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[2021] ZALAC 12
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Total SA (Pty) Ltd v Meyer and Others (JA03/2020) [2021] ZALAC 12; [2021] 8 BLLR 795 (LAC); (2021) 42 ILJ 1696 (LAC) (2 June 2021)
IN THE LABOUR APPEAL
COURT OF SOUTH AFRICA, JOAHNNESBURG
Reportable
Case No: JA03/2020
In the matter between:
TOTAL SOUTH AFRICA
(PTY) LTD Appellant
and
REON
MEYER First
Respondent
RONNIE BRACKS
N.O Second
Respondent
National bargaining
council for
the
chemical
industry
Third Respondent
Heard:
16 February 2021
Delivered:
02 June 2021
Coram: Davis JA,
Coppin JA and Molefe AJA
JUDGMENT
DAVIS JA
Introduction
[1]
This appeal concerns two separate issues.
In the first place the question arises for consideration as to
whether, having found
that the dismissal of the first respondent was
both substantively and procedurally unfair, the court
a
quo
exercised its discretion judicially
in ordering the appellant to pay the equivalent of twelve months’
remuneration as compensation
to the first respondent in terms of s
193 (1) (c) of the Labour Relations Act 66 of 1995 (‘LRA’).
The second
issue concerns a finding that the appellant committed an
unfair labour practice by failing or refusing to grant the first
respondent
a post-retirement medical benefit. The appellant had
offered a post-retirement medical aid benefit (‘PRMB’) to
its employees. In terms of the applicable policy ‘upon
normal ill health or early retirement’, employees who
joined
appellant on or before 31 December 2001 were entitled to an increased
medical aid subsidy of 75%, notwithstanding the provisions
of the
specific retirement fund. First respondent contended that this
policy was applicable to him in the same way that the
appellant had
granted the PRMB to nine employees who were retrenched in 2010.
The appellant had refused to offer the
PRMB to the first
respondent and contended that the case of the 2010 retrenchees was
clearly distinguishable from the position
of the first respondent.
The second leg of this appeal thus concerns whether the refusal by
the appellant was correctly classified
by the court
a
quo
as an unfair labour practice, in
that the appellant had failed to provide an objective rational or
fair justification for the difference
in treatment.
[2]
The finding that the first respondent’s
dismissal was both substantively and procedurally unfair is not the
subject of an
appeal before this court. For the purposes of this
judgment, this finding of the court
a
quo
is common cause. Consequently, the
factual matrix to which I now refer can be suitably truncated.
The background facts
[3]
The first respondent was employed by the
appellant with effect from 1 May 1987 as an Assistant Accountant. By
the time of his dismissal,
he was employed in the position of
Treasury Accountant. However, from 1993 he was seconded to Total
Exploration South Africa, which
changed its name to Total Coal South
Africa (‘TCSA’) in 2003. TCSA was a subsidiary company
within the Total group.
[4]
In December 2013 it was announced that the
TCSA would be sold to Exxaro. This proposed transaction caused some
anxiety to the first
respondent. Thus, at his annual performance
appraisal in February 2014, he raised his concerns with Mr Pravesh
Mohan, who held
the post of Manager: Accounting in TCSA. In
particular, he was concerned as to how the proposed sale to Exxaro
would impact
on his position as an employee who had been seconded to
TCSA and whether Exxaro would honour the secondment agreement with
the
appellant. It appeared at this point that he was the only TSA
employee seconded to TCSA.
[5]
A series of meetings then took place
between executives of TCSA and the appellant. Suffice to say that on
11 September 2014 appellant,
by way of Nonhlanhla Shabangu, informed
first respondent that, although appellant did not have a vacancy at
that time; ‘we
are looking at moving the employee to another
division, once that is done we will then have an opening.’
However, it
appears that at this point the appellant had already
begun the process of calculating the first respondent’s
severance package.
[6]
On 20 November 2014 a further meeting took
place between executives of TCSA and the Human Capital Manager of the
appellant, Siyabonga
Radebe. At this meeting Mr Radebe informed the
first respondent that there were no suitable vacancies within the
organisation of
the appellant and that he would consequently be
retrenched. Very little discussion took place in that meeting, which
lasted no
more than 20 minutes.
[7]
On 24 November 2014 the first respondent
emailed Mr Radebe, emphasising the importance of the PRMB to him and
his family and explaining
why it should be extended to him. In his
correspondence, he pointed out that PRMB ‘was given to staff
who were retrenched
in 2010’, a point confirmed by Mr Jabulani
Khumalo, appellant’s Divisional Manager, Human Resources
Administration.
Notwithstanding arguments put up by the
first respondent, the appellant refused to extend the PRMB to him.
The only clear reason
offered for the differentiation between the
2010 retrenches and the appellant was that ‘
the
terms and conditions of the 2010 restructure were only applicable for
that period and therefore the rationale hereof was relevant
to that
era.
’
By 23 December 2014 the
appellant made its final offer for a severance package, which
included an amount equal to two years of PRMB.
The first respondent’s
retrenchment became effective on 31 December 2014. He entered into a
new employment contract with
TCSA which was effective from 1 January
2015, but this contract did not recognise his previous length of
service at the appellant,
nor was he offered any PRMB benefit.
The decision of the
court
a quo
[8]
On 14 October 2016 the second respondent
issued an arbitration award in which he dismissed the first
respondent’s case, finding
that his dismissal from the
employment of the appellant has been both procedurally and
substantively fair.
[9]
The first respondent approached the court
a
quo
on review, seeking to have the
award set aside. Prinsloo J, in the court
a
quo,
found that second respondent had
fundamentally misconceived the nature of enquiry before him, by
finding that the appellant had
complied with all its obligations
towards the first respondent by ‘transferring him’ to
TCSA, which had the effect
of avoiding a retrenchment. By contrast,
Prinsloo J held:
‘
It
is evident from the evidence that the applicant was retrenched
notwithstanding that a vacant position was available because he
did
not have a chartered accountant’s qualifications.
This in circumstances where the applicant’s undisputed
evidence
was that he would have been able perform the duties of subsidiary
accounting manager and where there was no evidence placed
before the
arbitrator to show that the applicant did not possess the necessary
skills to perform the functions attached to the
position of
subsidiary accounting manager’
.
[10]
Prinsloo J found further that the appellant
had never engaged in a joint consensus seeking process which was
designed to avoid the
dismissal of the first respondent. He had not
been provided with any alternatives which could be considered prior
to the appellant
taking a decision to retrench him. There was, in
short, no meaningful consultation process conducted between the
parties. Accordingly,
the appellant had failed totally to comply with
the provisions of s 189 of the LRA prior to dismissing the first
respondent.
[11]
As noted, these findings are no longer
subject to an appeal. The only aspect of this part of the case which
requires this Court’s
attention is that, following the finding
that the first respondent’s dismissal was substantively and
procedurally unfair,
Prinsloo J ordered that the appellant pay the
first respondent compensation equivalent to twelve months’
remuneration calculated
at his rate of remuneration on the date of
dismissal.
Appellant’s case
concerning the award of compensation
[12]
Mr Boda, who appeared on behalf of the
appellant, submitted that the first respondent had secured employment
in 2015 at TCSA, only
because of his previous employment with the
appellant and as a result of discussions which had taken place
between the appellant
and TCSA. He contended further that, when the
first respondent obtained employment at TCSA, it was still a
subsidiary company of
the appellant. He also noted that it was common
cause that the appellant had paid the first respondent a severance
package of R
2.9 million.
[13]
Mr Boda submitted that the court
a
quo
had thus erred, when it found that
the R 2.9 million severance package was money to which the first
respondent was entitled because
he was retrenched after being
employed for 28 years, and further, that the severance package
received did not deprive him of the
solatium
to which he was entitled as a result of being dismissed unfairly. The
facts, in Mr Boda’s view, dictated that a different
result
should have been reached by the court
a
quo
. The immediate employment which the
first respondent obtained after his dismissal from the appellant’s
employ, together with
the severance package, which included an amount
equivalent to two years of medical aid benefit, was critical and had
to be considered
in any award of compensation. Further, the severance
payment amounted to more than four times the statutory requirement as
provided
for in the
Basic Conditions of Employment Act 75 of 1997
.
The appellant’s case was that it was manifestly unfair not to
take into account the
quantum
of the severance package when the court awarded the maximum amount of
compensation of twelve months to the first respondent in
terms of
s194
of the LRA.
[14]
In support of this submission, Mr Boda
cited the judgment of the Constitutional Court in
Equity
Aviation Services (Pty) Ltd v Commission for Conciliation, Mediation
and Arbitration and others
[2008] 12
BLLR 1129
(CC) at para 43:
‘
[a]
court or commissioner has a discretion to determine the extent of
retrospectivity of the order of reinstatement or re-employment.
In
exercising the discretion, a court or an arbitrator may address,
amongst other things, the period between the dismissal and
trial as
well as the fact that the dismissed employee was without income
between the period of dismissal, ensuring, however that
an employer
is not unjustly financially burdened if retrospective reinstatement
is ordered or rewarded
.’
[15]
In Mr Boda’s view, the court
a
quo
had not taken sufficient account of
the quantum of the severance package which had the consequence that
the first respondent had
suffered no financial loss as a result of
the retrenchment. Indeed, he had been placed in a greater financial
position than he
was prior to the retrenchment.
First respondent’s
case
[16]
By contrast, Mr Leslie, on behalf of the
first respondent, submitted that the appellant’s case
incorrectly conflated an award
which was based on patrimonial loss
and a
solatium
awarded for the indignity caused by the suffering of rank unfair
treatment at the hands of an employer such as the appellant. He
relied on the decision in
Johnson and
Johnson (Pty) Ltd v CWIU
[1998] 12 BLLR
1209
(LAC) at para 41:
‘
The
compensation for the wrong in failing to give effect to an employee’s
right to a fair procedure is not based on patrimonial
or actual
loss. It is in the nature of a
solatium
for the loss of the right and is punitive to the extent that an
employer (who breached the right) must pay a fixed penalty for
causing that loss. In the normal course a legal wrong done by
one person to another deserves some form of redress.
The party
who committed the wrong is usually not allowed to benefit from
external factors which might have ameliorated the wrong
in some way
or another. So too in this instance
.’
See also
ARB
Electrical Wholesalers (Pty) Ltd v Hibbert
[2015] 11 BLLR 1081
(LAC) at paras 22 – 23.
[17]
Johnson and Johnson, supra
has represented the legal position adopted by this
Court for more than 20 years. It is sound precedent which must be
followed. Thus,
the award of compensation limited as it is in terms
of
s 194
of the LRA, cannot be equated to the staunching of
patrimonial loss suffered by an employee, as a consequence of an
unfair dismissal,
in this case, both procedurally and substantively.
By contrast, an award of compensation as envisaged in
sections 193
and
194
read together constitutes a payment in lieu of an impairment
of an employee’s dignity.
[18]
This case is illustrative. The first
respondent’s rights to be treated fairly, with care and concern
and to enjoy the benefits
of an adequate consultation process, as
provided for in the LRA, before being retrenched, were ignored by a
large and powerful
employer, which unquestionably had the resources
to ensure that its human relations management policy was congruent
with the clear
objectives of the LRA. The award of compensation
represents a monetary response to the clear breach of an employee’s
rights
and cannot be equated with the amount awarded in respect of
the patrimonial loss suffered by an employee, such as the first
respondent.
[19]
This conclusion does not detract from a
dictum
of
this Court in
Kemp t/a Centralmed v
Rawlins
(2009) 30 ILJ 2677 at para 30
in which this Court held that the question as to whether an employee
had suffered any financial loss
as a result of a dismissal should be
taken into account in the award of compensation. It
follows that a benefit granted
in this case by the appellant to the
first respondent, such as a severance pay, which is significantly in
excess of the amount
provided for under the
Basic Conditions of
Employment Act, should
have been taken into account in the assessment
of what constitutes ‘just and equitable’ compensation in
terms of
s 194
of the LRA. In my view, this was not a case
where the maximum award of compensation of twelve months was
justified. This
case does not involve the kind of egregious conduct
by an employer which would justify a maximum award of compensation.
This conclusion,
however, does not mean that no award of compensation
should be awarded. The manner in which the first respondent was
treated by
the appellant and the clear breaches of important
provisions of the LRA, regarding retrenchment, justify the award of
compensation.
In my view, an amount of six months’ compensation
as a
solatium
would be justified in the context of the facts of this case.
The unfair labour
practice
[20]
In setting aside the award of the second
respondent, that the failure to grant the first respondent PRMB did
not constitute an unfair
labour practice, Prinsloo J said:
‘
In
my view Total failed to provide any evidence to show or establish
that there was an objective, rational, fair or justifiable
basis on
which to treat the applicant differently from the 2010 retrenchees in
circumstances where he had satisfied all the required
criteria as at
the date of retrenchment and where he was effectively in the same
position as the 2010 retrenchees who received
the PRMB. Total’s
decision to deprive the applicant of the PRMB could not be justified
on any objective ground and
the decision was indeed arbitrary and
inconsistent.’
[21]
This finding of the court
a
quo
was based on a careful comparison
between the appellant’s conduct towards the first respondent
and its grant of PRMB to nine
retrenchees in 2010. Although the nine
were part of a large scale retrenchment exercise, they were
considered eligible for PRMB,
in addition to severance pay, which
they received. The basis upon which the nine retrenchees had been
deemed eligible for PRMB
was that they had been employed on or before
31 December 2001, were members of the medical aid scheme at that
time, and they were
at least 50 years old at the date of their
retrenchment.
[22]
In an email sent by Siyabonga Radebe to the
first respondent on 17 December 2014, the appellant’s response
to the first respondent’s
case, concerning the alleged
differentiation in the former’s conduct towards the nine
employees, as compared to the appellant,
was set out thus:
‘
Conditions
relating to the PRMB are not applicable to yourself and therefore you
cannot have this guarantee extended to you.
Note that the terms
and conditions of the 2010 structure are only applicable for the
period and therefore the rationale thereof
is relevant to that era
.’
[23]
The first respondent correctly adopted the
view that the answer contained in this email hardly constituted an
adequate response
as to why a different decision had been made in
2010 as compared to his treatment.
[24]
Mr Boda submitted that the key evidence was
that of Mr Jabulani Khumalo, the Divisional Manager Human Resources
of the appellant.
This evidence indicated that the appellant had not
denied the first respondent post-retirement medical aid benefits, but
had exercised
a discretion to award a post-retirement medical aid
benefit for two years, having considered the first respondent’s
submission
in this regard. Furthermore, none of the employees,
who were retrenched in 2010, found employment immediately, whereas
the
first respondent had secured a job immediately after his
retrenchment. Further, the 2010 retrenchment exercise had
affected a large number of employees who faced unemployment. For this
reason, it had to be considered as a once off process that
created no
precedent, insofar as the appellant was concerned.
[25]
Turning to the first respondent’s
cause of action, it was predicated on the definition of unfair labour
practice as set out
in
s 186
(2) (a) of the LRA, which includes ‘any
unfair act or omission that arises between an employer and an
employee involving
unfair conduct by the employer relating to the
provisions of benefits to an employee.’ In
Apollo
Tyres South Africa (Pty) Ltd v CCMA
[2013] 5 BLLR 434
(LAC) this Court gave content to the phrase ‘the
provisions of benefits to an employee’ as follows:
‘
In
my view, the better approach would be to interpret the term benefit
to include a right or entitlement to which the employee is
entitled
(
ex contractu
or
ex lege
including rights judicially created)
as
well as an advantage or privilege which has been offered or granted
to an employee in terms of a policy or practice subject to
the
employer’s discretion.
’
(my emphasis)
[26]
It is within this legal context that Mr
Khumalo’s evidence must be evaluated. Mr Khumalo conceded in
his evidence that:
‘
Okay.
In 2010, let me just say that I was not part of the HR Team then,
because I had moved onto a different department. I
was in Finance.
So my knowledge of it is from the point of view of being some of the
staff who were consulted.’
[27]
Hence, Mr Khumalo was hardly in a position
to provide concrete evidence to whether an objective standard had
been employed in the
extension of PRMB in 2010 and whether the
distinction between the 2010 employees and the first respondent could
not justifiably
be classified as arbitrary, capricious or
inconsistent conduct, whether negligent or intended. (
Apollo
Tyres supra
at para 53)
[28]
Mr Khumalo indicated that the provident
fund rules, which regulated early retirement, did not form the basis
for eligibility for
the receipt of PRMB which took place pursuant to
the 2010 retrenchment exercise. The evidence revealed that the
retirement age
of 50 was one of the inherent requirements for the
receipt of PRMB, that, as in similar fashion to the nine employees
who received
PRMB in 2010, the first respondent had been employed
before 2002, was a member of the relevant medical aid and was older
than 50.
[29]
It followed, therefore, from this evidence
that the differentiation between the appellant’s conduct
towards the nine employees
in 2010 and the first respondent was
prima
facie
unfair. This finding required the
appellant to provide clear reasons in order to justify this
differential treatment on objective,
rational and fair grounds.
[30]
There was no such evidence offered by the
appellant that can be gleaned from the record. Thus, the court
a quo
was
correct to find that there had been a lamentable failure on the part
of the appellant to provide such evidence. No witness,
who had any
knowledge of the justification or the manner in which the 2010
retrenchment exercise had taken place, was called to
testify. The
best that Mr Khumalo could offer in his testimony was to note that
’in terms of our current practice the age
restriction has
changed. It used to be 50 at a point in time and then changed to
55.’
[31]
The problem with this evidence was that no
date was even suggested by Mr Khumalo as to when the earlier
retirement age had changed;
that is, whether the change had taken
place in the relevant period between 2010 and 2014. Mr
Khumalo
then sought to justify the differentiated treatment on the basis that
the 2010 retrenchment exercise was a large scale exercise,
whereas in
2014 only the first respondent had been affected.
[32]
One only has to state this evidence to realise that it
provides no rational justification for the differentiation between
the nine
retrenchees and the first respondent insofar as the same
PRMB benefit was concerned. Mr Khumalo then noted that the
first
respondent ‘did not retire’, in that he had taken
up a position at the TCSA with effect from 1 January 2015. But,
as is apparent from the following passage of Mr Khumalo’s
evidence, it did not appear that payment of the PRMB to the 2010
employees was dependent on their contingent unemployment:
‘
The
difference there in my view would have been the employment under a
Total Group subsidiary which would not necessarily have been
the case
with other people who might have had subsequent employment after
2010.
MR
LESLIE: Sure. Mr Khumalo let us first deal with the
answer to the question. Someone who gains; who gets employed
after they are retrenched from Total, would you take away the
benefit? Is that the rule? Is that what the company would
do?
JABULANI
CYPRIAN KHUMALO: To my knowledge no, because when this benefit
is paid out. It is paid out on the basis that
the person is
retiring from Total at that time.
MR
LESLIE: And so really what you are left with is
that it is because Mr Meyer was employed by a subsidiary within
the
group.
JABULANI
CYPRIAN KHUMALO: Based on the influence which the company had in the
process.’
[33]
The sharp point is that, if the appellant
was not concerned with whether the 2010 employees had obtained
alternative employment
after their retrenchment and that this fact
had been irrelevant to their entitlement to receive the PRMB, then
there does not appear
to be any rational basis to justify the
differentiated treatment on the basis that the first respondent took
up employment with
TCSA. Once the first respondent had succeeded in
showing, as he clearly did, that
prima
facie,
the appellant had treated the
2010 employees in a different manner to the conduct to which the
first respondent had been subjected,
then it behoved the first
respondent to provide a rational and justifiable basis for this
differentiated treatment. This it failed
to do, in that there was no
evidence put up to gainsay the first respondent’s case of
differentiated treatment. The only
conclusion that can be drawn is
that reached by the court
a quo,
namely, that the appellant’s decision was arbitrary, capricious
and inconsistent, and thus amounted to an unfair labour practice
in
terms of
s 186
(2) (a) of the LRA.
The cross-appeal
[34]
The court
a
quo
declined to make an award of costs
in favour of the first respondent on the basis that the appellant’s
opposition to the
relief sought before the court
a
quo
had not been vexatious.
Although it was argued by Mr Leslie that, given the appellant’s
opposition to the review application,
the first respondent was
compelled to incur substantial costs, the court
a
quo
exercised its discretion not to
award costs, presumably on the basis that the principal relief sought
by the first respondent was
reinstatement in respect of which he had
been unsuccessful. There does not appear to be any justification to
interfere with the
discretion exercised by the court
a
quo
in this regard.
[35]
However, in this appeal, the first
respondent has been substantially successful in opposing the appeal.
Accordingly, costs should
be awarded in his favour, insofar as the
costs of the appeal are concerned.
[36]
In the result,
1.
The appeal succeeds in part. The order of
the court
a quo
of 9 October 2019 is set aside and replaced with the following:
2.
The arbitration award issued on 14 October
2016 under case number GPCHEM 324 – 14/15 and GPCHEM 405-14/15
is reviewed and
set aside;
3.
The arbitration award is substituted with a
finding that:
3.1
The applicant’s dismissal was
substantively and procedurally unfair;
3.2
The first respondent committed an unfair
labour practice by failing or refusing to grant the applicant his
post-retirement medical
benefit.
3.3
The first respondent is ordered to pay the applicant compensation
equivalent to 6 months’
remuneration calculated at his rate of
remuneration on the date of dismissal;
3.4
The first respondent is ordered to pay the compensation as per
paragraph 5 of this order to applicant
within one month after
delivery of this judgment.
3.5
The first respondent is ordered to provide the post-retirement
medical benefit to applicant, effective
from date of his dismissal
for operational requirements;
3.6
The first respondent is entitled to set off the amount that was paid
to the applicant in respect
of the aforesaid benefit;4.7There is no
order as to costs.
4.
The appellant is ordered to pay the first respondent’s costs in
respect of this appeal.
____________
Davis JA
Coppin JA and Molefe AJA
concur.
APPEARANCES:
FOR THE
APPELLANT:
Adv Boda SC
Instructed
by
Norton Rose Fulbright South Africa Inc
FOR THE FIRST
RESPONDENT:
Adv Leslie
Instructed
by
Malcolm Lyons & Brivik Inc.