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[2011] ZALCJHB 53
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Pik-it-Up Johannesburg (Pty) Ltd v SALGBC and Others (JR1834/09) [2011] ZALCJHB 53; (2011) 32 ILJ 2728 (LC) (28 June 2011)
Unfair
dismissal –section 186 (1) (b) of the LRA-factors to consider.
Employee –onus to show dismissal. Employer show
fairness of
the dismissal. Factors to consider in determining the reasonableness
of the expectation.
IN
THE LABOUR COURT OF SOUTH AFRICA
HELD
AT JOHANNESBURG
Reportable
Case
number JR1834/09
In
the matter between:
PIK-IT
UP JOHANNESBURG (PTY) LTD
….........................................
Applicant
and
SALGBC
…......................................................................................
First
Respondent
K
MAMBA N.O
….......................................................................
Second
Respondent
IMATU
obo COOK
…...................................................................
Third
Respondent
Date
of Hearing: 16 February 2011
Date
of Judgment: 28 June 2011
JUDGMENT
Molahlehi
J
Introduction
[1]
This is an application in terms of which the applicant seeks to have
the arbitration award, issued by the second respondent
(the
arbitrator) under case number JMD 1208/09, declared
null
and
void
alternatively reviewing and setting aside the same. In
terms of the arbitration award, the arbitrator found that the
termination
of the third respondent`s employment contract to have
been unfair and ordered that she be reinstated.
[2]
This matter which was filed in this Court under the above case number
was argued at the same time with the one filed under case
number
JR1613/09. Whilst the facts of both cases are similar and the
respondent is the same in both matters, I have for convenience
decided to write two separate judgments.
[3]
For ease of reference and convenience the third respondent in this
judgment is referred to as “the employee.”
Background
facts
[4]
It is common cause that the five years fixed term contract which the
employee had with the applicant was terminated after she
was served
with what purports to be a month´s notice, served on her on 23
October 2008. The relevant portion of that contract
for the purpose
of this judgment reads as follows:
“
This
contract of employment is for a period of five years (renewable at
the end of the period, subject to performance) and shall
come into
operation on the 1 November 2003 and shall continue until the
employment of the employee shall cease and terminate.”
[5]
On 23 October 2008, the applicant addressed a letter to the employee
informing her that the employment contract would expire
on 31 October
2008 and that she was given one month´s notice.
[6]
The employee in the dispute she referred to the first respondent,
(the bargaining council) contended that she had an expectation
that
her five years contract would be renewed and that failure to do so by
the applicant constituted a dismissal in terms of section
186 (b) of
the Labour Relations Act (the LRA).
1
Grounds
for review
[7]
The grounds for review upon which the applicant seeks to review the
arbitrator´s arbitration award are set out in the
founding
affidavit as follows:
“
18
The fundamental premise of the award was that the third respondent
had proved that she was dismissed on the grounds that she
had a
reasonable expectation of renewal in terms of section on 186(b) of
the
Labour Relations Act, 1995
.
19
The entire premise for the award was faulty and incorrect. The common
cause facts show that the contract expired on 31 October
2008 and
that the date of termination was 30 November 2008. As at that date of
termination, there was no fixed term Contract of
Employment for 5
years any longer.
20
The fundamental premise of the award is wrong and this error of law
is gross that it permeates the entire award rendering the
entire
award reviewable.”
[8]
The applicant contends that any expectation for the renewal of the
five years´ contract of employment of the employee
was
destroyed when she was issued with the letter dated 23 October 2008
which informed her that she was given a month´s notice
of
termination of that contract. The applicant contends that the
arbitrator in assessing whether there was an expectation that
the
contract of employment would be renewed for a further five years
ignored and failed to take into account the letter of 23 October
2008
and thereby committed a gross irregularity. The applicant says the
arbitrator committed a gross irregularity because:
“
21.1
The Arbitrator failed to apply her mind to the material evidence; and
The
conclusion that she reached is not reasonable in relation to the
material before her.”
[9]
At the hearing of this matter, Mr Boda for the applicant argued that
the employment contract was fairly terminated because the
applicant
had given the employee a reasonable notice of termination of the
contract. He further contended that the decision of
the arbitrator to
reinstate the employee was unreasonable and thus the arbitrator
exceeded his powers by ordering reinstatement.
The
arbitration award
[10]
The arbitrator in his analysis of the evidence and the arguments
submitted to him during the arbitration hearing accepted the
version
of the employee that she had a reasonable expectation that her fixed
term employment contract would be renewed on its expiry
as being
credible and further that it was corroborated by documentary
evidence. The arbitrator rejected the contention of the applicant
that the letter of 23 October 2008 constituted a new one month fixed
term contract. In this respect, the arbitrator in the second
sentence
of paragraph [13] of his arbitration award said the following:
“…
Firstly,
no evidence was led to prove this and secondly van Aswegan´s
letter dated 23 October 2008, states clearly that the
applicant was
being notified of the expiry of her fixed term contract and her
notice period. No mention is made that she was being
offered a one
month ´s contract, even if such offer had been made, there is
absolutely no evidence of any acceptance by the
applicant that,
whether tacitly or otherwise, of the said offer. It is well
established law that in the absence of a clear and
unequivocal
acceptance by the applicant there can be no valid contract.”
[11]
In assessing whether the employee had an expectation that her
contract would be renewed the arbitrator (at paragraph [15])
said:
“
Was
her expectation reasonable? I had no reason to reject the applicant's
evidence that she had a reasonable expectation that the
contract
would be renewed as she had fulfilled the condition attached to the
renewal of her contract namely that of performance.
Any reasonable
employee in the circumstances would expect the employer to renew the
fixed term contract after having fulfilled
the condition agreed upon.
It is common cause that the applicant was generally an excellent
worker throughout the duration of her
employment, she received
performance bonuses in support of this. In addition to these the
applicant's manager van Aswegan made
recommendations for her contract
to be extended, this to me is a classic undertaking that her contract
would be renewed. This tacit
undertaking was made by a person with
the necessary authority to do so, no contrary evidence was led to
show that van Aswegan did
not have such authority. Under these
circumstances, any reasonable employee would have an expectation that
the contract would be
renewed. A reasonable employee would anticipate
renewal."
[12]
The arbitrator went further to say:
“
The
respondent has not led any evidence to disprove that the applicant´s
expectation was unreasonable, their assertion that
it was not, is not
evidence, it is just (sic) that an assertion. I do not believe the
applicant is required to show that she pestered
the respondent about
the renewal of the contract for her to prove that she had a
reasonable expectation that it would be renewed.
What was essentially
required of her to guarantee renewal was her to perform and she did
just that. This was never disputed by
the respondent.”
[13]
It was on the basis of the above that the arbitrator concluded that
the employee had successfully shown that she had reasonable
expectation that her contract would be renewed.
Evaluation
[14]
In evaluating whether I should interfere with the arbitration award,
the first issue to consider is whether there exists a
dismissal upon
which the jurisdiction of the bargaining council to entertain the
dispute would have been based. The second issue
to consider if I find
that the employee was indeed dismissed is whether such a dismissal
was fair or otherwise. It has to be noted
that unlike in dismissal
for misconduct where the line between the determination of the
existence of dismissal and the fairness
thereof can be easily
separated, such a distinction is generally easy to make where it is
alleged that a fixed term contract was
terminated despite reasonable
expectation of its extension on the part of the employee. The
termination of a contract of employment
in fixed term contracts and
the fairness thereof are integrally linked by the concept of
“reasonable expectation
”
for
the renewal of the contract. The determination of the existence of a
dismissal in a dispute concerning the non-renewal of a
fixed term
contract remains critical in that it is a jurisdictional fact upon
which the CCMA or the bargaining council can entertain
the dispute.
[15]
In terms of
section 192
of the LRA, read with
section 186(1)
(b), the
employee bears the
onus
of
showing that he or she was dismissed because the employer failed to
renew or renewed a fixed term contract on terms less favorable
than
those that existed previously despite reasonable expectation of its
renewal. The employee discharges the
onus
by
showing that he or she had reasonable expectation that despite the
contract having come to an end by effluxion of time, he or
she had
reasonable expectation that the contract would be renewed and the
employer failed do so. Once the employee has discharged
the
onus
of
showing that the employer has failed to renew a fixed term contract
despite the existence of reasonable expectation, the
onus
rests
of on the employer to show that the termination of the contract was
for a fair reason.
[16]
In the present case, the starting point is to determine the
jurisdictional fact of whether the employee was dismissed by the
applicant. The duty to show the existence of such a dismissal rests
as indicated above on the employee. The applicant is correct
in its
submission that the test for determining jurisdiction in review
matters is not that of a reasonable decision maker as is
the case in
the general review cases but that which was enunciated in the case of
SA
Rugby Players’ Association (SARPA) and Others v SA Rugby (Pty)
Ltd and Others; SA Rugby (Pty) Ltd and Another
2
.
In
that case, the Labour Appeal Court per Tlaletsi JA, held that where
jurisdiction is in issue the test to apply is the following:
“
[39]
The issue that was before the arbitrator was whether there had been a
dismissal or not. It is an issue that goes to the jurisdiction
of the
CCMA. The significance of establishing whether there was a dismissal
or not is to determine whether the CCMA had jurisdiction
to entertain
the dispute. It follows that if there was no dismissal, and then the
CCMA had no jurisdiction to entertain the dispute
in terms of
section
191
of
the Act.
[40]
The CCMA is a creature of statute and is not a court of law. As a
general rule, it cannot decide its own jurisdiction. It can
only make
a ruling for convenience. Whether it has jurisdiction or not in a
particular matter is a matter to be decided by the
Labour Court. In
Benicon Earthworks & Mining Services (Pty) Ltd v Jacobs NO &
others (1994) 15 ILJ 801 (LAC) at 804C–D,
the old Labour Appeal
Court considered the position in relation to the Industrial Court
established in terms of the predecessor
to the current Act. The court
held that the validity of the proceedings before the Industrial Court
is not dependent upon any finding
which the Industrial Court may make
with regard to jurisdictional facts, but upon their objective
existence. The court further
held that any conclusion to which the
Industrial Court arrived at on the issue has no legal significance.
This means that, in the
context of this case, the CCMA may not grant
itself jurisdiction which it does not have. Nor may it deprive itself
of jurisdiction
by making a wrong finding that it lacks jurisdiction
which it actually has jurisdiction. There is, however, nothing wrong
with
the CCMA enquiring whether it has jurisdiction in a particular
matter, provided it is understood that it does so for purposes of
convenience and not because its decision on such an issue is binding
in law on the parties. In Benicon’s case, the court
said:
‘
In
practice, however, an Industrial Court would be short-sighted if it
made no such enquiry before embarking upon its task. Just
as it would
be foolhardy to embark upon proceedings which are bound to be
fruitless, so too would it be faint-hearted to abort
the proceedings
because of a jurisdictional challenge which is clearly without
merit.” (At 804C–D.)
In
my view, the same approach is applicable to the CCMA.”
[17]
The enquiry that needs to be conducted in the present matter is
whether the facts as presented by the employee objectively
establish
that a dismissal had occurred when the applicant did not extend her
employment contract.
[18]
The common cause facts which had been presented before the arbitrator
was that the parties entered into a five year fixed term
contract. It
is also common cause that the applicant issued the employee with a
letter informing her that the five years contract
would not be
renewed. The notice period, fell outside the period of the fixed term
contract.
[19]
At one level, the applicant contends that the notice “dealt a
blow” to any expectation which the employee may have
had and at
another level says that the notice period constituted a new one
month’s fixed term contract on the expiry of which
the
employment relationship with the employee was terminated.
[20]
I have already indicated earlier that the
onus
to show that
there was a dismissal rests on the employee and if successful in
doing so, the employer has the duty to show that
dismissal was for a
fair reason. In the present case, the only evidence which was
presented at the arbitration hearing was that
of the employee which
sought to show the existence of reasonable expectation for the
renewal of the fixed term contract. The applicant
only made oral and
written submissions as to what happened with regard to the
termination of the employment contract. In challenging
the version of
the employee, the applicant focused on the fact that the provision of
the contract of employment provided for the
termination of the
contract at the end of the period set out therein.
[21]
The employee on the other hand testified that she expected her
contract to be extended because she had satisfied the important
condition for the renewal of the contract being good performance. The
performance of the employee was not placed in dispute neither
did the
applicant seek to rely on it as a reason for the non renewal of the
employment contract. The employee further testified
that during the
currency of the employment contract, she received annual performance
bonuses and wage increases in recognition
of her good performance.
[22]
In my view, the evidence of the employee, which as already indicated
was not disputed, was sufficient to discharge the
onus
of
showing the existence of a dismissal by the applicant as envisaged in
terms of
section 186(1)
(b) of the LRA. Thus the bargaining council
had jurisdiction to entertain the unfair dismissal dispute which the
employee had referred
for determination.
[23]
In light of the above finding, I now proceed to determine whether the
decision of the arbitrator in finding that the dismissal
of the
employee was unfair was reasonable or otherwise.
[24]
It is trite that the
common law principle that
a fixed term contract expires automatically on the expiry of the date
on which the parties agree that
it should, has been altered by the
provisions of
section 186(b)
of the LRA. The section reads as
follows:
“
Dismissal”
means that -
(b)
an employee reasonably expected the employer to renew a fixed term
contract of employment on the same or similar terms but the
employer
offered to renew it on less favourable terms, or did not renew it.”
[25]
The LRA does not provide a definition of the concept
“
reasonable
expectation.”
The
concept has however been defined by case law to include, (a) equity
and fairness; (b) existence of substantive expectation that
the fixed
term contract would be renewed; (c) the employee, subjectively
expecting the contract to be renewed or extended ; (d)
objective
factors that supports the expectation. See in this regard
Dierks
v University of South Africa
3
[26]
In
Dierks v University of South Africa
, the Court held that
the following factors are important in the assessment of whether
there existed an expectation that the fixed
term contract would be
renewed:
“
A
number of criteria have been identified as considerations which have
influenced the findings of the past judgments of the Industrial
and
the Labour Appeal Courts. These include an approach involving the
evaluation of all the surrounding circumstances, the significance,
or
otherwise of the contractual stipulation, agreements, undertakings by
the employer, or practice or custom in regard to renewal
or
re-employment, the availability of the post, the purpose of or reason
for concluding the fixed-term contract, inconsistent conduct,
failure
to give reasonable notice, and (sic) nature of employer’s
business.”
4
[27]
The enquiry to be conducted in determining whether an employee had a
reasonable expectation that the fixed term contract would
be renewed
consists of both the subjective and objective factors. In other words
the employee has to adduce evidence showing that
she had subjectively
anticipated that the contract would be renewed. The employee has to
also adduce evidence that point to the
objective creation of such
anticipation. It is well established that the
written
provisions of the fixed term employment contract also play an
important role in the evaluation of the existence of the expectation
but is not decisive. The key in the assessment of the objective
existence of the reasonable expectation is the totality of the
evidence together with the surrounding circumstances of a given case.
See in this regard the decision of Supreme Court of Appeal
in
Mediterranean
Woollen Mills (Pty) Ltd v SA Clothing and Textile Workers Union
5
,
Dierks
v University of South Africa
6
and
Zank
v Natal Fire Protection Association.
7
[28]
Turning to the facts of this case, I have already indicated that the
evidence of the employee that she expected the contract
to be renewed
was not contradicted by the applicant. It was on these basis that the
arbitrator found that the failure by the applicant
to renew the fixed
term employment contact of the employee to be unfair. The arbitrator
rejected the contention of the applicant
that upon the expiry of the
five years fixed term contract a new one month’s fixed term
contract was concluded. The arbitrator
correctly rejected the
contention of the applicant on the basis that there was no evidence
that a new contract was concluded between
the parties. The applicant
by failing to lead evidence regarding its assertion that a new
contract was concluded failed to discharge
its duty of showing that
indeed a new contract was concluded between it and the employee.
[29]
In my view, the totality of the evidence and the circumstances of
this case support the view that objectively speaking the
employee had
reasonable expectation for the renewal of the five years fixed term
contract. The facts that support the finding of
the arbitrator that
there was reasonable expectation for the renewal of the employment
contract are that; there is undisputed evidence
that the employee
performed well and thus satisfied the precondition to the extension
of the contract; the employee received wage
increases and bonuses
during the currency of the fixed term contract. In fact, Mr Boda, for
the applicant, conceded that the wording
of the contract itself
created a basis for the expectation of the renewal of the contract.
[30]
Assuming the letter of 23 October 2008 was to be regarded as notice
of termination then the question that arises is whether
it
constituted reasonable notice. If that is the case, then strictly
speaking it means the employee was given less than ten days
notice of
termination of the contract because the contract was, on its
provisions, to expire on 31 October 2008. I do not agree
with Mr Boda
when he says that the applicant had given the employee a reasonable
notice which would have addressed the issue of
reasonable
expectation. On the facts and the circumstances of this case, the
notice as was given was not reasonable. As stated
earlier, this is a
case where the employee had performed in terms of the provisions of
the contract, received bonuses for that
reason and wage increases.
[31]
It is on the basis of the above that I find that the conclusion
reached by the arbitrator satisfy the requirements and the
standard
of reasonableness as set out by the Constitutional Court in the case
of
Sidumo
and
Another v Rustenburg Platinum Mines Ltd and Others.
8
I
am therefore of the view that there is no basis for interfering with
the decision of the arbitrator and accordingly the applicant’s
application stands to fail. I also see no reason in both law and
fairness why the costs should not follow the results.
Order
[32]
In the premises, the applicant’s application to review the
decision of the second respondent is dismissed with costs.
Molahlehi
J
Appearances
For
the Applicants : Adv F Boda instructed by Mokhatla Attorneys
For
the Respondent : Mr S Ramsden of
Sean
Ramsaden Attorneys
1
66
of 1995.
2
[2008] ZALAC 3
;
[2008]
9 BLLR 845
(LAC).
3
(1999)
20 ILJ 1227 (LC) at 1245 para130.
4
Id
1246 para 133
.
5
[1998]
ZASCA 11
;
1998
(2) SA 1099
(SCA);
(1998) 19 ILJ 731 (SCA) at 733–734.
6
at
1246 and 1250 para 161
7
(1995)
16 ILJ 708(IC).
8
(2007)
28 ILJ 2405 (CC).
11