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[2010] ZALCCT 42
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Lottering and Others v Stellenbosch Municipality (C159/2010) [2010] ZALCCT 42 (7 May 2010)
IN
THE LABOUR COURT OF SOUTH AFRICA
REPORTABLE
HELD
IN CAPE TOWN
CASE
NO: C159/2010
In
the matter between:
RONNIE
PETER
LOTTERING
...............................................................................
1ST
APPLICANT
MICHAEL
JOHN
RHODE
.......................................................................................
2ND
APPLICANT
MARX
PUARWA
.......................................................................................................
3RD
APPLICANT
and
STELLENBOSCH
MUNICIPALITY
..........................................................................
RESPONDENT
JUDGEMENT
CHEADLE
AJ
Introduction
[1]
The context for understanding the events
described in this matter is one of a transfer of political power
giving rise to shifting
alliances between the political parties on
the Council of the respondent and infighting among its senior
managers. The applicants
were executive directors appointed directly
by the municipal council in terms of section 56 of the Local
Government: Municipal
Systems Act, 32 of 2000 (the Systems Act). Like
the municipal manager, they are what are called ‘political
appointments’
in the sense that they are chosen by Council,
which normally means chosen by the majority party or coalition in the
municipal council.
During November and December 2009, the opposition
party in coalition with other parties acquired the majority in the
Council. The
shifting alliances and changes in political authority
have given rise to a number of conflicting and confounding decisions
by the
executive mayor and the municipal manager giving rise to some
knotty legal problems.
[2]
At a meeting on 6 November 2009 the
applicants had their delegated powers withdrawn by the recently
reinstated municipal manager.
In response, the three applicants
resigned that day. The municipal manager accepted their resignation
that day but only communicated
that to them on 9 November. On 16
November the applicants appealed to the executive mayor against the
municipal manager’s
decision to accept the resignations. On 19
November, the executive mayor upheld the appeal. On 23 November the
applicants withdrew
their resignation, which withdrawal was accepted
by the executive mayor on 24 November. Accordingly, as far as the
applicants were
concerned, their contracts continued to subsist.
[3]
On 8 December, the applicants were advised
that pursuant to a meeting of the mayoral committee confirming the
executive mayor’s
decision to accept the withdrawal of their
resignations, they were requested to continue reporting for duty. The
next day the municipal
manager retracted the contents of that letter
stating that he had been misled into believing that a mayoral
committee had been
held. The municipal manager reverted to the
respondent’s previous position, namely that the applicants’
employment
had been terminated by the respondent’s acceptance
of their resignations on 9 November.
[4]
On 14 December the Applicants were
appointed to their positions in acting capacities pending the
‘permanent filling of the
positions’. On 13 and 14
February 2010, the applicant’s posts were advertised. When the
respondent failed to confirm
that the applicant’s original
contracts were still in force and failed to withdraw the
advertisements, the applicants launched
this application on 24
February as a matter of urgency.
[5]
The applicants sought a declarator that the
contracts of employment ‘that were in place on 30 November 2009
still subsist’
and an order ‘to cease the recruitment
process it has commenced in order to fill the posts of the first
second and third
applicants’.
[6]
At the hearing on 5 March, it was agreed
that the matter be postponed to 21 April for hearing on the opposed
roll and that the applicants
remain in the respondent’s
employment in acting positions until the date of judgement. The
matter was heard on 21 and 23
April 2010 and judgment was reserved.
[7]
Although various points were raised
concerning jurisdiction, it was clear that the applicants’
cause of action was contractual.
The decisions of the executive mayor
and the municipal manager concerning those contracts are not, after
Gcaba v Minister of Safety and Security
& Others
2010 (1) SA 238
administrative action.
[8]
The central issue on which the application
turned was whether the applicants had a clear right to the relief
that they sought. It
was and has proved unnecessary to consider the
other requirements for declaratory and interdictory relief.
Outline
of the law
[9]
The Applicants have a main argument and
several alternative arguments:
9.1
The main argument is that despite their
letters of resignation, their contracts of employment did not
terminate because the notices
were in breach of contract and in
contravention of section 37 and 38 of the BCEA;
9.2
Alternatively, the contracts did not
terminate because the Municipal Manager’s decision to accept
the Applicants’ resignations
was overturned on appeal to the
Executive Mayor;
9.3
Alternatively, if the contracts were
terminated, the executive mayor agreed to the withdrawal of their
resignations.
[10]
These arguments are subject to an
additional argument namely that the First Applicant contends that his
letter of resignation is
not unequivocal.
[11]
Before dealing with each of these arguments
it is necessary to outline the law implicated by the arguments.
The
common law on resignation from employment
[12]
Resignation is the term ordinarily used to
refer to the termination of employment by the employee just as
dismissal is used to refer
to termination by the employer. Like
dismissal, resignation can take many forms. It can take the form of
the cancellation for breach,
which has long been understood to
include the acceptance of repudiation. If the contract permits, it
can take the form of termination
on notice.
[13]
A resignation in the form of a cancellation
of the contract will mean, in the case of a fixed term contract, that
the employee may
terminate the contract before the expiry of the
term; and, in the case of an indefinite contract, that the employee
may terminate
without giving notice. A resignation in the form of a
cancellation is unilateral in the sense that one party can bring the
contract
to an end without the consent of the other. It however can
only be exercised if the other party has committed a material breach.
In other words, if no material breach is found to be committed then
the party resiling from the contract is itself in breach. In
other
words if the reason for the cancellation is bad, the cancellation
itself is bad.
[14]
In
an indefinite contract, either party may terminate the contract on
notice. A resignation in this context is simply the termination
by
the employee on notice. There does not have to be a specific
provision to that effect, it is an inherent feature of an indefinite
contract and if there is no agreed notice, the notice must be
reasonable
[1]
(provided that it
is not less than the minimum notice prescribed in section 37 of the
BCEA). If the contract is for a fixed term,
the contract may only be
terminated on notice if there is a specific provision permitting
termination on notice during the contractual
period – it is not
an inherent feature of this kind of contract and accordingly requires
specific stipulation.
[2]
[15]
The common law rules relating to
termination on notice by an employee can be summarised as follows:
15.1
Notice of termination must be unequivocal –
Putco Ltd v TV & Radio Guarantee Co
(Pty) Ltd
1985 4 SA 809
(SCA) at 830E.
15.2
Once communicated, a notice of termination
cannot be withdrawn unless agreed –
Rustenberg
Town Council v Minister of Labour
1942
TPD 220
and
Du Toit v Sasko (Pty) Ltd
(1999) 20
ILJ
1253 (LC).
15.3
Termination on notice is a unilateral act –
it does not require acceptance by the employer – Wallis
Labour
and Employment Law
para33 at 5-10. This
rule is disputed by the applicants in so far as it applies to notice
not in compliance with the contract.
The rule is accordingly dealt
with more fully below.
15.4
Subject to the waiver of the notice period
and the possible summary termination of the contract by the employer
during the period
of notice, the contract does not terminate on the
date the notice is given but when the notice period expires –
SALSTAFF obo Bezuidenhout v Metrorail
[2001] 9 BALR 926 (AMSA) at para [6].
15.5
If the employee having given notice does
not work the notice, the employer is not obliged to pay the employee
on the principle of
no work no pay;
15.6
If notice is given late (or short), that
notice is in breach of contract entitling the employer to either hold
the employee to what
is left of the the contract or to cancel it
summarily and sue for damages –
SA
Music Rights Organisation v Mphatsoe
[2009]
7 BLLR 696
; and
Nationwide Airlines
(Pty) Ltd v Roediger & Another
(2006) 27
ILJ
1469 (W).
15.7
If notice is given late (or short) and the
employer elects to hold the employee to the contract, the contract
terminates when the
full period of notice expires. In other words if
a month’s notice is required on or before the first day of the
month, notice
given on the second day of the month will mean that the
contract ends at the end of next month if the employer –
Honono
v Willowvale Bantu School Board & Another
1961(4) SA 408 (A) at 414H – 415A. Since this articulation of
the rule is contentious and its application was placed in dispute
by
the applicants, it too is dealt with more fully below.
Termination
on notice not in compliance with contractual notice
[16]
Mr Kantor on behalf of the applicants
contends that notice of termination not in compliance with the
contract constitutes a repudiatory
breach which does not bring the
contract to an end unless the other party elects to accept the
repudiation.
[17]
I take the view that termination on notice
involves two discrete elements: the notification of termination (the
act of resignation)
and the giving of notice. The notification of
termination is a unilateral act permitted by the contract –
either inherently
or specifically. Unlike the notification of
termination in the form of the cancellation of the contract for
material breach, which
requires a determination of whether or not the
termination is permissible on those grounds, the notification of
termination on
notice does not require any justification. It is
sufficient of itself.
[18]
Once given, the contractual terms dealing
with the period of notice take effect. The failure to give proper
notice is a breach of
contract entitling the employer under the
ordinary principles of law relating to breach to either to accept the
repudiatory breach
and terminate the contract summarily or to hold
the employee to the contract. But in these circumstances, holding the
employee
to the contract would mean no more than requiring the
employee to work out her notice. Grogan states this distinction
succinctly
in his reasons for his award in
SALSTAFF
obo Bezuidenhout v Metrorail
[2001] 9
BALR 926 (AMSSA):
‘
A
resignation is a unilateral act by which an employee signifies that
the contract will end at his election after the notice period
stipulated in the contract or by law. While formally speaking a
contract of employment only ends on expiry of the notice period,
the
act of resignation being a unilateral act which cannot be withdrawn
without the consent of the employer, is in fact the act
that
terminates the contract…The mere fact that the employee is
contractually obliged to work for the required notice period
if the
employer requires him to do so does not alter the legal consequences
of the resignation’ (at para 6).
[19]
It follows that the act of termination is
unilateral act permitted by the contract. The fact that the notice
period is not in compliance
with the contract and accordingly a
breach does not mean that that breach should reach backwards and
contaminate the act of termination.
In my view, the act of
resignation (the communication of the decision to terminate) is not a
breach or a repudiation of the contract
but an exercise of a right
conferred by the contract. It is a legal act and its consequences for
the date of termination are determined
by the contract, not what
might be stated in the notice.
[20]
That means in an indefinite contract, short
notice to bring that contract to an end does not constitute a
repudiation – it
is a unilateral legal act permitted by the
nature or the specific terms of the contract for bringing the
contract to an end at
a future date – that date being
determined by the contract. That is why an indefinite contract, often
referred to as ‘permanent
employment’ because it
contemplates employment for long periods of time sometimes from the
whole of an employee’s working
life, does not amount to
servitude – as Mr Stelzner for the respondent pointed out, it
is always open to being terminated
unilaterally. In a fixed term
contract, a notice to bring the contract to an early end is a
repudiation because it does not in
itself constitute a contractually
permissible act of termination. Being a repudiation, the employer has
an election to hold the
employee to the contract or to accept the
repudiation and cancel the contract.
[21]
Mr Kantor contended otherwise and argued
that notice of termination not in compliance with the contract
constituted a repudiatory
breach requiring the employer’s
acceptance before the contract could be terminated. The first
authority relied on for this
proposition is
Santos
Professional Football Club (Pty) Ltd v
Igesund and another
(2002)
ILJ
2001 (C). In that matter the football coach had entered into a three
year contract with the club. In order to take up a more lucrative
and
more secure offer of employment, the coach gave two weeks notice of
termination a year before the expiry of the fixed term.
In that case
the notice constituted a repudiation of the contract because no
provision was made for the termination of the contract
on notice. The
giving of notice in such a circumstance is clearly a repudiation
putting the employer to its election. Although
the applicant’s
contracts are for a fixed term, specific provision is made in clause
15.1 of their contracts for the applicants
to terminate the contract
before the expiry of the fixed term. In
Santos
there was no contractual right to terminate on notice. That is the
difference.
[22]
The next authority for the proposition is
Datacolour International (Pty) Ltd v
Intramarket (Pty) Ltd
[2000] ZASCA 82
;
2001 (2) SA 284
(SCA). In that case a distributorship agreement provided for
termination by either party on ‘no less than twelve months
written notice to terminate’. The plaintiff had written to the
defendant indicating a clear intention of terminating the agreement.
It did not purport to exercise its right to terminate on notice –
important in this regard was the fact that the letters
of termination
did not refer to notice or the provisions for notice under the
agreement nor to the notice period which was required
to be fixed by
the party exercising the right to terminate under the provisions. In
these circumstances, the Court held that the
letters constituted a
repudiation. It is accordingly not authority for the proposition that
when a contracting party exercises
its right to terminate on notices
that that exercise constitutes a repudiation.
[23]
The next authority is a statement by the
learned author, Martin Brassey, in his authorative
Employment
and Labour Law
Vol 3 :
‘
Under
the common law of contract a resignation takes effect immediately it
is communicated if it constitutes
lawful
cancellation for material breach or is given in compliance with the
notice or other requirements expressly or impliedly governing
the
termination of the contract. Such a resignation needs no acceptance
to be valid and so operates unilaterally.
If
the termination is in breach of contract, its acceptance is in
principle necessary since repudiation terminates the contract
if the
innocent party (here the employer) elects not to act on it’
(at
A8-26 my emphasis).
A
similar statement made by John Grogan in his
Dismissal,
Discrimination and Unfair Labour Practices
Juta is made at 157.
[24]
The statements of both authors are broad
summaries of the law seeking to encapsulate both fixed term and
indefinite contracts and
termination by cancellation or by notice. I
am not certain that either author intended their nutshell summaries
to be interpreted
in the manner relied on by the applicants. If
however these summaries do represent their views in respect of a
termination on notice,
I must respectfully disagree with them because
as a matter of principle a decision to terminate on notice can never
be a repudiation
or a breach although the failure to properly give
notice may do so. The breach is not the decision to terminate but the
failure
to give proper notice - a breach that entitles the employer
to hold the employee to the contract (i.e. what is left of it) which
means holding them to work their notice in full or to cancel the
contract summarily and sue for damages.
[25]
In
Nationwide
Airlines (Pty) Ltd v Roediger & Another
(2006) 27
ILJ
1469 (W) the contract of employment provided for 3 calendar months
notice. The 1
st
Respondent, a pilot, gave notice on 3 October that he was terminating
his employment and that his last day was 3 November. The
applicant
airline sought to hold the employee to his contract, which meant
requiring him to work his notice i.e. until 31 January
of the next
year. The breach was the deficient notice not the invalid termination
that entitled the employer airline to hold him
to work his full
notice.
[26]
There are two authorities for this
approach.
Pemberton NO v Kessell
1905
TS 174
and
Honono v Willowvale Bantu
School Board & Another
1961(4) SA
408 (A) at 414H – 415A. In
Honono
a teacher was required by regulation to give a school quarter’s
notice of termination, which notice had to be served in the
first
week of the quarter. The respondent school board gave a school term’s
notice to terminate the services of the appellant
teacher on 31 March
1959 but only served the notice in the second week of the quarter.
The Court rejected the argument that the
notice of termination was
invalid because it was not served in time. It found that the notice
was ‘insufficient to terminate’
the contract at the date
stated in the notice, namely the end of the quarter. The Court went
on to say:
‘
It
does not follow, however, that it [the notice] had no force and
effect whatever. As a result of the conditions of service imposed
upon the appellant by the regulations, his position, as far as notice
of termination or dismissal is concerned was equated with
that of any
common law servant. That being so, it follows from the judgement of
Innes CJ in the case of
`Pemberton NO v
Kessell
1905 TS 174
that the notice
served on the appellant on the 27
th
January was sufficient and valid to terminate his appointment on the
30
th
June, 1958 at the end of the second school quarter’ (at 414H
-415A).
[27]
Kerr takes a different view. In his chapter
on ‘Lease’ in
LAWSA
Vol 14 at para 212 he argues:
‘
if
notice expires on a date which is not the terminal date of one of the
periods of the lease, it is ineffective even if the whole
of a period
elapses between the date on which the notice is given and the date on
which the notice purports to bring the lease
to an end. In other
words, when notice covering a full period is given, it is the
terminal date which matters, not the date of
which the notice is
given’
Kerr
cites several cases in support of this proposition, the most
important of which are
Fulton v Nunn
1904 TS 124
,
Tiopaizi
v Bulawayo Municipality
1923 AD 317
and
Moyce v Estate Taylor
1948 (3) SA 822
(A). He significantly does not cite
Honono
,
the later Apellate Division authority which clearly does not accord
with his views.
[28]
Fulton v Nunn
and
Tiopaizi
are
authority as to
when
the
notice period comes to an end if no notice is stipulated in the
contract and that that date is dependent on the periodicity
of the
lease. Neither are authority for the proposition that if the notice
is deficient that the act of termination is invalid.
They simply
assert the notice period
should
run concurrently with the periodicity of the lease and accordingly
should end at the end of the period.
[29]
In
Moyce
a
monthly lease was terminated on 4 October with effect on 24 December.
Relying on
Fulton v Nunn
and
Tiopaizi
and the fact that there was no evidence that the tenancy ran from the
25
th
of the month to the next, the Court found that the ‘notice to
quit…was not intended as a termination of the appellant’s
tenancy, it was not pleaded nor – if that tenancy ran from the
first of the month – was it relied upon before us, and
rightly
so’ (at 830).
Moyce
was decided on its facts. Whether the intention was correctly drawn
from the fact that it was improbable that the tenancy was one
that
ran from the 25
th
of the month to the next or not, it cannot be a decision that one can
rely on for establishing a a principle. And it certainly
cannot on
this basis seriously stand against the same but later court’s
decision in
Honono
in which it is explicitly stated that the fact that notice was
deficient did not mean that it had ‘no force and effect’.
[30]
To sum up, there is a distinction between
notification to terminate and the date of termination, which is
determined by the notice
period stipulated in or inferred from the
contract of employment. Put another way termination on notice turns
an indefinite contract
into a fixed term, the final date of which is
determined by contract if the notice is deficient. A deficient notice
does not vitiate
the act of termination although it may constitute a
breach, which may entitle an employer or employee to either cancel
the agreement
summarily or hold the employer to the contract, which
in its terminal state amounts to no more than requiring the employee
to work
notice or paying the employee in lieu of notice if the
empoyer does not want the employee to work out the notice.
The
application of sections 37 and 38 of the BCEA
[31]
It is now necessary to outline the
application of sections 37 and 38 of the BCEA. to resignations.
[32]
Section 37(1) (c) states that a contract
cannot be terminated at the instance of a party to the contract on
notice less than four
weeks if the employee has been employed for a
year or more. It is common cause that the applicants have been
employed for more
than a year.
[33]
Section 38(2) read with subsection (1)
states that if an employee gives notice of termination and the
employer waives any part of
the notice, the employer must pay the
remuneration the employee would have received if the employee worked
the full notice.
[34]
It follows that although section 37(1)(c)
requires an employee to give a minimum period of notice, section
38(2) permits an employer
to waive any part of that notice provided
that it pays the employee an amount equal to what the employee would
have earned for
the unworked part of the notice.
[35]
If notice is given and not waived, the
contract terminates on the expiry of the notice. If the employer
waives any part of notice,
the contract terminates when the employee
leaves work (i.e. at the commencement of the waived period).
[36]
If an employee having given notice to
terminate, fails to work the notice, that failure constitutes a
breach of contract entitling
the employer to hold the employee to the
contract (i.e. work out the notice) or cancel the contract. Nothing
in section 37 or 38
affects the application of common law principles
to the failure to comply with the contract until its expiry at the
end of the
notice period.
[37]
If an employer fails to pay an employee who
works the full notice period, the employee can sue the employer for
the remuneration
earned for that work. Section 37 and 38 do not
affect the common law principles in respect of the failure of an
employer to pay
an employee for working out the notice period. The
same would apply to an employee who tenders to work the full period
but is not
permitted by the employer to do so.
[38]
Accordingly, what sections 37 and 38 do,
for the purpose of this case, is to guarantee a minimum period of
notice which may be waived
by an employer. If waived, it must pay the
employee an amount equivalent to what the employee would have earned
had she worked
out her full notice.
[39]
Mr Kantor argued that section 37 required
four weeks notice in order for a contract terminable at the instance
of a party to the
contract to be lawfully terminated. If less than
four weeks notice was given, the contract could not be terminated. In
other words,
the contract would subsist until four weeks notice was
formally and properly given. The employer’s right to waive any
part
of the notice under section 38(2) only has application if the
notice of termination complies with section 37(1).
[40]
Such a reading requires an interpretation
that makes the termination at the instance of a party to the contract
unlawful if the
full notice is not given. There are several answers
as to why this cannot be a correct reading of the provision.
Firstly
,
the mischief that the legislation was seeking to remedy was the abuse
that a contractual regime for giving notice was prone to
such as the
giving of no notice or very short notice by the employer (such as an
hour or a day), the disparity in notice permitting
the employer to
give short notice while requiring the employee to give long notice,
and allowing an employer to waive notice without
paying in lieu of
notice. That is clear from the provisions of the two sections.
[41]
Secondly
,
what mischief would the legislature be seeking to remedy by upholding
the contract until formally terminated and thereby keeping
the
employee working for an employer she no longer wants to work for or,
if she leaves employment, allowing the employer to cancel
the
contract for material breach and thereby avoid the obligations under
sections 37 and 38 in their entirety by virtue of section
37(6) (a).
Rather than ensure compliance with the provisions of the section by
preventing termination, an interpretation that gives
the employee the
right to claim the amounts owing for non-compliance under the
enforcement mechanisms of the BCEA or by way of
a civil claim is the
more preferable one.
[42]
Thirdly
,
the interpretation advanced here is one that is in accord with the
common law as I have analysed it. It is not the act of termination
that is rendered unlawful but the failure to give the statutory
notice. That unlawfulness is easily remedied by a claim for
outstanding
money and a compliance order under the enforcement
machinery of the BCEA.
Applying
the law to the main argument
[43]
The Applicants’ main argument runs as
follows:
43.1
The Applicants gave short notice namely
notice 6 days short of the 30 days required by their contracts of
employment and 2 days
short of four weeks required by section
38(1)(b) of the BCEA;
43.2
There was no agreement to waive the full
period of notice and pay remuneration in lieu thereof under either
the contract or section
38 of the BCEA;
43.3
Those notices were accordingly in breach of
contract and in contravention of statute;
43.4
A breach of contract or repudiation does
not bring the contract to an end, an employer has an election to hold
the employee to the
contract or to cancel it in accordance with its
terms;
43.5
The Applicants’ contracts provide if
there is a material breach of contract, the innocent party may cancel
the contract after
giving the other party 14 days’ notice to
rectify the breach. No such notice was given.
43.6
Accordingly until the contract is cancelled
by the employer, it subsists.
[44]
It is necessary to break the main argument
up into its constituent parts in order to deal with each proposition.
The first issue
is what the legal consequences are of a failure to
comply with the notice of termination requirements in clause 15.1 of
the applicants’
contracts of employment. Those provisions read:
‘
The
employee may terminate this contract by giving 30 days written notice
of termination and the employer may, in his sole discretion,
waive
any part of the notice period’.
[45]
On 6 November the applicants gave written
notice of their intention to terminate their contracts with effect
from 30 November. The
notice of termination was accordingly 6 days
short of the contractual requirement and 2 days short of the
statutory requirement.
Mr Kantor, for the applicants, argued that the
notice of termination was accordingly wrongful (a breach of contract)
and unlawful
(a contravention of statute).
[46]
Despite the failure to give the required
notice, the respondent’s municipal manager wrote to the
applicants on 6 November
accepting their notices of resignation and
confirming that their ‘last working day would be 30 November
2009’.
[47]
The thrust of the applicants’
contractual argument is that a notice of termination not in
compliance with the terms of the
contract. Is not a lawful
termination but a breach of contract. Being a breach of contract, the
employer is put to an election:
either to hold the employee to the
contract or to cancel it on grounds of the breach. Since the
respondent did not cancel on grounds
of the breach, the applicants’
contracts remained in force.
[48]
I have held that as a matter of authority
and principle, an employee has the right to unilaterally terminate
the contract of employment
on notice. That means that even if the
employee does not give the proper notice, the unilateral termination
of the contract is
not a breach or repudiation of the contract. The
failure to give proper notice is a breach of contract in response to
which the
employer may elect to hold the employee to the contract,
which having been terminated amounts to no more than holding the
employee
to work out the contractual period. Alternatively it may
elect to cancel the contract on grounds of breach. In any case even
if
the employer did neither, the employer would not be obliged to pay
the employee for that part of the contractual notice period not
worked.
[49]
It accordingly follows that the applicant’s
acts of terminating the contracts of employment do not constitute a
breach or
a repudiation of the contract. They were doing no more than
giving effect to a right accorded to them by their contracts, namely
the power to bring the contracts unilaterally to an end. It is quite
clear that the notice given in their letters of termination
is 6 days
short of the 30 days notice required under clause 15.1. Although the
applicants considered that their notice period to
terminate on 30
November this does not mean that as a matter of law it ‘has no
effect’ once notice is given the contract
ends when the notice
period contemplated in the contract expires.
[50]
But even if I am incorrect on the legal
consequences of short notice, section 15.1 of the applicants’
contracts specifically
provides that the respondent can ‘waive
any part of the notice period’. The Mr Stelzner argued that the
letters dated
6 November 2009 and handed to the applicants on 9
November constitute such a waiver. Those letters confirm that the
applicants’
last working day will be 30 November 2009. I agree
with him that the inference is inescapable that a confirmation of an
employee’s
last working day before the expiry of the notice
period constitutes a waiver of the balance of the contractual period
of notice.
By waiving that part of the notice period, the respondent
has agreed to the short notice. The waiver cures the breach. It has
the
effect of releasing the respondent from the horns of electing
either cancellation for a repudiatory breach or holding the employee
to the contract until validly terminated. It follows that the
contract accordingly terminated on 1 December
[51]
Mr Kantor raised two arguments against
accepting such a waiver. The first was that clause 16.1 of the
applicants’ contracts
provides that ‘no waiver of any
right arising from this contract or its breach or termination shall
be of any force and effect
unless reduced to writing and signed by or
on behalf of both parties’. Since the waiver of the period of
notice was not signed
by both parties it was not valid. But as Mr
Stelzner pointed out when the employer exercises its right to waive a
part of the notice
period in terms of clause 15.1 it is not waiving
any right – it is exercising one.
[52]
The second argument was that the waiver
contravened section 37 read with section 38. Section 38(2) states
that if the ‘employer
waives any part of the notice’; it
must pay the remuneration that the employee would have earned had the
employee worked
the full notice. The waiver contemplated in clause
15.1 of the applicant’s contracts of employment gives the
employer the
contractual entitlement to do what section 38(2)
permits. The only contravention that can arise from the section is
the failure
to pay the remuneration due for the waived part of the
notice period.
[53]
It follows then that the resignation
letters of 6 November constituted unilateral exercises of the power
to terminate requiring
no acceptance and permitting no withdrawal
without consent. Accordingly the municipal manager’s purported
acceptance of the
resignation had no legal effect – the
contracts had been terminated to take effect at the end of the
contractual notice period.
T
The
alternative arguments
[54]
The alternative arguments are premised on
decisions made by the executive mayor and the failure of the
respondent to review them.
The first decision is the upholding of the
appeal against the municipal manager’s acceptance of the
applicant’s resignations.
The second decision is the executive
mayor’s decision to accept the applicant’s withdrawal of
their resignations. The
argument centred on the validity of the
decisions and if invalid whether it was required of the respondent to
review them and have
them set aside before it could rely on that
invalidity.
[55]
Section 62
of the
Local Government:
Municipal Systems Act, 32 of 2000
gives an executive mayor the power
to hear appeals from decisions affecting a person’s rights
taken by the municipal manager
(other than decisions in respect of
which the municipal manager is the appeal authority).
[56]
In his letters to the applicants on 6
November 2009 the municipal manager states that his letter ‘serves
as acceptance of
your notice of resignation and confirmation that
your last working day will be 30 November 2009’. It is this
decision to
accept their resignations that forms the basis for their
appeal to the municipal manager.
[57]
I have held that even though the notice
period was not in compliance with the applicants’ contracts,
their termination of
those contracts was a unilateral act not
requiring acceptance. Although the municipal manager may have
purported to ‘accept’
the resignations, no acceptance was
necessary – the contracts terminated as a matter of law
following their notification
to terminate not as a result of his
acceptance. Even if the ‘acceptance’ by the municipal
manager constituted a decision
– it was not a decision that
affected the applicant’s rights. The resignations took effect
irrespective of the municipal
manager’s purported acceptance
and the executive mayor’s reversal of that acceptance.
[58]
The next argument is premised on the
executive mayor’s decision to accept the applicants’
withdrawal of their resignations.
The central issue here is whether
the executive mayor has the power to withdraw the resignations. Mr
Kantor contended that the
executive mayor had the delegated power to
do so under EM93 of the respondent’s System of Delegations,
July 2009. That delegation
confers on the Executive Mayor the power
‘to exercise the rights and obligations of Council in terms of
the service contracts
of the Municipal Manager and Managers directly
accountable to the Municipal Manager’. In order to understand
the scope of
this delegation, it is necessary to determine the extent
of the Council’s powers in respect of the service contracts of
managers
that are directly accountable to the municipal manager
(‘
section 56(a)
managers’). That requires an analysis of
the Systems Act and the Local Government: Municipal Structures Act,
117 of 1998
(‘the Structures Act’)
[59]
Section 56(3) (f) of the Structures Act
requires an executive to ‘perform such duties and exercise such
powers as the council
may delegate to the executive mayor in terms of
section 59 of the Local Government: Systems Act, 2000’. Section
59 of the
Systems Act authorises a council to develop a system of
delegation and delegate appropriate powers, subject to certain
exclusions,
to any of the municipality’s other political
structures, political office bearers, councillors or staff members.
It is specifically
stated in subsection (2) (a) that such delegation
‘must not conflict with the Constitution, this Act or the
Municipal Structures
Act’.
[60]
Section 60 of the Systems Act confines a
council’s power to delegate. The power to determine or alter
‘the remuneration,
benefits or other conditions of service of
the municipal manager or managers directly responsible to the
municipal manager’
may be delegated to only an executive
committee or an executive mayor. Accordingly, the power delegated
under EM 93 of the System
of Delegations at least includes the power
to determine and alter the conditions of service of the section 56(a)
managers. Mr Kantor
contends that this includes the power to accept a
withdrawal of a resignation.
[61]
The difficulty with this argument is that
the Systems Act makes the municipal manager ‘responsible and
accountable for -…
the management of the municipality’s
administration,… the management of staff, … the
maintenance of discipline
of staff, … [and] the promotion of
sound labour relations and compliance by the Council with applicable
labour legislation’.
This effectively means that the municipal
manager has the statutory responsibility for all labour matters
subject to a few exceptions.
It is an all embracing responsibility
applicable to staff including section 56(1) (a) employees. There is
no definition of staff
but its ordinary meaning embraces the managers
that are directly accountable to the municipal manager. The very
existence of limited
exceptions in respect of section 56(1) (a)
employees only serves to reinforce that the legislature contemplated
that a municipal
manager must exercise the general power to manage
the staff of the municipality.
[62]
The exceptions to the general power to
manage section 56(1)(a) employees are the power to appoint them
(section 56(1)(a)), the contractual
requirements (section 57)
requirement that they have a contract of employment performance
agreements (section 57), the determination
or alteration of their
conditions of employment (section 60(b)) and appeals from decisions
of the municipal manager that affect
their rights (section 62(4)(b))
and the exclusions from the municipal manager’s powers in
regard to the staff establishment
(section 66). Four important
provisions arising from these exceptions highlight the municipal
manager’s general power to
manage section 56(1) (a) employees.
[63]
The first is that the performance
agreements under section 57(1) (b) must be concluded between the
sections 56(1) (a) employees
and the municipal manager (section 57(2)
(c)). The second is that the Act contemplates that the municipal
manager will make decisions
that affect the rights of section 56(1)
(a) employees – that is the plain inference to be drawn from
the rights of appeal
under section 62(4) (b). The third is that the
municipal manager has the power to approve the staff establishment
and the job description
of each post in that establishment which
includes the posts of section 56(1) (a) employees. The determination
of the job description
also determines the employee’s duties.
Finally, it is important to note in this regard that the duties
flowing from the job
description determined by the municipal manager
under 66(1) (b) are not listed in section 60(b) whereas they are in
section 57(3).
[64]
Section 60(b) deals with the determination
of some of the content of the contract not with decisions that may
arise from the rights,
powers and duties flowing from the contract
itself.
[65]
It follows that the wide interpretation of
the delegation under EM93 advanced by Mr Kantor would conflict with
the powers conferred
on the municipal manager under the Systems Act.
That would render the delegation invalid under section 59(2) (a).
Given that
the delegation refers back to the powers of the Council,
those powers should be interpreted narrowly and in accordance with
the
Systems Act.
[66]
It follows from this that the executive
mayor did not have the power to withdraw the applicants’
resignations.
[67]
Mr Kantor then argued that even if the
executive mayor’s decisions were invalid, they remained de
facto decisions on which
the applicants continue to rely. Relying on
the decision in
Oudekraal
Estates (Pty) Ltd v City of Cape Town &
Others
2004 (6) SA 222
(SCA), he argued
that until the respondent reviews those decisions they should stand.
The difficulty with this argument is that
it is the applicants
themselves that are relying on the validity of the decisions to
support their claim that their original contracts
of employment
continue to subsist.
Was
the 1
st
applicant’s letter of resignation
unequivocal?
[68]
On 6 November the applicants handed in
their letters of resignation to the municipal manager. The first
applicant stated the following:
‘
1
Hereby my formal notice of my proposed resignation from my post as
director: public safety: Stellenbosch municipality.
2
This serves as one month notice.
3
My last working day would be on 30 November 2009.
4 Please ensure that
my leave and the other benefits are calculated for payments as a part
of my employment conditions according
to the collective agreements
and performance contract.
5
In anticipation of your corporation.’
[69]
Mr Kantor argued that the use of the term
‘proposed’ meant that the letter of resignation was
equivocal and under the
common law principles enunciated above ought
not to have constituted a unilateral termination of the contract. It
is abundantly
clear that the letter was unequivocal and the term
‘proposed’ means intended rather than put forward for
discussion.
The letter states that the last working day. It calls on
the municipal manager to ensure that various payments due on
termination
such as leave pay, benefits under his contract and
performance agreement are calculated.
[70]
In any event, the municipal manager
raised the ambiguity introduced by the use of the word ‘proposed’
in his letter
dated 6 November and stated that ‘if your letter
is indicative that your last working day will be 30 November 2009, I
accept
your notice of resignation’. The 1
st
applicant never disabused the municipal manager of his assumption.
Moreover, he appealed against the acceptance and sought to withdraw
his resignation – neither of which would have been necessary if
he had not intended to resign and given an equivocal notice
of
termination.
Conclusion
[71]
It follows from the above that the
applicants have failed to demonstrate a clear right to the relief
sought. They unilaterally terminated
their contracts. If the failure
to give notice in accordance with their contracts constituted a
breach, it was not a breach that
rendered their decision to terminate
contractually invalid. In any event the respondent waived the balance
of the notice and accordingly
there was no breach – the notice
contemplated by clause 15.1 was given effect to, namely 30 days
notice subject to the employer
waiving any part of that notice.
[72]
There was no legal requirement on the part
of the respondent to accept the resignation. The purported statement
to that effect in
the municipal manager’s letter of 6 November
2009 has no legal effect. If it is a decision, that decision does not
affect
the applicants’ rights and accordingly cannot be
appealed under section 62(4) of the Systems Act. But even if it can
be appealed,
the reversal of the municipal manager’s acceptance
had no legal effect on the status of the applicants’ contracts
of
employment.
[73]
The executive mayor did not have the
delegated power to accept the applicant’s withdrawal of their
resignations.
[74]
Accordingly, the applicants’
contracts expired on 30 November 2009 as a result of the respondent
waiving the balance of the
notice period which would have terminated
on 6 December 2009. Those contracts no longer subsist.
[75]
The applicants accordingly failed to
establish a clear right to the relief. It is unnecessary for me to
consider the other factors
to take into account in deciding an
application of this nature.
Costs
[76]
The applicants have themselves to blame for
their predicament. They had secure fixed term contracts and channels
of communication
and appeal open to them. Despite this, they
terminated their contracts on 6 November 2009 because they said that
they could not
work with the municipal manager and his ‘cabal’
and yet 10 days later they sought to have the ‘acceptance’
of their resignations revoked and 7 days after that sought to
withdraw their resignations and be re-instated. They justified their
application to the executive mayor for his consent to their
withdrawal on the basis that they never intended to resign so much
as
to bring their plight to the attention of the Council. But there were
other ways of bringing their plight to the attention of
the Council.
Instead they decided to collectively resign to make a point knowing
full well what the effect would be to the operations
of the
respondent by a collective resignation of its senior management.
[77]
In these circumstances, the normal rule
that costs follow the result should prevail.
Order
[78]
The application is dismissed with costs,
including the costs of senior counsel.
_______________
CHEADLE
AJ
Date
of Hearing : 21/04/2010
Date
of Judgment : 07/05/2010
Appearances
For
the Applicant : Adv P Kantor
Instructed by :
Craig Schneider Associate
For the Respondent
:Adv R Stelzner
Instructed
by: Fairbridges Attorneys
[1]
Tiopaizi
v Bulawayo Municipality
1923
AD 317
at 326.
[2]
There
is such a provision in the applicants’ contracts of
employment. Clause 15.1 permits the employee to terminate the
contract on notice before the expiry of the fixed term stipulated in
clause 2.2 of the contracts.