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[2011] ZALCJHB 164
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Naidoo v MB Technologies (Pty) Ltd and Others (JS 565/08) [2011] ZALCJHB 164 (26 August 2011)
GUSH J
IN THE LABOUR COURT OF SOUTH
AFRICA
HELD IN JOHANNESBURG
Not reportable
Case No: JS 565/08
In the matter between:
V NAIDOO
.........................................................................................................
.Applicant
and
MB TECHNOLOGIES (PTY) LTD
.........................................................
First
Respondent
M B T SERVICES (PTY) LTD
............................................................
Second
Respondent
ADVANCED CHANNEL TECHNOLOGIES
(PTY) LTD
..............................................................................................
Third
Respondent
TARSUS TECHNOLOGIES (PTY) LTD
.............................................
Fourth
Respondent
GLOBAL OUTSOURCING SERVICES
(PTY) LTD
...............................................................................................
Fifth
Respondent
CHANNELWARE (PTY) LTD
...............................................................
Sixth
Respondent
M B T INVESTMENTS (PTY) LTD
..................................................
Seventh
Respondent
Date of Hearing: 14, 15, 16
March and 4 May 2011
Date of Judgment; 26August 2011
JUDGMENT
GUSH J.
The applicant was employed by
the second respondent on 1 December 2006. On 25 April 2008, the
applicant was given a letter terminating
her services with the
second respondent for operational reasons with effect from 31 July
2008 on the grounds that her position
with the respondent had become
redundant.
The
applicant claims that the reason for her dismissal was automatically
unfair on the grounds of discrimination alternatively
both
substantively and procedurally unfair as it was not effected in
accordance with section 189 of the Labour Relations Act
(LRA)
1
and seeks an
order declaring it to be so. The applicant claims fair and
reasonable compensation arising from her unfair dismissal.
In
addition, the applicant claims the payment of an amount of R18,600
in respect of an unpaid bonus.
The respondents opposed the
matter on the grounds that the position to which the applicant was
appointed viz. Manager-Special
Projects had become redundant and
that it had followed a fair procedure in effecting the termination
of her employment for operational
reasons. (The respondents
abandoned their special plea that the applicant had agreed to be
retrenched). In addition, the respondents
denied that the applicant
was entitled to the unpaid bonus but agreed the quantum of the bonus
which had not been paid to the
applicant.
The applicant agreed to start
and only the applicant gave evidence in support of her claim. The
respondents led the evidence of
a Mr Leo Baxter, who at the time of
the applicant’s employment was the CEO of the respondents’
group of companies,
and the group’s financial director Mr
Glenn Fullerton.
At the time that the applicant
was offered employment by Baxter, she was employed by South African
Breweries as a trainee manager.
The applicant, a chartered
accountant, had been introduced to Baxter who had been impressed by
her. Baxter had met with the applicant
on a number of occasions and
had arranged for her to meet the respondents’ senior managers.
This process had led to her
being employed.
The applicant gave extensive
and detailed evidence regarding the discussions she had had with
Baxter leading up to her employment
and what she understood to have
been offered to her. What was clear from the applicant’s
evidence was her understanding
of what she had been offered was
unrealistic. She seemed incapable of distinguishing between the
discussions she had had with
Baxter and the actual offer of
employment that was made. Suffice to say that the applicant was
employed by the 2
nd
respondent on the strength of a
written contract of employment “in the position of
Manager-Special Projects”. Her
evidence regarding what she
understood or believed Baxter to have offered her in the discussions
leading up to the formal offer
of employment and her signing of the
formal contract of employment was largely relevant only in the sense
that it explained the
background to why the relationship between the
applicant and the respondents soured.
Baxter, whose evidence the
applicant conceded, was forthright and honest, explained in detail
the contents of his discussions
with the applicant and the extent of
his undertakings to the applicant regarding her employment. Baxter
made it clear in his
evidence that he had been impressed with the
applicant’s qualifications and that as the respondent was
“embracing
transformation” employing the applicant and
grooming her for a senior role “if not the most senior role”
fitted
in with the respondents plans. He candidly admitted that he
had actively sold the idea of working for the MB technologies group
of companies on the strength of the opportunities it offered to the
applicant and that he had thereby “induced” the
applicant to resign from her position with SAB and accept employment
with the respondents’ group of companies.
What was abundantly clear
however from the evidence of both Baxter and the applicant, was that
she was employed in accordance
with a written contract of employment
which although it described the applicant’s job as
“Manager-Special Projects”
that the intention was to
mentor the applicant with a view to her progressing to a senior
position within the group. Crucially
in response to the proposition
that the applicant’s role had not become redundant, during his
cross examination,, Baxter
agreed.
Although the applicant averred
that her dismissal was automatically unfair for reasons of
discrimination I am not satisfied that
her evidence established
this. The applicant averred that as one of the reasons for her
appointment was to promote transformation
by terminating her
employment, the termination was automatically unfair on the grounds
that the respondents’ had discriminated
against her.
The matter therefore involves
an assessment of the circumstances surrounding the applicant’s
dismissal by the respondent
for operational reasons and specifically
whether the applicant’s dismissal was for a fair reason, in
accordance with a
fair procedure and in compliance with section 189
of the LRA.
It became abundantly clear
during the evidence of both the applicant and the respondents’
witnesses that the relationship
between the applicant and the
respondent had soured for a number of reasons. The most notable of
these reasons appeared to be
the applicant’s unrealistic
expectation she believed had been offered to her and what was
expected of her once she was
employed. The applicant was
dissatisfied
inter alia
with having to perform an internal
audit function, complained of not having been mentored as she
expected, was of the opinion
that Baxter had offered, but had not
sent her to study at Stanford university in the USA and that she had
felt out of her depth
at the board meetings she was expected to
attend. It became clear during her evidence however that the
applicant expectations
if not unrealistic certainly did not coincide
with what the respondents’ expected of her. During the
evidence however it
became clear that the applicant did not make the
effort to seek assistance from her fellow board members before
meetings. What
the applicant did make abundantly clear during her
evidence was that she was extremely unhappy and that by the time the
so called
retrenchment consultations commenced, the employment
relationship was doomed. The applicant during her evidence confirmed
that
the relationship had soured and that she had met with Baxter
after his accident to explain “how unhappy” she was In
fact during her cross examination the applicant conceded that the
relationship had become intolerable.
The crisp issue however given
that the respondents’ stated reason for termination the
applicant’s employment was that
her position had become
redundant is whether the respondents’ reasons for retrenching
the applicant were fair, whether
the procedure adopted was fair and
whether there had been compliance with section 189 of the LRA.
In this regard, taking into
account the evidence regarding the redundancy of the applicant’s
position, the evidence of the
respondents’ second witness the
group’s financial director, Mr Glenn Fullerton, is decisive.
Counsel for the applicant
submitted that Fullerton’s evidence
was unsatisfactory. I agree. Not only was Fullerton at times evasive
but his version
of the events surrounding the purported
consultations was at times fanciful at best. For example, regarding
the subsequently
(and appropriately) abandoned special plea,
Fullerton persisted in endeavouring to explain his interpretation of
the so-called
minutes of the consultation meetings and his
recollection of what transpired therein and therefore justify the
conclusion that
the applicant had not only agreed that her position
was redundant but that she had in fact agreed that her contract of
employment
be terminated and that the respondent had followed a fair
procedure.
In his evidence, Fullerton
maintained that the reason for embarking on the retrenchment
exercise was that the applicant’s
job viz “Manager-Special
Projects” had become redundant in that there were no special
projects requiring the applicant’s
attention in the future.
Unfortunately for Mr Fullerton, this evidence was not only in direct
contrast with the evidence of the
applicant but also with the
evidence of Baxter. That being so, the stated reason upon which
Fullerton and accordingly the respondents
relied for terminating the
applicant’s employment was in fact not the reason at all.
The sequence of events which
led to the applicant’s dismissal were as follows:
On 20 March 2008, Fullerton
and the group CEO McGregor addressed a letter, purporting to comply
with the provisions of section
189(3) of the LRA to the applicant
advising her of her possible retrenchment. The letter advised the
applicant
inter alia
that she had been employed primarily to
perform an internal audit function and in addition to attend to
ad
hoc
special projects from time to time. The letter went on to
advise the applicant that the “law “ precluded a “main
board director” from performing internal audit function and
that her role as acting financial manager of the 3
rd
respondent was no longer available as it had been filled
permanently. It also suggested that he applicant had declined to
take on this position permanently.
This was followed by meetings
on 31 March 2008, 9 April 2008 and 22 April 2008. At the meeting on
22 April 2008, matters reached
an impasse. Fullerton advised the
applicant that there had been a breakdown of trust and that she was
to hand over the companies’
property and leave the premises.
The applicant left escorted by the respondents’ human
resources manager (Bettencourt)
to applicant’s office from
whence she left the premises.
After each meeting, Fullerton
purported to prepare minutes of the meetings. In the case of the
minutes of the meeting of 31
March 2008, they are not signed. The
minutes of 9 and 22 April 2008 are both signed by Fullerton and
Bettencourt but not by
the applicant. Somewhat bizarrely what
purports to be a minute of the meeting held on 22 April ends with a
description of the
applicant leaving the meeting, being accompanied
by Bettencourt to her office and includes comments regarding what
supposedly
happened there.
On 25 April 2008, the
respondents’ attorneys addressed a letter to the applicant
headed “Notice of Termination of
Employment with MBT Services
(Pty) Ltd” in which letter the applicant was advised that the
2
nd
respondent intended terminating the applicant’s
employment for operational reasons and gave her three months notice
that
her employment would terminate on 31 July 2008.
During their evidence, both
Fullerton and the applicant gave extensive evidence of the breakdown
of the relationship between applicant
and the respondents’
senior management. This evidence included accusations by the
applicant that she had been marginalised
and left to her own devices
and evidence by Fullerton that the applicant was perceived as being
lazy and out of her depth. Both
the applicant and Fullerton referred
to meetings they had had late in 2007 and early 2008 where both
parties dissatisfaction
had been expressed and discussed. Fullerton
insisted that the applicant had directly expressed her desire to
leave the respondents’
employ whereas the applicant insisted
that she had not. Neither version was entirely plausible and suffice
to say that what was
clear was that neither party was happy with the
other and that the relationship was doomed.
However in, in justifying the
decision to retrench the applicant, Fullerton relied heavily on the
appointment of the applicant
to the position of acting financial
manager of the 3
rd
respondent and her supposed refusal of
an offer to take up the post permanently. This according to
Fullerton was one of the main
reasons why it was necessary to
retrench the applicant in addition to the supposed drying up of
special projects. Apart from
denying that the post was formally
offered to her, the applicant in addition explained that she had not
been employed to become
a financial manager but was employed to be
mentored and trained, a conclusion justified by the evidence.
Despite the extensive evidence
led in this matter, the simple issue that the Court is required to
decide is whether the reason
given by the respondents’
Fullerton and McGregor for retrenching the applicant was a genuine
or fair reason and whether
the procedure adopted by the Fullerton
which lead to the applicant’s dismissal was fair. The
breakdown of the relationship
is only relevant to the issue of
compensation should it be found that the dismissal was substantively
and/or procedurally unfair.
What is clear from the evidence
is that the applicant had been employed in order to be mentored and
trained for a senior position
in the respondents’ group of
companies. The terminology used in the contract viz “special
projects” was explained
by the applicant although considerably
embroidered. Baxter however, candidly and lucidly corroborated the
essence of the applicant’s
evidence concerning the nature of
her employment. In particular, he clearly and unequivocally stated
that the applicant’s
position had not become redundant. This
evidence stands in stark contrast to Fullerton’s disingenuous
attempts to try and
persuade the Court that due to the absence of
any special projects in the near future the applicant’s role
had become redundant
and that in any event the applicant had agreed
that her dismissal for operational reasons was fair both
substantively and procedurally.
I am in no doubt that the real
reason for the applicants retrenchment was the fact that her
employment had not turned out as it
had originally been envisaged.
This was due in equal measures to Baxter’s accident which
essentially took him out of the
picture, the reluctance of Fullerton
and McGregor to embrace his intentions regarding the applicant’s
employment and the
applicant’s unrealistic expectations of the
job and her failure to apply herself.
It is so that had the matter
been approached differently by Fullerton the issues could have been
amicably resolved. The applicant
both in her evidence and in
documentation did indicate that the employment relationship had
become intolerable and that was prepared
to consult with the
respondents’ in an attempt to resolve the issues.
The record of the consultation
process and the evidence of both the applicant and Fullerton suggest
at the very least that it
was prematurely concluded and that the
required meaningful joint consensus seeking process had not been
exhausted. In the so
called minute of the final meeting, Fullerton
recorded that he believed that the applicant’s suggestion that
the company
deal through her lawyer constituted a breakdown of trust
and that she was to hand over the companies’ property and
leave
the premises. This was followed by the letter of termination
addressed to the applicant by the respondents’ attorneys.
Given these circumstances and those dealt with above, it cannot be
said that the applicant’s dismissal was procedurally fair
or
in accordance with the provisions of section 189 of the LRA.
I am accordingly satisfied that
the termination of the applicant’s employment was neither
substantively or procedurally
fair.
Where an
applicant seeks compensation for an unfair dismissal, the Court must
exercise its discretion to determine what compensation
would be
“just and equitable in all the circumstances”.
2
I have taken
into account the parlous state of the employment relationship
between the applicant and the respondents and the issues
discussed
in the meetings between the applicant and the respondents’
management prior to the commencement of the retrenchment
process,
the reasons given by the respondents why the applicant was no longer
required (the so-called operational reasons), the
procedure adopted
by the respondents leading up to the applicant’s dismissal and
the retrenchment benefits paid to the
applicant on her termination.
I am of the view that compensation of an amount equivalent to six
months remuneration is just and
equitable in the circumstances of
this matter.
As regards the issue concerning
the bonus, on 31 May 2007, Fullerton advised the applicant that she
would be paid a bonus for
the year ended 28 February 2007 but
despite her having commenced her employment on 1 December 2006, she
was to receive a prorated
bonus for two months (January February
2007). Fullerton’s explanation for not taking into account
December 2006 was that
the applicant had not made a contribution to
the respondents’ performance during her first month.
Unfortunately for the
respondents Fullerton’s email
notification that the bonus was to be paid refers to a “contracted
annual bonus”.
The bonus was to be paid “on achievement
of performance criteria as set by the ... directors. The criteria
will be communicated
and agreed upon by yourself”. This was
not done and the email does not suggest in any way that the
applicant had not met
a “performance criteria”. There is
according no reason why the applicant should not be paid the unpaid
bonus in the
agreed amount of R18,600.
In the circumstances, I make
the following order:
The termination of the
applicant’s employment by the 2
nd
respondent was
unfair;
The 2
nd
respondent
is to pay to the applicant compensation in an amount equivalent to
six months remuneration;
The 2
nd
respondent
is to pay to the applicant an amount of R18,600 in respect of the
unpaid portion of her bonus;
The 2
nd
respondent
is to pay the applicant’s costs.
_______________
GUSH J
Appearances
For the Applicant : Adv Sniders
instructed by
Instructed by : Perrot Woodhouse
Mtyolo Inc
For the Respondent: M. T Mills;
Cliffe Dekker Hofmeyr Inc
1
Act
No. 66 of 1995.
2
Section
194 of the LRA.
13