, flawed. However, this
should not be understood to suggest that there can never be instances
in which the doctrine
of set-off, especially where there are mutual
debts in existence, may be invoked.”
(Footnotes
omitted.)
[46]
By
parity of reasoning the doctrine of self-help cannot be invoked
in
casu
to defeat the applicant’s claim to his leave benefits that were
admittedly due to him, that is not unless the parties real
dispute is
resolved in the respondents’ favour.
[47]
The
Constitutional Court’s suggestion in PSA obo Ubogu that the
provisions of section 34 of the BCEA might present a point
of
reference to remedy the unconstitutionality of section 38 (2)(b)(i)
of the PSA is exactly because deductions against an employee’s
remuneration under this provision will not be countenanced unless, as
in this instance where the applicant disputes that he is
liable for
the alleged overpayment, there is proper judicial redress for him
culminating in an order that sanctions the set off
proposed.
[48]
The
dicta
that were held up to me by Mr. Malunga that assert to the contrary
that an employee’s consent need not be obtained for set
off to
apply or for the deductions of erroneous salary payments to be made
are in my view wrong against the authority of PSA obo
Obogu that
section 34 (5) read with 34 (1) of the BCEA do not authorise
arbitrary deductions. The employee will either consent
or there
will be a need to go the judicial route to determine the applicant’s
liability, if any, before prevailing upon such
employee to pay back
the money that was allegedly erroneously paid to him/her.
[49]
In
summary the answer to the first issue referred for oral evidence is
indeterminate. There is no evidence to suggest that the applicant
was
incorrectly paid on Task grade 18 but even taking into account the
applicant’s concession that the error may have come
about
because of a mistake in his appointment, there is no basis for this
court to find that the offer and acceptance falls to
be said aside on
the basis of any illegality. The respondents have simply failed
to establish a case at all on the counterapplication
that they are
entitled to recover the alleged overpayment from the applicant.
[50]
In
the result the counterapplication falls to be dismissed and the
applicant succeeds in respect of his claim.
[51]
Concerning
the issue of costs. I am not in agreement with Mr. Malunga that the
costs ought to be paid on the magistrate’s
court scale.
The declaratory order sought by the respondents would not have been
competent in that court in any event.
It is further evident
that the matter turned on fairly complex legal issues.
[52]
In
the result I issue the following order:
1.
The
respondents’ counterapplication is dismissed, with costs on the
high court scale.
2.
The
second respondent is directed to pay to the applicant all sums due to
him as leave pay (pegged at TASK Level Grade 18 in respect
of the
acting period), together with interest at the legal rate on the said
sum calculated from seven days after the termination
of his contract
with the Buffalo City Metropolitan Municipality, to date of payment.
3.
The
respondents are directed to pay the cost of this application and of
the application for the referral for oral evidence (which
were
reserved on 7 February 2019) jointly and severally, the one paying
the other to be absolved on the high court scale of party
and party.
________________
B
HARTLE
JUDGE
OF THE HIGH COURT
DATE
OF HEARING: 26
July 2021
DATE
OF JUDGMENT: 15 December 2021*
*Judgment delivered
electronically on this date by email to the parties at 19h40.
APPEARANCES
:
For the
applicant: Mr. B Nduli of B Nduli & Co., East London
(ref. Mr. Nduli)
For
the respondents: Mr. Y Malunga instructed by Smith Tabata Inc., East
London. (Ref. Mr. Mutizamhepo).
[1]
It is not evident though if the respondents had
in fact already applied set off or if they were merely holding back
the leave
benefits due to the applicant. Up to the point when
the counterapplication was issued they had taken no steps to recover
the alleged overpayment. The prayers crafted in that application (1
and 2) are a concession in themselves that the second respondent
was
not entitled to have applied set off which is possibly why they
were, prospectively, seeking a declarator that the applicant
should
be “held liable” (whatever that might mean) for the full
alleged overpayment and that he “repay”
this amount, at
which point a set-off would then have been more palatable.
[2]
The real issue was whether his appointment on its
terms, more particularly that the applicant be remunerated on Task
Grade 18,
could be challenged on any basis. There was no
dispute whatsoever that he had been appointed on the higher task
grade and
by obvious implication was entitled to be reimbursed at
this level. The referral seems to have missed this nuance.
[3]
It is not apparent to what purpose such reliance
would conduce.
[4]
In
terms of Uniform Rule 33(1), parties to a dispute may agree upon a
written statement of facts in the form of a special case
for the
adjudication of the court. This statement sets out the facts agreed
upon and the questions of law in dispute between
the parties, as
well as their contentions. Rule 33(3) gives the court a discretion
to draw any inference of fact or law from
the facts and documents as
if proved at trial.
[5]
The kind of relief envisaged should ideally have
been of the nature declaring the placement of the applicant in the
acting position
on the higher TASK Grade irregular, the basis for
which the respondents would no doubt have explained or justified in
making
out their case. This would then have entitled them to a
declarator that the decision to place the applicant on the higher
TASK
grade was constitutionally invalid; that the agreement be set
aside; and that, as a consequence, the incorrect payments be
recovered.
(But see BCMM v Asla Construction (Pty) Ltd
2019
(6) BCLR 661
(LLC) at [105] where the Constitutional Court declared
a municipal tender contract invalid but did not set it aside. The
effect
of the peculiar order was to preserve the rights which had
already accrued under the impugned contract whilst not permitting
the party which had contracted with the municipality from obtaining
further rights thereunder.)
[6]
[2012] 4 All SA 136
(SCA) at para [32].
[7]
The respondents relied on the following
authorities for the proposition that the consent of an employee is
not required to recover
against his remuneration any overpayments of
the kind envisaged by section 34 (5) (a) of the BCEA:
Sibeko
v CCMA
(2001) JOL 8001
(LC) at para 6; Jonker v Wireless Payment
Systems CC (J1137109)
[2000] ZALC 150
at para
[21]
; and SA Medical
Association on behalf of Boffard v Charlotte Maxeke Johannesburg
Academic Hospital and Others (J2469/13) [2014]
ZALCJHB 78 at [39].
[8]
See footnote 5 above.
[9]
Section 32 (3)(b) of the BCEA.
[10]
See section 34 (1) (a) and (b) of the BCEA.
[11]
8
th
Edition, at pages
68 - 69.
[12]
Workplace Law,
Supra
at page 69.
[13]
2018 (2) BCLR
184 (CC).
[14]
Supra
, at par
[78].
[15]
In reasons furnished recently in T A Gqithekhaya
& Others v Amathole District Municipality (EL Case No. 601/2021)
I issued
an interim order prohibiting arbitrary deductions summarily
effected or about to be effected against the applicants’
salaries
all of whom were engaged in unlawful industrial action.
I observed that the authority in section 34 (1)(b) of the BCEA by
one of the four instruments indicated in the sub-section had to be
specific in relation to their authorisation for the relevant
deductions to be made rather than being of general effect. In
that scenario there had been a general order simply declaring
the
strike in which the applicants were involved as an unprotected one.
I refer to the seminal paragraph [4] in which I
justified that:
“
[4]
In this respect it is contended that the deduction ought to have
been
made consistent with the provisions of section 34 of the Basic
Conditions of Employment Act, No. 74 of 1997 (“BCEA”)
which requires a court order or arbitration award authorizing the
deductions made by it, rather than a general order of court
simply
declaring the strike in which they were involved as an unprotected
one, or the applicants’ consent in writing to
the deductions.
This is particularly so since on the face of it a settlement
agreement deriving from the earlier unlawful
industrial action
suggests that the respondent would not adopt a one-size fits all
approach with regard to the acceptance of
a no work no pay principle
concerning the employees who participated in the unprotected
strike. There is also the suggestion
that some of the days
involved over which the unprotected strike extended should have
conduced to the benefit of the applicants
who would not in the
ordinary course have been required to report for duty because of a
rotation roster system imposed during
the COVID state of emergency.
(Whatever disputes exist between the parties on the papers in this
respect does not detract
from the fact that the
sequelae
to the unlawful industrial action, giving rise to each employee’s
supposed indebtedness to the respondent by the salary
payment that
were not due to them because of the no work no pay principle, is not
reflected in any final order or arbitration
award or collective
agreement.)”