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[2012] ZALAC 20
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Karan t/a Karan Beed Feedlot v Randall (JA 87/10) [2012] ZALAC 20; [2012] 11 BLLR 1093 (LAC); (2012) 33 ILJ 2579 (LAC) (22 June 2012)
9
-REPUBLIC OF SOUTH AFRICA
IN THE LABOUR APPEAL COURT OF SOUTH
AFRICA
(HELD IN JOHANNESBURG)
Reportable
Case no: JA 87/10
IVOR MICHEAL KARAN
t/a KARAN BEEF FEEDLOT
…........................................................................
Appellant
and
J W C RANDALL
…......................................................................................
Respondent
Heard: 04 May 2012
Decided: 22 June 2012
Summary: Appeal-automatically
unfair dismissal- sec. 187(1)(f) of the LRA dismissal on the basis of
age- the employee tacitly agreeing
to work beyond normal retirement
age and leaving it to the employer to determine the retirement age or
date on notice to the employee-
nothing unlawful or unfair in the
agreement reached by the parties under these circumstances.
JUDGMENT
___________________________________________________________________
TLALETSI JA
Introduction
[
1] The respondent was
dismissed by the appellant on 28 February 2006. He considered his
dismissal to be both substantively and procedurally
unfair in that he
was discriminated against because of his age. He referred a dispute
of automatically unfair dismissal in terms
of section 187(1)(f) of
the Labour Relations Act 66 of 1995 (“the Act”) to the
Labour Court for adjudication after
an unsuccessful conciliation of
the dispute.
[2] The respondent contended that the
respondent’s dismissal was fair. The Labour Court (per Francis
J) found that the dismissal
of the respondent by the appellant was
automatically unfair in terms of section 187 (1)(f) of the Act and
ordered the appellant
to pay the respondent compensation in the
amount of R1 527 443-54 which was said to be an equivalent of twenty
four (24) months
remuneration plus costs of the application.
[3] Aggrieved by the decision of the
Labour Court the appellant applied and was granted leave to appeal to
this Court against the
whole judgment and order of the Labour Court.
Factual background
[4] For a better understanding of the
issues a brief factual background is apposite. In the Labour Court
the respondent who was
the applicant testified and the appellant
tendered the evidence of David Johannes Loots (“Loots”)
who was the Group
Human Resources Manager, Arnold Francois Pretorius
(“Pretorius”) who was Chief Executive Officer and Ivor
Michael Karan,
the owner of Karan Beef Feedlot and chairman of the
respondent. It shall not be necessary for the purpose of this appeal
to refer
to the detailed evidence tendered because of the specific
issue to be decided. The evidence is captured in detail in the
judgment
of the court below.
[5] The respondent, then 53 years old,
was employed by the appellant on 01 June 1997 as a Financial
Controller. On 01 August 1999
he was appointed the Group Financial
Director, the position he held until his dismissal. The respondent
was
inter alia
, responsible for developing appellant’s
accounting system.
[6] It needs to be mentioned that the
respondent’s letter of appointment did not make any reference
to the respondent’s
retirement age. He was a member of the
Karan Provident Fund (“the Fund”). The Rules of the Fund
provided that normal
retirement age was 60 years. On 05 February
2003, the appellant took a resolution adopting the Rules of the fund
effective from
01 August 2002. This meant that the respondent’s
retirement age became 60 years.
[7] It was common cause that on 08
August 2003 Mr Loots addressed a letter to the respondent stating as
follows:
‘
This
is to confirm that you will reach your retirement age on 25 March
2004.
We
would like you to continue to work for Karan Beef. The normal notice
period will apply in the event that we would like you to
go on
retirement
.
Please
take note that you can continue to be a member of the Karan Beef
Provident Fund as for the pensionable portion is concerned
and it
will be regarded as a deferred retirement...’
(Emphasis
added)
[8] The reference to 25 March 2004 was
to the date on which the respondent turned 60 years old. On 25
February 2004 Loots sent another
letter to the respondent with
substantially similar content to that of 08 August 2003. The
respondent did not respond to these
letters.
[9] On 23 November 2005, Pretorius
wrote a letter to the appellant informing him of his increase in
salary as from 01 January 2006.
He further thanked him for his
contribution towards the success of the business during the past year
and that they relied on his
continued support towards the future
success of the business.
[10] On 18 January 2006, Pretorius
wrote another letter to the respondent and referred him to the letter
dated 25 February 2004.
He further informed him that in terms of the
previous letter he was furnishing him with a notice that he was to go
on retirement
and that 28 February 2006 would be his last day in
service. He was further advised that should an incentive bonus be
paid in July,
the respondent would qualify for a
pro rata
bonus up to the end of February.
[11] On 20 January 2006, the
respondent wrote a letter to Pretorius in which he challenged the
decision of the appellant to place
him on retirement before he
reached age 65 and suggested that a negotiated settlement be agreed
upon. He suggested that a meeting
be held with his attorney for the
purpose of reaching an amicable solution. On 30 January 2006 the
respondent’s attorneys
forwarded a letter to the appellant
taking issue with the decision to retire the respondent and
threatening legal action unless
settlement was reached.
[12] On 31 January 2006 the respondent
received a letter from Loots in which he was informed that the
appellant was confirming that
he was being relieved of his duties
with immediate effect and that he was no longer required to report
for duty.
[13] Since the parties could not
settle their dispute the respondent instituted proceedings in the
Labour Court challenging his
“dismissal” and seeking
inter alia
, reinstatement, alternatively compensation for
automatically unfair dismissal equivalent to 24 month’s
remuneration. The
appellant contended that the dismissal or
termination of the respondent’s employment was fair as it was
entitled to dismiss
him as he had reached the requirement age of 60
which had been an agreed retirement age.
The Finding of the Labour Court
[14] The Labour Court made, among
others, the following findings which are fundamental to this appeal.
14.1 The respondent had raised several
defences that were not supported by the evidence.
14.2 The appellant’s main and
only defence was that the respondent had reached the normal or agreed
retirement age.
14.3 Despite the denial by the
respondent the appellant had a retirement age of 60 years and that
the appellant was aware of such
retirement age and that it was
applicable to him.
14.4 The respondent was given a letter
on 08 August 2003 and that his employment had come to an end upon
reaching the retirement
age of 60.
14.5 The effect of the letter was to
offer the respondent new employment. There is no reference made in
the said letter what the
normal or agreed retirement age is going to
be. The letter only gave the appellant the right to decide when they
would like the
respondent to go on retirement.
14.6 Since the letter did not employ
the respondent on a fixed term contract of employment after his
retirement date his employment
was therefore for an indefinite
period;
14.7 Where the appellant had decided
on his own to keep the respondent in employment beyond the retirement
age there would have
to be a fair reason to terminate his services.
14.8 No evidence was presented what
the normal or agreed retirement age was after he went beyond 60.
14.9 The appellant could not
unilaterally impose a retirement date as in
casu
and its
reliance on section 187(2)(b) of the Act is therefore misplaced.
Since the respondent was dismissed solely on the grounds
of his age,
his dismissal was therefore automatically unfair.
[15] In this Court, counsel for the
appellant contended that the mere fact that the respondent’s
employment was extended,
did not mean that the protection afforded to
the employer by section 187(2)(b) was thereby lost or that a new or
agreed retirement
age had to be brought about. Secondly, it was
contended that, there was, in any case, an agreement between the
parties as to when
and how it would be determined that the respondent
should be retired. This latter argument means that the Labour Court
erred in
finding that the appellant was legally empowered to
unilaterally determine the retirement date and or age of an employee.
The appeal
[16] The relevant statutory provision
in this case is section 187 which provides that:
‘
187(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-
(f)
that the employer unfairly discriminated against an employee,
directly or indirectly, on any arbitrary ground, including, but
not
limited to race, gender, sex, ethnic or social origin, colour, sexual
orientation,
age
,
disability, religion, conscience, belief, political opinion, culture,
language, marital status or family responsibility.
(2)
Despite subsection (1)(f):
(a)...
(b)
a dismissal based on
age is fair if the employee has reached the normal retirement or
agreed retirement age for persons employed
in that capacity.’
(Emphasis added)
[17] It is common cause that the
dismissal of the respondent was based on his age. His dismissal would
therefore be automatically
unfair unless the appellant shows that
there is a fair reason for it. The appellant relies, for
justification of the dismissal
of the respondent, on section
187(1)(f), which provides that a dismissal based on age is fair if
the employee has reached the normal
or agreed retirement age for
persons employed in that capacity.
[18] In
casu
, the
court a
quo
found, correctly on the facts, that there was indeed an
agreed retirement age of 60 years that was applicable to the
respondent.
However, the court held further that the respondent
having reached the retirement age, the appellant offered him new
employment
by medium of the letter dated 08 August 2003 without
stating what his new retirement age would be and instead reserved to
itself
unilaterally decide when to retire the respondent from his new
employment contract. The
court a quo
ruled that the appellant
was not legally empowered to determine unilaterally, the date or age
of retirement of an employee.
[19] There are two plausible arguments
concerning the application of section 187(1)(f) and 187(2)(b) in this
matter. The first is
that where there is a normal or agreed
retirement age and the employee has reached that age, the employer
shall enjoy protection
prescribed in section 187(2)(b) from that date
and at any time thereafter. He or she would be entitled to terminate
the employment
of the employee on the grounds of age.
[20] The second scenario is that, when
there is an agreement reached between the employer and employee
before the latter has reached
the normal or agreed retirement age, to
determine a new retirement age, the employer would enjoy the
protection of section 187(2)(b),
should he/she terminate the
employment of the employee, once the new agreed employment date is
reached.
[21] In light of the facts of this
case, it is not necessary to decide upon the merits of the first
argument. What is common cause
is that the respondent was informed in
the letters dated 08 August 2002 and 25 February 2004 respectively
that the appellant required
him to continue working beyond his
retirement date and that it was left to the appellant to determine on
notice when the respondent
is to be retired. The Court
a quo
found, and it was also common cause in this Court, that the
respondent did receive the aforementioned letters and did not respond
to them. He instead continued with his employment beyond the date on
which he reached his retirement age.
[22] The finding of the Court
a quo
that the appellant was not entitled to unilaterally determine a
retirement date is therefore, in the circumstances of this case,
not
correct. The respondent tacitly agreed to work beyond the normal
retirement age and left it to the appellant to determine the
retirement age or date on notice to the respondent. There is nothing
unlawful or unfair in the agreement reached by the parties
under
these circumstances. It was open to the respondent to reject the
condition imposed by the appellant at the time it was made
and make a
counter proposal. He also had an election to refuse to continue
rendering his services beyond his agreed retirement
age.
[23] The evidence further showed that
this was appellant’s standard practice was applied to other
employees who at different
occasions, found themselves in a similar
position to that of the respondent.
[24] In the light of this finding , it
is unnecessary to deal with the correctness and fairness of the
amount of compensation awarded
to the respondent by the Court
a
quo
. Furthermore, in view of the concession made on behalf of the
appellant that he does not persist with costs both in the Court
a
quo
and in this Court, in the event of the appellant being
successful, it is not necessary to discuss same, save to state that
the
concession is properly made taking into account,
inter alia
,
how the respondent was treated. It would be in accordance with the
requirements of law and fairness that each party carry its
costs of
both courts.
Order
[25] In the result the following is
ordered:
The appeal succeeds and the order of
the Labour Court is set aside and replaced with the following:
“
(a) The
applicant’s claim is dismissed.
(b) Each party is to pay its costs.”
2. Each party is to pay its costs on
appeal.
___________________
TLALETSI, JA
Judge of the Labour Appeal Court
Davis JA and Murphy AJA concur in the
judgment of Tlaletsi JA.
Appearances:
For the Appellant: Advocate Kennedy SC
Instructed by: Edward Nathan
Sonnenberg Inc
For the Respondent: Mr T Mills of
Cliffe Dekker Attorneys