South African Typographical Union v Kohler Flexible Packaging (Cape) (CA2/2001) [2002] ZALAC 10 (8 May 2002)

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[2002] ZALAC 10
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South African Typographical Union v Kohler Flexible Packaging (Cape) (CA2/2001) [2002] ZALAC 10; [2002] 7 BLLR 605 (LAC); (2002) 23 ILJ 1248 (LAC) (8 May 2002)

IN
THE LABOUR APPEAL COURT OF SOUTH AFRICA
(HELD
AT CAPE TOWN)
CASE NO: CA 2/2001
In
the matter between:
SOUTH
AFRICAN TYPOGRAPHICAL UNION
(obo
J.G. VAN AS & 6 OTHERS) Appellant
and
KOHLER
FLEXIBLE PACKAGING (CAPE)
a
division of KOHLER PACKAGING LIMITED Respondent
JUDGMENT
:
TRAVERSO,
A.J.A. :
[1]
The Appellant trade union was recognised by the Respondent and
has bargained on behalf of the Respondent’s weekly paid staff
since
1988.
[2]
The Respondent is a separate entity in a group of companies
trading under the Kohler Corporate barrier.
[3]
The Appellant represents certain weekly paid employees of the
Respondent. These workers were employed on a rotating shift system.

In terms of their conditions of employment, they were entitled to
receive an additional amount, referred to as the “
shift
allowance
”
for each shift worked. This shift allowance was added to their basic
salary, and calculated on the following basis:
3.1 06h00
- 14h00 shift 15% of basic salary
3.2 14h00
- 22h00 shift 16% of basic salary
3.3 22h00
- 06h00 shift 17% of basic salary
[4]
During 1990 the Appellant and the Respondent entered into a main
collective agreement which regulated,
inter
alia
,
the retrenchment procedure of the employees of the Respondent. In
terms of this agreement, retrenched employees would be entitled
to
severance pay of one week per year of service. This notwithstanding,
it is common cause that the Kohler Corporate Group had in
the past
applied a policy of offering a severance benefit of two weeks per
year service, excluding the shift allowance.
[5]
Due to financial difficulties, the Respondent engaged in a series
of retrenchment exercises, the first of which was concluded
in late
1997. In respect of this retrenchment exercise, retrenched shift
workers received two weeks’ pay for each year of service.
This
amount excluded the shift allowance referred to above.
[6]
During September 1998 the Respondent engaged in a second round of
retrenchments. The parties agreed that these retrenchments
would be
treated
de
novo
and with a full consultation process.
[7]
At the conclusion of these consultations both voluntary and
compulsory retrenchments took place. The Appellant in this appeal
only represents the compulsory retrenchees.
[8]
The Appellant is not challenging the fairness of the dismissals
either procedurally or substantively.
[9]
At
the final meeting Respondent adopted the stance that two weeks per
year of service severance pay was to be paid to each employee,
but
that such pay was to exclude the shift allowance. The shift
allowance was however applied to accrued leave pay and was paid
out
at 16%.
[10]
The Appellant disputed the failure by the Respondent to include
the shift allowance and addressed this in a communication to
the
Respondent. Respondent’s attitude remained unchanged, namely that
as the severance pay was greater than the statutory minimum
provided
for in Section 41 of the Basic Conditions of Employment Act, No. 75
of 1997 (“the Act”), the Respondent was under no
obligation to
consider the inclusion of a shift allowance.
[11]
The parties were
ad
idem
that at the heart of this appeal lies the question of the
interpretation of section 41(2) of the Act, and its application (if
any)
to the present facts.
[12]
Section 41(2) of the Act provides:
“
Any
employer must pay an employee who is dismissed for reasons based on
the employer’s operational requirements severance pay equal
to at
least one week’s remuneration for each completed year of continuous
service with that employer, calculated in accordance
with section
35.”
[13]
It was common cause that “
remuneration
”
in Section 41(2) of the Act, is to be afforded the meaning of
remuneration as defined in Section 1 of the Act namely:
““
remuneration
”
means any payment in money or in kind, or both in money and in kind,
made or owing to any person in return for that person working
for any
other person, including the State, and “
remunerate
”
has a corresponding meaning;”
[14]
Mr. Whyte, who appeared for the Appellant, conceded that the
severance packages which the Respondent had paid to the employees
was
higher than the minimum remuneration stipulated for in Section 41(2)
of the Act.
He
however submitted that Section 41(2) of the Act should not be read in
isolation and should be read subject to the provisions of
Section
35(5) of the Act.
[15]
Section
35(5) of the Act provides:
“
(5)
For the purposes of calculating an employee’s annual leave pay in
terms of section 21, notice pay in terms of section 38 or
severance
pay in terms of section 41, an employee’s remuneration -
includes
the cash value of any payment in kind that forms part of the
employee’s remuneration unless the employee receives that
payment
in kind; but
excludes
-
gratuities;
allowances
paid to an employee for the purposes of enabling an employee to
work; and
any
discretionary payments not related to the employee’s hours of
work or work performance.”
[16]
Accordingly, it was argued that even if the severance package
exceeds the statutory minimum of one week’s remuneration per
completed year of service, it had to be calculated in accordance with
the provisions of Section 35(5) of the Act.
[17]
In my view Section 35(5) of the Act takes the matter no further.
It does not expand on the definition of “
remuneration
”
as contained in Section 1 of the Act. If anything it curtails it.
[18]
Section 35(5) of the Act, in any event, expressly provides that
it applies only to the calculation of severance pay in terms
of
Section 41 of the Act. Section 41(2) of the Act deals with the
minimum
severance pay.
[19]
Mr. Whyte conceded that there was no agreement as to whether the
shift allowance should be included in the severance package
or not.
He however argued that the agreement that the employees would receive
“
two
weeks
”
salary per completed year of service brings the agreement of
retrenchment within the ambit of Section 41(2) of the Act.
Accordingly,
he argued that the calculation of the severance pay had
to be effected in accordance with Section 35 of the Act.
[20]
The effect of this argument is rather startling. If I have to
accept this argument it will mean that if any employer
ever
had to express the amount of severance pay in multiples of “
weeks
”,
Section 41(2) would find application, irrespective of whether the
amount paid by means of a severance package exceeds the minimum
stipulated for in Section 41(2) of the Act, or not.
[21]
The
purpose of the legislation is clear. It creates a statutory minimum
that has to be paid when an employee is dismissed for reasons
based
on the employers operational requirements. The only logical
interpretation that can be given to the words “
at
least
”
in Section 41(2) of the Act is that it should mean “
not
less than
”.
In my view the section is aimed at providing a safety net of a
minimum of one week’s pay per year of completed continuous
service.
Section 189(2)(c)
of the
Labour Relations Act, No. 66 of 1995
requires parties consult over severance pay. The aim of the
consultation is to reach consensus. In the context of severance pay
this can logically only mean consensus on the payment of more than
the guaranteed statutory entitlement.
[22]
In the circumstances I am satisfied that the finding of the Court
a
quo
in respect of the interpretation of Section 41(2) of the Act cannot
be faulted.
[23]
In the alternative Mr. Whyte argued that the Respondent acted in
breach of its corporate policy, in that in terms of the Kohler
Corporate Group policy the Respondent was bound to offer the
retrenchees two weeks’ per year service. He seemed to suggest that
this “
policy
”
was tacitly incorporated into the conditions of service of the
employees. I fail to understand this argument. The Appellant
must
either base its appeal on a breach of a statutory provision, or it
must base its case on a breach of contract. The Appellant’s
case
was at all times based solely on the Respondent’s alleged failure
to comply with the provisions of Section 41(2) of the Act.
[24]
It is common cause that there was no agreement between the
Appellant and the Respondent in respect of the payment of the shift
allowance. It is self-evident that if there was no agreement, there
could not be a breach of contract, either expressly or tacitly.
[25]
In view of the above, the appeal is dismissed with costs.
_____________________
JHM
TRAVERSO
Acting
Judge of Appeal
I
agree:
____________________
RMM
ZONDO
President
I
agree:
__________________
CR
NICHOLSON
Judge
of Appeal
Counsel
for Appellants : Attorney J. Whyte
Attorneys
for Appellants : Chennells Albertyn
Counsel
for Respondent : Advocate M.L. Norton
Attorneys
for Respondent : Cliffe Dekker Fuller Moore Inc.
Date
of Hearing : 6 March 2002
Date
of Judgment : 8 May 2002