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[2021] ZALAC 57
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Gauteng Provincial Legislature v Commission for Conciliation, Mediation and Arbitration and Others (JA87/2020) [2021] ZALAC 57; (2022) 43 ILJ 616 (LAC) (25 November 2021)
IN
THE LABOUR APPEAL COURT OF SOUTH AFRICA, JOHANNESBURG
Reportable
Case
no: JA87/2020
In
the matter between:
GAUTENG
PROVINCIAL LEGISLATURE
Appellant
and
THE
COMMISSION FOR CONCILIATION,
MEDIATION
AND ARBITRATION
First
Respondent
COMMISSIONER
ERIC MYHILL N.O.
Second
Respondent
SIPHO
MALEFANE
Third
Respondent
GIDEON
WISSIE
Fourth
Respondent
COLLEEN
MOGANE
Fifth
Respondent
ANDISWA
NGCINGWANA
Sixth
Respondent
Heard:
26 August 2021
Delivered:
Deemed
to be the date the judgment is emailed to the parties (
25
November 2021
)
Coram:
Waglay JP, Jappie et Coppin JJA
JUDGMENT
COPPIN
JA
[1]
The Labour Court (Kirstein AJ) dismissed an application to review and
set aside an
arbitration award of the second respondent (“the
arbitrator”), acting under the auspices of the first respondent
(“the
CCMA”), in favour of the third to sixth respondents
(collectively referred to as “the employees”) and in
terms
whereof it was,
inter alia
, found that the appellant
(“the legislature”) had unfairly dismissed the employees
and was ordered to reinstate them
retrospectively with full backpay.
This is an appeal against that decision with the leave of that court.
[2]
The issue for resolution by the arbitrator essentially related to
whether the legislature
had dismissed the employees, or whether their
employment contracts had been terminated through the effluxion of
time. The employees,
in their referral to the CCMA, essentially,
contended that they were in permanent employment with the legislature
when their contracts
were terminated, albeit in terms of a tacit
contract. The legislature, on the other hand, maintains that they
were employed on
fixed-term contracts that had come to an end.
Factual
Matrix
[3]
The appellant is a constitutional entity served,
inter-alia
,
administratively by the Legislative Services Board (“the LSB”),
created in terms of the Gauteng Provincial Legislature
Services
Act
[1]
. The LSB is empowered in
terms of that Act to determine the size and organisation of the fixed
establishment and, inter-alia, to
determine and prescribe conditions
of service, appointments, et cetera.
[4]
The third respondent (“Mr Malefane”) was employed by the
legislature as
director of Institutional Support Services. He
commenced his employment with the legislature on 3 January 2005. On 9
December 2006,
he entered into a four year fixed-term contract which
was to terminate on 30 November 2010. Thereafter, he continued to be
employed
by the legislature on a fixed term basis, albeit tacitly and
without an express, written contract to that effect. In accordance
with a resolution of the LSB, to extend all fixed-term contracts of
senior managers to 30 June 2015, Mr Malefane signed a further
fixed
term contract terminating on that date. His continued employment from
1 July 2015 forms the subject of the dispute that had
to be resolved
in this matter and is discussed in the course of this judgment.
[5]
The fourth respondent (“Mr Wessie”) was employed by the
legislature as
Executive Director, Corporate Support Services. He was
first employed on 3 January 2005. On 1 December 2006, he concluded a
fixed-term
contract with the legislature that was to expire after
four years on 30 November 2010. Upon expiry of that contract, he
continued
to be employed by the legislature on a fixed-term basis,
albeit tacitly, without an express, written contract to that effect,
until
1 June 2014. In accordance with a resolution of the LSB to
extend all fixed-term contracts of senior managers to 30 June 2015,
Mr Wessie also signed a further fixed-term contract terminating on
that date. His continued employment from 1 July 2015 also forms
the
subject of the dispute that had to be resolved in this matter and is
discussed in the course of this judgment.
[6]
The fifth respondent (“Ms Mogane”) was employed by the
legislature as
Director, Member Affairs, Corporate Support Services.
She commenced her employment on 1 February 2001 and on 1 December
2007 she
also entered into a fixed-term employment contract for a
period of three years terminating on 30 November 2012. After that
date
she remained employed by the legislature in the same position,
albeit tacitly, without an express, written contract to that effect.
Following the LSB resolution of 13 August 2013, she also concluded a
written fixed-term contract of employment with the legislature
that
was to terminate on 30 June 2015. The basis of her continued
employment by the legislature subsequent to that date is the
subject
of the dispute and is discussed in the course of this judgment.
[7]
The sixth respondent (“Ms Ngcingwana”) was employed by
the legislature
as Manager, Budgeting and Planning, on a five year
fixed-term contract that commenced on 1 October 2010 and terminated
on 30 September
2014. On her version, her fixed term contract was
extended for a year, and was to terminate on 30 September 2015.
Subsequently
she remained employed by the legislature, as with the
other employees, without a written contract to that effect and,
similarly
to the other employees, the nature of her further
employment by the legislature was the subject of a dispute which is
discussed
later in the judgment.
[8]
It is common cause that in about 2013, there was a directive for a
proposal to be
made to the Remuneration Committee of the legislature
for the fixed-term contracts of senior managers, that had expired or
were
to expire, to be replaced with a rigorous performance-based
contractual regime. The proposal was presented to the Remuneration
Committee and approved by that committee for recommendation to the
LSB.
[9]
The LSB held a meeting on 7 August 2013 where the recommendation of
the Remuneration
Committee was considered. (a) The memorandum from
the committee proposed “a reconsideration of the five year
fixed-term contracts
to be replaced with rigorous performance-based
contracts.” (b) the memorandum referred to the fact that “[a]
number
of contracts of senior managers had expired and the Executive
Director of Corporate Support Services [i.e. Mr Wessie] had presented
a proposal requesting that the expired contracts be extended
retrospectively from the date on which they expired.” The
argument
in favour of their proposal being that the situation, where
contracts had expired, created uncertainty; (c) the memorandum
mentions
that in terms of the proposal – there was no evidence
that the fixed contract regime had achieved its intended goals,
namely,
institutional and individual performance; that fixed-term
contracts provided the employees with no guarantee of renewal, even
when
there was evidence of consistent satisfactory performance; and
it was also argued, that, the fixed-term contracts did not provide
the employer “with the flexibility of separation where there is
evidence of recurring unsatisfactory performance.”
[9]
As per the proposal, the Remuneration Committee had recommended to
the LSB “to
extend the contracts and replace them with the
performance-based contracts till 2015.” In terms of its
resolution of 7 August
2013 the LSB,
inter-alia
, approved the
proposal for “the extension of fixed term contracts for senior
managers as recommended by the Performance and
Remuneration
Committee”, and adopted the report of that committee.
[11]
It is not in issue that the resolution of the LSB was interpreted to
mean that while the policy
for the performance-based contact was
still being developed – the contracts that had expired or were
about to expire were
to be extended until 30 June 2015. And that it
was anticipated that the extension would allow enough time for the
policy (i.e.
on performance-based contracts) to be developed fully
and to be communicated to the employees to whom it was to apply.
[12]
It is also common cause that the affected senior managers, including
the employees, were presented
with written extensions of their
employment contracts, i.e. presumably effective from the time when
their existing contracts expired
until 30 June 2015; that they were
asked to consider and sign those extensions if they accepted them. It
further appears to be
common cause that the employees accepted and
signed those extensions. Those documents have not been included in
the record.
[13]
There was no further express extension of the contracts before 30
June 2015, but as from 1 July
2015 the employees continued to be
employed by the legislature in the same, respective, capacities,
albeit tacitly. The ultimate
issue for determination was on what
basis they were employed from 1 July 2015, i.e. whether it was on a
tacit, fixed-term basis,
which was subsequently extended to 30 June
2016, as the legislature contends, or as the employees contend, on a
tacit, but permanent
basis.
[14]
Before 30 June 2015, and particularly on 15 June 2015, Mr Malefane,
the third respondent, who
was responsible for human resources,
prepared a memorandum in order to request the LSB to: (a) approve the
extension of the contract
of senior managers and; (`b) to authorise
the secretary of the appellant, Mr Skosana, to implement the revised
performance management
and development system framework for managers;
and (c) to recommend that the revised performance management and
development system
framework be developed and approved by 15 August
2015.
[15]
According to Mr Skosana, the Secretariat Committee of the legislature
discussed the memorandum
and he, as the secretary, prepared a
memorandum for submission to the LSB containing all the options
discussed and proposed to
the committee in that regard. The presiding
officers, at a meeting also attended by,
inter alia
, the
fourth respondent (Mr Wessie), adopted a resolution in terms of which
they rejected all the proposals in the memorandum and
passed a
resolution that all fixed-term contracts be extended to 30 June 2016;
that the affected positions be advertised in January
2016; and that
the entire process be finalised by the end of June 2016.
[16]
On 11 December 2015, the LSB held a meeting where it,
inter-alia
,
considered and accepted the resolution of the presiding officers, and
in effect, resolved that the employment contracts of those
same
managers be extended by one year, that is, retrospectively, from 1
July 2015 to 30 June 2016 and to terminate the services
of all senior
managers by 30 June 2016. The positions were to be advertised and the
affected persons, including the employees,
were required to re-apply
for the positions they occupied up to 30 June 2016.
[17]
In an e-mail dated 15 March 2016, bearing the subject heading,
“Mandate to recruit for
the positions of Director Institutional
Support Services and Director Members’ Affairs”,
addressed to the fourth respondent,
Mr Wessie and copied,
inter
alia
, to the third respondent, Mr Malefane, the secretary of the
legislature, Mr Skosana, informed as follows: “as you are
aware,
the position of Directors: Institutional Support Services
(ISS) and Members’ Affairs will become vacant when the contract
of employment expires in June 2016. In order to ensure a smoother
transition, the legislature’s Services Board decided that
all
positions expiring in June 2016 must be advertised. In line with the
LSB decision, kindly receive herewith a mandate to recruit
for the
position of Directors: ISS and Members’ Affairs. Please sign
the memo and submit to Ms Wanda Els and send me a copy.”
[18]
In March 2016, Mr Skosana also notified the senior managers
(including the employees) that their
contracts would terminate at the
end of June 2016 and urged them to apply for their positions as per
the resolution of the LSB.
The employees did not apply for their
positions. Instead, in response, the employees’ attorneys of
record wrote letters to,
inter alia, the Speaker and Deputy Speaker
of the legislature and to the secretary, Mr Skosana, all dated 23
March 2016 and with
more or less identical content, demanding on
threat of legal action, inter alia, (a) an immediate withdrawal of
the “termination”
letter in respect of each of the
employees; (b) an undertaking before 12 April 2015 that the
legislature would not proceed with
the advertisement of those
employees’ positions or proceed with the “headhunting of
people to fill in their positions”;
and significantly, (c) an
undertaking that their clients’ “fixed term contracts of
employment have been automatically
renewed and/or with an expectation
to be retained as permanent employees of” the legislature.
[19]
Importantly, these letters briefly record the history of employment
of each of the employees
and, inter alia, states the following:
‘
3.
Our clients instruct us that the fixed term contracts cannot legally
be extended retrospectively as in any event there is no
existence of
such a retrospective one (1) year extended fixed term contracts of
employment entered into and signed by them and
the GPL effective
[from] 1 July 2015 to 30 June 2016. We are instructed further by our
clients that when their fixed term contracts
of employment lapsed the
GPL allowed them to continue fulfilling their duties and
responsibilities to date, thus effectively automatically
renewing
their contracts.
4. Indeed it must be
recorded that our clients are as a matter of fact, de facto employed
by the GPL on the basis that there has
been an automatic renewal of
their fixed term contracts of employment of five (5) years which have
been renewed in certain instances
on more than a single extra term.
5. Given the aforesaid
facts, our instructions are that the decision by the GPL to terminate
our clients’ employment in your
letter dated 15 March 2016
cannot be countenanced as it constitutes an unfair dismissal which is
liable to be challenged and set
aside.’
[20]
In its penultimate paragraph, the letter informs of the employees’
willingness “to
entertain other reasonable suggestions
concerning their employment with the GPL…”
[21]
Pursuant to the letter, the employees brought an urgent application
in the Labour Court seeking
to interdict the recruitment process, but
it was struck from the roll for lack of urgency. Those senior
managers who did re-apply
for their positions, including Mr Skosana,
and save possibly for one, were appointed on performance-based
contracts for a fixed
term of five years (i.e. from 1 July 2016).
[22]
On 7 July 2016, the employees referred an unfair dismissal dispute,
relying on section 186(1)(b)(ii)
of the Labour Relations Act (“the
LRA”), to the CCMA. On 4 August 2016, the dispute was
conciliated, albeit unsuccessfully.
[23]
Section 186(1)(b)(ii) provides that a “dismissal” means
that “an employee employed
in terms of the fixed term contract
of employment reasonably expected the employer… To retain the
employee in employment
on an indefinite basis but otherwise on the
same or similar terms as the fixed term contract, but the employer
offered to retain
the employee on less favourable terms, or did not
offer to retain the employee.”
The
arbitration
[24]
In his award, which was rendered on 17 January 2017, the arbitrator
described the issues to be
decided as follows:
“
8.
Whether the applicants were employed on a permanent basis,
alternatively on fixed term contracts at the time of the termination
of their services.
9. Whether, in the event
of finding that the applicants were employed on a permanent basis at
the time of termination of their services,
they were dismissed in
terms of s 186 of the [LRA], and, if so, whether their dismissals
were procedurally and substantively fair.
10. If held that they
were employed on fixed term contracts at the time of termination of
their services, whether:
10.1 the applicants
reasonably expected the respondents to retain them in employment on
an indefinite basis but otherwise on the
same or similar terms as the
fixed term contract, but the respondents did not retain them (section
186(1)(b)(ii) of the [LRA]);
10.2 alternatively,
whether Ngcingwana had a reasonable expectation of renewal of her
fixed term contract on the same or similar
terms (section
186(1)(b)(i))
11. If they were unfairly
dismissed, what relief would be appropriate.”
[25]
Having concluded (
inter-alia
) - that “the probabilities
favour the conclusion that the [legislature] envisaged replacing the
fixed-term contract applicable
to senior managers with an
indefinite/permanent one” and that Mr Skosana’s exclusion
from the performance-based contracts
was probably the reason why the
contract that was later concluded with him was a five year contract
-the arbitrator went on to
consider the status of the other employees
after their fixed-term contracts had expired on 30 June 2015.
[26]
The arbitrator concluded, in effect, that the no-variation clause, in
the contracts that had
been extended until then, precluded the coming
into existence of the proposed, extended fixed term contracts and
that their status
was dependant on whether it was proved on a balance
of probabilities that the parties entered into “a tacit
agreement that
their continued employment would be of an indefinite
nature.” According to the arbitrator, the question was whether
that
could “reasonably be inferred from their conduct.”
[27]
The arbitrator then went on to reason as follows: “ 96... There
was a delay of almost 6
months in resolving to extend their contracts
retrospectively without any consultation with the [affected
employees]. Prior to
the termination letters they received on 18
March 2016 there is no documentary evidence that they were informed
that their contracts
would terminate on 30 June 2016 and that they
could apply for their jobs. As stated above, there is documentary
evidence supporting
their view that the fixed-term regime would be
replaced by a permanent performance-based regime. The decision made
by the LSB on
11 December 2015 was contrary to the resolution made by
the LSB on 7 August 2013 and the steps taken thereafter by the
administration
of the [legislature] to prepare for the implementation
of the new regime is consistent with the understanding of the
[employees].
I agree with Mr Goosen that there is no documentary
evidence to support the notion that the LSB resolved to replace the
fixed term
regime was another fixed term regime which the
[legislature] claims took place.… 97. While it is common cause
that the applicants
did not refuse to sign an extension of their
fixed term contracts to 30 June 2016 (such were not presented to
them) their opposition
to this is consistent with their belief that
their fixed term contracts would be replaced by an indefinite
performance-based regime….98.
In these circumstances, it can
reasonably be inferred from the conduct of the parties that they
entered a tacit agreement that
the continued employment of the
applicants would be of an indefinite nature from 1 July 2015….
99. On the same grounds,
I also find that [the employees] proved, on
a balance of probabilities, that after their fixed term contracts
expired on 30 June
2015, they reasonably expected the [legislature]
to retain them on an indefinite basis but the [legislature] did not
offer to retain
[the affected employees]. Instead, it unlawfully
extended such contracts with retrospective effect to 1 July 2015 and
informed
[the employees] on 18 March 2016 that such contracts would
terminate on 30 June 2016…. 100. This amounted to a dismissal
in terms of s 186(1)(b) (ii) of the [LRA].”
[28]
The arbitrator then proceeded to make an award in the following
terms:
“
104.
The [employees] proved on a balance of probabilities that they were
dismissed by the [legislature]….105. The [legislature]
failed
to prove that these dismissals are procedurally and substantively
fair….106. The [legislature] is ordered to reinstate
the
applicants… to the indefinite contracts of employment they had
with the respondent from 1 July 2015 with retrospective
effect from
the date of their dismissal, i.e. 1 July 2016….107. The
[employees] must report for duty at the [legislature]
on 1 February
2017.… 108. The respondent is to pay…”
[29]
Thus, in sum, the arbitrator found that the employees had proved that
when their fixed term contracts,
that had been extended in terms of
the LSB resolution of 7 August 2013, to 30 June 2015, had expired,
they continued to be employed
by the legislature in terms of a tacit
agreement on an indefinite/permanent basis and that the notice given
to them on 18 March
2016 to the effect that their contracts would
terminate after 30 June 2016, constituted a dismissal in terms of s
186(1)(b)(ii)
of the LRA because the employees had a reasonable
expectation that they would be employed on an indefinite/permanent
basis.
The
Labour Court (“the court a quo”)
[30]
The court
a quo
concluded that the determination of the
arbitrator that after 30 June 2015 the employees remained employed in
terms of tacit indefinite
contracts was “based on justifiable
inferences on facts presented at the arbitration and therefore the
determination does
not fall within the ambit of a defect as referred
to in section 145 of the LRA.”
[31]
The court
a
quo
then referred to a passage of this Court’s decision in the
matter of
Department
of Agriculture Forestry and Fisheries v Teto & others
[2]
(“
Teto
”)
where it was held that if after the expiry of a fixed-term contract
an employee continues to the render services to an
employer and to be
remunerated for them “the contract is deemed to be tacitly
located or novated” and that “[t]he
new contract may be
on varied terms and its duration period must be determined in light
of the circumstances of each case”,
and that “unless a
contrary intention can be inferred from the facts, it will generally
be assumed that the new contract
[is] of indefinite duration,
terminable by reasonable notice given by either party.”
[32]
The court
a quo
then concluded with reference to the facts of
this case that the intention can be inferred that the employees’
employment
became contracts of indefinite duration after 30 June 2015
and notably, that the resolution of the LSB of 11 December 2015 “was
not implemented and/or agreed upon and therefore had no legal
effect.”
[33]
The court
a quo
then went on to find that the termination of
the employees’ employment on 30 June 2016 “amounted to a
dismissal in
terms of section 186(1)(a) of the LRA.” Crucially,
this was contrary to the conclusion of the arbitrator, namely, that
it
was a dismissal as contemplated in section 186(1) (b)(ii) of the
LRA. However, the court
a quo
attached no significance to this
difference in finding and, instead, went on to hold that the
arbitrator did not have to determine
whether the dismissal amounted
to one as contemplated in section 186(1)(b) of the LRA and that the
arbitrator’s finding to
that effect “is not a defect to
the extent that the arbitration award should be reviewed and set
aside”, i.e. the court
a quo
found that the arbitrator’s
reference to a different section of the LRA was immaterial.
[34]
Having dismissed an argument that the CCMA lacked jurisdiction to
entertain the dispute for arbitration
because of an alleged late
referral to that body, and having found that the appellant had failed
to prove that the dismissal was
fair, the court
a quo
dismissed
the legislature’s application to review and set aside the
arbitrator’s award and made no order as to costs.
Discussion
[35]
Briefly, regarding the lack of jurisdiction point - The appellant
repeated this point in argument
before this court, but in a further
note and in response to the supplementary argument on behalf of the
employees on the point,
the appellant, i.e. the legislature, opted
not to pursue the jurisdictional point any further, ostensibly
because of this court’s
decision in
Epstein
[3]
,
where it was held that the CCMA had jurisdiction to arbitrate the
dispute even though the certificate of conciliation was invalid
and
would only have been deprived of such jurisdiction to arbitrate if
the certificate had been set aside on review.
[36]
While the withdrawal of the jurisdictional point is noted, it is
necessary to emphasise that
in fact the point lacked merit for a more
obvious and fundamental reason. The referral of the dispute to the
CCMA was not late.
It is common cause that the employees left the
service of the appellant on 30 June 2016. In terms of section
190(1)(b) of the LRA
that would have been the date of their
dismissal. In terms of section 191(1)(b)(i), the referral to the CCMA
must be made within
30 days of the date of dismissal. The referral in
this case was made on 7 July 2016. The 30 days – reckoned in
accordance
with section 4 of the Interpretation Act
[4]
would only have expired, at the earliest, on 30 July 2016. The
referral was therefore in time. The conciliation certificate was
not
invalid and the CCMA had jurisdiction to arbitrate the dispute.
[37]
Turning to the merits - in terms of section 192 of the LRA, it was
incumbent on the employees
to establish the existence of the
dismissal (section 192(1)) and then the employer was to prove the
fairness of the dismissal (section
192(2)).
[38]
Section 186 defines “dismissal”. The two relevant
subsections for discussion in this
matter are subsections 186(1)(a)
and (b). In terms of the former, a dismissal occurs when the employer
terminates the employment
with or without notice. And section
186(1)(b) refers to instances where the employer did not terminate
the employment, but the
employment would have come to an end through
the effluxion of time (i.e. the so-called, “fixed-term
contract”), and
the employee had specific, reasonable
expectations that the contract of employment would be renewed, but
those expectations were
thwarted by the employer.
[39]
More particularly, it is envisaged in terms of section 186(1)(b)(i)
that the employee has a reasonable
expectation that the fixed-term
contract would be renewed on the same or similar terms, but the
employer offers to renew it on
less favourable terms, or does not
renew it. And, in terms of section 186(1)(b)(ii), it is envisaged
that the employee reasonably
expected to be retained, i.e. after the
fixed-term contract had come to an end, on an indefinite basis, and
on the same, or similar
terms as the fixed-term contract, but the
employer offered to retain the employee on less favourable terms, or
did not offer to
retain the employee.
[40]
There is a fundamental difference between the dismissal postulated in
the scenario contemplated
in section 186(1)(a) and that envisaged in
section 186(1)(b). The former is common where employees are in
permanent or indefinite
employment, and the latter, as the subsection
expressly contemplates, are confined to situations where the employee
is employed
on a fixed-term basis.
[41]
An employee is not employed permanently and on a fixed-term basis at
the same time by the same employer.
It is either one of the other. An
employee who is in permanent, or indefinite, employment at the time
of his or her dismissal,
does not have an expectation that his or her
employment is going to be converted into permanent or indefinite
employment, as envisaged
in section 186(1)(b), as that expectation
has already been met.
[42]
In this matter the arbitrator, unfortunately, treated the scenarios
envisaged in those subsections,
essentially, as the same. This is
apparent, from both, his description of the issues to be decided and
his findings in the award.
The arbitrator seemingly found at once
that the employees were employed by the legislature on an indefinite
basis from 1 July 2015
and, effectively, that during that same period
they were employed on fixed-term contracts – hence his
conclusion that they
had proved that they were dismissed in terms of
section 186(1)(b)(ii) of the LRA.
[43]
The arbitrator also clearly failed to take into account that if there
was a dismissal it would
only have occurred on or after 30 June 2016,
since it is common cause that the employees were employed by the
legislature until
then. They left the service of the legislature on
or after 30 June 2016. Irrespective of the nature of the employment
from 1 July
2015 – in terms of section 190 of the LRA that date
would have constituted the date of their dismissal, that is, if the
dismissal
had been proved as envisaged, either in section 186(1)(a),
or (b).
[44]
The arbitrator, seemingly, was not critical of the opening statement
made on behalf of the employees
by their legal representative, Mr
Goosen, who stated: “… Essentially what we are saying,
is that at the time that
we, our services were terminated, our
argument …
is that we were
actually already at that point in time permanent employees
”
(Emphasis
added).
[45]
If that was their contention, then they could not also rely on
section 186(1)(b). By, also relying
on that subsection, they were,
essentially, contradicting themselves, in that they could be taken
thereby to have implicitly conceded
that as from 1 July 2015 they
were employed on a fixed-term basis, as was contended by the
legislature.
[46]
The court
a
quo
wrongly attached no significance, to what was, essentially, a pointer
to a contradictory finding of the arbitrator concerning the
nature of
the employees’ employment from 1 July 2015 to 30 June 2016. The
court
a
quo
was of the view that it was not a material defect, whereas it was. It
effectively showed that the arbitrator did not appreciate
the true
nature of the issues that had to be decided, and of the enquiry(-ies)
that had to be conducted in that regard. All of
which were material
irregularities that impacted the outcome of the arbitration and
therefore, reviewable
[5]
.
[47]
Another material, reviewable, error by the arbitrator, and seemingly,
the court
a quo
, was to effectively apply the reasonable
expectation test, contemplated in section 186(1)(b), to the period
starting 1 July 2015,
that is, after the fixed-term contracts, that
had been extended in terms of the LSB’s resolution of August
2013, were supposed
to have ended; and then to reason (in effect)
that the “expectation”, in this instance, of permanence,
at that point
automatically translated into the employees being
permanently, or indefinitely, employed from 1 July 2015, because
their (individual)
expectation in that regard was reasonable. But
that approach clearly ignored the relevance of actual consensus and
the probabilities
regarding the employees’ status as from 1
July 2015.
[48]
Both, the arbitrator and the court
a
quo
,
found that from 1 July 2015 the employees had been employed on a
permanent/indefinite basis pursuant to a tacit agreement to that
effect between the parties. That conclusion was not reasonable, in
light of all the relevant facts. In
Teto,
this
court made it clear that if employees continued to be employed by the
employer after their fixed-term contracts had terminated,
the new
contract would be deemed to be of indefinite duration only if “a
contrary intention could not be inferred from the
facts”
[6]
.
[49]
The mere fact that an employee continues to work in the same position
for the same employer after
his fixed-term contract had come to an
end does not mean that his fixed-term contract had now “morphed”
into permanent
employment, or into employment of indefinite
duration
[7]
. It may still be on
a fixed-term basis, albeit tacitly. Ultimately, it depends on the
facts, or the inferences that may be drawn
from the facts.
[50]
Different and conflicting tests have been applied for inferring a
tacit contract
[8]
. It is trite
that, in terms of one test, the “preponderance of
probabilities” test
[9]
, in
order for a party to prove a tacit contract it is necessary, to not
only allege, but to prove unequivocal conduct that establishes
on a
preponderance of probabilities, usually by a reasonable inference
drawn from the relevant admitted facts, that the parties
intended to
and did in fact contract on the terms alleged. Another test, which is
referred to as the traditional or “no other
reasonable
interpretation” test, had been formulated in
Ocean
Commodities
[10]
as follows: “In order to establish a tacit contact it is
necessary to show, by a preponderance of probabilities, unequivocal
conduct which is capable of no other reasonable interpretation than
that the parties intended to, and did in fact, contract on
the terms
alleged. It must be proved that there was in fact
consensus
ad idem
.”
[51]
Because of the difference of emphasis in these two tests a synthesis
of the two has been accepted
and applied to infer the existence (and
terms) of a tacit contract
[11]
.
It incorporates the best of the two tests. In
Christie’s
The Law of Contract in South Africa
[12]
the synthesis has been summarised as follows: “In order to
establish a tacit contact it is necessary to prove, on a
preponderance
of probabilities, conduct and circumstances that are so
unequivocal that the parties must have been satisfied that they were
in
agreement. If the court concludes on the preponderance of
probabilities that the parties reached agreement in that manner, it
may
find that tacit contract established.”
[52]
The synthesis, essentially, requires the court to embark on a
three-stage, as opposed to a two-stage,
process
[13]
.
The first stage would be to decide on a balance of probabilities what
facts have been established. The second stage would be to
decide,
also on a balance of probabilities, what conclusion, consistent with
those established facts, is correct, and a third stage
would be
interposed between those two, in terms of which the court has to
decide how the proved facts, that is including the conduct
of each
party and the relevant circumstances, was probably interpreted by
each of the parties. It is said that at the third stage
the court is
essentially looking at the matter “through the eyes of the
parties – at their conduct and the circumstances”
and
“unless the conduct in those circumstances was so clear, so
unequivocal, so unambiguous that the parties must have regarded
themselves in agreement, there is no contract.”
[14]
[53]
In this instance, the following,
inter alia
, was established:
(a) that the employees had been employed on the basis of fixed-term
contracts for a long period of time (Mr Malefane
from 2006; Mr Wessie
from 2007; Ms Mogane from 2007, and Ms Ngcingwana from 2010); (b)
there were previous tacit extensions of
the contracts of senior
managers, including these employees (possibly with the exception of
Ms Ngcingwana) i.e. on the same terms
as those that previously
applied; (c) the fixed term regime they had been employed under also
had some performance-base, which
was admittedly regarded as weak and
ineffective; (d) on 7 August 2013 the LSB adopted a resolution in
terms of which,
inter alia
, (i) the existing contractual
regime for senior managers was to be replaced with a more rigorous
and effective, performance-based,
one; and (ii) all fixed term
contracts that had expired, or were about to expire, were extended to
30 June 2015, to allow for the
new regime to be developed.
[54]
Furthermore, it was established: (e) that written contracts with
expiry date 30 June 2015 were
signed by the individual employees (Ms
Ncingwana’s position in this respect is equivocal); (f) that
there was no written
extension of those contracts; (g) that,
notwithstanding, the employees remained in the employment of the
legislature beyond that
date; (h) that the rigorous,
performance-based system that was to be developed had not been
finalised by 30 June 2015; (i) that
some proposal was made by,
inter
alia
, Mr Malefane that the performance system been developed by,
inter alia
, his unit, be adopted by October 2015; (j) that the
proposal was not accepted by either the presiding officers, or the
LSB; (k)
that instead, on 11 December 2015 the LSB resolved (i) that
all fixed-term contracts that would have expired on 30 June 2015 were
to be extended from that date to 30 June 2016, when they were to
expire; and (ii) that the positions of those affected by the change
(i.e. those in senior management positions, including the employees)
should be advertised and that the entire process be finalised
by the
end of June 2016.
[55]
It was also established: (l) that the employees were informed of the
resolution of the LSB through
Mr Malefane and Mr Wissie; (m) that in
March 2016, the employees were again informed of the resolution of
the LSB, namely, that
their fixed-term contracts were to expire on 30
June 2016 and they were urged to re-apply for their positions; (n)
that the senior
managers who applied (possibly with one exception)
were re-employed to their positions on a fixed-term, subject to a
rigorous performance-based
system; and (o) the employees refused to
accept the resolution of the LSB and did not re-apply for their
positions.
[56]
A conclusion that the employees automatically became employed
permanently after 30 June 2015
cannot be correct for a number of
reasons. The LSB never, at any stage, be it before, or on 7 August
2013, or thereafter, resolved
that the employees would be employed on
a permanent basis after 30 June 2015. The resolution of 7 August 2013
to extend fixed-term
contracts to 30 June 2015 was unarguably to
allow for the development of the rigorous performance regime that was
to replace a
weak and ineffective one. At the time of the resolution
it must have been generally anticipated that the new regime would be
finalised
and accepted for implementation before or by 30 June 2015.
Accordingly, it must follow that if the new regime had not been
finalised
and accepted by then, the
status quo
would remain
until that occurred.
[57]
Further, there is no evidence that the regime that was to be
developed by,
inter alia
, Mr Malefane’s unit, was
finalised by 30 June 2015, let alone, soon after that date, or that
it would have been acceptable
to the LSB in all respects. Clearly the
new system could only have been implemented after it had been
accepted and approved by
the LSB. Conceptually, therefore, extending
the fixed-term contracts, albeit retrospectively, from 1 July 2015 to
30 June 2016,
requiring the positions of senior managers that were
affected to be advertised and requiring the incumbents to re-apply
for them,
may well have been the LSB’s additions to ensure,
from its perspective, that the system that was to be introduced was
rigorous
and effective. Further, viewed from the perspective of the
legislature and the employees, converting the employees’
contracts
to permanent (or indefinite) contracts, without further
ado, and without the new performance system, as accepted by the LSB,
being
in place, would have defeated the very rationale for the
resolution of 7 August 2013.
[58]
It is further apparent that from the outset, i.e. immediately before
and upon adoption of the
resolution of 7 August 2013, all those in
senior management positions, including the employees, were treated
the same in respect
of the extension of their contracts. The
resolution of that date was to extend, both, contracts that had
already expired, and those
there were about to expire (conceivably
such as that of Ms Ngcingwana, which was only to expire in September
of 2014) to 30 June
2015. Thus, all fixed-term contracts envisaged in
terms of that resolution were to expire on 30 June 2015, including
that of Ms
Ngcingwana. The contention, to the effect that her
contract extended beyond 30 June 2015, despite the resolution of 7
August 2013,
is therefore misconceived. In any event, at no stage
before us was a written contract produced to prove that it would have
expired
beyond that date.
[59]
Even if I may be wrong in regard to Ms Ngcingwana (which in my view,
I am not), and one accepts,
that the written (extension) contract
signed by Ms Ngcingwana pursuant to the resolution of 7 August 2013,
states that the expiry
date of her contract is some time at the end
of September 2015, there was, clearly, a tacit contract extending her
employment beyond
that date. However, for the same reasons stated
above, it cannot be correct that she would have been automatically,
tacitly employed
on a permanent, or indefinite, basis after that
date, before or in the absence of the finalisation and acceptance by
the LSB of
a rigorous performance-based system that had been
developed to replace the previous one, otherwise the entire rationale
of the
resolution of 7 August 2013 would have been undermined and
defeated.
[60]
In light of all the established facts and circumstances, including
those briefly referred to
above, the correct conclusion is in line
with the legislature’s contention, namely, that as from 1 July
2015 the employees
were still employed by it on a fixed–term
basis, albeit tacitly, until 30 June 2016, after which the rigorous,
performance
based system was to be implemented. They had effectively
rejected the LSB’s resolution regarding the new system and its
implementation,
by not applying for their positions and by
unilaterally concluding that they had already reached their
self-created nirvana.
[61]
Since it was the employee’s contention throughout that they
were not employed on a fixed-term
basis, but, tacitly on a permanent
basis for the period as from 1 July 2015, they could not rely on
section 186(1)(b) of the LRA,
i.e. they could not have had any of the
reasonable expectations as contemplated in that section. They could
not pursue contradictory
courses at once, or at the same time.
Essentially, they thus failed to prove that they were dismissed. A
reasonable arbitrator
would have found accordingly. The court
a
quo
erred in effectively finding the contrary.
Costs
and order
[60]
Taking into account all the facts and circumstances, the law and
fairness, a costs order is not
appropriate.
[61]
In the result, the following order is made:
61.1
The appeal is upheld;
61.2
The order of the court
a quo
is set aside and is replaced with
the following order: “1. The arbitration award rendered by the
second respondent, under
the auspices of the first respondent, in
case GAJB 14830/16 dated 19 January 2017, is reviewed and set aside,
and is replaced with
the following: ’The claims of the
employees are dismissed’.”
61.3 There is no costs
order.
P
Coppin
Judge
of the Labour Appeal Court
Waglay
JP and Jappie JA concur in the judgment of Coppin JA.
APPEARANCES:
FOR
THE APPELLANT:
Messrs PL Mokoena SC with TK Manyage SC
Instructed
by Sanqela Attorneys
FOR
THE 3
rd
to 6
th
RESPONDENTS:
Mr Mkhambeni (heads prepared by Mr C Goosen)
Instructed
by Ngcingwana Inc.
[1]
Act
5 of 1996.
[2]
[2020]
ZALAC 19
(28 May 2020);
(2020)
41 ILJ 2086 (LAC)
.
[3]
Fidelity
Guards Holding (Pty) Ltd v Epstein NO and Others
[2000] 12 BLLR 1389 (LAC).
[4]
Act
35 of 1957.
S
See,
inter alia,
Head
of the Department of Education v Mofokeng and others
[2015] 1 BLLR 50 (LAC).
[6]
See
Teto
(above) at para 20.
[7]
Ukweza
Holdings (Pty) Ltd v Nyondo and others
(2020) 41 ILJ 1354 (LAC) para 14.
[8]
See
GB Bradfield
Christie’s
Law of Contract in South Africa
(7ed)
(“
Christie’s
”)
at 98 et seq.
[9]
See
Joel
Melamed & Hurwitz v Cleveland Estates (Pty) Ltd
[1984] ZASCA 4
;
1984
(3) SA 155
(A) at 165B.
[10]
Standard
Bank of SA Ltd v Ocean Commodities Inc.
1983 (1) SA 276
(A) at 292.
[11]
See,
inter
alia
,
Christie’s
(above) at 101
et
seq
and the cases cited in fn. 609.
[12]
See
Christie’s
(above) at 101.
[13]
See
Christie’s
(above) at 100-101.
[14]
See
Christie’s
(above) at 101.