Beacons Sweets & Chocolates v Armugen (DA10/2001) [2002] ZALAC 27 (6 December 2002)

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[2002] ZALAC 27
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Beacons Sweets & Chocolates v Armugen (DA10/2001) [2002] ZALAC 27 (6 December 2002)

6
IN
THE LABOUR APPEAL COURT OF SOUTH AFRICA
CASE
NO.: DA10/2001
In
the matter between
BEACON SWEETS &
CHOCOLATES APPELLANT
and
THUNGAVALOO
ARMUGEN RESPONDENT
JUDGMENT
________________________________________________________________________
Nicholson JA
The respondent was
employed by the appellant as a Stores Manager from 15 January 1953
to 31 August 1977 a period of forty-four years.
During May 1997 the
appellant embarked on what it termed a restructuring exercise which
involved the introduction of new work
methods, changes to the
organisation of work and redundancy of certain positions. The
appellant resolved to consult with the staff
who would be affected
and considered alternatives to redundancy including
retirement/voluntary redundancy and the payment of severance
packages. Acceptance of an application was limited to persons over
the age of 55 years and was subject to the approval of the board
of
directors who considered criteria such as skills, length of service
and age.
A bulletin was issued
during June 1997 calling for volunteers for early retirement or
redundancy but no mention was made that no
person working their last
year of service before retirement would not be considered. The
respondent was interviewed by Martin
Birtwhistle during May 1997 and
indicated that he wanted to apply for a voluntary severance package.
The benefits that the respondent
would have received had his
application been successful were calculated on a document and
totaled R130 682.
The respondent was not
given a severance package by virtue of the fact that he was due to
retire at the end of August 1997. A letter
was written by his
attorney on 16 February 1998 in which respondent alleged that he was
offered a package as mentioned and that
he accepted such sum. What
was clearly alleged in the letter was an agreement between the
appellant and respondent that he would
be paid out the said sum. The
letter evinces some uncertainty thereafter as it states ‘Client
had a discussion with you and you
promised to make good on the
package after the September budget and you also indicated that the
company would do something for
him as he had served your company for
44 years’.
The appellant replied by letter on 20 February alleging that the
claim was refuted and that respondent retired at the normal
retirement
age. The document was a ‘guideline’ and did not
constitute an offer and no monies were due to him.
He declared a dispute
with the appellant alleging that the appellant had committed an
unfair labour practice by not paying him the
agreed severance
package. Attempts at conciliation before the Commission for
Conciliation, Mediation and Arbitration (CCMA) having
failed the
dispute was referred to a commissioner, second respondent herein for
arbitration. The commissioner heard the evidence
of respondent, who
testified on his behalf and Birtwhistle and Steven Evans, who
testified on behalf of the appellant.
It is important to
ascertain the precise issue that was subject to arbitration. The
arbitrator found that what was referred was
an unfair labour
practice which related to section 196 of the Act. Although the
respondent referred to an unfair labour practice
he relied on
section 196(9) and the issue in dispute was the payment of severance
pay ‘as agreed’. In his evidence respondent
referred to the fact
that his attorney had referred to section 196(9) in advising him of
his rights. In argument at the conclusion
of the evidence in the
arbitration the respondent again referred to section 196(9).
The relevant
subsections of
section 196
of the
Labour Relations Act 66 of 1995
provide as follows:
“
(1) An
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 ear of continuous
service with that employer, unless the employer
has been exempted
from this subsection.
If there is a dispute only about entitlement to severance pay in
terms of this section, the employee may refer the dispute to-
a council, if the parties to the dispute fall within the
registered scope of that council; or
the Commission, if no council has jurisdiction.
(8) The council or the commission must attempt to resolve the
dispute through conciliation.
If the dispute remains unresolved, the employee may refer it to
arbitration.”
The Commissioner who arbitrated the matter concluded that in order
for the respondent to qualify for severance pay in terms of
Section
196
he had to prove that he had been dismissed for reasons based on
the employer’s operational requirements. The Commissioner went
on
to hold that where an employment contract came to an end as a result
of an agreement there was no dismissal and he relied on
the case of
Kynoch Feeds (Pty) Ltd vs CCMA and Others
(1998) 19 ILJ 836
(LC) 849 G. He held further that no dismissal took place where an
employee had reached the normal or agreed retirement
age.
The arbitrator held that ‘at best for the [respondent] he and
[appellant’s] management agreed that he would retire earlier
than
February 1998 and that in return for retiring earlier the applicant
would be paid a severance package which included notice
pay, an
ex
gratia
payment and severance pay. If this is accepted, the
contract of employment had come to an end by agreement and the
[respondent]
had not been dismissed. The [respondent] would
therefore even on his own version not be entitled to severance pay
in terms of
section 196(4).
It follows that
section 196
does not
require the dispute to be resolved through arbitration.’
What the arbitrator
was saying in his award was that he as arbitrator only acquired the
power or right to determine whether severance
should be paid was in
circumstances which revealed that there had been a dismissal. In
other words he concluded that if there
was no dismissal he had no
jurisdiction in terms of the section to arbitrate the matter nor
grant any relief pursuant thereto.
The arbitrator then
went on, in his award, to consider whether the appellant committed
an unfair labour practice, more especially
in terms of item 3(4)(b)
read with item 2(1)(b) of schedule 7 of the Act, which relates to
unfair conduct in the provision of benefits.
Without making a
definite finding the arbitrator assumed in favour of the respondent
that the failure to pay him the benefits
in accordance with an
agreement would constitute such unfair conduct.
The arbitrator analysed the evidence and found that it was
improbable that the appellant would pay out the severance pay where
an employee was in his last year of employment before retiring. In
addition the arbitrator found that on the evidence the board
of
directors were required to approve the package. There was no proof
that this had taken place. The arbitrator found that the
respondent
did not become entitled to severance as a result of an agreement
between him and the respondent.
The respondent had
testified that he was told he could work until February 1998 but had
foregone that opportunity on the basis that
when he retired in
August of the previous year he was entitled to the severance package
I have referred to. The arbitrator considered
the question whether
the respondent did not have a claim for the difference between what
the respondent would have earned until
February 1998 and what
pension he received for that period.
The arbitrator found
that this was not a dispute about severance pay and that, because no
such dispute had been referred to conciliation
or arbitration and
evidence had not specifically directed to that question, he could
not deal with such in his award. He added
that he had made the above
comments on the basis that they would be of assistance to the
parties to resolve the dispute by agreement.
An application for a review of the arbitrator’s decision was
brought in terms of
section 145
of the Act on the sole ground that
the arbitrator exceeded his powers by arbitrating the dispute in as
much as that, given the
nature of the same, the arbitrator did not
have power to do so.
The Labour Court found
that once the arbitrator had found he had no jurisdiction he should
have not made any further findings in
the matter. The Labour Court
held that the arbitrator was not called upon to decide the unfair
labour practice which was not an
issue in the arbitration.
It is correct that the
respondent relied on
section 196
in his referral although he spoke
of an unfair labour practice. In
Naude and Another vs Fraser
[1998] ZASCA 56
;
1998 (4) SA 539
(SCA) 539 at 563 Schutz JA held at page 563 E
-G:
“It is one of the fundamentals of a fair trial, whether under the
Constitution or at common law, standing co-equally with the
right to
be heard, that a party be apprised of the case which he faces. This
is usually spoken of in the criminal context, but
it is no less true
in the civil. There is little point in granting a person a hearing
if he does not know how he is concerned,
what case he has to meet.
One of the numerous manifestations of the fundamental principle is
the sub-rule that he who relies on
a particular section of a statute
must either state the number of the section and the statute, or
formulate his case sufficiently
clearly so as to indicate what he is
relying on...”
It seems to me that the reference to an ‘unfair labour practice’
was not intended to bring the matter within the purview of
schedule
7. The attorney was in all probability referring to the cause of
action brought in the old Industrial Court. No reference
was made to
schedule 7 and the evidence was not directed at determining whether
there was unfair conduct on the part of the employer
in withholding
a benefit from the respondent. It follows that the arbitrator was
not entitled to deal with any issue apart from
whether the
respondent fell within the purview of section 196.
The Labour Court held
that the finding that there had been no agreement concerning the
payment of severance closed the door on
any further proceedings in
any other forum. The award was set aside with costs on that basis.
I am not satisfied
that the Labour Court was correct in so holding. The ordinary rule
is that judicial decisions ordinarily stand
until set aside on
appeal or review but to such rule there is the exception that a
decision which is given without jurisdiction
may be disregarded
without the necessity of a formal order setting it aside. See
Mkhize
v Swemmer and others
1967(1)SA 186 (N) at 197 C-E and
Winter
v Administrator-in-Executive Committee South West Africa
1973(1)SA 873 (AD) at 886 H-887A.
It follows that in such instances the plea of
res judicata
would not stand in the way of the present respondent seeking relief
in some other forum or notionally in the same forum with a
different
cause of action.
In my view the
following order must be granted.
1. The appeal is
upheld with costs.
2. The order in the
Labour Court is set aside and replaced with the following order
‘The application is dismissed with costs’.
_______________________
NICHOLSON JA
I agree.
________________________
ZONDO JP
I agree.
________________________
MOGOENG JA
Appearance
for Appellant: Adv P Schumann instructed by Ditz Incorporated.
Appearance for
Respondent: Adv SM Govender instructed by Sugen Reddy and Company.
Date of hearing: 14
May 2002.
Date of judgment: 6
December 2002