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[2011] ZALCCT 29
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Gubevu Security Group (Pty) Ltd v Ruggiero NO and Others (C 481/10) [2011] ZALCCT 29; [2012] 4 BLLR 354 (LC); (2012) 33 ILJ 1171 (LC) (11 November 2011)
REPUBLIC OF SOUTH AFRICA
Reportable
Of
interest to other judges
THE LABOUR COURT OF SOUTH AFRICA, CAPE TOWN
JUDGMENT
case
no: C 481/10
In the matter between:
GUBEVU
SECURITY GROUP (PTY) LTD
….....................................
Applicant
and
RUGGIERO
N.O.
…................................................................
First
respondent
CCMA
…............................................................................
Second
respondent
M
LANGEVELDT
…...............................................................
Third
respondent
Heard
:
1 November 2011
Delivered
:
11 November 2011
Summary:
Review – expiry of fixed term contract –
reasonable expectation of renewal - LRA s 186(1)(b).
judgment
STEENKAMP J
Introduction
The third respondent, Ms Meagan Langeveldt (“the employee”),
was employed by the applicant on a fixed term contract
for three
months. It was due to expire on 30 November 2009. She continued
working until 3 December 2009, after which she was
told that she
could work out the rest of December as a notice period, but that her
contract would not be renewed. She referred
a dispute to the CCMA
(the second respondent) in terms of s 186(1)(b) of the LRA,
1
claiming that she had been unfairly dismissed as she had had a
reasonable expectation that her contract would be renewed.
The arbitrator (the first respondent) found in the employee’s
favour. However, contrary to the employee’s assertion
that she
had entertained the prospect of permanent employment, he noted that
in terms of section 186(1)(b) she could only have
expected a renewal
of the contract for another three months. He also noted that she was
offered the option of working out the
month of December 2009, but
she elected not to do so. Therefore, he ordered the applicant to pay
her the equivalent of two months’
remuneration as
compensation, amounting to R11 000, 00 less any applicable
statutory deductions.
The applicant seeks to have the arbitration award reviewed and set
aside.
Background facts
The background facts are largely common cause. The parties concluded
a fixed term contract of employment for the period 1 September
to 30
November 2009. It was signed on 7 September 2009. In an accompanying
email, the applicant’s financial director, Ms
Katie Mackintosh
(who deposed to the applicant’s founding affidavit in this
review application), stated:
“
Dear
Meagan
As discussed, please see
attached the employment agreement for your perusal and signature. I
have put in place a 3 month contract
at the agreed upon rate. Upon
successful completion of the first 3 months of employment, we will
increase your rate to R6000, again
as discussed.
[The email then sets out some
practicalities relating to the terms of employment and concludes]:
Aside from the above, all that
is left for me is to wish you all of the best and welcome aboard. We
look forward to many years of
business together.”
In the course of the arbitration, and indeed in this hearing, it
became apparent that the period of the fixed term contract was
really intended to be a probationary period. In response to a
question about the “normal company policy” from her
attorney, Mr Johannes de Beer (who represented her at arbitration
and who was the applicant’s instructing attorney in these
proceedings), Ms Mackintosh testified at arbitration:
“
We
always employ them for a period of three months, in the event that
they perform or fit in with the company ... to check them
out and
then a new contract will be entered into obviously if both parties
are to be in agreement thereof.”
The applicant’s attorney, Mr de Beer, then asked Mackintosh
why the applicant decided not to renew the employee’s
contract. Her response was:
“
Well,
just her general attitude and her manner that resulted in me not
wanting to continue with the employment agreement or renew
the
employment agreement.”
According to Mackintosh, she did not inform the employee of this
decision timeously because she was on leave at the end of November.
It is common cause that the employee was not told before the end of
November that her contract would not be renewed (apart from
the
terms of the contract itself). On 30 November, Ms Mackintosh’s
father, Mr Alistair Mackintosh (the applicant’s
Chief
Executive Officer) sent the Managing Director, Mr Rob Cloete, a
letter stating:
“
Over
the few weeks I have been closely reviewing the performance of the
Western Cape, which, to say the very least, administratively
speaking, has reached an all time low. Furthermore, please also note,
for the first time, there appears an unacceptably arrogant
and
obstructive attitude that has crept in to the Western Cape Company.
Something I cannot accept.
In view of the aforementioned,
please note that I have instructed that Meagan Langeveldt’s
contract not be renewed and arrangements
be put in place to source an
administrative assistant that will comply with head office
requirements, in accordance with her contract,
her services
terminated today. She will however be given the month of December as
notice should she so elect.”
The letter was copied to Ms Katie Mackintosh. It is common cause,
though, that the employee was oblivious of this communication
until
3 December. On that date, she was informed that her contract would
not be renewed.
The award
The arbitrator, having considered the common cause facts, came to
the conclusion that the employee had a reasonable expectation
that
her fixed term contract would be renewed. That was based mainly on
the contents of the email by Katie Mackintosh of 7 September
2009;
and the fact that the applicant did not, at any stage during the
three month period – that was akin to probation
– make
the employee aware of any problems with her performance or
“attitude”.
The employee had claimed that she expected her contract to
transmogrify into permanent employment. The arbitrator, though,
accepted that she could only have expected her fixed term contract
of three months to be renewed. In considering the appropriate
relief, therefore, he took into account that she could have worked
for the month of December but elected not to; and therefore
she was
entitled to two months’ salary as compensation only. That
equated to R11 000, based on a salary of R5 500
per month.
The test on review
Both parties approached the review application on the basis that the
test set out in
Sidumo v Rustenburg Platinum Mines
2
applies, ie whether the decision reached by the commissioner was one
that a reasonable decision-maker could not reach.
They persisted in this view even when I questioned it in oral
argument. In the light of the weight of authority in the Labour
Appeal Court, though, I am not persuaded that they are correct.
As I pointed out in
Asara
Wine Estate & Hotel (Pty)
Ltd v Van Rooyen & others
3
,
the LAC has held that a question concerning the reasonable
expectation of renewal of a fixed term contract in terms of s
186(1)(b)
of the LRA
4
is essentially a jurisdictional one, going to the existence of a
dismissal.
Anomalous as it may seem, therefore, the
Sidumo
test does not
apply. The LAC spelt it out in
SA Rugby Players Association &
others v SA Rugby (Pty) Ltd & others:
5
“
The
issue that was before the Commissioner 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, then the CCMA
had no jurisdiction to entertain a dispute in
terms of section 191 of
the Act.
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.…
The question before the court a
quo was whether on the facts of the case, a dismissal had taken
place. The question was not whether
the finding of the Commissioner
that they had been a dismissal of three players was justifiable,
rational or reasonable. The issue
was simply whether objectively
speaking, the facts which would give the CCMA jurisdiction to
entertain the dispute existed. If
such facts did not exist, the CCMA
had no jurisdiction, irrespective of its findings to the contrary."
In the more recent case of
Joseph v University of Limpopo &
others
6
,
however, the LAC appears to have applied the
Sidumo
test to a
review application arising from a dispute in terms of s 186(1)(b).
It did so without having regard to the
SA Rugby
judgment or
considering whether that was the appropriate test.
The most recent authority that I have considered is that of
University of Pretoria v CCMA & others.
7
That judgment was handed down by the LAC some two days ago, and
three days after this matter had been argued before me.
In the
University of Pretoria
case, having considered the
provisions of s 186(1)(b), Davis JA appeared to agree with the
approach in the
SA Rugby
case with regard to the question
whether the existence of a fixed term contract could lead to the
expectation of permanent employment
(of which more later). But he
did not specifically address the question of the appropriate test of
review as set out in
SA Rugby
; nor did he apply
Sidumo
,
but without setting out any reasons therefor or explicitly stating
that
Sidumo
does not apply. He simply stated
8
that:
“
Given
that this court has found that both the [arbitrator] and the court
a
quo
erred in concluding that there could be a dismissal, in that on facts
properly shown, there was a reasonable expectation of permanent
employment, [the arbitrator’s] decision falls to be reviewed
and set aside”.
The court substituted the arbitrator’s finding that the
employee in that case had been dismissed with the following order:
“
It is
declared that the [employee] was not dismissed by the applicant.
It is declared that [the CCMA]
has no jurisdiction to entertain the dispute referred to it by [the
employee] pertaining to her alleged
unfair dismissal.”
In the light of the clear authority of the LAC in
SA Rugby
,
and the indication in
University of Pretoria
that the
question under consideration in applying s 186(1)(b) is a
jurisdictional one, I still consider myself bound by the
dictum
in
SA Rugby
that
Sidumo
is not the appropriate test in
these circumstances and that I simply need to consider whether the
arbitrator was correct in deciding
as he did.
The law applied to the facts
In
University of Pretoria
, the LAC preferred the view that s
186(1)(b) does not allow for an order to be made that an employee
who had been employed on
a fixed term contract should be employed
permanently, based on a reasonable expectation to be so employed.
The court found support for this argument in article by Prof Marius
Olivier entitled “Legal constraints on the termination
of
fixed term contracts of employment: An enquiry into recent
developments”.
9
Under the heading, “Nature of the expectation” the
learned author states:
‘
The
third issue of importance relates to the nature of the expectation,
and by implication the nature and extent of the relief to
be
afforded. What is required in order to activate the provisions of s
186(b) is an expectation that the fixed-term contract in
question
would be renewed on the same or similar terms. It is evident that the
Act does not require that or regulate the position
where the
expectation implies a permanent or indefinite relationship on an
ongoing basis ...
The reference to renewal on the
same or similar terms supports that this is the inference to be drawn
from the wording of the subsection.
What s 186(b) apparently
envisages is that an employer should not be allowed not to continue
with fixed-term employment in circumstances
where an expectation of
renewal is justified. The implication is that the usual remedy to be
granted in this case, if the termination
is found to be unfair, is
that of reinstatement or re-employment on the same or similar terms
(see s 193(1) and (2)), but not that
the employee has to be
(re-)appointed as a permanent employee or on an indefinite basis ...
This would consequently leave the possibility
open that the employer
could after the expiry of the period of the subsequent fixed-term
contract terminate the services of the
employee concerned, as long as
the termination is not otherwise prohibited - such as where the
employee had once again a reasonable
expectation that the contract
would be renewed.
The LAC in
University of Pretoria
preferred this approach,
followed in
Dierks v University of South Africa
10
and
SA Rugby (supra)
to that of the acting judge in
McInnes
v Technikon Natal.
11
In doing so, Davis JA had regard to the clear language of s
186(1)(b) and the dictum of the Constitutional Court in
S v Zuma
12
that courts cannot interpret legislation to mean ‘whatever we
might wish it to mean’.
The wording of s 186(1)(b) requires that, in order to constitute a
dismissal, the employee had a reasonable expectation that
the
contract would be renewed “on the same or similar terms”;
and that it was not so renewed. If there was a dismissal,
therefore,
the remedy could not be to order the employer to reinstate the
employee permanently. The employer could only be ordered
to renew
the fixed term contract “on the same or similar terms”
or to pay the employee compensation that would give
effect to the
terms of that contract. That is exactly what the arbitrator did in
this case.
It is clear from Ms Mackintosh’s email to the employee
accompanying her contract of employment that she would have created
a reasonable expectation of renewal in the mind of the employee. In
the ensuing three months, and up to 3 December 2009, the
applicant
did nothing to dispel that expectation.
In those circumstances, given the clear evidence of a reasonable
expectation of renewal before him, the conclusion reached by
the
arbitrator was entirely justified. He also properly applied his mind
to the appropriate remedy and ordered only two months’
salary
as compensation. The decision is not reviewable.
Costs
The employee had an arbitration award in her favour. She had little
choice but to oppose the application for review in order
to indicate
her rights. The applicant, on the other hand, chose to incur legal
costs well in excess of the amount of compensation
(R11 000
minus statutory deductions) it was ordered to pay the employee. Mr
Venter
, for the applicant, submitted that it did so in order
to establish a principle, as the award would have far-reaching
consequences
for its operations, were it allowed to stand. The
consequences for the applicant may well be that it will reconsider
its inappropriate
use of fixed term contracts of employment instead
of a probationary clause in what is intended to be permanent
employment. That
would be in accordance with the purpose and objects
of the Labour Relations Act and section 23 of the Constitution.
In law and fairness, the applicant should pay the respondent's
costs.
Order
The application for review is dismissed with costs.
_______________________
A J Steenkamp
Judge
APPEARANCES
APPLICANT: Adv F Venter
Instructed by Johannes de Beer.
THIRD RESPONDENT: N Masizana of Legal Aid SA.
1
Labour
Relations Act 66 of 1995
.
2
(2007)
29
ILJ
2405
(CC);
[2007] 12 BLLR 1097
(CC);
2008 (2) SA 24
(CC).
3
[2011]
ZALCCT 21.
4
Section
186(1)(b)
provides that dismissal means that – “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.”
5
(2008)
29
ILJ
2218
(LAC) at paras [39] – [41].
6
(2011)
32
ILJ
2085
(LAC) [per Jappie JA, Waglay DJP and Hendricks AJA concurring].
7
JA
38/2010 (4 November 2011) [per Davis JA, Ndlovu JA and Mocumie AJA
concurring].
8
In
para [22]. The court also did not refer to the
University
of Limpopo
case.
9
(1996)
17
ILJ
1001.
10
(1999)
20
ILJ
1227
(LC) paras 118-149.
11
(2000)
21
ILJ
1138
(LC) at 1143 para 20.
12
[1995] ZACC 1
;
1995
(2) SA 642
(CC) paras 17-18.