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[2020] ZALAC 2
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Eskom Holdings SOC Ltd v National Union of Mineworkers and Others (JA78/18) [2020] ZALAC 2; [2020] 4 BLLR 362 (LAC); (2020) 41 ILJ 1129 (LAC) (6 January 2020)
IN
THE LABOUR APPEAL COURT OF SOUTH AFRICA, JOHANNESBURG
Reportable
Case
no: JA78/18
In
the matter between:
ESKOM
HOLDINGS SOC LTD
Appellant
and
NATIONAL
UNION OF MINEWORKERS
First Respondent
MI
MAPONYA AND 7 OTHERS
Second Respondents
Held:
21
November 2019
Delivered:
06 January 2020
Summary:
Contractual claim – employer implementing ad hoc salary
adjustment but not at the amount stipulated in the memorandum
-
employee claiming specific performance for the payment of arrears –
employer contending that the signatory of the ad hoc
salary
adjustment letter not having the authority to unilaterally adjust
salary – court held that a
valid contract between the
parties providing for the initial salary increases could not have
lawfully come into existence in the
absence of authorisation –
Labour Court’s judgment set aside and Appeal upheld with costs.
Coram:
Waglay JP, Davis JA and C Murphy AJA
JUDGMENT
DAVIS
JA
Introduction
[1]
This appeal concerns a contractual claim for arrear salaries; in
particular,
whether the appellant lawfully awarded ad hoc salary
increases to second and further respondents on 10 May 2012.
[2]
Much of the factual matrix was common cause. During the latter part
of
2011, appellant decided to award ad hoc salary increases to a
category of employees which included second and further respondents
(‘the employees’). The decision was a unilateral one
which was taken by members of appellant and was not a result of
prior
negotiations or an agreement between appellant and respondents. The
employees in question fell within the ambit of the Basis
Salaries for
Bargaining Unit Employees, Grade TO 4 – P13. Their ad hoc
salary increases were designed to ensure that employee
salaries were
market related.
[3]
Pursuant to this decision, a letter was generated by the appellant,
headed
“Salary Review- Salary Adjustment”. It read thus:
‘
I
have pleasure in informing you that your basic salary has been
increased from R231, 300.00 to R265, 590.00 per annum, with effect
from 01 May 2012.
All
other Conditions of service will remain unaltered.
Thank
you for your continued contribution.
You
are one of our Guardians – helping us power this great nation.’
[4]
It appears that employees were provided with this letter which was
contained
in a closed envelope. Their respective managers, Mr Duren
Maharaj and Mr Gladstone Moroke, explained to the employees that they
were part of a group which was to receive salary adjustments. The
employees opened their letters and appeared to be happy with
the
contents thereof. There was no further engagement in regard to the
proposed salary adjustments.
[5]
On 22 May 2012, the employees received their electronic payslips. The
amounts reflected on the payslips were less than the amounts which
the appellant had informed the employees to be the adjusted salary,
subsequent to the proposed increase contained in the letter of 10 May
2012.
[6]
Upon queries by the employees, a second letter was generated by the
appellant
on 25 May 2012. The date of this letter was incorrectly
dated as 10 May 2012. It was headed “Revised Salary
Review
– Salary Adjustment” and indicated the revised
post salary adjustments, which were clearly lower than those provided
for in the first letter of 10 May. Although the employees refused to
acknowledge this unilateral revision, appellant paid the employees
according to the revised salary amounts as reflected in the second
letter.
[7]
A grievance session was held on 30 July 2012 but this did not result
in
a resolution of the dispute, as a result of which respondents
approached the court
a quo
with a contractual claim for
specific performance based on
s 77
(3) of the
Basic Conditions of
Employment Act 75 of 1997
.
[8]
Mamasebo AJ upheld respondents’ claim, finding that Mr Masango,
the general manager, who had signed the letters of 10 May 2012, which
contained the initial ad hoc salary adjustments, had the authority
to
approve them in terms of the procedure agreed to between the
appellant and first respondent.
[9]
Turning to the question raised as to whether the initial letters
contained
reasonable and justifiable errors which rendered the
initial offer of no force and effect, the learned judge held as
follows:
‘
It is
inconceivable that Mr Masango did not even bother to read the letters
before appending his signature thereon. In my
view, Eskom
cannot claim that the
error
is
Justus
. I am not
satisfied that Eskom has discharged the onus to show that its mistake
was reasonable. I am therefore
not persuaded by Eskom’s
defence of mistake. It is my view that the applicants stand to
succeed in their claim.’
[10]
With the leave of this Court, the appellant appeals against the order
of the court
a quo
.
The
appeal
[11]
The evidence indicates that the decision to increase salaries was
communicated to relevant
managers in a memorandum of 15 December
2011, written by one Bhabhalazi Bulunga, the divisional head of the
Human Resources Department
of the appellant. In terms of paragraph 2
of this memorandum, the remuneration of the employees had to be
compared with what other
outside employers were paying their
employees in similar positions and for similar work. This comparative
exercise guided the decision-making
process in the determination of
the salary increases which were to be granted, the objective being to
ensure salaries which were
as close as possible to market related
salaries. This exercise of comparison was then reflected in a
spreadsheet which contained
a heading “Final Proposed Salary”.
The increases had been approved by the executive manager Kobus
Steyn.
[12]
Once this approval was obtained, the spreadsheet was sent to the
Human Resources Department
of appellant to generate the requisite
letters to inform the employees of the salary increases. Instead of
reflecting the salary
increases as contained in the relevant column
(column E), the Human Resources Department made a mistake and
reflected the increases
as contained in column; “that is the
increases which were contained in the letters of 10 May 2012 but
which were not correct,
in terms of the amounts reflected in the
final proposed salary column in the spreadsheet.”
[13]
Mr Boda, who appeared on behalf of the appellant, submitted that the
increases as reflected
in the initial letter of 10 May 2012 had not
been duly authorised. It was common cause that Mr Masango was not the
Divisional Managing
Director, who was the office bearer possessed of
the authority to approve the salary increases as contained in the
letter.
[14]
This submission was supported by the contents of subparagraph (b) of
the Basic Salary for
Bargaining Unit Employees document which
contained the following clause:
‘
Ad Hoc Salary
Adjustment
(a)
Individual salary adjustments, for example market related adjustments
can take place during the year on a one-to-one basis based on a
mechanism determined by the Divisional R & B Manager and agreed
to by the respective Managing Director.
(b)
All the ad hoc salary augments must be approved by the relevant
Divisional Managing Director
. HR practitioners are, therefore,
requested to ensure that all the ad hoc salary adjustments are
approved by the relevant Divisional
Managing Director, prior to
processing the requested increase.’ (my emphasis)
[15]
Significantly, in respondents’ statement of claim, reference
was expressly made to
this paragraph in order to set out the
requisite procedure for granting salary increases. To the extent that
there is any doubt
about this acknowledgement, the pre-trial minute
reflects the following:
‘
The Respondent’s
process of adjusting salaries is not a one-man process. In
terms of paragraph 3.12 (a) of the Basic
Salary of Bargaining Unit
Employee, the ad hoc salary adjustments are determined by the
Divisional R & B Manager and agreed
to by the respective Managing
Director.’
[16]
Given this agreement and the absence of any evidence that the
Divisional Managing Director
approved the salary increases relied
upon by the individual respondents, Mr Boda’s submission was
unassailable. In short,
a valid contract between the parties
providing for the initial salary increases could not have lawfully
come into existence in
the absence of authorisation thereof by the
Divisional Managing Director.
[17]
This conclusion renders irrelevant an examination of the doctrine of
justus error
and its application to the present case as relied
upon by the court
a quo
. Mr Malan, who appeared together with
Ms Jackson on behalf of the respondents, tentatively submitted that
the doctrine of ostensible
authority could be invoked in favour of
respondents.
[18]
There has been a keen debate recently about whether ostensible
authority can be distinguished
from
estoppel
or whether in
effect ostensible authority is a form of
estoppel
. See the
judgments of Jafta J and Wallis AJ in
Makate v Vodacom (Pty) Ltd
2016 (4) SA 121
(CC). Mercifully, there is no need to deal with
this question in that there is no evidence to suggest that the
respondents were
misled into believing that any ad hoc salary
increase could have been granted, absent the approval of the
Divisional Managing Director
and that the provisions of the
Collective Bargaining Agreement could have been bypassed. This
requirement was known to the respondents.
It was expressly provided
for in the Basic Unit Services Conditions document. Furthermore,
respondents admitted such by virtue
of the manner in which they
drafted their statement of claim. There cannot, therefore, on the
evidence, be a breach of contract
committed by appellant, which would
justify the respondents’ claim.
[19]
For these reasons. the following order must be made:
1.
The appeal is upheld with costs.
2.
The order of the court
a quo
of 08 May 2018 is set aside and
replaced with the following:
‘
The claim is
dismissed with costs’
_______________
Davis
JA
I
agree
________________
Waglay JP
I
agree
________________
Murphy
AJA
Appearances:
FOR
THE APPELLANT:
Adv F A Boda SC
Instructed by Gildenhuys
Malatji Attorneys
FOR
THE RESPONDENTS: Adv
L Malan and Adv S Jackson
Instructed by Finger
Phukubje Attorneys