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[2016] ZALAC 85
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Tulwana and Another v City of Johannesburg (JA 59/15) [2016] ZALAC 85 (26 July 2016)
THE LABOUR APPEAL COURT OF SOUTH AFRICA, JOHANNESBURG
Reportable
Case no: JA 59/15
ALAN
TULWANA
First
Appellant
ROBERT
WIEBOSCH Second
Appellant
and
CITY OF
JOHANNESBURG
Respondent
Heard: 26 May 2016
Delivered: 26 July 2016
Summary:
Employees claiming dismissal as a result of the non-renewal of their
fixed term contract – employees contending that
they have
reasonable exception for the renewal of their fixed term contract in
term of a 2006 collective agreement - alternatively
that their
dismissal was automatically unfair on the basis of a protection
disclosure made against one senior employee- employer
contending that
no legal basis exists for the employees to reasonably expect the
renewal of their contract on account of the new
collective agreement.
Appeal – evidence showing that employees’ contract
terminated prior to the coming into effect
of the new collective
agreement and that the 2009 collective agreement was still
applicable. – no fair reason exists to justify
the failure to
renew the employees’ fixed term contract and it stands to be
considered to be an unfair dismissal in terms
of s188 of the LRA.
Protection
disclosure – court
finding that employees
must discharge the burden of proof or convince the court that the
inference advocated is the most readily
apparent and acceptable
inference to be drawn from a number of possible instances - there is
no doubt that an inference can be
drawn that occupational detriment
followed upon the disclosure. Court holding however that two factors
militate against a finding
that employees were dismissed for
occupational detriment: the fact that only one out of nine employees
whose fixed term contracts
ended was reemployed and that the
employer’s failure to follow the provisions of the 2006
agreement was due to a mistake
of law as opposed to an act of
occupational detriment suffered by the employees. Employees’
dismissal found only to be substantively
unfair – Labour
Court’s judgment set aside –
Relief
– because of the passing of the first appellant prior to the
hearing of the appeal it is impracticable to afford him
the
reinstatement - maximum compensation of 12 months is ordered-
employer ordered to reinstate second appellant with no loss of
benefits.
Coram:
Davis, Musi JJA
et
Murphy AJA
JUDGMENT
DAVIS
JA
Introduction
[1]
This is an appeal against a judgment
of Molahlehi J of 29 April 2015 in which the learned judge dismissed
the claim of the appellants
to be reinstated with no order as to
costs.
[2]
The background to this case can
be summarised thus: Both appellants were long standing employees of
the respondent. First appellant
was employed as from 10 February 1984
and the second appellant as from 1975. For most of their careers with
respondent, both appellants
had been employed on permanent contracts
in the financial unit of the Emergency Medical Services Department
(EMS). On 1 November
2005, both entered into fixed term contracts for
a period of five years.
[3]
It appears that, in terms of
these new contracts, the employees could elect to maximise their
income, while the employer was empowered
to introduce maximum
performance management into these contracts.
[4]
On the evidence, there is no
suggestion that appellants did not voluntarily enter into these
contracts. It was clearly their intention
to secure additional
remuneration thereunder, together with further additional benefits
such as training courses and skill improvement
programs. In terms of
these contracts, the employment relationship between appellants and
respondent was to terminate on 31 October
2010.
[5]
Of additional significance to
the present dispute was a settlement agreement, which is a collective
agreement with binding effect
in terms of s 23 of the Labour
Relations Act 66 of 1995 (‘LRA’), entered into between
the Independent Municipal and
Allied Workers Union (IMATU) and the
South African Municipal Workers Union (SAMWU) on the one hand and the
South African Local
Government Association (SALGA) on the other.
Clause 2.4 of this agreement provided as follows:
‘
In
respect of current fixed term contracts concluded with non-Section 57
employees, these contracts will run for their agreed terms,
where-after the employees concerned will remain employed on the
SALGBC terms and conditions of employment and at the applicable
SALGBC grades and salary scales, unless otherwise agreed in a
division of the SALGBC or unless exemption is granted in terms of
clause 7 thereof
.’
[6]
Being a collective agreement,
this provision altered the terms of the appellants’ contracts
by virtue of s 23(1)(d) of the
LRA. This agreement was the subject of
considerable dispute. Initially, it was made an arbitration award
which was subsequently
rescinded on application by SALGA. On 1 August
2006, SALGA, together with various municipalities, instituted an
application in
the Labour Court to set aside this agreement. It is
clear from an agreement which was then later entered into between
respondent,
IMATU and SAMWU that this settlement agreement was only
declared to be null and void and of no force and effect as from the
conclusion
of a fresh agreement entered into between the parties on
28 September 2012. Consequently, the first collective agreement
remained
binding until that date. In terms of the second collective
agreement, clause 9 thereof provided:
‘
9.
TERMINATED FIXED TERM CONTRACTS OF EMPLOYMENT
All
fixed terms contracts of employment that have already terminated
automatically through the effluxion of time, in accordance
with its
own terms, prior to or on 31 July 2012, shall have no claim against
the COJ in respect of the process of conversion and
placement as set
out more fully in paragraphs 7 above.’
[7]
During June 2009, first
respondent discovered that Dr Gule, who was the executive manager of
EMS, had deposited an amount of R 208 148.29
into her personal
bank account, although this amount had been part of a sponsorship
which she received to finance a trip to the
United States of America.
The complaint against Dr Gule eventually reached the Parliamentary
Portfolio Committee and received extensive
media coverage. Second
appellant was involved in this issue, in that he had invoiced Dr Gule
to repay the amount in question.
[8]
Appellants’ case was that
respondent had created a reasonable expectation that their fixed term
contracts of employment would
be renewed on the same or similar terms
upon the expiry thereof on 31 October 2010. First appellant testified
that his supervisor
had informed him that notwithstanding the
fixed term contract, if he performed to the best of his abilities,
there was no
reason why his contract would not be renewed. However
once the disclosure had been made, the relationship between
appellants or
Dr Gule deteriorated markedly. Appellants contend that
Dr Gule ensured that no renewal of their contract would be concluded
Thus,
failure to renew the contracts or employ the appellant’s
permanently was, in their view, as a result of the disclosures
pertaining
to fraud, corruption and financial impropriety perpetuated
by Dr Gule; that is in her attempt to personally appropriate the R
208148.29.
[9]
In summary, appellants cause of
action was based upon the allegation that they were dismissed because
they had a reasonable expectation
of renewal in terms of s 186(1)(b)
of the LRA or alternatively in terms of s 186(1)(a) of the LRA
because their terms and conditions
of employment had been novated in
terms of s 23(1) of the LRA by the 2006 collective agreement.
Whatever the nature of the dismissal,
they allege an automatically
unfair dismissal in terms of s187(1)(h) of the LRA in that they were
victimised for making a protected
disclosure.
The
decision of the court
a quo
[10]
In essence, Molahlehi J,
accepted the argument of respondent that the appellants’ had no
reasonable expectation of the renewal
of the fixed term contracts nor
that it was required in law for respondent to employ the appellant’s
permanently upon the
expiry of their fixed term contracts on 31
October 2010. He further accepted that the fixed term contracts
terminated automatically
through the effluxion of time and that no
nexus could be shown to exist between the termination of these
contracts and the particular
disclosures which had been made by
appellants regarding the conduct of Dr Gule, to which I have made
reference.
[11]
The critical reasoning employed
by the learned judge is reflected in the following two passages from
his judgment:
‘
[54]
In
considering the above evidence, it cannot be said that but for the
protected disclosure, the fixed term employment contracts
of the
applicants would not have been terminated. The proposition that is
supported by the evidence and which I accept is that
of the
respondent, which is that the fixed term contracts of the applicants
came to the end as a result of the effluxion of time.
In other
words, it cannot be said on the facts and the circumstances of this
case that the protected disclosure made by the applicants
was the
main, dominant or most likely cause of the termination of the fixed
term contracts.
[55]
In summary, the applicants have failed to show that the termination
of their fixed term contracts was due to an impermissible
reasons of
the respondent. The applicants’ fixed term contracts came
to an end as a result of the effluxion of time.
Accordingly, I
find that the applicants were not dismissed and, therefore, this
court does not have jurisdiction to entertain their
claim of
automatically unfair dismissal
.’
Regarding
the averment that the collective agreement had amended the terms of
the appellant’s arguments, Molahlehi J said:
‘
The
non-implementation of the 2006 collective agreement does not assist
the applicants in their assertion that they expected their
contracts
to be extended. It has not been disputed that that agreement was
never implemented. There is also no evidence that the
applicant ever
sought to enforce that agreement
.’
The
appeal
[12]
On appeal, Mr Flynn, who
appeared on behalf of the appellants, contended that, apart from the
two bases upon which the initial application
has been dismissed by
the court
a quo
,
respondent had failed to employ the appellants permanently in
accordance with the terms of the 2006 Collective Agreement, upon
expiry of their fixed term contracts of employment. In so doing,
appellants had suffered occupational detriment in terms of s 3
of the
Protected Disclosures Act 26 of 2000 (‘PDA’).
[13]
By contrast, respondent
contended that the settlement agreement had been rescinded and set
aside in 2008 and hence it held no significance
to the present
dispute.
[14]
According to respondent,
following the legal position which, in its view, was no longer
governed by the 2006 agreement, on 11 February
2010 a letter was sent
by respondent to the appellants which read thus:
‘
Kindly
be advised that your fixed term contract COJ dated 01 November 2005
will be ending on 31 October 2010. The position will
be advertised
and you are welcome to apply and compete should you desire to do so.
’
This
letter followed upon a general notice which was placed on the notice
boards of respondent on 18 May 2009 which read thus:
‘
Kindly
take note that no Fixed Term Contract will be extended or renewed at
the end date of such a contract.
All
positions on Fixed Term Contract will be advertised at the end of
such contract. All employees including the job holder
of the
Fixed Term Contract position could apply for the same position or any
other position if he/she desires to do so.’
[15]
For this reason, Ms Snyman, on
behalf of the respondent, submitted that the claim of appellants that
the settlement agreement of
2006 created an expectation of renewal
could not be substantiated. At best for appellants, this agreement
was disputed, had not
been implemented and was later replaced by the
2012 agreement. The 2012 agreement contained paragraph 9, to which I
have already
made reference, namely that all who held fixed term
contracts of employment that had already been terminated
automatically through
the effluxion of time prior to or on 31 July
2012, had no claim against respondent. Respondent contends that it
was this clause
that governed the relationship between appellants and
respondent; hence there was no legal basis upon which appellants’
claim
could be justified.
Evaluation
[16]
In my view, the insurmountable
difficulty which confronts respondent is that the evidence shows
clearly that the settlement agreement
of 2006 had not been replaced
prior to the termination of appellants’ fixed term contracts on
31 October 2010. When these
fixed term contracts terminated in
October 2010, clause 2.4 of the 2006 settlement agreement still
applied. This meant that appellants
would remain employed ‘on
the SALGBC terms and conditions of employment and at the applicable
SALGBC grades and salary scales’.
The evidence before this
Court is clear: the 2006 agreement was only cancelled as a result of
clause 4.1.1 of the 2012 agreement
which provided:
‘
The
parties agree that:
with
effect from the Signature Date, the Disputed Settlement Agreement as
it purports, on the face of it, to bind the COJ, shall
be null and
void and of no force and effect;’
[17]
Therefore, it must follow,
absent any further evidence, that the refusal to reemploy the two
appellants, the provisions of the 2006
agreement notwithstanding,
constituted a dismissal in terms of s186(1) of the LRA. Section 23 of
the LRA provided that the collective
agreement had altered the terms
of employment of appellants. The absence of any justification for the
dismissal as defined means
that, at best for respondent, it was not
for a fair reason and stands to be considered to be an unfair
dismissal in terms of s188
of the LRA. The conclusion leads to a
further enquiry: whether the dismissals were triggered by a protected
disclosure which converted
the dismissals into automatically unfair
dismissals.
Protected
Disclosure
[18]
I turn thus to deal with the
further question as to whether these dismissals were automatically
unfair in terms of s187(1)(h), namely
the dismissal was for a reason
which was in contravention of the PDA, on account of evidence that
appellants had made a protected
disclosure as defined in the PDA. In
turn, a finding of this nature would have significant consequences
for the relief which may
be granted.
[19]
Section 3 of the PDA provides
that no employee may be subjected to any occupational detriment by
his or her employer on account
or partly on account of having made a
protective disclosure. Occupational detriment is defined in s 1 of
the PDA to include: ‘
been
otherwise adversely affected in respect of his or her employment,
professional office, employment opportunities and work security
.’
[20]
It is common cause that the
onus
was on appellants to show a nexus between the occupational detriment
that they alleged to have suffered, the failure to employ
them
permanently in terms of the 2006 collective agreement and the
disclosure they made in respect of Dr Gule’s appropriation
of
the sponsorship money.
[21]
Appellants’ case in
respect of occupational detriment was based on evidence which can be
summarised thus: Following upon the
disclosure, Dr Gule deliberately
obstructed first appellant in the performance of his duties. For
example, first appellant was
responsible for collecting monies from
the Road Accident Fund (‘RAF’) in respect of ambulance
accounts. After a meeting
in late 2009 which was attended by first
and second appellant and representatives from the RAF, first
appellant was advised that
the respondent should also claim ambulance
monies from the RAF. A new revenue stream for the respondent would
thus have been created
by first appellant, who tabled a request to Dr
Gule so that she could approve this new revenue stream. She simply
ignored this
request. First appellant discussed the problem issue
with Ms Naidoo who then approached Dr Gule. Dr Gule indicated that
she did
not wish to discuss this issue further, as a result of which
respondent lost approximately R 6 million revenue.
[22]
In relation to a grievance
lodged by first appellant, Dr Gule simply referred the matter to his
immediate supervisor and refused
to deal with the issue any
further.
[23]
Second appellant refers to a
failure to appoint him to the post of Deputy Director: Finance,
notwithstanding that he had successfully
acted in this position for
almost two years. By contrast, Mr Skosana whom the appellants
referred to as “a known cohort of
Dr Gule”, was appointed
to the post, albeit that appellants claim he had little or no
financial acumen. Further, second appellant
was not informed at all
of this appointment. According to the testimony of second appellant,
the way in which he found out about
the appointment of Mr Skosana was
as follows:
‘
Let
us get that part, Ruben Skosana, okay. You came back from
leave, you said Ruben Skosana comes into your office. ---
Yes.
At
that point when you come back from leave, were you still acting?
--- I was still acting, yes.
Deputy
Director? --- For all intents and purposes, yes, I was,
Your Lordship.
What
does Skosana say to you when he comes into your office? ---
He said something like: has anybody spoken to
you about your
acting post because I have been put into this acting post by Dr Gule
now and you are not acting anymore and he says
…[intervenes]
So
he just came into your office… --- Ja,
did anybody come and discuss it? I said no,
nobody, that
is the first I heard of it, Your Lordship.
You
had heard nothing from Dr Gule about this? --- Nothing at
all, Your Lordship.’
[24]
Appellants refer to the
suspension of Ms Lakraj-Naidoo, appellants’ manager which
prevented them from properly performing
their duties as they had no
person to report to for extended periods other than Dr Gule, who
continued to behave in an aggressive
fashion towards them.
[25]
The action of Dr Gule against
Ms Lakraj-Naidoo resulted in a CCMA order to the effect that Dr Gule
had committed an unfair labour
practice by demoting her. She was
therefore reinstated into her position as Director-Finance and Supply
Chain Management.
[26]
Appellants refer further to
their achievements in the performance in their posts. This averment
finds support from Ms Lakraj-Naidoo
who, in a letter on 1 September
2010 motivating for an extension of their contracts, said of first
appellant that he “regularly
takes brilliant initiatives to
ensure that optimum revenue is collected on a monthly basis.”
Further “he demonstrates
his expertise by initiating new ideas
and ensures his contribution to networking capital of the City and
his liquidity position
by his commitment and dedication.” Of
second respondent, Ms Lakraj-Naidoo noted that “his technical
financial knowledge
and experience is unequalled in this department”
and that “although interviewed for the position of Deputy
Director:
Finance he was denied the opportunity of the post although
he still acting in the post after the interview”. She also
referred
to the fact that second appellant had received performance
bonuses over the past four years for his achievements at EMS.
[27]
Mr Flynn contended that the
only employees to have suffered this sort of treatment at the hands
of Dr Gule were appellants and Ms
Lakraj-Naidoo. No reasonable
inference could have been drawn, other than that, but for their
protective disclosures of Dr Gule’s
financial impropriety, they
would not have suffered occupational detriment, they would have had
their contracts renewed, alternatively
they would have been placed in
permanent employment in accordance with the terms of the 2006
agreement.
[28]
Respondent counters by
contending that there had been a practice to advertise positions of
those whose contracts were due to expire,
a point which was not
disputed by first appellant insofar as EMS was concerned. In his
evidence, first appellant was taken to a
document of 16 August 2010
which listed the names of nine employees whose fixed terms contracts
were terminating on 31 October
2010, save for one CS Hartnady whose
contract was to terminate on 30 September 2010. First appellant was
asked:
‘
I
am saying the fact that your positions were advertised could not have
created an expectation in your mind that your contract would
be
renewed… no it could not. It could… No it
could not
.’
Furthermore
although only two appellants had made a protective disclosure, none
of the employees on this list, save for a Mr Gaju,
were reappointed
after the expiration of their contracts.
Evaluation
[29]
The question which arises for
determination is whether appellants showed a sufficient causal
connection between respondent’s
refusal to extend their
contracts and the protected disclosure they had made, and then as to
whether it was the latter which caused
occupational detriment as
defined in the PDA. Invariably, in cases of a protected disclosure,
there is a diminished likelihood
of a “smoking gun” being
found and Courts are required to rely on inferences. In this case,
the question is whether
the only reasonable inference that can be
drawn is that the failure to abide by the 2006 agreement and thus
ensure that the appellants
remained employed by respondent,
subsequent to the termination of their fixed term contracts, was as a
result of the protective
disclosure, whether in whole or in part.
[30]
In proceedings of this nature,
the inference sought to be drawn must be consistent with all the
proven facts, although it needs
not be the only reasonable inference.
It is sufficient if it is the most probable inference. See
Katz
v Katz
[2004] 4 All SA 545
(C) at para 95 and
AA
Onderlinge Assuransie Bpk v De Beer
1982 (2) SA 603
(A) at 614-615 where it was held that a plaintiff who
relies on circumstantial evidence needs not prove that the inference
which
he or she asks the court to draw is the only reasonable
inference
.
He or she will discharge
the burden of proof if he or she can convince the court that the
inference advocated is the most readily
apparent and acceptable
inference to be drawn from a number of possible instances.
[31]
In this case, there is no doubt
that an inference can be drawn that occupational detriment followed
upon the disclosure of Dr Gule’s
dishonesty with regard to the
scholarship money. But is it the most probable, readily apparent
inference? The list of actions which
constitute possible detriment is
extensive, as set out earlier in this judgment. But there are two
powerful factors which need
to be taken into account, namely that
only one of the nine employees whose fixed term contracts ended in
2010 was reemployed and,
further, that it appears that the
respondent’s failure to follow the provisions of clause 2.4 of
the 2006 agreement was due
to a mistake of law as opposed to an act
of occupational detriment suffered by the appellants who had
disclosed Dr Gule’s
dishonesty; that is, given the manner
in which the case was argued by respondent, incorrect advice was
given to respondent
which caused the failure to reemploy the two
appellants.
[32]
I accept that there is little
evidence as to whether any of the other of the nine employees, whose
fixed contracts ended in 2010,
were not reemployed because they
preferred to leave the employ of the respondent as opposed to being
confronted by a refusal of
respondent to abide by the terms of clause
2.4 of 2006 agreement. But, in my view, it cannot be said that the
respondent’s
decision not to renew the contracts of appellant
was not due to a complete misreading of the contents of continued
validity of
the 2006 agreement. In other words, it cannot be said
that the more natural plausible conclusions amongst several
conceivable and
plausible alternatives was not that the respondent
had mistaken the proper legal position which governed the
relationship between
it and the appellants.
[33]
For these reasons therefore,
the probabilities do not justify a conclusion that a dismissal of the
appellants as defined in s186
(1) of the LRA can be sourced in s
187(1)(h) of the LRA. The evidence presented does not justify an
exclusion of a plausible, readily
apparent, alternative inference.
Accordingly, the requisite nexus has not been properly proved by
appellants.
The
remedy
[34]
As indicated earlier, the
finding that s187 (1)(h), (that is that the dismissals were
automatically unfair), cannot be sustained
has consequences for the
remedies which are available to appellants.
[35]
This is particularly the case
because first appellant passed away on 09 February 2016, three and
half months before this appeal
was heard. Accordingly, the primary
remedy of reinstatement in terms of s193(1) of the LRA is now
rendered impractical in terms
of s193 (2)(c) of the LRA.
[36]
Mr Flynn contended that courts
have accepted that a claim for benefits arising from the employment
relationship could accrue to
a deceased estate. He submitted that the
benefit of reinstatement, which would ordinarily have been available
to the first appellant
but for his death, should not, in the
interests of fairness and equity, be unnecessarily curtailed. In Mr
Flynn’s view, the
plain wording of s193 (2)(c) of the LRA
provides that reinstatement should not be ordered where it is not
reasonable practicable
‘for the employer’. In other
words, the reason for the impracticability of reinstatement must
arise from submissions
made by the employer in relation to its own
operational necessities. The death of the first appellant is a reason
which arises
from first appellant himself, and therefore falls
outside the purview of s193(2)(c). In addition, it is common
cause that
the posts are vacant, that they are still on the
respondent’s organisational structure and that the first
appellant sought
reinstatement up to the point of his passing.
[37]
The wording however of the
relation in s193(2)(c) is clear; namely
‘
it
is not reasonable practicable for the employer to reinstate or
re-employ the employee’
.
However unfair the outcome may be to the estate of first appellant,
the words ‘reinstate’ or ‘reemploy’
must be
given their clear meaning and neither can be twisted to justify the
case made out by Mr Flynn on behalf of a deceased employee.
Thus,
given the finding regarding the appropriate classification of the
dismissal, namely that it cannot be based upon s187 of
the LRA, s 194
(1) is of clear application, namely that the compensation which must
be awarded to first appellant can be no more
than the equivalent for
12 months remuneration calculated at the employees rate of
remuneration on the date of dismissal.
[38]
By contrast, it is reasonably
practical for respondent to reinstate the second appellant, whose
post has not been filled.
[39]
Accordingly and for these
reasons, the following order is made:
1.
The appeal is upheld with
costs.
2.
The order of Molahlehi J of 29
April 2015 is set aside and replaced with the following order:
2.1
The failure to renew the
employment contracts of the first and second applicants constituted
an unfair dismissal in terms of
s186(1)
of the
Labour Relations Act
66 of 1995
read together with
s188
(1) of that Act.
2.2
Respondent is ordered to pay
the executor of first applicant’s estate an amount equivalent
to 12 months remuneration calculated
at first appellant’s rate
of remuneration as at 1 November 2010.
2.3
Respondent is ordered to
reinstate second applicant retrospectively with no loss of benefits,
increases or bonuses as from 1 November
2010.
2.4
Respondent is ordered to pay
both applicants’ costs.
Davis
JA
Musi
JA and Murphy AJA concur in the judgment of Davis JA
APPEARANCES:
FOR
THE APPELLANTS:
Adv P E Flynn
Instructed by Cowan Harper Attorneys
FOR
THE RESPONDENT:
Adv F M M Snyman
Instructed Helena Strijdom Attorneys