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[2021] ZALAC 18
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De Bruyn v Metorex Proprietary Limited (JA 40/2020) [2021] ZALAC 18; [2021] 10 BLLR 979 (LAC) (21 July 2021)
IN THE LABOUR APPEAL
COURT OF SOUTH AFRICA, JOHANNESBURG
Not
Reportable
Case no: JA 40/2020
In the matter between:
THEUNIS DANIEL DE
BRUYN
Appellant
and
METOREX
PROPRIETARY LIMITED
Respondent
Heard (via Teams): 30
March 2021
Delivered: (On date
e-mailed to parties, deemed to be 21 July 2021)
Coram: Waglay JP,
Coppin JA
et
Molefe AJA
JUDGMENT
COPPIN JA
[1]
This is an appeal against the whole judgment of the Labour Court
(Tlhotlhalemaje J),
with the leave of that court, and in terms of
which it dismissed the appellant’s claim that his dismissal by
the respondent
was automatically unfair, declared that the dismissal,
for the purposes of the respondent’s operational requirements,
was
procedurally and substantively fair, and dismissed the
appellant’s other claims for a cell phone allowance, and for
short-term
and long-term incentive bonuses (referred to respectively
as “STIB” and “LTIB”).
Common factual history
[2]
The respondent (“Metorex”), a mining company based in
Johannesburg, has
a controlling interest in the Kinsenda and Ruashi
mines in the Democratic Republic of the Congo (DRC) and in the
Chilumba mine
in Zambia (collectively referred to as “the
mines”).
[3]
The appellant commenced employment with Metorex on 1 July 2003, in
the capacity of
chief operations officer (“COO”). At the
time of his parting from Metorex, his remuneration package was
approximately
R3.5 million per annum. Clause 7 of his contract of
employment stipulated that he was to become eligible to participate
in Metorex’s
incentive bonus schemes.
[4]
Shortly before the resignation of Metorex’s former executive
officer, Mr Ferreira,
in about April 2015, he authorised a
retrospective salary increase for the appellant, apparently as an
incentive to dissuade the
appellant from attending a job interview at
another mining company.
[5]
It is common cause that at the time the mines were unprofitable,
Metorex was experiencing
financial challenges and that after Mr
Ferriera’s resignation in April 2015, the majority shareholder
of Metorex’s
holding company, Jinchuan Group International
Resources Co. Ltd (“Jinchuan”), resolved to take over the
day to day
business management of Metorex.
[6]
Mr Dexin Chen (“Chen”), a Chinese national, replaced Mr
Ferriera as CEO
of Metorex, albeit in an acting capacity. Mr Fugui
Qiao (“Qiao”), who is also a Chinese national, was
appointed to
the newly created position of “Acting Deputy CEO”
of Metorex on 23 April 2015.
[7]
Jinchuan took a decision to replace the general managers at its mines
in the DRC and Zambia
with Chinese speaking nationals, and during
June 2015, through the agency of Chen and Qiao, that decision was put
into effect.
This was part of the implementation of the silo or
“Jinchuan model” in terms of which greater autonomy was
to be given
to the general managers at those mines, and changing the
role of staff at Metorex’s head office from a day to day
management
role of those mines to more of a supervisory role.
[8]
The appellant had been informed that his role was to change under the
new structure and
that he was not responsible for the daily
operations of the mines. The newly appointed general managers
reported directly to Mr
Qiao or Mr Chen on a daily basis.
[9]
During July 2015 the appellant had sent an email to Chen in which he
raised concerns
that he had never been consulted or engaged
concerning the appointment of the general managers, even though they
were supposed
to have reported to him, and that it appeared as if his
position had been made redundant without any input at all from him.
Chen
did not reply to this email.
[10]
During the period 31 July 2015 to 5 August 2015 various
organisational changes within Metorex were
announced. By
September/October 2015 it had become apparent,
inter-alia
, to
Metorex’s human capital executive, Ms Carolyn Hutton (“Hutton”)
that the position of the appellant had possibly
become redundant
since the general managers were working comfortably with Qiao, who
was appointed as deputy CEO on 11 November
2015.
[11]
On 25 November 2015 Metorex issued a section 189(3) letter to all its
head office staff, including
the appellant. Consultation with the
appellant commenced shortly thereafter.
[12]
The appellant had disputed the need for his retrenchment, contended
that Qiao had usurped his duties
and responsibilities as COO and that
his position had not become redundant. He proposed,
inter-alia
,
that instead of retrenching him, that he be “bumped” into
Qiao’s position as deputy CEO because (according to
him) he was
a better candidate and had longer service with Metorex than Qiao.
[13]
By letter dated 14 January 2016 Qiao informed the appellant that
Metorex had carefully considered alternative
positions equal to or
higher than that of the appellant, but that none had become
available.
[14]
On 25 February 2016 the appellant was issued with a retrenchment
notice and was dismissed with effect
from 31 May 2016. At his
request, the appellant was not required to work the three-month
notice period. He was paid one week’s
severance pay for each
year of completed service with Metorex. He was not paid a short-term
incentive bonus (“STIB”)
for the period 1 January 2016 to
31 May 2016. (The appellant raised the issue of his (alleged)
entitlement to a LTIB for the first
time in the Labour Court).
[15]
The appellant referred an unfair dismissal dispute to the Commission
for Conciliation Mediation and Arbitration
(“CCMA”). The
dispute was not resolved at conciliation and a certificate of outcome
to that effect was issued. The
dispute was then referred to the
Labour Court for adjudication as contemplated in section 191(5)
(b)
of
the LRA
[1]
. The appellant
alleged,
inter
alia
,
that his dismissal by Metorex was automatically unfair,
alternatively, was substantively and procedurally unfair. He sought
monetary
compensation under various claim headings, but did not seek
reinstatement. A central plank of his case for automatic unfairness
was that he was discriminated against because he was not a Chinese
national or a Chinese speaking person.
[16]
In his final amended statement of claim the appellant sought the
following relief: (a) an order declaring
his dismissal by Metorex to
have been an automatically unfair dismissal, alternatively, a
substantively and procedurally unfair
dismissal; (b) “maximum
compensation” for the automatic unfair dismissal, alternatively
for the substantively and procedurally
unfair dismissal; (c) the
difference between the severance pay of one week for every year of
service paid to him by Metorex and
what he alleged he was entitled to
in respect of severance pay, namely, the equivalent of one month’s
pay for every year
of service. This difference amounted to R678
744.00; (d) payment of a STIB for the period 1 January 2016 to 31 May
2016, amounting
to R437 500 – 00; (e) payment of a cell phone
allowance for March, April and May 2016, totalling an amount of
R4500–00;
(f) payment of damages in respect of a LTIB in the
amount of R5 370 270 – 62; and (g) costs.
[17]
At the hearing in the Labour Court Metorex relied on the evidence of
Hutton and Chen, while the appellant
gave evidence in support of his
claim.
[18]
In its judgment, the Labour Court made short shrift of both the
appellant’s claim for automatic unfair
dismissal and his
alternative claim based on procedural and substantive unfairness. The
Labour Court found that the appellant’s
dismissal was not
automatically unfair; and that “on the totality of the
evidence, the implementation of the new operating
model in the
respondent had resulted in redundancies, including the position of
COO”. The Labour Court held that the “position
was phased
out” and that it did not understand the appellant’s case
to be that the position still exists. The Labour
Court held that
“there was therefore no logic in having the [appellant] in a
position that did not exist’’.
[19]
The Labour Court held that: “Accordingly, the
main/dominant/approximate or more likely cause of the
[appellant’s]
dismissal was that his position was declared redundant, and not on
any discriminatory grounds as he had alleged.
His selection for
retrenchment and non-appointment in the position of acting Deputy
CEO, in the light of the explanation proffered
by Chen, cannot solely
be reduced to his being non–Chinese. These conclusions also
therefore dispose of any allegations of
substantive unfairness.”
[20]
In respect of the alternative claim of procedural unfairness, the
Labour Court essentially held that
the claim was not well founded and
ultimately concluded in that regard as follows: “even if it can
be said that there were
procedural flaws to the extent that Chen had
formed a
prima facie
view that the [appellant] and other
employees were going to be retrenched, or anything [that] could be
read in [Hutton’s]
and Qiao’s correspondence before the
consultation process was completed, on the whole there is no basis
for any conclusion
to be reached that the process was completely
flawed for the purposes of the objectives of section 189(2) of the
LRA.”
[21]
The Labour Court essentially found in respect of the claim for
severance pay that the amount paid to
the appellant was justified and
fair. The provisions of section 41(2) of the Basic Conditions of
Employment Act (“BCEA”)
were strictly applied to the
appellant, who was a senior employee and earned more than the junior
employees who had received the
‘higher’ severance package
in order to alleviate the financial hardship which they were likely
to suffer due to their
retrenchment. Given their shorter periods of
employment with Metorex the ‘higher’ severance was
reasonable. The Labour
Court criticised the appellant’s
reliance on the decision in
Imperial
Storage and Supply Co Ltd v Field
[2]
,
to the effect that an employer acts unfairly if it pays its senior
employees a higher severance package than its junior employees.
The
Labour Court held that the decision was not authority for the
opposite situation and that the appellant’s reliance on
it was
misplaced.
[22]
The appellant’s claim for a cell phone allowance was also
dismissed, but since the appellant did not
pursue that aspect on
appeal nothing more needs to be said about it. The Labour Court also
found that the STIB claim had no merit
because no targets had been
set for the period claimed by the appellant and he had not asked for
them to be set; his contention
that the conditions for the STIB had
been fictionally fulfilled were without merit because he had not
worked for a six-month period
in 2016 and had asked to be released
from his obligations to work the notice period of three months. The
Labour Court also found
that the appellant inappositely tried to
equate his situation regarding the STIB claim with that of one Le
Roux.
[23]
Lastly in respect of the LTIB claim, the Labour Court, in essence,
found that no decision had been
taken to implement the scheme because
of a drop in share price. It further found that this claim was an
afterthought and had not
been raised by the appellant before he
instituted the claim in court. It found that, in any event, this
claim was not sustainable
in light of the provisions of the King III
report.
[24]
On appeal, the appellant, in essence, contended that the Labour Court
had erred in dismissing his claims
(i.e. with the exception of the
cell phone allowance claim, which he abandoned). On the other hand,
the respondent, in essence,
supported the judgment of the Labour
Court. The claims the appellant is persisting with will be discussed
in turn.
Discussion/Evaluation
Automatic unfair
dismissal
[25]
In terms of section 187(1)
(f)
of
the LRA a dismissal is automatically unfair (
inter
alia
) if the reason for the dismissal
is that the employer unfairly discriminated against an employee,
directly or indirectly, on any
arbitrary ground, including, but not
limited to (
inter alia
)
race, ethnic and social origin, culture or language. However, section
187(2)
(a)
provides
that a dismissal may be fair if the reason for the dismissal is based
on an inherent requirement of the particular job.
[26]
In
TFD
Network
[3]
this Court held that section 187 “imposes an evidential burden
on the employee to produce evidence which is sufficient to
raise a
credible possibility that an automatically unfair dismissal has taken
place. It then behoves the employer to prove the
contrary by
producing evidence to show that the reason for the dismissal did not
fall within the circumstances envisaged in section
187 for
constituting an automatically unfair dismissal.”
[4]
[27]
Regarding the issue of fairness, this Court held there that “in
the context of the LRA, the fairness
enquiry coincides in most
respects with the determination whether the discriminatory job
requirement falls within the exemption
in section 187(2)
(a)
of
the LRA. Relevant considerations in regard to fairness and the
inherent requirements of the job include the position of the victim
of the discrimination in society, the purpose sought to be achieved
by the discrimination, the extent to which rights and interests
of
the victim of the discrimination have been affected, whether the
discrimination has impaired the human dignity of the victim
and
whether less restrictive means are available to achieve the purpose
of the discrimination.”
[5]
[28]
In
TFD
Network
this Court referred with approval
[6]
to the decision of the Supreme Court of Appeal in
Department
of Correctional Services & another v Police and Prisons Civil
Rights Union & others
[7]
,
in
particular where it stated: “an inherent requirement of the job
has been interpreted to mean ‘a permanent attribute
or quality
forming…an essential element…and an indispensable
attribute which must relate in an inescapable way to
the performing
of the job.”
[29]
This Court then held that the test whether a requirement was inherent
or inescapable in the performance
of the job is essentially a
proportionality enquiry; because of the exceptional nature of the
defence, the requirement must be
strictly construed and a mere
legitimate commercial rationale will not be enough; and that the
requirement must be rationally connected
to the performance of the
job, in the sense that the requirement should have been adopted with
a ‘’genuine and good
faith belief that it was
necessary for the fulfilment of a legitimate work–related
purpose and must be reasonably necessary
for the accomplishment of
that purpose.”
[8]
[30]
However, this Court also held in
TFD
Network
that even if that was shown that would not be the end of the enquiry.
In addition, the employer would have to show that it was
“impossible
to accommodate the individual employee without imposing undue
hardship or unsurmountable difficulty.” In
that regard this
Court referred with approval to what the Labour Court had held in
Clothing
&Textile Workers Union & others v Berg River Textiles –
A Division of the Seardel Group Trading (Pty) Ltd
[9]
,
namely that “ultimately the principle of proportionality must
be applied.”
[31]
Turning to the facts of this case – counsel for Metorex, in
essence, conceded that the substantial
reason for Qiao’s
appointment related to language and culture and that a
prime
facie
case of discrimination had been
made out. However, Metorex relied on the proportionality defence. The
argument basically, was that
it had found itself in dire financial
circumstances and something had to be done to save the company. If
the Jinchuan model had
not been implemented, and if Qiao had not been
appointed, but the appellant had been appointed in his stead, the
financial problem
Metorex found itself in would merely have been
perpetuated. Hence it was contended that even though there was
discrimination it
was not unfair and was reasonably justified. The
argument advanced on behalf of the appellant was that the
discrimination was unfair
and based on race, ethnic and social
origin, culture or language, and that, as a consequence, the
dismissal was automatically unfair.
[32]
In substantiation of this claim, the appellant had essentially
testified that Metorex had appointed
Qiao as the acting deputy CEO in
order to displace him and replace him with a Chinese national. Much
was made of a concession made
by Chen in his evidence that the
appellant would not have been retrenched if he was Chinese speaking.
The concession has to be
understood in the context of all the
evidence that Chen and Hutton gave. The legitimacy of the business
rationale for appointing
Chinese speaking mine managers and a Chinese
speaking CEO could not really be rebutted.
[33]
Efficient communication between the general managers, the CEO, and
the Chinese banks and other shareholders
in Hong Kong, was clearly an
imperative, given the seriously adverse financial situation Metorex
found itself in. Chen explained
in detail why Qiao was a more
suitable candidate for the acting CEO position. It did not begin and
end with the fact that Qiao
was Chinese speaking. Qiao and Chen also
had experience and knowledge of mining in accordance with the
Jinchuan model. Qiao did
not only act as deputy CEO, but effectively
had to do the work of CEO after Chen had left South Africa. On the
probabilities, his
appointment (instead of the appellant) was genuine
and in the belief, held in good faith, that it was necessary for the
financial
recovery of Metorex, which is a legitimate purpose, and
that his appointment (in the context of the implementation of the
Jinchuan
model) was necessary for the accomplishment of that purpose.
[34]
Qiao’s appointment as acting deputy CEO and subsequently as
deputy CEO was genuine and its aim
and purpose was not to “bump-out”
the appellant or to displace him. The redundancy of the appellant’s
position
appears to have been a consequence, although not the
purpose, of the implementation of the Jinchuan model and the
appointment of
the Chinese general managers at the mines. Qiao as
deputy CEO may have taken over certain of the duties and
responsibilities of
the COO, but that was in addition to those,
effectively, of the CEO.
[35]
Chen had explained the need for a Chinese speaking CEO, not only to
facilitate communication with the
general managers, but more vitally,
to facilitate the raising of finance with the Chinese shareholders,
banks and financial institutions.
The South African banks, which had
been financing Metorex were threatening to call in their loans and
Metorex was obliged to seek
additional/alternative financing from its
Chinese shareholders and from Chinese financial institutions.
[36]
Chen and Hutton, inter alia, testified to the effect that the
implementation of the Jinchuan model
was rational and justified and
that was not contested by the appellant. Chen, a Chinese national,
replaced Ferreira, the previous
CEO of Metorex. The appointment of
the Chinese nationals as general managers at the mines in the DRC and
Zambia followed as part
of the implementation of the model. Appellant
did not suggest that those appointments were not justified, nor does
the appellant
seem to suggest that their direct communication with
him (i.e. COO) would have been in the best interest of Metorex, given
the
fact that he was not Chinese speaking. He also did not suggest
that his direct communication with the Chinese shareholders and
Chinese financial institutions would have been in the best interest
of Metorex.
[37]
On a conspectus of all the evidence the appellant’s employment
with Metorex was terminated because
his position, i.e. as COO, had
become redundant because of structural changes affected for
operational and financial reasons. The
appellant ironically did not
contest the fact that his position as COO had become redundant, but
he claimed that he ought to have
been appointed to the position to
which Qiao had been appointed, namely, that of acting deputy CEO, and
that he had not been appointed
to that position because he was not
Chinese speaking. This clearly ignored the fact that in the scheme of
things Qiao was a more
suitable candidate for that position.
[38]
The evidence of Chen and Hutton, was uncontested, that Metorex
retained numerous employees who are
not Chinese nationals or Chinese
speaking at executive, office and operational level; that the
implementation of the new model
resulted in about 22 retrenchments at
its head office and also in retrenchments at the mines. The appellant
was not the only casualty
of the implementation of the model. In
respect of the position he was contending for, namely acting deputy
CEO, the ability to
speak Chinese had essentially become an inherent
requirement of the job in order to facilitate direct communications
with the general
managers of the mines, Chinese shareholders, and
with Chinese financial institutions. On the probabilities, it is hard
to contend
that the retention of the appellant (merely to accommodate
him), and retrenching Qiao, would not have imposed undue hardship and
insurmountable difficulties on Metorex. The retention of Mr Peter
Albert, an Englishman, as CEO of Jinchuan in Hong Kong, cannot
serve
to undermine those difficulties, because, unlike the appellant, he
was CEO of Jinchuan, and Chinese speaking as well.
[39]
The Labour Court cannot be faulted in its conclusions in respect of
this claim.
Substantive fairness
[40]
The appellant’s claim under this heading was essentially based
on his allegations that his retrenchment
was due to the fact that
Qiao had taken over his responsibilities as COO, alternatively,
because he, and not Qiao, ought to have
been appointed to the
position of deputy CEO.
[41]
Much of what was said in dealing with the issue of his alleged
automatic unfair dismissal is also applicable
to the issue of the
alleged substantive fairness of the appellant’s dismissal. As
pointed out earlier, the implementation
of the Jinchuan model had
fundamentally changed the way Metorex’s mines and its head
office operated, communicated and were
required to communicate.
According to Hutton, retrenchments at Metorex’s head office
could not have been considered until
the model had been successfully
implemented. The model was initially implemented in the mines in
2015. Conceivably, retrenchments
at head office could only be
considered once the model had been fully implemented.
[42]
It was not shown that the implementation of the model and the
appointment of Chen had been illegitimate
and unwarranted. It is also
not disputed that Metorex was in a dire financial situation and that
a remedy for that situation could
legitimately have required
operational and structural changes in order to, inter-alia, raise
finances and reduce operating costs.
[43]
It became clear after the implementation of the model that the
position of the COO had become redundant.
There was also a general
need to retrench all those at the mines and at head office whose
positions were similarly affected.
[44]
It is noteworthy that the appellant’s main gripe with the
process, was not so much about the
fact that his position as COO had
become redundant, but that he was not the one appointed as the acting
deputy CEO. He did not
seriously dispute the commercial rationale for
consolidating the COO position with that of the deputy CEO (or CEO).
He considered
himself a more suitable candidate for the position to
which Qiao had been appointed. So effectively, in the appellant’s
estimation,
it was Qiao and not him who ought to have been
retrenched, thereby implicitly acknowledging the general need to
retrench in respect
of the COO position.
[45]
Metorex would have had to consider, essentially, whether to retrench
Qiao and promote the appellant,
who held the position of COO, to the
higher position of deputy CEO. This consideration would conceivably
have involved an assessment
to determine who the better candidate was
for the position of deputy CEO within the Jinchuan model. The
appointee was not only
required to do what the COO did previously,
but was required to deputise for Chen and act as CEO in Chen’s
absence. In addition,
this person was supposed to be able to
communicate effectively with the general managers of the mines, the
Chinese shareholders
and the financial institutions in order to raise
the necessary financing.
[46]
Chen testified that Qiao was the better candidate and this was not
only because he was Chinese speaking
or a Chinese national, but
essentially because of his experience and knowledge, including of the
newly implemented model. The incumbent’s
ability to communicate
directly with the general managers of the mines as well as with the
Chinese shareholders and Chinese financial
institutions, was another
important factor. The appellant also fell short in that regard.
[47]
The appellant’s aspiration to be “bumped into” a
higher position, simply because
he had longer service with Metorex
and because his duties as COO had been assimilated into that
position, was misplaced. The appellant
did not claim to have had
experience as deputy CEO or CEO, let alone that he had more
experience than Qiao in such positions, or
in respect of the Jinchuan
model.
Procedural fairness
[48]
The appellant contended that his retrenchment was
a fait accompli
,
and had been decided upon before commencement of the consultation
process with him. According to him, Metorex merely “went
through the motions” in respect of the consultations. He
alleges that his position as COO had become redundant in June or
July
2015 and that he should have been consulted at that stage already.
Metorex denies that his position became redundant as he
alleges and
according to both, Chen and Hutton, this only occurred after the
successful implementation of the Jinchuan model in
November 2015. The
Labour Court held that Metorex only contemplated the retrenchment of
the appellant after the successful implementation
of the changes at
the mines.
[49]
In terms of section 189(1) of the LRA an employer is to consult with
employees (or those representing
them) when it “contemplates”
dismissing one or more of its employees for reasons based on its
operational requirements.
This court accepted that the prevailing
legal position is that, for purposes of section 189, the word
“contemplates”
refers to dismissal as the preferred and
most likely option from the employer’s point of view rather
than the mere possibility;
and that it follows that an employer is
entitled to engage in a process of weighing up various alternatives
before it can be said
that dismissal is contemplated
[10]
.
[50]
On the probabilities Metorex contemplated the retrenchment of, in
particular the appellant, as the
preferred or most likely option
after successful implementation of the Jinchuan model at its mines
and at its head office, i.e.
sometime in November 2015. In any event
as submitted on behalf of Metorex, no prejudice was shown to have
been suffered by the
appellant because of the time when consultations
were commenced with him.
[51]
The appellant tried to extract some mileage from documentation that
had suggested that he had been
retrenched before the consultation
process, but Hutton’s explanation that the documentation had
been erroneous and how that
occurred was reasonable and not
discredited. Taking into account all of the evidence the
appellant’s retrenchment
was procedurally fair.
The LTIB claim
[52]
The appellant alleges in his final statement of claim that the
parties agreed that he would participate
in a LTIB scheme which took
the form of a share option scheme; and that “there was a
contractual obligation on [Metorex]
to timeously approve and to
implement the [LTIB] scheme and afford [him] share options in terms
thereof”; and further, that
Metorex “breached the
contract by failing to timeously approve and to implement,
alternatively extend” the LTIB scheme
to him. He then goes on
to deal with the modalities of the scheme. He alleges
inter alia
,
that in terms of the scheme he was to receive share options
equivalent to 50% of his guaranteed annual package on 1 January of
each year. Later in the statement of claim he alleges the number of
share options he was to receive and dates upon which he was
to
receive them. His claim is for damages allegedly flowing from the
said alleged breach of contract, and is in the amount of R5370270
–
62. At this stage one should point out that in the statement of claim
neither the date of the alleged breach is specified,
nor is there an
allegation specifying whether the agreement was oral or in writing.
[53]
From the appellant’s evidence it was clear that he was not
relying upon or referring, i.e. in
respect of the LTIB claim, to the
incentive benefits clause (clause 7) in the offer of employment made
to him by Metorex, which
became a term of his employment contract,
but was relying upon an alleged oral agreement. According to his
evidence, the scheme
and his participation in it was (orally)
discussed with him by Hutton and Ferreira, and it relates to share
options in the parent
company of Metorex, namely Jinchuan. He
testified that the board of directors of Jinchuan approved a share
incentive scheme at
an annual general meeting (i.e. of Jinchuan) on 2
June 2015. His calculation of the options that were allegedly due to
him pertained
to shares in Jinchuan.
[54]
The case the appellant purported to make out in his evidence was
clearly different to the one that
had been pleaded. Metorex, as a
subsidiary of Jinchuan, could not control the shares of the latter.
The appellant’s employment
was with Metorex and not with
Jinchuan. In any event, he did not testify when and how Metorex
breached the contract which he referred
to in his statement of claim.
He also did not give evidence to the effect that he had notified
Metorex of the alleged breach and
what Metorex’s response was.
[55]
Besides those fundamental difficulties, it is hard to fathom how the
appellant had to be allocated
Jinchuan shares if he was not its
employee, let alone shares in it for 2014 and 2015 if the Jinchuan
board only adopted and approved
the share incentive scheme on 2 July
2015, as he alleges.
[56]
In any event, the appellant never demanded this allocation before. He
claimed it for the first time
in his statement of claim in court. He
could not explain why he had not done so at any earlier stage. Hutton
and Chen denied the
alleged agreements relied upon by the appellant
and denied that any such schemes have been implemented at Metorex or
at Jinchuan,
and it appears to have been common cause that no other
employee at Metorex had received the LTIB benefits contended for by
the
appellant. The appellant’s claim in this regard was not
only contradictory, but was based on what Jinchuan allegedly did and
not on what Metorex did. One would expect his claim to have been
against the former and not the latter.
[57]
The Labour Court’s conclusion that this claim was an
afterthought, had not been proved, and lacked
merit, also taking into
account the King III report, in terms of which bonuses are to be
contractual and not discretionary, is
unassailable.
The STIB claim
[58]
The appellant alleges in his statement of claim, in essence, that in
light of his employment with Metorex
he qualified for participation
in its STIB scheme, which is based on his performance and individual
performance as per the performance
management system. He then
selectively quotes from clause 15 of Metorex’s Group Reward and
Recognition Policy (“the
bonus policy”). He alleges,
inter alia
, that in terms of the bonus policy a minimum of
three months’ service during the measurement period is required
in order
to qualify for the STI, which will be pro-rated for periods
of less than six months and that the STI equated to 30% of his
guaranteed
package. His claim is for a STIB for the period 1 January
2016 to 31 May 2016 in an amount of R437 500 – 00.
[59]
It is notable that the appellant did not refer to the fact that a
six-month bonus period was applicable;
that the bonus policy required
an employee to be at work (or on leave) during the six-month period;
and that any person who left
the employment of Metorex, through
dismissal or resignation, “during the bonus period will not
qualify for any incentive
payment.” A person must be in service
and not be serving a notice period at the date on which the incentive
period concludes
in order for that person to qualify for such an
incentive (clause 15.2).
[60]
The appellant also did not refer to the fact that the bonus policy
required targets to be set in respect
of a participating employee.
According to clause 15.8 of the bonus policy, “targets shall be
set at the beginning of each
bonus period based on the staff member’s
key performance areas”; and the “targets shall clearly
state what level
of performance is required for each employee.”
[61]
It is common cause the appellant did not request targets to be set
for 2016 and that no targets were
set; he did not work for the
required six-month period, he was on notice from March to May 2016,
but at his request, he did not
work during this notice period. He was
not at work when the six-month period, commencing in January 2016,
would have concluded.
In terms of the very policy he purported to
rely upon, he did not qualify for the bonus he claimed.
[62]
Metorex did not act unreasonably, inconsistently, or unfairly by
paying a STIB to Le Roux, and not
to the appellant. Their
circumstances in respect of the bonus differed substantially
.
In the case of Le Roux, the required targets had indeed been set; he
worked for the six-month bonus or incentive period, and had
achieved
the targets. In any event, in terms of the King III report the
remuneration policies and practices applicable to a company’s
executives has to be linked to the executive’s contribution to
the company’s performance. On his own version, the appellant
made no contribution to the performance of Metorex in 2016.
[63]
Counsel for the appellant submitted that it should have been found
that the conditions for the payment
of the bonus to the appellant had
been fictionally fulfilled because they had not been fulfilled due to
Metorex’s conduct
in unfairly dismissing him. Even though this
argument stands to be dismissed merely because his retrenchment was
correctly found
not to have been unfair, there was, in any event, no
duty on Metorex to keep the employment contract of the appellant
alive in
order to enable him to earn the bonus. Further, without
targets having been set, which not even the appellant requested or
insisted
on, how could his performance be judged. It would have been
incumbent for the appellant to show what targets would have been set
and that he would have met them. Hutton did not concede at all that
the appellant had met any of the targets that would have qualified
him for the STIB he claimed. In conclusion, in view of all of the
difficulties, the Labour Court correctly dismissed the STIB claim
of
the appellant.
The Severance pay
claim
[64]
The Labour Court’s criticism of the appellant’s reliance
on
Imperial Storage
is justified. It is a decision that
applies to a situation contrary to that of the appellant and is not
authority for the position
of the appellant in respect of severance
pay. It is not disputed that junior employees retrenched with the
appellant were paid
a severance of four weeks’ remuneration for
each completed year of service, while the appellant was paid one
week’s
remuneration for each completed year of service. Hutton
explained the rationale for this distinction. Junior employees had
shorter
periods of service and were earning much lower salaries than
the appellant at the time of their retrenchment, and the payment to
them was to alleviate the hardship that they were to experience as a
result of being retrenched. The appellant, on the other hand,
was
high earner that did not face such hardship relative to those junior
employees. Another factor was that the appellant had been
given three
months’ notice, whereas those junior employees (who, generally,
had shorter periods of service) had only been
given one month’s
notice.
[65]
The minutes of a consultation meeting held by representatives of
Metorex, which included Hutton and
Ms Hunter, with the appellant on
25 February 2016 show that the disparity in the severance pay was
discussed with the appellant
and that the rationale for the payment
was explained to him. It was pointed out to him, in essence, that he
was effectively to
receive close to 4 months’ salary as
severance and not one month and one week as the junior employees and
that the cost of
his severance pay “makes up for approximately
60% of the total severance figure of all affected corporate
employees.”
Further, it is recorded that the payment made to
him was far more than what junior staff were receiving, and also
noteworthy, that
he was invited to make other proposals on the
matter, which he refused to take up. The Labour Court’s
conclusion, effectively,
that this claim was without merit, cannot be
assailed.
[66]
In the circumstances the appeal stands to be dismissed. The Labour
Court made no costs order and there
was no cross-appeal against that
order. However, in respect of the actual appeal there is no reason
why the costs of this appeal
should not follow the result. However,
the use of two counsel by the respondent was not justified.
[67]
In the result:
67.1
The appeal is dismissed;
67.2
The appellant is to pay the costs of the appeal.
__________________
P Coppin
Judge of the Labour
Appeal Court
Waglay JP and Molefe AJA
concur in the judgment of Coppin JA.
APPEARANCES: (via TEAMS)
FOR THE
APPELLANTS:
Riaz Itzkin
Instructed by Edward
Nathan Sonnenbergs Inc
FOR THE RESPONDENT:
A Redding SC with MJ Van As
Instructed
by Solomon Holmes Attorneys
[1]
Labour Relations Act 66 of 1995
.
[2]
(1993) 14 ILJ 1221 (LAC)
[3]
TFD
Network Africa (Pty) Ltd v Feris
(2019) 40 ILJ 326 (LAC).
[4]
Para
27.
[5]
Para
35.
[6]
Para
36.
[7]
(2013)
34 ILJ 1375 (SCA) para 23.
[8]
TFD
Network
(above) para 37.
[9]
(2012) 33 ILJ 972 (LC).
[10]
SACCAWU
& others v JDG Trading (Pty) Ltd
(2019) 40 ILJ 140 (LAC)
para
26- quoting with approval from Du Toit et al
Labour
Law Through the Cases
(Lexisnexis October 2017 Update) LRA Chapter 8, Commentary on
s
189(1).