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[2009] ZALCJHB 92
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Labournet Payment Solutions v Vosloo (J1086/08) [2009] ZALCJHB 92 (7 August 2009)
IN THE LABOUR COURT
OF SOUTH AFRICA
HELD IN
JOHANNESBURG
REPORTABLE
CASE
NO: J1086/08
In the matter
between:
LABOURNET PAYMENT
SOLUTIONS
(PTY)
LTD
APPLICANT
and
DANIEL
FRANCOIS
VOSLOO
RESPONDENT
JUDGMENT
Molahlehi J
Introduction
[1]
This is an application in terms of rule 7
of the Rules of the Labour Court read with section 77 of the Basic
Condition of Employment
Act of 1997. In terms of this application the
applicant claims damages from the alleged breach of the contract of
employment, by
the respondent in that he is alleged to have resigned
without giving a proper notice.
[2]
The applicant further claims that the
respondent should be ordered to refund it the sum of R40 000.00
(fourty thousand Rand), being
the agreed amount and quantum of the
training of the respondent by the applicant, in the event of early
termination of the employment
contract.
Background
facts
[3]
The following facts are common cause: The
parties entered into a fixed term employment contract on 25
th
July 2007 in terms of which the respondent was employed as a pay roll
administrator as from the 30
th
July 2007 on a salary of R13 000.00 per month. The contract was to
expire in October 2007. The contract further provided that the
applicant would provide the respondent with in-house training in
respect of relevant labour law, industrial relations and its
practical application at the costs of R40 000.00.
[4]
On the 5
th
October 2007, the respondent issued the applicant with a 30 (thirty)
days notice of intention to terminate the contract of employment
with
the applicant. However, shortly thereafter he issued a further letter
of resignation on the 9
th
October 2007. The applicant accepted the resignation as contained in
the letter of the 5
th
October 2007.
[5]
The issue between the parties arose in
relation to the interpretation of the provisions of the contract and
concerned in the main
the period of notice of termination of the
contract which the respondent ought according to the applicant to
have given in the
termination of his employment. The notice of
termination of the contract is provided under both clauses 3 and 11
which respectively
deal with “
TRAINING
PERIOD”
and “
TERMINATION”
The relevant sub-clauses of clause 3 provides:
“
3.3
For this training period, the employee will be regarded as being
employed on a fixed term contract of employment, which
will only
endure for this training the employment of the employee shall
automatically end as a matter of law terminate at the expiry
of the
training period, on the grounds that the term of this fixed term
contract had been fulfilled.
3.4
Only if written notice is given at least 7 (seven) days prior to the
expiry of the training period,
this contract will be renewed, and
will the employee’s employment with the company continue on a
permanent basis, on the
terms as set out in this agreement.
3.5
Should the employee’s employment be terminated by the company
for any reason whatsoever during
the training period, the company
shall only be obliged to give the employee notice as prescribed by
the Basic Conditions Employment
Act from time to time.”
[6]
The relevant part of the contract for the
purpose of this judgment under the heading “
TERMINATION”
provides:
“
11.1
The employee’s employment with the company may be terminated by
him or by the company upon giving 1 (one) month’s
written
notice to the other party concerned
11.2
. . .
11.3
The company shall, in order to advance and promote the training and
experience of the employee, provide for the
employee to attend
extensive in-house training at the cost of the company, on all
relevant aspects of labour law, industrial relations
and its
practical application.”
[7]
The contract further provides for the
recovery of the costs incurred by the employer in providing the
in-house training of the employee
at the termination of the
employment. Clause 11.6.3 provides:
“
11.6.3
The sum of R40 000.00 (fourty thousand rand) shall be immediately
due, owing and payable by the employee to the company
with effect
from the date of termination of the employment of the employee with
the company in the circumstances contemplated by
clause 4.2 above . .
.”
[8]
The case of the applicant in as far as the
alleged breach of contract and the consequent damages it suffered is
set out in the founding
affidavit as follows:
“
5.8
The actions of the respondent caused the applicant severe prejudice.
The applicant was left with a situation that it was
a payroll
administrator short for several weeks, and the work had to be
allocated to other administrators to the detriment of their
existing
work load, and attendances they already had, and to the prejudice of
the applicant's clients.
5.9
The work of payroll administrator requires detailed attention, and
proper planning of such work, and
such work load is scheduled well in
advance. For this reason, and by law, proper notice is required.
5.10
To find a suitable replacement payroll administrator, and to train
such administrator to the extent of permitting
that administrator to
render services to clients of the applicant, will take at least a
month. The applicant in the end was left
without the services of a
capable, administrator as a result of the breach of contract of the
respondent, without prior notice,
for about two months.”
[9]
Thus the essence of the applicant’s
case is that the breach of the employment contract by the respondent
caused it damages.
The applicant calculated its damages on the basis
of a monthly salary which the respondent received. The applicant
claims damages
in the amount of R53 000.00 (fifty three thousand
Rand), being an amount equivalent to respondent’s monthly
salary for the
period of notice the respondent was required to give
the applicant in terms of the contract. The respondent’s
monthly salary
was R13 000.00.
[10]
As concerning the refund for costs of the
in-house training the applicant contends that the respondent agreed
to serve the applicant
for at least a year from date of signature of
the employment contract and that in the event of the termination of
the employment
contract prior to the expiry of this period of one
year, the sum of R40 000 would immediately be payable by the
respondent to the
applicant in terms of clause 11.6.3 of the contract
of employment.
Evaluation
[11]
The applicant contended that the respondent
was compelled in terms of the agreement, to give it a 1 (one) month’s
notice of
termination of his contract of employment but failed to do
so. As a result of this breach the applicant contends it suffered
damages
in the amount stated above. In support of its contention the
applicant relied on the judgment of
National
Entitlement Workers Union v Commission for Conciliation, Mediation
and Arbitration & Others (2007) 28 ILJ 1223 (LAC),
where the Court held that:
“
Where
the employee has resigned without giving notice in circumstances
where he was obliged to give notice, usually the employer
does
not even sue the employee for damages which in law he would be
entitled to and the damages would be the equivalent of
the notice
pay. However, if an employer wants to sue an employee in such a
situation, he does have a right to do so both at common
law and in
terms of the BCEA. Employers hardly use even this right.”
[12]
The respondent on the other hand argued
that the requirements of a three months notice which is provided for
in paragraph 11 (eleven)
of the employment contract only came into
effect once she had acquired the status of a permanent employee on
terms of clause 3.4
of the agreement. The respondent further argued
that because he was still serving his 3 (three) months probationary
period he was
obliged to give a shorter notice of one week.
[13]
Clause 11 of the employment agreement which
requires 1 (one) month’s notice has to be read with clause 3
(three) which in
particular at clause 3.5 gives the applicant the
power terminate the employment contract during the probationary
period of the
Basic Condition of Employment Act which is one weeks
notice.
[14]
Section 37(3) of the Basic Condition of
Employment Act provides as follows:
“
No
agreement may require or permit an employee to give a period of
notice longer than that required of the employer.”
[15]
In my view the essence of the applicant’s
case is that it is entitled to give a shorter notice during the
probationary period
which was between July and October 2007. The
employee on the other hand was not during that period entitled to a
shorter period
of one week but one month.
[16]
I agree with the contention of the
respondent that the provisions of section 37(1) of the Basic
Condition of Employment Act applies
to the provisions of clause 3.4
of the employment contract between the parties and therefore the
respondent was entitled to terminate
the contract during the
probationary by giving 7 (seven) days notice.
[17]
Turning to the facts of the case, it is
common cause that the respondent initially served the applicant with
the notice of intention
of terminating the contract on 5
th
October 2007 and thereafter issued the second notice on the 9
th
October 2007. In the notice of the 9
th
October 2007, the respondent gave the applicant in essence 24 (twenty
four) hours notice. That notice was shorter than 7 (seven),
day’s
and therefore amounted to breach of the employment contract. The
applicant was accordingly entitled as a matter of
principle and law
to claim for damages arising from the breach of the contract by the
respondent.
[18]
The next enquiry following the conclusion
that the respondent had breached the contract of employment, is to
determine the connection
between the breach and the damages the
applicant suffered as result of the breach. This approach would apply
assuming for argument
sake it was to be accepted that the respondent
was suppose to have given the applicant 1 (one) month’s notice.
In investigating
the relationship between the breach of contract and
the damages alleged to have been suffered by the applicant a two
stage investigation
is conducted to determine whether the damages
were caused by the breach.
[19]
The enquiry entails firstly determining the
factual causation and then inquiring into legal causation. See RH
Christie,
The Law of Contract in South
Africa (5
th
Edition Butterworth) page 543.
The
factual causation entails showing that “but-for” the
breach the applicant would not have suffered the loss. The
applicant
is in this regard required to show no more than the probability that
he or she would not have suffered loss but for failure
by the
respondent to comply with the terms of the contract by failing to
give a proper notice.
[20]
The second inquiry was enunciated
International Shipping Co (Pty) Ltd v
Bentley
1990 1 SA 680
(A) at page 7001,
where the Court held that:
“
The
second inquiry then arises, viz whether the wrongful act is linked
sufficiently closely or directly to the loss for legal liability
to
ensue or whether, as it said, the loss is too remote. This is
basically a juridical problem in the solution of which considerations
of policy play a part. This is sometimes called legal causation.”
[21]
In the present instance in its founding
papers the applicant does not take its case further than showing that
the respondent has
breached the employment contract. The applicant
based its claim on the argument that damages arose automatically from
the breach
by the respondent and the damages were equivalent to the
period of notice calculated on a monthly salary of the employee. In
this
respect the applicant contended that it was prejudiced by the
breach of contract and for several weeks it did not have a pay roll
administrator. As indicated in the paragraph 5 of the applicant’s
founding affidavit, the case is not that it suffered damages
in that
it took a particular period to find a substitute for the respondent.
The case of the applicant is that “
it
will take at least a month”
to
find another administrator.
[22]
In
SA Music
Rights Organization Ltd v Mphatsoe
[2009] 7 BLLR 696
(LC),
the Court faced with a similar facts held that the employee’s
abandonment of the employment contract before the period constitutes
breach contract, but that the employer was entitled to such damages
as proved. In dealing with the issue of damages at paragraph
19 of
the judgment Van Niekerk J had this to say:
“
[19]
This formulation of SAMRO’s claim for damages begs a number of
questions. First, there is no logical basis on which to
assume that
SAMRO’s losses are necessarily limited to the remuneration and
benefits that the respondent would have earned
in a denied period of
notice. When he resigned, the respondent may, for example, have been
teetering on the brink of redundancy,
making no significant
contribution to SAMRO’s business operations. In these
circumstances, to have been relieved of the obligation
to pay the
respondent’s salary for the balance of the notice period would
be a benefit rather than a burden - there is little
likelihood of any
pecuniary loss in these circumstances. On the other hand, the
respondent may have been an employee with rare
and highly sought
after skills, necessitating the engagement at a premium of a
similarly skilled temporary employee. I see no reason
why the
application of the general rule would not entitle SAMRO in those
circumstances to recover its losses, even though they
may exceed what
the respondent would have been paid had he worked his full notice
period. These examples can be taken further -
what if the respondent
had been instrumental in securing a business transaction from which
SAMRO would benefit by a substantial
commission, and had breached his
contract to commence work for a competitor in circumstances where the
competitor stands to benefit
instead? Surely SAMRO in those
circumstances ought to have a claim for damages against the
respondent beyond what the limited damages
rule provides? These are
difficult questions of law and policy, particularly in the light of
the recent judgments of the Supreme
Court of Appeal that recognise a
mutual contractual obligation of fair dealing between employer and
employee (see, for example,
Old Mutual Life Assurance Co SA Ltd v
Gumbi
[2007] 8 BLLR 699
(SCA) and Boxer Superstores Mthatha v Mbenya
(2007) 28 ILJ 2209 (SCA). The introduction of a contractual right to
fair dealing
in the employment relationship calls into question the
assumption that the purpose of damages for breach of an employment
contract
is simply to protect the aggrieved party’s interest in
a denied period of notice, or the unexpired portion of a fixed term
contract. Breaches of mutual obligations of trust and confidence are
unlikely to be remedied by an approach to the assessment of
damages
for breach of an employment contract such as that for which SAMRO
contends. Happily, in the present matter, I need venture
no further
than SAMRO’s founding affidavit and the obvious conclusion that
it fails to establish any factual foundation on
which its claim for
damages might be assessed. In short, SAMRO has failed to establish
any loss consequent on the respondent’s
breach of contract. For
that reason, SAMRO’s claim for damages must fail.”
[23]
In concluding on the issue of breach of the
contract, I find that the applicant has failed to show the alleged
loss it suffered
(either because of failure to give a 30 or 7 seven
days notice as the case may be) was as a result of the breach of the
employment
contract by the respondent. It is for this reason that I
conclude that applicant’s claim stand to fail.
The
claim for the in-house training
[24]
In my view there is a clear and genuine
dispute of fact as to whether the applicant did provide the employee
with the in-house training
on labour law, industrial relations and
its practical application or all aspects of its pay roll
administration and practical application
thereof. This remains so
even after seeking to resolve it through the test as set out in
Plascon-Evans Paints v Van Riebeeck
Paints 1984 (3) 623 (AD).
This claim
should therefore be sent for oral evidence to determine whether or
not the applicant did in fact provide training to
the respondent as
alleged.
[25]
In the premises I make the following order:
(i)
The applicant’s claim arising from
the breach of the contract of employment by the respondent is
dismissed.
(ii)
The claim regarding the payment of the
in-house training is referred to oral evidence.
(iii)
There is no order as to costs.
_______________
Molahlehi J
Date of Hearing
: 23
rd
April 2009
Date of Judgment
: 7
th
August 2009
Appearances
For the Applicant
: Mr Sean Snyman of
Snyman Attorneys
For the
Respondent: Adv I Strydom
Instructed by
: De Villiers
Mojapelo
Inc