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[2020] ZALAC 60
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Malie v FOSKOR (Pty) Ltd and Others (JA15/2017) [2020] ZALAC 60 (27 October 2020)
IN
THE LABOUR APPEAL COURT OF SOUTH AFRICA, JOHANNESBURG
Not
reportable
Case
number: JA15/2017
In
the matter between:
RONALD
MAILE
Appellant
and
FOSKOR
(PTY) LTD
First Respondent
COMMISSION
FOR CONCILIATION MEDIATION
AND
ARBITRATION
Second Respondent
NELSON
LEDWABA
N.O.
Third Respondent
Heard:
23 September 2020
Delivered:
27 October 2020
Coram:
Coppin JA, Murphy AJA and Savage AJA
JUDGMENT
SAVAGE
AJA
[1]
This appeal,
with the leave of this Court, is against the judgment of the Labour
Court (Tlhotlhalemaje J) which dismissed an application
brought by
the appellant, Mr Ronald Maile, to have an arbitration award of the
second respondent, the Commission for Conciliation
Mediation and
Arbitration (CCMA), set aside on review.
[2]
The matter
concerns an unfair labour practice claim in terms of section
186(2)(
a
) of
the Labour Relations Act 66 of 1995 (‘the Act’)
relating
to the provision of benefits
.
T
he
benefit in question is the payment of an allowance aimed at retaining
skilled employees in the employ of the first respondent,
Foskor (Pty)
Ltd (‘Foskor’).
The
appellant was employed as an artisan by Foskor in 1994 and in 2004
was appointed into the position of Superintendent Safety,
Health,
Environment and Quality (SHEQ). That post became redundant in 2008
and, as an alternative to retrenchment, the appellant
was appointed
into ‘
a
similar environment (SHEQ)
’
with no reduction in salary. In 2010 the appellant was appointed as a
SHEQ trainer. In March 2017 the appellant resigned
from his
employment with Foskor.
[3]
During
2006 the company introduced a scarcity or retention allowance (‘the
allowance’) to attract and retain scarce
and critical employee
skills in various technical fields. Foskor employs technical,
operational and SHEQ trainers. In 2008 technical
trainers became
eligible to receive the allowance. From 1 November 2011 eligibility
was extended to operations and SHEQ trainers.
Although the appellant
as a SHEQ trainer was eligible to receive payment, Foskor exercised
its discretion not to pay the appellant
the allowance given that the
gross monthly salary was R38 758,04 was higher than that received by
the other SHEQ trainer, Mr A
G Xulu, who earned R35 448,37 per
month, including the allowance of R5000,00, and operations trainers,
Mr
KM Mosweu, Mr EQ Sekgobela, Mr SR Paulse and Mr CJ Roos, who earned
R37 736,05, R33 408,91, R36 751,13 and R32 730,72
per
month respectively, including the allowance.
[1]
[4]
Dissatisfied
with the decision not to pay him the allowance the appellant lodged
an internal grievance. The grievance was unsuccessful
on the basis
that the appellant’s remuneration “
was
already more than that of the other SHEQ trainer and the rest of the
operations trainers
”
even after they had received the allowance from November 2011.
[5]
In November
2013, the appellant referred an unfair labour practice claim to the
Commission for Conciliation, Mediation and Arbitration
challenging
the fairness of the decision not to pay him the allowance. At
arbitration, the appellant testified that he had been
treated
unfairly in that the allowance was paid to trainers across the board,
including Mr Xulu, his fellow SHEQ trainer and to
trainers who earned
more than him, such as Mr CJH Vorster, who earned R44 993,87 per
month including the allowance.
[6]
Mr Johannes
Liversage, employed as specialist in operational benefits, testified
for Foskor that
the
purpose of the allowance was to attract and retain technical staff
due to skills shortages. He indicated that
different
categories of trainers perform different job functions and that both
Mr Vorster and Mr J Makhoba, who earned R40 502,21
per month,
including the allowance, were technical trainers and in a different
category to the appellant. Mr Liversage explained
that some salary
distinctions between employees were the result of differences in
appointment date, sign-on salary negotiations
or annual salary
increments granted. The reason the appellant was not paid the
allowance was that he was already highly remunerated
before the
allowance was extended to other trainers in 2011 and that his
earnings exceeded those of the other SHEQ trainer and
operations
trainers after they had received the allowance.
[7]
The third
respondent (‘the commissioner’) found that
the
allowance arose out of a practice rather than out of the contract of
employment and that it was for the appellant to prove that
he had the
necessary skills to justify receipt of such allowance. Since he had
not shown that
he fell within the category of recipients intended to benefit from
the scheme given that he earned more than his counterparts,
he was
not entitled to the allowance. This was so since he already earned
more than the other SHEQ trainer and other operations
trainers. Mr
Vorster, as technical trainer, had technical skills justifying his
greater remuneration. The commissioner rejected
evidence that the
appellant was a qualified artisan on the basis that it was put up in
re-examination for the first time and that
Foskor had not had the
opportunity to rebut the evidence. With the employer’s reasons
for the allowance not challenged and
the appellant not having
demonstrated unfairness in the implementation of the benefit given
that he earned ‘
way
above most of his counterparts
’,
it was found that no unfair labour practice had been proved. The
claim was, therefore, dismissed.
Judgment
of the Labour Court
[8]
On
review to the Labour Court, the appellant contended that the
commissioner’s findings were defective, unreasonable and wrong.
The Labour Court found that the commissioner had erred in finding
that the appellant lacked the skills required to qualify for
the
allowance since it was undisputed that he was an artisan.
Nevertheless, with reference to
Head
of the
Department
of Education v Mofokeng & others
[2]
the
c
ommissioner’s
errors
of fact were found not to be sufficient to justify the arbitration
award being set aside.
With
no written policy regulating payment of the allowance, its payment
was discretionary. The fairness of the discretion exercised
had to be
assessed against the purpose of the allowance
,
which was primarily to retain scare skills. S
ince
the appellant earned significantly more than his counterparts, had
the allowance been paid to the appellant, it would have
created
further unfairness in that it would have caused his earnings to
increase further. Consequently, t
he
Court found that the
re
existed a rational basis for deciding not to pay the allowance to the
appellant and that it had not been shown that the discretion
was
exercised unfairly,
arbitrarily,
capriciously or in bad faith. The commissioner’s
conclusion that Foskor’s conduct did not amount to
an unfair
labour practice fell within the band of reasonableness required and
t
he
review application was dismissed with no order as to costs.
Submissions
on appeal
[9]
On appeal, it
was argued for the appellant that the Labour Court had erred in
dismissing the review application when the outcome
reached by the
commissioner was unreasonable. This was so in that the appellant fell
within the category of employees entitled
to receive the allowance.
It was argued that he, therefore, had a right to payment and Foskor
held no discretion not to pay him.
The appellant disputed that the
purpose of the allowance was to achieve parity in wages or that he
earned significantly more than
other trainers when trainers such as
Mr Vorster received the allowance and were paid more than him.
Foskor, it was submitted, had
considered only the remuneration of the
appellant and not of other employees and there existed no rational
basis for him not being
paid the allowance, with it argued that the
decision taken was arbitrary, capricious, in bad faith and unfair.
The result was that
payment of the allowance to other employees
increased their earnings but caused an effective reduction in the
appellant’s
income. For these reasons, the appellant sought
that the appeal succeeds, with costs, and that it be ordered that an
unfair labour
practice had been committed against him, as a
consequence of which Foskor pay him the allowance from the date on
which it was extended
to SHEQ and operations trainers.
[10]
Foskor opposed
the appeal on the basis that the Labour Court had correctly found
that the commissioner’s decision fell within
the band of
reasonableness required and was not reviewable. The allowance was a
practice administered at its discretion. The appellant
was eligible
to receive payment of it but Foskor had exercised its discretion
against him since he earned significantly more than
his fellow SHEQ
trainer and other operational trainers and when payment to him
would
have perpetuated a disproportionate disparity in earnings between
employees.
It was
submitted that the appellant could not rationally attack the exercise
of the discretion which not exercised unfairly, arbitrarily,
capriciously or in bad faith. All employees in a category were not
entitled as of right to receive payment of the allowance and
for all
of these reasons the appeal should fail with costs.
Evaluation
[11]
The
allowance constituted a benefit in the sense that it was an existing
advantage or privilege to which an employee “
is
entitled as a right or in terms of a policy or practice subject
to the employer’s discretion
”.
[3]
Taking the form of an unwritten policy or practice, eligibility for
and payment of the allowance was determined by Foskor at its
discretion. Although the appellant submitted for the first time in
this appeal that Foskor did not exercise a discretion in refusing
to
pay him the allowance, there was no evidence before the commissioner
to sustain the contention that employees were entitled
as of right to
payment of the allowance. The issue before this Court is therefore
whether the commissioner’s finding that
the exercise of that
discretion was rational and fair was one that a reasonable
decision-maker could not reach.
[4]
[12]
The purpose of
the allowance was to retain scarce employee skills. To do so
different categories of employees were determined by
Foskor from time
to time to be eligible to receive the allowance. Eligibility was
extended in 2008 to technical trainers and on
1 November 2011 to
operations and SHEQ trainers. Foskor exercised its discretion not
only in relation to the eligibility of a category
of employees to
receive the allowance, but also to determine which employees within
any such category were to receive such allowance.
A determination of
eligibility did not create a right to payment.
[13]
The allowance
was not paid to the appellant on the basis that he earned more than
the other SHEQ trainer and operations trainers
employed, even after
the allowance had been paid to them. The appellant disputed that the
decision not to pay him the allowance
was rational or fair on the
basis that the purpose of the allowance was not to achieve parity in
wages and other trainers who received
the allowance, such as Mr
Vorster, earned more than he did. The evidence showed clearly however
that those employees who earned
more than the appellant were employed
in a different category, as technical trainers to whom eligibility to
receive payment of
the allowance had been extended in 2008. A
comparison between the salaries of technical trainers and the
appellant was therefore
misplaced. The appropriate comparison to be
made was between the salaries of SHEQ and operations trainers, into
which category
the appellant fell. Within that category, the evidence
was that the appellant earned more than any one of his colleagues,
even
after payment of the allowance.
[14]
Foskor’s
expressed purpose in making provision for the allowance was to retain
scarce employee skills. It sought to achieve
this by bolstering
earnings to make continued employment attractive. While some
differentiation existed between salaries earned
by employees within
an identified category, even after payment of the allowance to
employees in his category the appellant earned
more than his
counterparts. Foskor exercised its discretion not to pay the
allowance to the appellant for this reason. Had it paid
him the
allowance this would have perpetuated the historical wage distinction
which existed between SHEQ and operations trainers.
Conceivably, this
risked undermining the very purpose of payment of the allowance,
namely to retain scarce skills, insofar as it
would have perpetuated
an uneven situation in which one employee within the category
received earnings well in excess of the others.
[15]
The
CCMA, in the exercise of its unfair labour practice jurisdiction, was
required to scrutinise the fairness of the employer’s
conduct
in the exercise of its discretion.
[5]
Unfairness implies a failure to meet an objective standard, which may
be taken to include arbitrary, capricious or inconsistent
conduct,
whether negligent or intended.
[6]
In
Protekon
(Pty)
Ltd v Commission for Conciliation Mediation and Arbitration and
Others
[7]
it was stated that:
‘
With
fairness as the test, questions of proportionality will invariably
need to be considered. The disadvantages to a minority may,
as a
matter of fairness, outweigh the advantages to a majority. In the
present case, however, there is no reason to conclude that
any
adverse impact on the Third Respondent is disproportionate to the
settled interests of the majority of employees in the affected
class’.
[8]
[16]
Although the
result was that payment of the allowance increased the earnings of
other SHEQ and operations trainers and not the appellant,
it brought
their salaries more closely in line with his while the appellant
continued to earn more. The commissioner found that
the decision
taken by Foskor was for this reason not shown to be arbitrary,
capricious, in bad faith or unfair. The Labour Court
cannot be
faulted for finding that, despite its factual errors, the conclusion
reached by the commissioner fell within the band
of reasonableness
required. There existed a clear, acceptable, fair and rational basis
for deciding not to grant the appellant
the allowance having regard
to the purpose of the allowance, the earnings of SHEQ and
operations trainers and the comparatively
greater amount earned by
the appellant as compared to his counterparts. The employer was not
shown to have exercised its discretion
unfairly against the
appellant, and the commissioner arrived at a decision which was not
one that
a reasonable decision-maker
could not reach.
[17]
For these
reasons, the appeal against the judgment of the Labour Court cannot
succeed. Both parties sought costs in the event of
their success on
appeal. Having regard to considerations of law and fairness, it is
not appropriate to make an order as to costs
in this matter.
Order
[18]
The following
order is made:
1.
The appeal is
dismissed.
__________________
SAVAGE
AJA
Coppin
JA and Murphy AJA agree.
APPEARANCES
:
FOR
APPELLANT:
M
E S Makinta of Makinta Attorneys
FOR
FIRST RESPONDENT: M
Edwards instructed by Bowmans
[1]
As
earned
on 31 October 2013.
[2]
[2015]
1 BLLR 50
(LAC)
at para 31.
[3]
Apollo
Tyres South Africa (Pty) Ltd v Commission for Conciliation Mediation
and Arbitration
[2013] 5 BLLR (LAC) a
t
para
50.
In
that matter at para 25 the distinction between the terms
“remuneration” and a “benefit” was found
artificial and unsustainable.
[4]
At para 110.
[5]
Protekon
(Pty) Ltd v Commission for Conciliation Mediation and Arbitration
and Others
[2005] ZALC 75
at para 35.
[6]
Apollo
(
supra
note 3)
at para 53.
[7]
Protekon
(Pty) Ltd v Commission for Conciliation Mediation and Arbitration
and Others
[2005] ZALC 75.
[8]
At para 58.