Vancoillie v Sanlam Life Insurance Limited (DA1/2001) [2002] ZALAC 6; (2003) 24 ILJ 1518 (LAC) (29 March 2002)

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Vancoillie v Sanlam Life Insurance Limited (DA1/2001) [2002] ZALAC 6; (2003) 24 ILJ 1518 (LAC) (29 March 2002)

23
IN THE LABOUR APPEAL COURT OF
SOUTH AFRICA
HELD IN DURBAN
CASE NO: DA1/2001
In the matter between
ROLAND VANCOILLIE APPELLANT
AND
SANLAM LIFE INSURANCE
LIMITED RESPONDENT
_____________________________________________________________
JUDGEMENT
_____________________________________________________________
ZONDO JP
INTRODUCTION
[1] The appellant was employed by
the respondent, Sanlam Life Insurance Limited, as a branch manager
for its Port Shepstone branch
from 1990 until the 30th September
1998 on which latter date he was dismissed. A dispute arose between
the two parties about whether
dismissal was fair and, if it was,
what relief the appellant was entitled to. He then referred to it
the Commission for Conciliation
Mediation and Arbitration (

the
CCMA

)
for conciliation. When conciliation failed to produce a resolution
of the dispute, he referred the dispute to the Labour Court
for
adjudication. In the Labour Court he sought compensation and
severance pay of a higher amount than the severance pay that the
respondent had indicated it would pay him. The Labour Court , per
Ngcamu AJ, found that the dismissal was fair both substantively
and
procedurally and, accordingly, dismissed his unfair dismissal claim
as well as the claim for the payment of a higher amount
of severance
pay. With the leave of the Court a quo, the appellant now appeals to
this Court against that order.
The Factual Background
[2] About April 1997 the
respondent caused certain research and other initiatives to be
undertaken in order to place itself in a
position to make certain
important decisions about the improvement of the quality of its
service and its competitiveness. As a
result of such research and
initiatives, certain proposals were made to the respondent. These
included a proposal that the respondent
should undergo a process of
restructuring.
[3] On the 16th March 1998 the
respondent addressed a letter to, among others, branch managers and
regional managers. The appellant,
as one of the branch managers,
also received the letter. Because this letter is one of the
critical letters in this appeal, it
is appropriate that its
contents be quoted in full. It reads thus:-

PROPOSED
RE - STRUCTURING OF SANLAM LIFE AND SANLAM MARKETING:
Sanlam
Life and Sanlam Marketing started various renewal initiatives
namely Finpro (Savings Products), Call Centres and New Dawn
to
achieve certain goals - set out in Annexures 1 and 2 (as attached).
A major part of the research and planning is now coming
to a stage
where we need to communicate these proposed changes to you in order
for us to get your input and comments. The projects
(Finpro (
Savings Products), Call Centres and New Dawn) propose re -
structuring of Sanlam Life and Sanlam Marketing to become
more
competitive
in the following respective areas:
Sanlam Life: There exists two
focus areas namely Savings Products and Call Centres ( For a summary
of the proposals of the projects
see Annexure 1).
Sanlam Marketing: New Dawn
envisages a migration towards a client oriented, profitable Sanlam
distribution. ( For a summary of the
proposal see Annexure 2).
The proposals as set out above
were presented to Exco, and have been approved on a preliminary
basis
subject to further consultation
.This does not complete
the roles of Finpro ( Savings Products), Call Centres and New Dawn,
which will continue to envisage the
full implications of these
proposals and its impact on all the employees in Sanlam Life and
Sanlam Marketing.
We are presently consulting
with General and Senior Management in both Sanlam Life and Sanlam
Marketing on the impact of these proposals.
At this stage, we cannot
give a definite indication of what impact these proposals will have
on you. However, rest assured that
when we do have clarity on this
and any impact on your job, you will be consulted. Further
information will be distributed to you
via roadshows, pamphlets and
various other media. Sanlam Life and Sanlam Marketing have however
decided on one integrated communication
channel to you in order to
prevent duplication of the information provided.
To assist (Finpro Savings
Product), Call Centres and New Dawn in our research we will
appreciate any comments or feedback on the
proposals as out in the
Annexures attached, on or before
25
March
1998
.
Any of the communication channels indicated below can be used for
these purposes

.
The annexures are not reproduced
in this judgement.
[4] Certain points contained in
the letter need to be emphasised. One is that it is clear from
paragraph 1 of the letter that at
that stage the respondent was
talking about

proposed
changes

.
This means that no final decision
had been made by the respondent on whether those proposals on
changes would be accepted by it.
Indeed, in the fourth paragraph of
the letter it was expressly stated that the approval which Exco had
given was on a preliminary
basis and was subject to further
consultation. These proposals, it must be pointed out, were made to
the respondent by its consultants.
The second point contained in the
first paragraph was that the respondent

s
purpose in communicating the proposals to, among others, branch
managers was

to
get your input and comments

.
In the fifth paragraph it was stated that at that stage the
respondent could not

give
you a definite indication of what impact these proposals will have
on you

.
However, continued the letter,

rest
assured that when we do have clarity on this and any impact on your
job, you will be consulted

.
In the last paragraph of the letter it was stated:

Please
be specific in your requests. Your input is vital to the success of
any restructuring

.
[5] It is common cause that the
appellant did not give the respondent any input or comment in
response to the letter. On the 8th
June 1998 the respondent issued a
letter to, among others, branch managers including the appellant. As
this is also a very important
letter in this matter, it is
appropriate to quote its contents as a whole. The letter reads
thus:-

Dear
Re:
INPUT REGARDING
FINALISATION OF STRUCTURE, SELECTION CRITERIA (JOB CONTENT) AND
METHOD OF SELECTION FOR POSITION OF COMMISSIONED
SALES MANAGERS
1. As you know, the New Dawn
project

s
recommendations on structures in the marketing environment have been
approved. Staffing of the positions of Individual Business

channel heads and Provincial Managers has been finalised and the
process of staffing the positions of Regional Managers (Sales
Centre
Managers) has commenced.
2. The aspects mentioned in
the heading now have to be finalised and consequently, in terms of
the proposals, we are considering
in principle to abolish your post
and to implement the proposed new structure.
3. To a large extent you have
been part of the preliminary process, but we require your input
during the remaining process and in
respect of all aspects mentioned
below. This applies in particular to the proposed structure with
regard to the above - mentioned
positions, the proposed job content
and the method of selection. The proposed job content and method of
selection are explained
in annexure A and B respectively. During the
consultation process we would like to reach an agreement with you as
far as possible.
4. In order to make the
process as transparent as possible, a branch managers

meeting will be held at which the matter can be discussed and input
obtained. You may also submit your input in writing before.
If you
require any further information to give your input, please advise
Schalk Cronje at x2539.
5. If the restructuring
continues unchanged and if you cannot be accommodated in the new
structure, we will try to redeploy you
elsewhere. We will do our
best to accommodate you, and your input in this regard will be taken
into consideration in full

.
The annexures to the
latter
are
not reproduced in this judgement.
[6] It will have been seen from
the contents of the letter that, between the letter of the 16th
March and that of the 8th June,
the respondent had approved the New
Dawn proposals. It did this after having given the appellant and
other branch managers an
opportunity to comment on them. It will
also have been seen in the letter that the respondent was
contemplating abolishing the
post of branch manager for the Port
Shepstone branch and to implement the new structure that had been
proposed. In par 8 of the
letter the respondent stated that the
proposed job content would serve as

the
primary selection criteria

(sic). The respondent emphasised the importance of the managers
giving their

final
input regarding the structure as well as the job content

at a meeting that the respondent was going to be convening as part
of the consultation process. The letter also said that, if the
proposed structure was implemented and the appellant was not
accommodated in the new structure, and no alternative could be
found,
he could be retrenched in which event severance benefits
would be paid to him.
[7] On the 9th June 1998 a
meeting was held that was attended by branch managers including the
appellant and representatives of
senior management. At this meeting
the letter of the 8
th
June was distributed to the branch
managers including the appellant. The importance of this meeting
lies partly in the fact that
the continued employment of employees
at management level including branch managers was no longer
guaranteed but they had an opportunity
to give their input. The
positions that would have to be filled were those of the channel
heads, provincial managers and branch
managers. The purpose of the
meeting of the 9th June was to consult on the various issues raised
in the letter of the 8th June.
Furthermore, according to the
evidence of Mr H.A. Smit in the Court a quo, at that meeting it was
stated that there was time until
the 22nd June for any one to make
an input on those issues if they wanted to. No particular decision
was taken at that meeting.
[8] After the meeting of the 9th
June the appellant did not make any comment or input to the
respondent in response to the invitation
extended in the letter of
the respondent dated the 8th June and at the meeting of the 9th
June. However, he did apply for appointment
to the post of branch
manager for the respondent

s
branch in Port Shepstone. Although he and other managers had been
urged to apply for more than one post and to indicate their
order of
preference, the appellant did not apply for any post other than that
of branch manager for Port Shepstone. In court the
reasons he gave
for not applying for other posts were that he was confident that he
was
qualified
for that post of branch manager for Port Sheptone and he did not
want to move to another area because his daughter was going to
do
matric and two of his sons were going to senior school.
[9] After branch managers had
made applications for appointment to various posts, there had to be
assessments to determine those
suitable for appointment to the
various posts in the new structure. The assessments were conducted
in Cape Town. As already stated
earlier, according to par 8 of the
letter of the 8th June the job content was going to serve as the
primary selection criterion
in determining who would be appointed to
which post. The appellant was unsuccessful in his application. In
fact the post remained
unfilled for about nine months thereafter. It
was ultimately filled by a person who had a Higher Diploma in Tax
and financial planning.
[10] That the appellant had been
unsuccessful in his application was conveyed to him by a letter
dated the 3rd September 1998 which
apparently followed a telephone
conversation that Mr Beukes, the appellant

s
regional manager, had with the appellant. In that letter the
respondent gave the appellant various options available to him in
the light of the fact that he had not been placed in the new
structure. These included an adviser

s
contract as a first alternative. He was also informed that, if there
was any other position he was interested in within the respondent,
he could apply for it. Another option given in the letter was that
the appellant could apply for voluntary retrenchment with a
severance pay.
[11] It was stated in the letter
of the 3
rd
September that, if retrenchment occurred, severance pay would be
paid. The letter stated that severance pay would be calculated
as a
lump sum of two weeks

remuneration for every uninterrupted year of service up to a maximum
of 24 years subject to it meeting the minimum laid down by
law. The
remuneration was going to be based on 67% of the total remuneration
over the previous 12 months at the time of termination.
The total
remuneration was said to represent all fixed and incentive
remuneration as well as company contributions to medical and
pension
fund. Commission on own business was excluded.
[12] The appellant was unhappy
with the basis of the calculation of severance pay. He suggested to
the respondent that a different
basis be used in his case. He
contended that, as he had done very badly during the previous 12
months, the use of that basis would
operate unfairly on him. Using
the basis of calculation used for everyone else, the appellant

s
severance pay was about R13 000,00 or just over that figure. The
basis of calculation that the appellant suggested should be used
in
his case was one that would have ensured that his severance pay
jumped from about R13 000,00 to over R80 000,00. The respondent
rejected this proposal and maintained that the basis for the
calculation of the severance pay would be the same for everybody.
When no agreement was reached to treat him differently on this
issue, the appellant instituted legal proceedings claiming that
he
had been unfairly dismissed.
[13] In his statement of claim
the appellant attacked the fairness of his dismissal on the
following grounds that he claimed related
to the substantive
fairness thereof:-
13.1 the respondent failed to
allow reasonable and fair contribution to be made by the appellant
in the substantive decision making
process. The appellant was not
sufficiently consulted in establishing whether substantive grounds
of dismissal were present.
13.2 the
proposals for restructuring adopted by the respondent were a charade
used by the respondent to get rid of unwanted employees.
13.3 the
respondent failed to offer the appellant alternative positions

which
would have been far more suited for employees such as the
appellant

.
13.4 the respondent failed to
adequately take into account the individual requirements of the
appellants which the appellant claimed
were of a unique nature.
[14] The Labour Court found that
the appellant had been dismissed fairly and was not entitled to more
severance pay. It accordingly
dismissed his claim with costs. On
appeal Counsel for the appellant did not pursue any of the above
grounds of alleged unfairness
in relation to the substantive
fairness of the dismissal. In not pursuing them, she was correct.
Not a single one of them has merit.
Indeed, they have no factual
basis. Nothing more needs to be said about them. The point that
Counsel for the appellant sought to
pursue on appeal in relation to
the substantive fairness of the dismissal was a different one. It
was that the appellant had met
the selection criteria that had been
announced as the criteria that the respondent was going to use to
make appointments into the
new structure and that, for that reason,
it was unfair that, despite this, the appellant had been selected
for dismissal. It is
this contention that I now turn to consider.
[15] As already stated earlier
the respondent had stated prior to the assessment of candidates for
the various positions that the
primary selection criterion was going
to be the job content. The reason why the appellant was not
appointed to the position of
branch manager for the respondent

s
branch in Port Shepstone was that he was not considered suitable for
appointment to that position in Port Shepstone. This did
not mean
that he could not have been appointed to another post of branch
manager elsewhere if he had applied and was found suitable
for the
post of branch manager of the particular branch. However, as he had
not applied for any other posts except the post of
branch manager
for the Port Shepstone branch, he could not be considered for other
posts elsewhere.
[16] The evidence given by Mr
H.A. Smit, the respondent

s
provincial manager in Kwa - Zulu Natal, was that the candidate that
the respondent wanted to appoint as the branch manager of
the Port
Shepstone branch had to fit a certain profile. Mr Smit testified
under cross - examination that, after the restructuring,
the job
content for the post of branch manager was not the same as the job
content thereof before the restructuring. In this regard
he said
that, after the restructuring, there was

much
focus put on a target market approach

.
He explained that during the early 1995 leading upto the New Dawn
project, there had been a

production
push

but under the New Dawn project and
after the restructuring, the idea was to put the client

in
the centre of everything which was a different approach to what [the
respondent] was used to as far as strategy was concerned
up to that
point in time.

[17] Mr Smit

s
evidence was also to the effect that, as far as the post of branch
manager for Port Shepstone was concerned, the correct profile
was
somebody with a sound knowledge of the target market, a sound
knowledge of tax, tax implications, estate planning and financial
planning. He emphasised that he could add more and more to that list
including networking. During the cross-examination of Mr Smit,
Counsel for the appellant sought to suggest that the work profile
that Mr Smit said guided the respondent in determining a suitable
candidate should not have been used because such work profile was
different from the work profile that had been given in the
documentation
issued to the managers as the workprofile that would
be used. She put it to Mr Smit that there was nothing in the work
profile
that was contained in the documentation that required
knowledge of estate planning, financial planning or tax
implications.
[18] Mr Smit disagreed and
testified that the work profile contained in the documentation
entailed

the
output that is expected of the manager and the competence and the
knowledge that is needed

.
In this regard he also testified
that he saw the requirement of knowledge of financial services and
product knowledge as related
to the target market that the manager
would operate in. He said that knowledge of financial services and
product knowledge implied
the ability to give advice to clients
regarding their financial needs and basically doing financial needs
analysis for a client
and making recommendations about the sort of
product that such client needs.
[19] Counsel for the appellant
suggested that such information should have been specifically stated
in the profile. Mr Smit

s
evidence in this regard was that he had informed the meeting of the
9th June about the fact that in the Kwa Zulu Natal province
in which
the Port Shepstone branch fell the respondent would continue with a
market focus. He had also emphasised that, after
the restructuring,
there was to be a shift in focus to the senior market. He described
the senior market as comprising the farming
market, the small
business market and the top income group in the salaried market.
[20] Counsel for the appellant
referred to the fact that the appellant

s
achievements in 1991 included a qualification for a senior adviser

s
course and had he been trained in succession, advice on taxation,
business insurance, retirement planning, advice on investment
and
estate planning. She suggested that through such training the
appellant had what the respondent was looking for. Mr Smit rejected
this suggestion and said that, not only had a lot changed between
1991 and 1998, but, also, that the respondent was looking for
somebody who could move into that environment and do what the
respondent wanted him to do right from the begining. In this regard
Mr Smit highlighted the fact that the person who was ultimately
appointed to the post had a Higher Diploma in Tax and was a
certified
financial planner. He said that the training that the
appellant had had did not come anywhere near that of a certified
financial
planner.
[21] Counsel for the appellant
sought to suggest to Mr Smit under cross - examination that the
appellant had been dealing with the
senior market and therefore met
the requirement for a focus on the senior market. Mr Smit answered
this by testifying that the
percentage of the senior market of the
Port Sheptone branch upto about May 1998 under the appellant was
about 23% which, he said,
meant that the Port Shepstone branch was

the
worst branch that was doing in the senior market, the lower
percentage

.
He said

if
23% is dealing with the senior market, then that

s
not what I would regard as really dealing with the senior market

.
[22] Although Mr Smit conceded
under cross-examination that he had not discussed the requirements
of the Port Shepstone branch specifically
with the appellant, he
testified that

we
did discuss the principle in general that we will focus on target
markets the way we used to do in this province and that was
conveyed
to them on numerous occasions and it was also mentioned on the 9
th
...

.
[23] In the light of the above
there can, in my view, be no doubt that the appellant did not have
what the respondent was looking
for in the person who was going to
be appointed as the branch manager for the Port Shepstone branch. He
met some of the requirements
but not all. The importance that the
respondent attached to the need to only appointing a candidate who
met its requirements was
demonstrated by the fact that the
respondent was prepared to leave the post of branch manager for Port
Shepstone unfilled for about
nine (9) months while it was looking
for a candidate who would meet the requirements. The respondent
would not lightly have allowed
a branch to operate without a branch
manager for such a long period if the appellant met the respondent

s
requirements.
[24] As to the contention that
the appellant was not consulted with regard to the selection
criteria that were used, the evidence
that was led in the Court a
quo is clear. It is that in the invitations that were extended to
the appellant and others to make
their input, they were asked to
make whatever input they may have wished to make. The appellant did
not take this invitation up.
Mr Smit testified that at the meeting
of the 9
th
he explained the basis of the selection to all
who attended that meeting which included the appellant.
[25] The appellant was one of
the managers who were consulted by the respondent at the meeting of
the 9
th
where, according to Mr Smit he explained the matters that were later
relied upon by the respondent in deciding not to appoint him.
The
respondent did not have an obligation to consult the appellant
individually. In these circumstances there can be no doubt that
the
respondent

s
decision not to appoint the appellant to the post in Port Shepstone
was fully justified. Indeed, it was not the appellant

s
case that he was better qualified for appointment to that post than
the candidate that the respondent ultimately appointed to
it. In all
probability the reason why the appellant found himself no longer
employed by the respondent was that he chose not to
apply for other
posts. He may well have been appointed to one or other post had be
applied. Having put all his eggs in one basket,
the appellant cannot
now complain. I therefore conclude that the appellant

s
dismissal was substantively fair.
Procedural fairness
[26] The appellant

s
Counsel submitted that the appellant

s
dismissal was procedurally unfair on various grounds. The effect of
the grounds advanced in Counsel

s
heads of argument was that the respondent made the decision to
restructure before it could consult the employees and that it

provided the employees with information that was inadequate to
enable them to engage in effective and meaningful consultation. None
of these grounds of attack on the manner in which the respondent
handled the consultation process is sustainable. A reading of
both
the letters of the 16th March as well as that one of the 8th June -
both of which have been quoted above - reveals beyond
any doubt a
very high degree of commitment to proper consultation on the
respondent

s
part. Those letters leave one in no doubt that, if there was
anything that the employees sought to have clarified, they were free
to raise it with the respondent and the respondent would have been
more than willing to furnish the required clarification or

information.
[27] The submission that the
respondent made certain final decisions prior to consultations is
simply not supported by the evidence
and should be rejected. The
appellant was afforded an opportunity to engage in a meaningful
consultation with the respondent which
he elected not to use -
probably because he took the attitude that he would get the Port
Shepstone post and did not have to bother.
There is simply no doubt
that the appellant

s
dismissal was procedurally fair.
Severance pay
[28] There was also the
contention by the appellant

s
Counsel that the respondent ought to have calculated the appellant

s
severance pay on a basis different to the basis on which other
branch manager

s
severance pay was calculated. It is unnecessary to go into details
about this contention. It simply has no merit and falls to
be
rejected. The basis on which the respondent sought to calculate
severance pay was such that it could differentiate against
an
individual who had had a bad year. However, this would not render
the way it was calculated unfair because it all would be based
on
the performance of each individual. The respondent was entitled to
use the same calculation for all the employees affected.
It

s
decision not to accede to the appellant

s
demand was not unfair.
Conclusion
[29] In all of those
circumstances I am satisfied that the appeal falls to be dismissed.
It is, in my view, in accordance with the
requirements of law and
fairness that the appellant be ordered to pay the costs of the
appeal. In the premises the appeal is dismissed
with costs.
RMM Zondo
Judge
President
I agree.
C.R Nicholson
Judge
of Appeal
I agree.
N.S Page
Acting
Judge of Appeal
Date
of Judgment: 29 March 2002