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IN THE LABOUR APPEAL COURT OF SOUTH AFRICA
HELD AT JOHANNESBURG
CASE NO: JA44/03
In the matter between:
CASH PAYMASTER SERVICES (PTY)LTD Appellant
and
JOHN JAMES BROWNE Respondent
__________________________________________________________
JUDGMENT
Zondo JP
Introduction
[1] This is an appeal from a judgment of the Labour Court in a dispute
between the appellant an d the respondent. The dispute was about
the fairness or otherwise of the dismissal of the respondent by the
appellant from its employ. The dismissal took the form of a forced
retirement. The Labour Court found that the dismissal was
automatically unfair and ordered the appell ant to pay the
respondent compensation in an amount of R 684 621,00 and 70%
of the respondent’s costs of suit. Leave to appeal was granted by
the Labour Court.
The facts
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[2] As at February 1998 the respondent was in the employ of a
company called Datakor (Pty)Ltd as a general manager for its
division call ed Technology Application Group (“TAG”). His
conditions of employment included a clause to the effect that his
retirement age was 65. He had made all his plans – including
financial plans- on the basis that he would retire when he reached
the age of 65. To this end he was making contributions to a pension
scheme in terms of which he would receive a pension at that age.
[3] On the 23 rd April 1998 Dat akor (Pty)Ltd sold TAG to the
respondent and transferred it to the latter as a going concern as
contemplated by sec 197 of the Labour Relations Act, 1995 (Act
66 of 1995)(“the Act”). A consequence of a transfer of a business
or part of a business as a going concern as contemplated by sec 197
of the Act is that the contracts of employment of the employees in
such business or part of business transfer automatically from the
transferor of the business to the transferee of the business . The
result hereof is tha t the transferee steps into the shoes of the
transferor in regard to the employment contracts of the employees
employed in the business or part of business concerned. Although
the actual transfer of TAG was effected on the 23 rd April 1998, the
transfer was made to be with retrospective effect from the 1 st
March 1998.
[4] At the time of the transfer of TAG to the appellant, the terms and
conditions of employment of the appellant’s employees did not
include any specification of a retirement age. However, the
appellant had a staff manual which included a clause to the effect
that the respondent could amend the provisions of the manual.
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[5] On the 31 st March 1998 the respondent addressed a letter to Mr
Louis Rose of the appellant in which he raised a number of
concerns relating to his employment with the appellant which
seemed to him to be less favourable than those that he had enjoyed
while employed by Datakor (Pty)Ltd. It would seem that
subsequently the parties held a meeting to discuss the respondent’s
concerns. This can be gathered from Mr Rose’s letter of the 25 th
May 1998 which he addressed to the respondent. In that letter Mr
Rose addressed among others the respondent’s concern relating to
the use of a petrol card and also assured him that , should the
appellant consider staff retrenchment, the respondent’s previous
service with Datakor would be added to his service with the
appellant “for calculation purposes.”
[6] On the 25 th May 1998 the appellant’ s managing director, a Mr
Etsebeth, wrote to the respondent. The heading of the letter was:
“Offer of E mployment.” The first two paragraphs of that letter
read thus:-
“We are pleased to offer you the position of manager:
Technological Innovations and Services with effect from
1 March 1998.
We have a set of values which influence our approach to
our work, colleagues and most importantly our
customers. As a manager of CPS you have a significant
role to play in promoting the positive image of CPS and
we seek your active participation in ensuring effective
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customer service at all times in support of your division’s
drive for legendary service.”
[7] After these first two paragraphs of this letter followed a number of
paragraphs dealing with conditions of employment under various
headings such as emoluments, commission, hours of work, leave,
etc. The last topic dealt with in the letter was “ Terms and
Conditions of Employment ”. Thereunder appeared the following
paragraph: “The terms and conditions of employment set out in
this letter must be regarded as a summary of the most
prominent aspects. More comprehensive terms and conditions
are set out in the CPS S taff Manual and such terms and
conditions are subject to amendments by the CPS
Management.”
[8] In the concluding sentence of the letter the appellant’s managing
director asked the respondent to indicate his acceptance of the
appellant’s offer of employm ent by signing “ all copies of this
Offer of Employment .” On the 11 th June 1998 the respondent
signed the bottom part of the last page of the offer of employment
and, by so doing, signified his acceptance of the offer of
employment.
[9] On the 15 th June 1998 the appellant and respondent signed a
document bearing the heading: “Articles of Agreement made and
Entered into by and between Cash Paymaster Services
(Pty)Limited (hereinafter referred to as ‘CPS’) of the one part,
and, John Ja mes Browne (hereinafter referred to as ‘the
Employee’) of the other part ”. Clause 2 thereof read thus. “ The
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Employee agrees to enter the employment of CPS and to serve
at such place and in such capacity, and perform such duties , as
CPS may from time to time require.” Clause 3.1 of the document
read thus in part. “ The employee undertakes to make himself
familiar with the contents of CPS’s Staff Manual as amended
from time to time and acknowledges that those terms and
conditions contained therein … shall apply to his employment
…” For reasons that will emerge later on in this judgment, it needs
to be highlighted at this stage that neither the document headed
“Offer of E mployment” referred to earlier nor the document
headed: “ Articles of Agreement …” contained a clause to the
effect that such document contained all the terms and conditions of
employment between the appellant and the respondent.
[10] On the 23 rd February 2000 the respondent received a document –
circulated to employees of the appell ant – which cont ained
amendments to the staff manual. The document was dated the 17th
February 2000. The amendments created a new clause 9.10.4 of the
staff manual. That new clause read: “ Retirement age for all staff
is 60 years of a ge.” This clause introduced a retirement age for all
employees of the appellant – something that had not been there
before.
[11] After the respondent had learn’t of the introduction of 60 as the
retirement age, he immediately protested to the appellant and made
his objection known. On the 23rd February 2000 he wrote a letter to
Mr Lawrie Chalmers who was the human resources manager of the
appellant objecting to the introduction of 60 as the retirement age
for himself. He said in part: “ That is a serious change to the
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plans and employment terms of both Jimmy Malan and me. ”
The respondent stated that all his retirement plans had been made
on the basis that he would retire when he attained age 65. He
sought a review of the policy and a meeting to discuss the matter.
[12] On the 15th May 2000 the respondent wrote a memorandum to Mr
Chalmers. It appears from that memorandum that, subsequent to
the respondent’s letter of the 23 rd February 2000, there had been
discussions between the respondent and Mr Chalmers. In the letter
the respondent mentioned certain items on which he and the
appellant had held discussions and reached agreement following
upon his transfer from Datakor (Pty) Ltd to the appellant. He then
said: “ The subject of Retirement age (sic) was never discussed
because it was not an issue for CPS or ourselves. The la st three
paragraphs of the memorandum read thus:-
Additionally, last October CPS offered me a ‘Preferred
Compensation Plan’, the benefits of wh ich do not apply
until the policy has been held for 5 years. I must assume
that the retirement age of 65 was not an issue for CPS
less than 6 months before the change in policy was
issued.
As I stated in my earlier letter, all my financial affairs
are set up to provide best benefit at retirement at age 65
and I have every expectation that I will continue to work
until that age. I am most unhappy at this unilateral and
arbitrary action on the Company’s part to try to change
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these aspects of my employment terms and conditions
and again, ask that the policy to be reviewed.
Finally, as stated in our last conversation, we both have
29 years service because it was agreed that the service
with Dakator carried forward into CPS. I attach a copy
of both James’s and my 25 Year Certificates, dated
January 1996 and November 1995 respectively.”
[13] By a memorandum dated the 31 st July 2000 Mr Chalmers
responded to the respondent’s letter and memorandum o f the 23 rd
February and the 15 th May respectively. Paragraph 2 of the letter
read thus: “(w)hen we were a part of the FNB Group we did not
have a retirement age stipulated in the Staff Manual even
though the FNB Group’s retirement age was 60 at the time. I n
January 2000 it was decided at an Exco meeting to formalise
the retirement age within the company and the age of 60 was
the age that was decided upon. The age is fair when you
consider that a large number of companies now have their
retirement age at 55 and in some cases 50 .” Mr Chalmers went
on to say in the letter that, subject to certain conditions, employees
who were retired at 60 could be given contract work until a
maximum of age 65.
[14] By a memorandum of the 25th January 2001 the respondent lodged
a grievance with the appellant concerning, among others, his
objection to 60 being made a retirement age applicable to him. The
appellant stuck to its position that it would require the respondent
to retire in July 2001 when he re ached age 60. The respondent was
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going to turn 60 on the 8th July 2001 but the appellant wanted him
to continue working until the end of July 2001. The respondent
also stuck to his posit ion that this was unacceptable to him. By a
memorandum dated the 12 th March 2001 Mr Chalmers, on behalf
of the appellant, offered the respondent a fixed -term contract of
employment for his post-retirement period.
[15] In that memorandum Mr Chalmers also stated that fixed te rm
contracts could be offered to the respondent until he attained the
age of 65 provided that:
(a) the respondent was healthy enough to continue
working;
(b) the respondent was performing at the required level;
(c) the respondent h ad no disciplinary action that wa s
currently on his file; and,
(d) a suitable position was available.
A copy of the fixed -term contract that was offered to the
respondent was attached to the memorandum. As for the duration
of the contract clause 2.1 read thus: - “Subject to 2.2 a nd 7, this
agreement shall commence on 1 August 2001 and terminate on
the 31st July 2002.” Clause 22 read thus: - “Notwithstanding the
provisions of 2.1 this agreement shall be terminable by either
party giving not less than one-month’s notice of termination.”
[16] The respondent rejected the offer of a fixed -term contract of
employment. In his evidence he gave at least two reasons to justify
his decision in this regard. The one was that, as far as he was
concerned, he still had a contract of employment with the appellant
which stipulated 65 as his retirement age. The second was that the
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clause in the offer of a fixed -term contract to the effect that the
contract was terminable by the giving of a month’s notice by either
party meant that in effect the contract was not really one for a year
because, if he accepted it, the appellant could terminate it before
the expiry of the term by simply giving a month’s notice.
[17] On the 25 th April 2001 Mr Chalmers addressed a memorandum to
the respondent on the latter’s retirement. He maintained the
appellant’s position. In that memorandum Mr Chalmers drew the
respondent’s to the fact that he had signed the “ Offer of
Employment” referred to earlier as well as the “Articles of
Agreement.” At the bottom of the first page of that memorandum
Mr Chalmers wrote in bold that no mention had been made of a
retirement age in the “Offer of Employment.” Further discussions
and correspondence between the parties did not yield any results
and the respondent’s services were terminated with effect from the
31st July 2001 in accordance with the appellant’s policy that the
retirement age for its employees was 60. There was no question
that the respondent’s age would affect his performance of duties if
he had been allowed to continue working beyond the end of July
2001. Indeed, all indications are that he was still going to perform
his duties satisfactorily.
Proceedings in the Labour Court
[18] A dispute arose between the appellant and the respondent about the
fairness or otherwise of the respondent’s dismissal. In due course
the respondent instituted a claim in the Labour Court for an order
declaring that his dismissal constituted an automatically un fair
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dismissal and for compensation. The appellant defended the claim
and contended that it was entitled to dismiss the respondent when
he turned 60 as it had made 60 the retirement age for all its
employees. It also contended that in any event 60 was the normal
retirement age for employees in the industry in which the appellant
operated. As already indicated earlier, the Labour Court found in
the respondent’s favour and made the order already referred to
earlier.
The appeal
[19] From the fa cts set out above it is clear that the reason for the
respondent’s dismissal was the fact that he had reached the age of
60. This Court has recently dealt with another case where an
employee was dismissed for the reason that he had reached the age
of 60 which his employer had just recently imposed unilaterally on
its employees as the retir ement age. (see Rubin Sportswear v
SACTWU & others [2004]25 ILJ 1671(LAC)).
[20] Section 9(1) of the Constitution of the Republic of South Africa
108 of 1996 (“the Constitution”) provides that “(e)veryone is
equal before the law and has the right to equal protection and
benefit of the law.” Sub-section (2) provides that “(e)quality
includes the full and equal enjoyment of all rights and
freedoms.” It goes on to provide that “(t)o promote the
achievement of equality, legislative and other measures
designed to protect or advance persons or categories of persons
disadvantaged by unfair discrimination may be taken .” In so
far as it is relevant to this case, ss(3) provides that “(t)he state may
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not unfairly discriminate directly or indirectly against anyone
on one or more grounds, including, … age… .” Subsection (4)
provides that “(n)o person may unfairly discriminate directly or
indirectly against anyone on one or more grounds in terms of
subsection (3). National legislation must be enacted to prevent
or prohibit unfair discrimination.” Subsection (5) reads:
“Discrimination on one or more of the grounds listed in
subsection (3) is unfair unless it is esta blished that the
discrimination is fair.”
[21] Sec 187(1)(f) of the Act reads thus:
“(1) A dismissal is automatically unfair if the employer,
in dismissing the employee, acts contrary to section
5 or if the reason for the dismissal is:-
(a) - (e)
(f) that the employer unfairly discriminated
against an employee, directly or indirectly, on an
arbitrary ground, including but not limited to …
age…”.
Sec 187(2)(b) provides an exception to the general rule created by
sec 187(1)(f). It reads thus:
“(2) Despite subsection 1(f)-
(b) a dismissal based on age is fair if the employee has
reached the normal or agreed retirement age for
persons employed in that capacity.”
[22] The respondent’s dismissal, based as it was on age, will be
automatically unfair unless the appellant can show a fair reason for
it. The appellant relies on the provisions of sec 187(2)(b) to justify
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the dismissal. As already indicated above, that provision provides
that, despite the provision of sec 187(1)(f), a dismissal based on
age is fair if the employee has reached the normal or agreed
retirement age for persons employed in that capacity.
[23] The appellant’s first contention is that, when there is a normal
retirement age for employees employed in the capacity in which an
employee is employed, the dismissal of such employee when he
reaches such normal retirement age is fair in terms of sec 187 (2)(b)
of the Act even if there is an agreed retirement age . As I
understand the arg ument that would relate to a case where the
employee reaches the normal retirement age before he reaches the
agreed retirement age. The appellant conten ds that in this case
there was a normal retirement age applicable in the financia l sector
which was the sector in which the appellant operated which M r
Chalmers testified was 60. Such normal retirement age occurred
earlier than the agreed retirement age of 65.
[24] It was contend ed on behalf of the appellant that, because the
respondent had reached normal retirement age, the dismissal was
fair in terms of sec 187(2)(b) of the Act. Counsel contended in
effect that the reference in sec 187(2)(b) to “ normal or agreed
retirement age ” contemplates that, if the normal retirement age
occurs before the agreed retirement age, then the dismissal of the
employee on the basis of having reached the normal retirement age
provides a fair reason for dismissal.
[25] There is no merit in the appellant’s contention. The retirement age
dispensation prov ided for in sec 187( 2)(b) of the Act is one that
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works on the basis that, if there is an agreed retirement age
between an employer and an employee, that is the retirement age
that governs the employee’s employment. This is the case even
when there is a dif ferent normal retirement age for employees
employed in the capacity in which the employee concerned is
employed. The provision relating to the normal retirement age only
applies to the case where there is no agreed retirement age between
the employer and the employee.
[26] It would make no sense for the Act to make provision for an agreed
retirement age if such an agreement would not be binding on the
employer if there is a normal retirement age for employees
employed in the relevant capacity. What makes sense is precisely
what the law is, namely, where there is an agreed retirement age,
that agreement governs the position irrespective of the existence or
otherwise of a normal retirement age for employees employed in
the relevant capacity. Where there is n o agreed retirement age but
there is a normal retirement age for employees employed in the
relevant capacity, the position is governed by the normal retirement
age for employees employed in that capacity.
[27] If the appellant’s contention were to be upheld, the result would be
that, if there was a normal retirement age for employees employed
in a particular capacity and the employer and an employee agreed
upon a different retirement age, such agreement would be of no use
because, on the appellant’s conte ntion, it would be the normal
retirement age that would prevail over the agreed retirement age.
That would include a situation where the agreement containing the
agreed retirement age would be a collective agreement. One of the
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principles which form the pi llars of this Act is the primacy of
collective agreements. There is no way that there may be a section
in this Act which would let a norm or practice prevail over a
contrary provision of a collective agreement. The appellant’s
contention can simply not be correct. The appellant’s first
contention accordingly falls to be rejected.
[28] In the light of th e above conclusion, I do not need to consider and
deal with the evidence of Mr Chalmers about there having been a
normal retirement age applicable to the respondent because it is
irrelevant in this case as there was an agreed retirement age
between the appellant and the respondent which was transferred
from Datakor. This conclusion also makes it unnecessary for me to
deal with the English cases to which we referred that interpreted
the phrase “normal retiring age” in the relevant English statute. It
is unnecessary to do so because there was an agreed retirement age
in th is case and , where there is an agreed retirement age, the
normal retirement age which differs from the agreed retirement age
has no role to play.
[29] The second contention by the appellant was based on the fact that
the respondent made himself party to t he “Offer of Employment”
dated 25 May 1998 from the appellant which he signed on the 11 th
June 1998 as well as the “ Articles of A greement” which was
signed on behalf of the appellant and by the respondent on the 15 th
June 1998. The argument was that that a greement (or those
agreements) constituted a single memorial to which the parties
intended to incorporate all their rights and obligations and that, as
no provision for a retirement age was included therein, the
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intention of the parties was that there shou ld at that stage be no
agreed retirement age between them.
[30] I am unable to uphold the appellant’s contention in this regard. The
factual position is that, immediately before the respondent signed
the “ Offer of Employment ” and the “ Articles of Agreemen t”,
there was in law an agreement between the appellant and the
respondent that he would retire at age 65. In other words there was
an agreed retirement age between the parties. The appellant’s
contention amounts to saying that through the “ Offer of
Employment” and the “ Articles of Agreement ”, the respondent
and the appellant reached an agreement in terms of which the
respondent did away with such agreed retirement age . Put
differently, it means that the respondent waived his contractual
right to retire at age 65. In either case the onus lies with the
appellant to prove the parties’ alleged agreement to do away with
the agreed retirement age of 65 or to prove the waiver. In
determining whether the appellant has discharged that onus, the
question which arises is this: must that be determined only from the
terms and conditions of the “ Offer of Employment ” and the
“Articles of Agreement ” or is it permissible to take into account
evidence about the circumstances leading to or surrounding the
conclusion of such agreements?
[31] It seems to me that, whether one confines oneself to the terms and
conditions of those agreements or one takes into account the
evidence relating to the su rrounding circumstances, the result
would be the same. That is that the appellant has failed to discharge
the onus. If one has regard to the terms and conditions of both the
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“Offer of Employment ” and the “ Articles of Agreement ”, there
is no clause therein to the effect that those agreements contain all
the terms and conditions of employment between the appellant and
the respondent. There is also nothing that is inconsistent with the
continued existence between the parties of the agreement that age
65 would be the retirement age for the respondent . There is
furthermore no reason apparent from the two documents why the
respondent would have wanted to give this right up. Accordingly,
the respondent’s conduct in signing those documents did not have
in law the result that he gave up his contractual right to retire at 65.
[32] If evidence of the circumstances leading to, or, surrounding , the
conclusion of the agreements in the form of the “ offer of
Employment” and the “Articles of Agreement” is admissible and
should be taken into account in determining the question, in my
view that evidence is firmly against the proposition that the
respondent agreed to forgo his contractual right to retire at 65. That
evidence reveals that , prior to the co nclusion of those agreeme nts,
the respondent was aware that he had a right to retire at 65, he had
arranged his retirement annuities on the basis that he would retire
at 65 and had not done anything before to suggest that he might
desire to retire earlier than 65. The respondent’s reaction when the
appellant purported to fix 60 as the retirement age applicable to all
employees including him was indicative of someone who had not
given up his contractual right to retire at 65. In those circumstances
I am of the view that, even if one has regard to evidence extraneous
to the written agreements, the appellant failed to discharge the onus
that the respondent had agreed to do away with the agreement then
binding on the parties that the retirement age applicable to him was
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65 or that he had waived his contractual right to retire at age 65.
Accordingly, the appellant’s contention in this regard also falls to
be rejected.
[33] The appellant’s third contention was that, by signing the “ Offer of
Employment” and “ the Articles of Agreement ”, the respondent
agreed that the terms and conditions of employment contained in
the CPS Staff Manual became applicable to his employment . It
contended that the appellant had the right to amend the
respondent’s terms and conditions of employment contained in the
manual without requiring any further agreement from him. Put
differently, the appellant argued that those two agreements gave it
the discretion to amend the terms and conditions of employment of
the employees to whom the manual applied without havin g to seek
their further consent. The appellant argued that, when it gave
notice to all employees that the retirement age would be 60, it was
exercising that discretion.
[34] In support of the contention that the appellant had such a discretion
to amend th e staff manual, the appellant’s Counsel drew our
attention to the second last paragraph of the “ Offer of
Employment” and clause 3.1 of the “Articles of Agreement” The
second last paragraph of the “Offer of Employment” reads thus:
“The terms and conditions of employment set out in this
letter must be regarded as a summary of the most
prominent aspects. More comprehensive terms and
conditions are set out in the CPS Staff Manual and such
terms and conditions are subject to amendments by CPS
Management.” (Underlining supplied).
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Clause 3.1 of the “Articles of Agreement” reads thus:-
“The employee undertakes to make himself familiar with the
contents of the CPS’s Staff Manual as amended from time to
time, and acknowledges that those terms and conditions
contained therein, which are applicable to the category of
employment into which he falls, shall apply to his employment
and, in particular, but without derogating from the generality
of the aforegoing, acknowledges that the paragraphs covering
hours of wor k, salaries, wages and allowances and leave of
absences apply to his employment with CPS.”
[35] The appellant’s argument was that through the above two
paragraphs the respondent agreed that the terms and conditions of
employment contained in the staff man ual governed his
employment and that the appellant could amend them. The Court a
quo took the view that such right to amend was limited to
amendments of existing terms and conditions and did not extend to
introducing new terms and conditions. In this regar d it held that,
since, prior to the amendment of the staff manual introducing 60 as
the retirement age, there was no clause dealing with retirement age,
this “ amendment” was one introducing a new condition of
employment and not amending an existing conditi on of
employment, and, was , therefore, not the kind of amendment
contemplated by clause 3.1. of the “ Offer of Employment .” I
agree with the Court a quo in this regard. If one has regard to the
relevant part of the second last paragraph of the “ Offer of
Employment”, it refers to the terms and conditions that “ are
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subject to amendments by the CPS Management ” as “ such
terms and conditions … ”. The “ such” refers to the earlier
reference to the “ more comprehensive terms and conditions
[that] are set out in the CP S Staff Manual.” In my view this is a
good enough reason to justify a rejection of the appellant ’s
contention in this regard. Accordingly, it is rejected.
[36] I am not sure whether it was the appellant’s case that, even without
relying on the Staff M anual, the appellant was entitled to
unilaterally introduce a new retirement age as it did. To the extent
that this may have been part of the appellant’s case, it is rejected
for the reasons given by this Court in regard to a similar argument
in Rubin Sportswear.
[37] In those circumstances, the appellant’s appeal falls to be dismissed.
With regard to costs, the appeal was argued on the basis that costs
should follow the result. I shall make a cost order on that basis.
[38] In the premises the appeal is dismissed with costs.
Zondo JP
I agree.
Davis AJA
I agree.
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Jappie AJA
Appearances:
For the appellant : Adv A Redding SC
Instructed by : Webber Wentzel Bowans Attorneys
For the respondent : Mr H Kocks
Instructed by : Kocks & Dreyer Attorneys
Date of judgment :