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[2012] ZALCJHB 152
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Van Pletzen v Danmar Autobody West Rand (Pty) Ltd and Another (JS248/11) [2012] ZALCJHB 152 (6 November 2012)
REPUBLIC OF SOUTH AFRICA
THE LABOUR COURT OF SOUTH AFRICA, JOHANNESBURG
JUDGMENT
Reportable
Case no: JS248/11
In the matter between
VAN PLETZEN, CHANTELLE
................................................................................
Applicant
and
DANMAR AUTOBODY WEST RAND (PTY) LTD
....................................
First
Respondent
DANMAR AUTOBODY WEST RAND, DIVISION
OF THE IMPERIAL GROUP (PTY) LTD
..............................................
Second
Respondent
Heard: 06 November
2012
Delivered: 06 November 2012
Summary: Automatically unfair dismissal as a result of a transfer
of a business as a going concern – Section 187(1)(g) and
Section 197 – Compensation granted.
_____________________________________________________________
JUDGMENT
_____________________________________________________________
COETZEE, AJ
:
[1] In this matter the applicant claims an automatically unfair
dismissal in terms of section 187(1)(g) because the reason for
the
dismissal was the transfer of a business as a going concern as
contemplated in section 197 of the Labour Relations Act, Act
66 of
1995 (as amended).
[2] The relevant dates are as follows: the commercial agreement
underlying the transfer of the business from the seller to the
purchaser was signed on 1 July 2012, the effective date of the
transfer was 1 October 2010, the date of dismissal of the
applicant was 31 August 2010 and the procedure to retrench her
commenced on 10 August 2010.
Formalities
[3] At the commencement of the proceedings, the applicant handed up
an amended statement of claim to reflect the second respondent
as a
further party to the proceedings. There was no objection to the
amendment.
[4] The applicant initially referred the matter to this Court
claiming relief from only her erstwhile employer, cited as the first
respondent. I will refer to the first respondent as the old employer.
[5] Subsequently thereto applicant established that a transfer of the
business had taken place and she identified the second respondent
to
which I shall refer as the new employer.
[6] For that reason it became necessary to join the second respondent
which occurred earlier this year. The old employer and the
new
employer are before Court.
[7] The Court has been informed that the old employer has since
ceased doing business and has probably been liquidated.
[8] The Court also granted an amendment to the statement of claim to
substitute for the salary of the applicant the correct amount
of
R17 896 per month. That is what she earned upon dismissal.
The issue
[9] It is as common cause between the applicant and the new employer
that if the dismissal was for a reason relating to or because
of a
transfer of the business as a going concern, that the second
respondent then would as the new employer stand in the shoes
of the
old employer and on that basis be jointly and severally liable for
the conduct of the old employer in so far as it relates
to the
applicant.
[10] The applicant challenged the fairness of her dismissal both in
respect of procedure and substance, alleging that there was
no
substantive reason for the dismissal other than the transfer of the
business as a going concern as contemplated by Section 197
of the
Labour Relations Act and procedurally that there was no fair
procedure followed.
[11] She elected to claim compensation rather than reinstatement.
[12] During the trial the new employer informed the Court that it had
no evidence on the procedure or the reason for the dismissal
and that
it would wish only to place evidence before the Court as to the date
or the time when the new employer became aware of
the claim of the
applicant.
[13] The second respondent, the new employer, never conceded the
merits and merely stated that it had no knowledge of what occurred
when the old employer dismissed the applicant.
Facts
[14] In the evidence in chief of the applicant she stated that she
started with the company on 1 May 2008 and was located at its
head
office or main office at Ophirton. She was a junior accountant and
she did the books for them and earned R17 896 per
month at the
time of her dismissal.
[15] On 9 April 2010 she went on maternity leave and by agreement
with her old employer worked from home at half her normal salary.
During that period she also received payments from the Unemployment
Insurance Fund for the difference between her full time salary
and
what she received during maternity leave.
[16] She further testified that her direct supervisor was Mr Russell
Wood. She worked from home during her maternity leave and
she
received her remuneration.
[17] Upon her return on 10 August 2010 when arriving at the office
she greeted a colleague and noticed a letter that appeared to
be a
letter of retrenchment. She went to see Mr Russell Wood who was busy
on a telephone call but he then printed a letter for
her, signed it
and handed it to her. He also, as came out in cross-examination, then
told her not to worry about it, which she
understood to mean not to
worry about her being retrenched.
[18] Having read the letter she phoned her husband to inform him as
to what had occurred.
[19] The letter that she received on 10 August 2010 contains
inter alia
the following information: It is dated
3 August 2010 (for some or other reason it may have well
have been created on
that date in her absence while she was on
maternity leave) and it states as the reason for the proposed
retrenchment, the following:
‘
With
the transfer as a going concern, West Rand is considering
streamlining the business prior to the actual transfer of the
business.
Accordingly certain positions could be declared redundant
and that might lead to the retrenchment of personnel.’
[20] Under the category and the number of employees likely to be
affected, the position of one junior accountant is reflected.
The
applicant testified that that was her position.
[21] The letter further states that the timing of the proposed
retrenchment would be 31 August 2010. The letter then deals
with
a proposed severance package, documentation,
et cetera
and in respect of the possibility of future re-employment of affected
personnel states as follows:
‘
As all
the positions could be declared redundant, no possibility exists for
affected employees to be reemployed.’
[22] The penultimate paragraph of the letter states that the
applicant would be required to attend a consultation meeting
scheduled
for that purpose to take place at Danmar Autobody, Ophirton
on 16 August 2010 at 10:00. During that consultation she would
be afforded the opportunity to make her own representations
pertaining to all the matters raised in this particular letter.
[23] On the Wednesday, 11 August 2010, the second day on the job, she
carried on her duties as usual. On the 12
th
of
,
August
2010 because her son fell ill, she had to take him to the doctor.
Arriving at the doctor, she was informed that her medical
aid had
been cancelled. She had to pay in cash.
[24] She felt bad about this as she was humiliated and also had a
new-born baby with bronchitis who would need medical care. In
future
she would have to pay for the treatment herself.
[25] She subsequently established from the broker that it was an
instruction of her old employer that the medical aid contributions
had been stopped and she had been taken off the list of members of
the medical aid scheme.
[26] She further testified that she was never accused of any
misconduct at work or for poor performance. There was no reason to
terminate her employment save for what was conveyed to her in terms
of the letter of retrenchment that she had received.
[27] On Friday, 13 August 2010, the third day back at work, she was
called by Mr Russell Wood and instructed to meet Mr Fernandez
at
14:00 that day at the West Rand branch.
[28] Mr Fernandez was one of the directors of her old employer. At
around 13:45, Mr Woods called her and cancelled the visit to
the West
Rand branch and instructed her to meet Mr Peter Richardson in
the boardroom at head office. He is also a director
of the old
employer.
[29] Inside the boardroom were present the applicant, a labour
consultant that she was introduced to as one Tienie and Mr
Richardson.
Tienie explained to her that the old employer’s
business was being sold as a going concern and that it was necessary
to restructure
in anticipation of the takeover of the business.
[30] Mr Richardson added the reason was that it was “What
Imperial wanted” as a purchaser and therefore they had
to give
effect to it.
[31] Tienie then handed her the letter and explained all the aspects
mentioned in the letter. It was dated 16 August 2010, but
handed to
her on the 13 August 2010.
[32] Tienie told her that it was her retrenchment letter and that she
was being retrenched. The letter refers to a consultation
meeting
held on 13 August 2010. In fact, however, this letter was handed
to her on 13 August 2010 and there could not have
been any prior
consultation as the letter would have it.
[33] Upon receiving the news and the letter she was completely
dumbstruck and devastated. She thought it was ridiculous coming
back
to work and then being kicked out within three days. It did not make
sense to her.
[34] At no time was any alternative position offered to her. She also
testified that there were alternative positions and with
reference to
the list of people employed by the new employer as from July 2010 to
August 2010 she identified a number of positions.
[35] The position of receptionist would have been an appropriate
position for her as a new receptionist was employed on 1 August 2010.
That position was not offered to her. She would also qualify for the
service advisor position and the customer liaison position.
Franken
was appointed to that position after her retrenchment as the
appointment was made only on 1 October 2010. These positions
were not
offered to her.
[36] The effective date of the transfer of the business as a going
concern was 1 October 2010.
[37] After the effective date the new employer at no time contacted
her to enquire as to why she was not present at the premises.
[38] She made reference to clauses in the commercial sale agreement
which she only became privy to during June 2012 after the new
employer had been joined as a party.
[39] Clause 4 of the commercial agreement very specifically states
that the businesses are transferred as going concerns with all
the
assets. Party to the commercial agreement were also a Mr Groenewald,
Mr Richardson and Mr Fernandez. All three of them
were directors
of the old employer. Mr Groenewald subsequently commenced his
own business under the name Rolling Thunder and
Mr Fernandez and Mr
Richardson started a salvage company which businesses are, according
to her knowledge, still in operation.
[40] Clause 15 of the commercial agreement refers to the specified
employees. The specified employees are those employees whom
the
parties agreed whose contracts would transfer from the old employer
to the new employer. They were identified by the seller
and the
purchaser. Her name appears on the list. As Mr Richardson signed that
agreement, being a party thereto, he should have
known this.
According to her, Mr Richardson went outside the contract when he
retrenched her. The reason for her retrenchment clearly
was the
selling of the business of the company as a going concern.
[41] She accepted that the termination of her services was because of
the sale of the business of the company as that is what she
was told
by the old employer. That is also what was stated in the
documentation handed to her.
[42] She had no reason to believe that there was any other reason for
the termination of her services. If the business had not
been sold as
a going concern, she would still have had her job.
[43] She further confirmed that at no time had she entered into an
agreement as contemplated in section 197(6),
id est
an
agreement to be retrenched notwithstanding the provisions of section
197 and the business being transferred as a going concern.
[44] The relief that she wants is payment of compensation equal to
the maximum amount. In support she says that she was a loyal,
hardworking employee, she worked during her maternity leave and then
she was just told about the retrenchment. No fair process
was
followed and after returning to the company three days later, she was
told to go. She had a new-born baby and all of this resulted
in
financial hardship.
[45] Her mother created a position for her at R5 000 per month
at the family business so that she could get by. She had to
sell her
car and she moved in with relatives to survive. She saw a
psychiatrist to assist her to work through the trauma of the
event.
[46] With effect from 1 October 2012, 26 months later, she obtained
new employment at R15 000 per month which she regards
as a
comparable position and comparable salary.
[47] She has not yet recovered financially. The applicant’s
representative also argued that the conduct of Imperial as the
new
employer should be taken into account in determining just and
equitable compensation.
[48] According to the applicant, the new employer had not read its
own contract and should have realised with the first payroll
run that
she was not there. They never contacted her, which they should have
done and which would have resolved the issue. Also
when she served
her referral to the CCMA and subsequently the court papers, there was
no response from the new employer.
[49] She maintained that the documents were served, although she did
not do it personally, at the offices of her old employer,
which were
also the same premises where the new employer had been trading from
1 October 2010. The joinder papers were also
served in the same
fashion but there was no response at all from the new employer.
[50] She received an offer from the new employer during July 2012
and a further offer was made to her at the commencement
of this trial
on 5 November 2012.
[51] During July she was offered re-employment and at the
commencement of the trial she was offered re-employment and three
months’
remuneration which effectively would equal the offer
that was made in July three months earlier. The offers were disclosed
to Court
by agreement.
[52] Under cross-examination she conceded that if it was not for the
money, she did not have to work, but because she did not have
the
money she had to work.
[53] With regard to the medical aid she had approached Mr Wood who
said it was a misunderstanding. Notwithstanding her efforts
to get HR
to reinstate the medical aid and/or to claim back the premium or to
get her claim submitted and notwithstanding an undertaking
from the
HR lady of the old employer to do so, nothing materialised. This
probably is also due to the fact that the HR person left
at the end
of August 2010.
[54] During her employment with her mother, she did odd jobs,
reception, deliveries,
et cetera
, and did not receive any
increase.
[55] She explained that she filled in the retirement fund withdrawal
forms on 10 August by reason of the fact that the HR
Manager
requested her to do so stating to her that she, the HR lady, was
leaving and had to have the forms filled in in case there
was a
retrenchment at the end of the month.
[56] The second respondent called Me Brown, an HR Executive of the
new employer who testified that during September 2010 she was
the
HR Director at provincial Head Office and aware of the takeover,
but not aware of this matter. She was based at head office.
[57] She first became aware of this matter during
May 2012
when she received
documentation from the branch manager at the West Rand branch,
calling upon the second respondent to attend a
pre-trial conference
at the Labour Court.
[58] She had appointed her attorneys to act on behalf of the second
respondent and was unaware of and did not appoint the attorneys
that
acted for the old employer. When she became aware of this matter she
conducted an investigation. She established that the
previous manager
(of the old employer) had since left and she could not find any
documentation pertaining to the applicant, assuming
that the old
employer took the documents with.
[59] She confirmed that in terms of the commercial agreement of sale
the contract of employment of the applicant had to transfer
to the
new employer as her name was on the list.
[60] She established that all the names were put on the payroll
system used by the new employer, which system was different to
that
of the old employer and everything thus had to be reloaded.
[61] Further investigation established that the applicant was
receiving Unemployment Insurance Fund payments as she had been
retrenched.
This she only established after having become aware of
this case.
Consideration
:
[62] Having considered the undisputed facts and common cause facts,
it is clear that the dismissal was unfair because of a transfer
of
the business from the old employer to the new employer.
[63] The retrenchment thus was not only procedurally unfair for the
reasons set out above, but also substantively unfair as there
was no
operational requirement that the old employer justifiably could rely
upon to effect the termination.
[64] Section 194(3) of the LRA provides as follows:
‘
The
compensation awarded to an employee whose dismissal is automatically
unfair must be just and equitable in all the circumstances,
but not
more than the equivalent of 24 months’ remuneration calculated
at the employee’s rate of remuneration on the
date of
dismissal.’
[65] As far as compensation is concerned, the Labour Appeal Court in
the matter of
CEPPWAWU and Another v Glass and Aluminium
,
(2002) 23 ILJ, 695 and further, stated that save for exceptional
circumstances an award for an automatically unfair dismissal
should
place the employee in a position as if retrospective reinstatement
occurred. The Court sets out the following considerations:
‘
[49]
In considering whether or not to award compensation in such a case,
the court must consider that not to award any compensation
at all
where reinstatement is also not awarded may give rise to the
perception that dismissal for such a reason is being condoned.
This
may encourage other employers to do the same. It must also take into
account the fact that such a dismissal is viewed as the
most
egregious under the Act. Accordingly there must be a punitive element
in the consideration of compensation.
[50]
Once the court has decided to exercise its discretion in favour of
awarding compensation and it seeks to determine the amount
of
compensation, it must bear in mind that:
(a)
it may not award compensation exceeding the equivalent of 24 months’
remuneration;
(b)
the amount of compensation it awards is required to be ‘just
and equitable in all the circumstances’;
(c)
the amount of compensation that is awarded to an employee whose
dismissal is unfair because there is no fair reason to dismiss
cannot
be less, but can be higher, than the amount that would be awarded to
the same employee if he was in precisely the same circumstances
but
his dismissal was only unfair because the employer had not followed a
fair procedure;
(d)
the highest amount of compensation that can be awarded to an employee
under
section
194
is
provided for a dismissal that has been found to be automatically
unfair (ie subsection (3));
(e)
an amount of compensation purporting to be awarded under sub section
(3) to an employee whose dismissal has been found to be
automatically
unfair would not meet the requirement of subsec tion (3) of being
‘just and equitable in all the circumstances’
if it is
lower than the amount that would be awarded to the same employee if
his dismissal was not automatically unfair but was
unfair either,
because the employer did not follow a fair procedure, or, because the
employer failed to prove the existence of
a fair reason to dismiss;
(f)
ordinarily the amount of compensation that an employee whose
dismissal has been found to be automatically unfair would be awarded
would be higher than the amount that would be awarded to an employee
whose dismissal is only unfair because the employer did not
follow a
fair procedure or than the amount that would be awarded to an
employee whose dismissal is unfair because the employer
has failed to
prove the existence of a fair reason to dismiss;
(g)
the amount of compensation that is awarded to an employee whose
dismissal has been found to be automatically unfair must reflect
an
appreciation of the fact that, save in exceptional circumstances,
such employee would be the most deserving of an order of
reinstatement with full retrospective effect to the date of dismissal
so as to place the employee in the same position he would
have been
in had he not been dismissed, but also to penalise the employer for
dismissing the employee for a prohibited reason’.
[66] The Court made it clear that an award of compensation in an
automatically unfair dismissal is punitive in nature. At the end
of
the day the amount of compensation however, remains in the discretion
of the Court and the award must still be just and equitable.
[67] I take into account the factors set out below in order to arrive
at what I believe is a just and equitable amount of compensation.
[68] Firstly the procedure was grossly unfair. In fact what purports
to be a procedure, never was a fair procedure as envisaged
by the
LRA. There never was any consultation with the applicant who was
merely informed of what was happening.
[69] Substantively the dismissal was unfair and, as I have already
indicated, automatically unfair. There was no lawful operational
requirement of the old employer to terminate the services of the
applicant. She was told by the old employer that her retrenchment
was
what Imperial wanted. From the commercial sale agreement, however, it
is clear that what Imperial wanted was that her contract
of
employment should transfer to the new employer. It may well be that
her old employer was lying to her as to the reason for the
retrenchment in the sense that the retrenchment was prompted by
Imperial. The absence of any justifiable reason for her dismissal
however, is a factor in determining the amount of compensation.
[70] It took the applicant 26 months to find a comparable job at a
comparable salary.
[71] She was a loyal, hardworking employee working during maternity
leave in order to assist the company and obviously to earn
the
additional income that she was relying upon. Then upon the resumption
of duty she was just told about the retrenchment and
three days later
told to go.
[72] She worked for the old employer for two years prior her
dismissal. This is not a very long period but nevertheless
established
permanent employment subject to the normal reasons for
termination.
[73] They had a new-born baby to care for at the time of the
dismissal and the termination of her employment led to financial
hardship which resulted in her having to sell her car and move in
with relatives.
[74] On the probabilities the old employer had terminated her medical
aid contribution before 13 August 2010 which placed
her in an
invidious position and humiliating her when attending for and relying
upon medical treatment.
75] Her mother created a position for her in the family business from
which she earned R5 000 per month to get by. She nevertheless
earned a small income during this period. During that period she did
the deliveries, reception and whatever there was to do.
[76] The applicant had to incur medical expenses in seeing a
psychiatrist to come to grips with the treatment she received from
her old employer.
[77] She has found a comparable position. She has been earning
R15 000 per month from 1 October 2012 which she regards
as
a comparable position at a comparable salary.
[78] The applicant has not recovered financially from the termination
of her services.
79] There were jobs available at the old employer or new employer
which the old employer could procure for her but elected not
to do.
[80] The last aspect is the position of Imperial and to what extent
the conduct of Imperial, the new employer, should be taken
into
account in assessing compensation. The fact is that the applicant
never became an employee of the new employer. The new employer
merely
inherited the sins of the old employer. The conduct of the new
employer therefore cannot influence the amount of compensation,
in
any event not directly. It did not dismiss the applicant.
[81] The conduct of the new employer was after the event. The new
employer in terms of the commercial agreement wanted her and
thus the
conduct of the new employer subsequent to the transfer cannot be a
determining factor in arriving at just and equitable
compensation. It
is the conduct of the old employer that is relevant in determining a
fair amount.
[82] What can be taken into account is the offer to re-employ that
was made to her by the new employer during July 2012, 23 months
after
the dismissal. On the first day of the trial that offer was repeated
as in effect an offer to re-employ to which was added
the three
months’ payment. This offer was made and disclosed to the Court
by the parties.
[83] This offer may be relevant to the issue of payment of costs and
in mitigation of losses. It may also be taken into account
to assess
fair compensation as the liability of the old employer now rested on
the new employer and the latter took some steps
to ameliorate the
position of the applicant but also that of the new employer. In my
view this is not a major consideration.
[84] In my view considering these aspects a just and equitable amount
of consideration is an amount equal to 20 months’ remuneration
calculated at R17 896 per month.
[85] In respect of costs I considered the fact that the second
respondent did not concede the merits in the absence of any defence
with regard to the merits. Cost should normally follow the result
unless fairness dictates otherwise.
[86] The Court has been asked to consider granting costs only from
the date of the joinder in so far as the second respondent was
concerned.
[87] On the basis that the original referral of the dispute to the
DRC must, on the probabilities, have reached the offices from
where
the second respondent was trading at the time, it is probable that
the second respondent may have become aware of the documents
which
then ended up in the hands of the first respondent, because the first
respondent was cited on the documents. Otherwise it
is inexplicable
how any respondent could have defended the matter from the start.
[88] If I am wrong in this, then the applicant could in any event not
be blamed for commencing proceedings only against her old
employer.
She at the time knew there was going to be a sale, but did not know
the identity of the new employer as this was never
disclosed to her.
When she established the identity of the new employer, she joined it
as a party to the proceedings.
[89] Under the circumstances it is fair to order costs against the
two respondents for the proceedings before this Court.
[90] I make the following order:
90.1 The dismissal of the applicant was both procedurally and
substantively unfair.
90.2 The dismissal of the applicant is an automatically unfair
dismissal as it was because of a transfer of a business as a going
concern.
90.3 The first and second respondents jointly and
severally are ordered to pay the applicant compensation in an amount
equal to
20 months’ remuneration calculated at R17 896 per
month,
id est
R357 920
in total.
90.4 The first and second respondents jointly and severally are
ordered to pay the applicant’s costs.
_______________________
COETZEE, AJ
Acting Judge of the Labour Court
APPEARANCES:
For Applicant: JM Thompson
Of Thompson Attorneys
For First Respondent:
For Second Respondent: Adv. I Strydom
Instructed by M.D Swanepoel Attorneys